COVID-19 has shocked, and continues to shock markets everywhere. As we learned from the SARS epidemic in the early 2000’s, such shocks can accelerate existing trends, transform some, and decimate others. We are seeing similar forces at work here. I am in constant communication with the people that create and grow e-commerce organizations and ecosystems, and here are some of the trends that are currently in play.
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Omni-channel retail and payment systems
You might think that during a pandemic, customers would become less demanding on their favorite stores. But restrictions on movement and interaction means that they turn to their favorite businesses to provide them *more* options for shopping, paying, and receiving their purchases. So I have seen that omni-channel retail and payments have and will become increasingly important.
What does omni-channel mean? I think the Shopify blog put it well: “…people don’t just shop in-store … even when they’re inside a store.” An omni-channel retail strategy is an approach to sales and marketing that provides customers with a fully-integrated shopping experience by uniting user experiences from brick-and-mortar to mobile-browsing and everything in between. The idea has been around for a few years, but COVID poured fuel on the fire.
A good example are Galeria Kaufhof Karstadt department stores in Germany which became Amazon hubs during COVID. The German department store giant and Amazon have been partners since 2017, but with COVID came a surge of demand for Amazon and other e-commerce services. So customers purchase goods online and pick them up offline. But it also works the other way round: people are shopping in stores and expect the goods to be shipped to their home within 24 hours. It appears that the same operation is being implemented in the US, as Amazon is in talks to turn Sears and JCPenney locations into fulfillment centers. So brick and mortar shops are becoming even more “e-commercialized,” if I may coin such a term.
And as I mentioned previously, customers want all payment options available all of the time. When customers visit one of the aforementioned fulfillment centers to pick up an order placed on a mobile app, then chances are the customers want to pay for the goods in any manner that is most convenient for them, such a the following examples:
- Online shopping carts or “buy” buttons
- Recurring / subscription billing
- Invoicing with links to secure payment forms
- Keyed transactions (often used for phone or mail orders)
- Card readers connected to smartphones
- Traditional countertop credit card machines or POS systems
- Contactless / NFC transactions like Apple Pay
Instant bank transfer
Payment behaviour of customers will change and is changing. Credit cards, ATM cards, other payment cards, and cash will be less important and the relevance of instant bank transfer will grow in e-commerce.
Of course this trend has already been in progress, but it is really crazy how the crisis made cash so unpopular so quickly. Mobile banking and payments apps add a level of security and convenience to users. And as previously mentioned, the crisis has been a boon for e-commerce transactions and put a damper on in-person transactions. Naturally, almost all e-commerce transactions are “card not present.”
Finally, instant bank transfer offers a few real benefits to merchants: there’s virtually no risk, and the transactions feature low fees in comparison to credit cards.
Big Data
As the e-com environment is becoming more and more competitive, the only players that will survive are the ones who understand how to collect and use big data to constantly adapt their platform and tailor their offering to individuals.
The good news is that I have observed many companies drastically improve their data collection with modest effort. There are also a number of companies that specialize in assembling large, industry-specific datasets. Entering the Big Data space sounds overwhelming, but there is more assistance available than ever before.
Marketplaces: more orders + more competition
During COVID, one could also see that the importance of marketplaces is constantly growing and that this will be the only way for (some) stores to survive. Competition for Amazon will grow massively. Good examples are players like Otto, Cdiscount and Conrad.
Another interesting development is that real.de joined with other European online marketplaces Cdiscount (France), eMAG (Romania) and ePrice (Italy) and started the International Marketplace Network (IMN). The network offers a total of around 30,000 active dealers and access to more than 230 million potential customers in Europe. Retailers are able to synchronize their offers and orders across marketplaces in real time without incurring additional fees for the connection to the additional marketplaces.
Even in the US, where Amazon continues to reign supreme, the coronavirus e-commerce surge of orders overwhelmed its operations, forcing the company to slow delivery on many items. As the New York Times pointed out, while Amazon’s sales did boom, its competitors’ grew even more.
There are challenges, but recent history demonstrates massive opportunities
COVID-19 has disrupted, is disrupting industries horizontally and vertically. Still, as the massively successful JD.com demonstrated, even severe disruptions like SARS present opportunities. SARS forced JD.com to cancel its original expansion, and then forced it to close most of its shops, and then it transformed into an innovative e-commerce operation as a means of survival, and the rest is history. I wish your company the same kind of resilience, creativity and success.
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