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The Second Wave: Getting E-Commerce ‘Right’ For the Future
The second wave is well and truly here for residents of Melbourne and parts of Victoria, and parts of Sydney may be next. So, how will the second wave impact e-commerce, and will it have the same long-lasting effects? We spoke to a series of e-commerce experts to discuss the outcomes of the second wave of coronavirus on e-commerce.
During the first wave of coronavirus, the online boom was comparable to the first boom of 2010 and helped reduce the strain for multichannel retailers who were forced to shut their doors for the duration of lockdown. Here’s how the pandemic has impacted online retailers, and how to secure a company for the future, including the second wave of COVID-19.
The First Wave
B2C Furniture is an ethically-sourced hardwood furniture retailer that sells via a multichannel business model. Prior to COVID-19, approximately 50 percent of its sales were processed in its showroom – the other 50 percent were direct internet orders. “…when COVID-19 lockdowns were imposed to address the first wave, we were concerned that we will lose 50 percent of our business,” Anesley Clarke, the Director of B2C Furniture told Power Retail.
“However, this was not the case as we discovered that online sales increased to offset the in-store sales,” Clarke explained. “We feel that this will also be the case with the second wave.” During the first wave of the lockdown stages, there were specific departments of the industry that were put on hold, which severely impacted the overall function of a retailer, both online and in-store.
“The main issue we are dealing with is with disruptions to supply chain from suppliers overseas,” Clarke explained. “COVID-19 has had a significant impact on the time required to received supplies from our partners overseas.”
Luckily for Australia, the restrictions did not surpass Stage Three – for New Zealand, Stage Four restrictions stopped the deliveries from e-commerce retailers, resulting in a nation-wide shutdown of all retail for the span of the pandemic. As reported in mid-March, a New Zealand scenario could have wiped out “$25 billion a year minimum (annualised) of e-commerce revenue”, Grant Arnott, the Managing Director of Power Retail said. Even for one month, the estimated revenue loss for Australia would be a minimum $4 billion hit.
What About the Second Wave?
So, Australians have seen the impact that the first wave had on the retail industry, so what would happen if we were to enter a second wave? For Victorians, there are already impacts being felt – retailers have closed stores again and small businesses feel like they’re back to square one.
How are retailers positioned to handle the second wave of COVID-19 and the effects it has? “The second wave is going to be a bigger wake-up call than the first,” explained Craig Padoa, Managing Director at Wanzl Australia. “It shows that this isn’t a one-off. You don’t need to tweak your business model to embrace online, you need to change it. It’s not a black swan event anymore.”
Online certainly had a boom during the COVID-19 and felt a sense of security during the lockdown. However, according to Padoa, this ‘lucky’ sensation is something that is becoming the new normal, especially in these uncertain times.
“Retailers who think that the internet guys got lucky need to understand that this is the world we live in now,” he told Power Retail. “We’ve had MERS, we’ve had SARS, now we’ve had COVID. As populations globally move from rural to move to urban environments, these events will continue to arise. We have to think about a new way of doing business.
“From a consumer side, this will establish norms. People who weren’t used to buying online and thought they were doing it as a once-off during the first lockdown will now build habitual online purchasing behaviour. They know that this is increasingly how they shop,” he explained.
Are You Ready For the Second Wave?
Staying afloat during uncertain times is tough, but there are are some tools that retailers should have prepared.
According to David Bray, PROS Managing Director of Porter Novelli, there are certain ways to stay prepared for any turbulent changes within the industry:
“• Acquire the right skillsets and invest in the right infrastructure – a top-down corporate strategy that supports an e-commerce platform.
• Avoid channel conflict by aligning the current sales force with e-commerce.
• Build the right offers for customers through e-commerce by analysing customer desires.”
“All organisations should be aggressively investing in e-commerce as the country emerges from pandemic-related restrictions and prepares for an imminent ‘second wave’,” Bray told Power Retail. “E-commerce is driving engagement for all sizes and types of companies, regardless of geography.”
Six months ago, online was still a budding industry – look to the present, retailers need online to stay afloat. “Retailers who executed well during the pandemic have just converted a lot of customers,’ Padoa told Power Retail. “Those who got it right created a happy, loyal shopper. Food retail is a classic example. They did so well they had to slow down the deliveries and focus on the elderly and the vulnerable.”
“Those who got it right created a happy, loyal shopper”
“The next phase is about pricing transparency with a clearly defined value equation,” Padoa explained. “Value is price times product differentiation whether that be design, brand or quality. Retailers who nail the value equation and show how their product will look better, fit better and work better will have the opportunity to maintain some of the margins that those competing purely on price will not. This will be particularly prevalent in discretionary spending categories like garments and home furnishings where product imagery and marketing will play an important part in constructing purchasing decisions. Brands like The Iconic and Temple and Webster are nailing this today – they have made the investment to upsell and differentiate their produce on value, not just price.”
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