E-commerce Amid Covid 19: How Consumer Behavior is Changing (and What to Do About It)

29/04/2020

Companies which have gone digital are adapting to the crisis better than their peers. E-commerce has become a staple of the new normal and new consumer behavior surveys give insights into expectations, value sentiments and lifestyle changes

 

The novel coronavirus outbreak has forced people to practice social distancing and work from home, which is a boon for online food orders, teleconferencing, telemedicine and e-learning. Moreover, everybody has been forced to rapidly adopt new behaviors and trends that once existed in the background are standing now to the forefront of our daily lives. Concerning e-commerce, with stores, restaurants and entertainment venues closed, the quarantine has pushed even the most tough consumer into the digital world. 

 

Live-Streaming is China’s New Form of Digital Communication - video e-commerce - cifnews

© Alizila. Livestreaming let viewers make real-time purchases of any items on the runway from their mobile phones.

 

What people have been buying are household necessities. Data suggest that while consumers stuck at home, they were not interested in buying nonessentials such as clothing and electronics during the height of the epidemic, normally among the top-selling categories on online marketplaces. This behavior is consistent with large-scale shelter-in-place orders around the globe as well as consumers’ stated expectations of reduced spending but excepting China, consumers are dramatically pulling back on discretionary spending in most countries.

According to McKinsey, globally, consumers are still spending (and sometimes spending more) on basics such as food, household supplies, and personal care items, as well as on home entertainment. As countries move through the contagion curve, we see increased momentum across select categories.  

 

 

For example, both Alibaba and JD described robust growth in orders for groceries and other essentials compared with the same holiday period last year during the first month of epidemic outbreak. JD said that orders for food products on its platform grew 154% compared with last year. But as countries progress along the contagion curve, there are pockets of increased spending. Chinese consumers are beginning to spend more across a few categories outside of basics, including pet-care services, fitness and wellness, skin care and makeup, and basics for childcare.

 

© Alizila. Alibaba’s Freshippo (also known as Hema) supermarket reported robust growth in orders for groceries and other essentials.

© Alizila. Alibaba’s Freshippo (also known as Hema) supermarket reported robust growth in orders for groceries and other essentials.

 

Their shopping habits before, during, and after the COVID-19 peak show that shopping behavior after the peak resulted in more than 30% lower traffic but larger basket sizes for food purchases, and depressed traffic and consumption for apparel and department stores (40 to 50% below pre-COVID-19 levels). In South Korea and Japan, food takeout and delivery are showing positive momentum, reported McKensey.

The response to COVID-19 hasn’t been universally felt across generations, with consumers of different age groups responding differently to the crisis. Gen Z and Millenials are particularly altering their purchasing behaviors while older generations such as Gen X and Boomers are slightly less concerned than younger generations and letting it impact their shopping habits less. Plus, while data shows that shopping behaviors are changing based on generational differences, we’re also seeing variations based on gender. Consumers globally expect long-lasting effects of COVID-19 on their personal routines and finances, but preference aside, e-commerce has become a staple of the new normal, though according to consumers it is a practice that may have staying power.

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