RSS feed Get our RSS feed

News by Topic

BizReport : Ecommerce : July 06, 2020

How COVID-19 has changed ecommerce

As restrictions begin to lessen around the world, more people are hitting grocery stores and shopping malls, but what does that mean for the increase in spending digitally during the lockdown months of the pandemic? We asked a digital expert what merchants can expect as consumers return to work.

by Kristina Knight

Kristina: Over the past two months there has been a dramatic uptick in ecommerce as people have not been able to get to stores. With states loosening restrictions, are you seeing fewer online purchases?

Dani Cushion, CMO, Cardlytics: Throughout the COVID-19 pandemic, we've observed some sharp, upward spikes in ecommerce spend. Between March 12 and April 29, e-commerce gains have helped offset some of the loss of in-store spend across the board, particularly for select categories. We've also seen that online spend across several categories peaked in mid-April, coinciding with when many retailers began to open their physical locations. Online beauty retailers hit their peak the week of April 16, when spend was up 136 percent YOY. By the next week, growth of online spend in the beauty category slowed to just 14 percent YOY.

This finding indicates that many consumers were already taking advantage of the opportunity to shop in re-opened physical stores. As DMAs continue to reopen, it will be important to properly target customers who may be at risk of returning to old spend habits. Cardlytics is helping industries, like eCommerce, maintain their new market share by providing targeted cash-back offers as an incentive to these customers to drive continued loyalty.

Kristina: Despite the uptick in ecommerce, overall retail has been down - will merchants and brands begin seeing retail numbers return to normal now that shoppers can get into stores?

Dani: While overall retail spend has been down, we're already seeing some categories bounce back and think the trend will continue as physical locations reopen and consumer confidence improves. Cardlytics' Recovery Indicator, which tracks spend in select discretionary categories to inform when consumers may resume normal spending, is showing some positive signs of recovery. The week of March 26 spend at low-ticket, high-frequency businesses - including salons, apparel retailers, and casual dining establishments - was down 75 percent YOY. The week of May 14, discretionary spend was only down 51 percent. Tracking and understanding the discretionary spend shopping habits helps retailers understand when and where consumers are ready to begin shopping again so that they can target their advertising accordingly.

What's interesting is the opportunity for potential long-term shifts in consumer behavior. For example, online beauty was only growing at a single digit pace before the shelter in place began. After which, spend spiked, up 136 percent YOY at its highest point in time. While it's now starting to decline, it's still up 77 percent. If these retailers can capitalize on these recent gains now using precise targeting, incentivized offers, and seamless shopping experiences, this shift in shopping behavior could continue to prove significant in the long-term

Kristina: What areas have seen the biggest increase in ecommerce during the pandemic? What about the lowest?

Dani: Throughout the pandemic, online grocery has seen the biggest spike, with spend up 146 percent between March 12 and April 29. This is not surprising as consumers were increasingly gravitating toward more delivery and on-demand shopping options amid social distancing orders. On the same note, as stay-at-home orders begin to lift, these grocery retailers are faced with the sizable challenge of retaining their influx of new online customers and getting them in store. By offering timely promotions for online services, or discounts on select products at their physical locations, grocers will be in a better position to retain both their single- and omnichannel customers and maintain spend down the road.
While most of the categories we're tracking have experienced increases in online spend since March, the one online category that has been hit hard is convenience. The week of January 30, online convenience spend was up 9 percent YOY, but by the week of May 14, online convenience spend experienced a major drop, with spend down 52 percent YOY.

Kristina: In your opinion, will ecommerce continue to be the go-to for shoppers?

Dani: Retailers need to continue to ramp up their omnichannel efforts by catering to both online and in-store shoppers. While for the foreseeable future consumers may continue to gravitate toward online purchases, as states begin to open up, we're already noticing certain categories - like physical convenience stores, big box retailers, home and garden stores, and pet supply retailers - see positive in-store recovery. This is a good sign for the future of brick-and-mortar. Over the holidays, before COVID-19 began to impact U.S. spend, we found that omnichannel customers spent twice as much as their single-channel counterparts, further reinforcing the value of providing convenience-oriented omnichannel offerings to consumers. For instance, retailers can offer digital cash-back rewards that can be redeemed in-store or online to incentivize consumers to venture to the physical location, or make a purchase online.

Kristina: With restrictions loosening and more people beginning to spend, what should merchants do to engage?

Dani: Brands must make every marketing dollar count and understanding when and where consumer spend is coming back can help them do so. With a unique view into consumer purchase behavior, Cardlytics can help merchants understand who is beginning to actively spend in their category and target them with relevant ads in the form of cash back rewards. This savings becomes even more important to the consumer in these trying times, thus driving increased loyalty and incremental spend to the merchant as shopping restrictions and consumer choice begins to loosen.

Tags: Cardlytics, COVID-19, CX trends, ecommerce, ecommerce trends, m:Commerce, mobile commerce, mobile marketing

Subscribe to BizReport



Copyright © 1999- BizReport. All rights reserved.
Republication or redistribution of BizReport content is expressly prohibited without the prior written consent.
BizReport shall not be liable for any errors in the content, or for any actions taken in reliance thereon.