Throughout the uncertainty of these past few months, one aspect that has been hyper-consistent is the increased reliance on e-commerce. With order volume regularly exceeding last year’s holiday season, merchants have risen to the challenge of scaling up their businesses.
Both businesses and customers have been anxiously awaiting a return to normal physical retail. For customers, it means more options and potentially more convenience. For many retail businesses, it means rebounding from an extremely challenging few months. And for e-commerce businesses that have been eating a bigger piece of the retail pie than ever, it means more competition.
What remains to be seen is whether or not the consumer behavior that originated—at least partially—out of necessity during lockdowns is here to stay. Or, will the physical vs. digital retail mix return to pre-COVID levels just as quickly as it changed?
We think many of the changes are here to stay.
Oftentimes, the biggest blocker to trying something new is simply taking the first step. And even though this first step came partially out of necessity, we don’t see many new e-commerce shoppers turning back now.
As was the case for most of us when we first tried a smartphone or first adopted e-mail, our behaviors had changed forever.
It’s not to say that none of us held on to our flip phones or continued sending written letters. We did and still do. But, the pendulum swing has been undeniable.
Admittedly, the retail pendulum was already swinging towards digital before COVID-19 and the past few months have only accelerated it. No expert would tell you that the future of commerce is NOT increasingly digital. That question has already been answered.
A better way to evaluate this is: how much will COVID-19 speed up the pendulum for e-commerce merchants?
The answer, for each individual merchant, depends on how well they’ve adapted and how they’ve serviced new customers during this period.
It comes down to a simple operational distinction that varies from business to business:
Are you optimizing for building deep relationships with your customers, or are you simply optimizing for transactions?
While the concepts may seem to overlap, the difference between the two approaches is critical to long-term success.
A business that optimizes for pure transactions, by making sure their supply chain and inventory are in order, making sure their site is up and running, and maybe running a sale, will see strong upticks during strong market conditions, like COVID-19 for e-commerce.
But, if that same business doesn’t go the extra mile to cultivate a lasting impression and relationship with the new customers that it acquires during favorable market conditions, it stands to lose those customers just as fast.
And here’s why: many of those customers were first-time buyers that would otherwise prefer to make the same or similar purchases in person. In other words, they’re expecting to go back to their old habits when it’s safe again.
This means that if e-commerce businesses want to retain these customers over the long run, they need to overcome that expectation. To do this, an e-commerce business needs to deliver such a positive customer experience that it changes customers’ expectations and forces them to reconsider their preconceived notions about retail.
So, how does that take shape? It’s not super complicated. It comes down to proving to a new customer that buying from your business is a better overall experience when compared to their previous shopping habits.
Can you make your business more convenient than the alternatives? If the end-to-end experience of making a purchase from your site is, in the mind of your customer, easier than going to a local store (and also potential competing e-commerce businesses), customers will keep coming back.
Can you convince customers that ordering from you is the most reliable way to get the type of product that you sell? Especially for new e-commerce buyers, not being able to see the product or know where it is at all times can be a legitimate fear, or deterrent. You can overcome this by providing as much detail as possible on your website (pictures, specs, even videos) for your products. It’s also critical that you can give customers an expected ETA before purchasing and then provide detailed tracking for their orders post-purchase.
Do your customers feel confident that they are being treated well and kept informed at every stage of the process? Think about your returns policy. Is it clearly communicated prior to a customer making a purchase? And if a customer needs to process a return is it a pain-free experience? Pro tip: 95% of consumers said they will purchase again from a business after a positive returns experience. And what about shipping and handling costs—are you transparent about them, do you communicate what they are clearly and are they appropriate for what you are selling?
Can you offer your customers something more than what they would otherwise expect? I like to think of this as a business’ “secret sauce.” As consumers, we have so many interactions with businesses on a regular basis that most of them turn to a blur. Think about all of the emails that you’ve received or all of the boxes that you’ve opened—how many of them were truly memorable experiences. There is no one-size-fits-all solution for this, if there were it wouldn’t really be “secret sauce.” But, you should look at all of your customer interactions and try to pick out at least one where you are going to do something above and beyond the normal and something that really stands out from everyone else.
Some examples include a completely customized unboxing experience, an extra surprise in the box (maybe a note or a small gift), or a genuinely helpful piece of content to compliment your product. For example, if you sell running shoes, wouldn’t it be awesome to send a running-form tutorial video as part of your delivery confirmation email?
Are you making sure that all of the “scary logistical pieces” of e-commerce are executed with ease for your customers? You should take a look at your competitors and see how you stack up in terms of shipping costs, speed, and offerings of free shipping. If you’re not in as good a place as you initially thought, you might want to think about adding more options, or looking into additional carriers that could reduce costs, or increase speed for certain customers. For example, if your business is based in Texas, you can offer LSO (Lone Star Overnight) as a shipping option to local customers. This is going to be faster, cheaper, and possibly a more careful service when compared to national or international carriers.
Are you doing something extra to make sure you stay top of mind with your new customers? Okay, so you’ve delivered the best possible customer experience, but your customers still aren’t magically coming back to your site. If this is your situation (don’t fret, it’s not uncommon), you should start thinking about how you can stay top of mind for your customers even when they’re not actively looking to make new purchases. There’s no single “right” way to do this, but some potential options are starting a relevant newsletter for customers, implementing a rewards/loyalty program, or increasing your investment in your digital marketing programs (this could be social media content or even using retargeting to reach your previous customers with targeted messages). Here’s a more specific example to spur your thinking: Let’s say that I have a headband business that targets endurance athletes. I could start a monthly newsletter that covers the latest strategies in training and nutrition for various sports like triathlons, cycling, and distance running. As an alternative (or even better, in addition) to this, I could send a monthly blast of the best user-generated pictures of athletes using my headbands.
Think about it, if new shoppers initially engage with your business out of necessity and then find that shopping with you is more convenient and reliable than leaving home to shop at a physical store, then you’ve made the choice easy for them.
As more physical retailers are able to reopen, it’s a near guarantee that a greater share of total commerce will take place in person compared to the past several months of sheltering in place.
Some e-commerce businesses will likely see their volume drop right back to where it was in January, while others will be able to retain or even grow—on top of the new highs hit during shelter in place.
That said, there is still so much to be seen. Certain areas are moving back to almost pre-COVID-19 states, but that doesn’t mean consumer fears around the virus won’t linger. Nor does it mean that we won’t see a second wave of infections and subsequent shelter-in-place orders.
Not Everyone is Ready for Reopening
There are several factors that can and will come into play around reopenings and the ways things could unfold for e-commerce businesses.
1. Concerns About Going Back to the Old Normal
There is still a lot of concern around safety. Even with social-distancing mandates in place, COVID-19 numbers have still been rising in many areas—in fact, new cases have been increasing in many of the reopened states, especially in Florida, Texas, and Arizona.
For concerned consumers, relying upon online resources along with procurement methods such as home delivery and curbside pickup may stay the same for some time. A recent survey of retail executives shares a prediction that there will be up to a 13% increase in further online penetration, even during the reopening phase.
2. Preparing for the Next Wave
While reopening may be an important step for many struggling industries, health and safety experts have been predicting all along that the pandemic will continue to resurface in subsequent waves. In lieu of an approved vaccine, this will play a major role in the need for products found online. A second wave has already hit China, and it’s predicted that it will hit other places in the very near future, especially as the weather gets colder.
3. Becoming More Accustomed to E-Commerce
As we’ve all had to adjust our shopping habits these past few months, there will naturally be new shoppers who’ve grown accustomed to the virtues of online shopping, especially as more merchants offer fast delivery or buy-online-pick-up-in-store options. As mentioned above, for those that have been convinced that a specific online business is best for their needs, these trends are likely to continue.
4. Limited or Outdated Inventory in Stores
With stores closed and dormant for several months, having fresh inventory on hand has been a challenge during reopening, especially for various brick and mortar apparel and department stores. For instance, clothing that was originally intended to make a splash during the spring season has, in many cases, been bogged down in distribution centers for several months. Now, newly reopened retailers have to deal with the excess stock, which in turn may affect their ability to purchase new stock. This may have a bearing on the level of choices shoppers have, especially when compared with assortments available online.
Forging Ahead With Purpose
As stay-at-home decrees continue to lift—at least for now—the e-commerce brands best positioned to keep pace in a post-pandemic world will be those that have emphasized holistic customer experiences over just simply making the sale, and most importantly, have been able to prove this firsthand with customers.