How Customers are Changing Their Shopping Behavior in Times of Crisis

The Impact of COVID-19 on eCommerce

Today every merchant is concerned about the development, and above all, the survival of his business. The COVID-19 pandemic has evidently a huge impact on the international trade. This will cause for sure dramatic uncertainty on global economy.

It is also true that some of the measures taken by the governments have changed the mindset of the consumer. Isolation and social distancing are here to stay for nobody knows how long. Entire cities became fully locked-down. Schools and shops were closed. Most people claimed that they will avoid public, crowded places. People are staying home, some of them work from home, while others take a long-term break. In other words, we are changing our way of living.

Now it is time to fit the situation and go forward

The businesses had to learn on the go about how to fit themselves in the current situation. Online shops and websites providing different services took advantage of the situation by offering different benefits to their consumers. They told customers that it’s good to stay home without missing any of the essentials of the normal everyday life. Online shops selling various product categories offered free delivery – a key advantage to win the customer, as everybody knows. The delivery with no additional charge makes customer feel safe and comfortable in that situation. Various promotions and discounts also popped-up quickly. They are just another good advantage, since even high-end customers are right now quite cautious and more sensitive about saving money, rather than being big spenders.

Along with common ecommerce businesses, we have got plenty of examples of brick-and-mortar shops, restaurants, groceries, etc. that were forced to go online around the clock. The willingness of the business to survive clearly demonstrates that most of the merchants are ready to go online. For some of them this is a big step indeed, but ecommerce grew big time in the last few years and they should be there. Maybe such a force majeure situation was what business owners needed in order to overcome the fear of getting more digital?   

The current situation has both positive and negative impact on industries

In terms of internet penetration all online-based services, shops, educational platforms, etc. enjoy a remarkable boost in sales. Leading product categories became household items and groceries, medical consumables (such as face masks, gloves, hand sanitizers). Products for home and entertainment like DIY products, books, puzzles and board games also had impressive results. Mobile applications and some of the convenient subscription services are also in the priority list for people stuck at home.

In response to all this, local producers of textile and cosmetics adapted immediately to the situation. They started producing face masks and different kind of antibacterial products, including hand sanitizers. But other business sectors flourish as well. Concerned about the future, people are now more likely to search for the services of insurance companies. Other successful product categories are health products and food supplements. Almost always on top of online sales, they will continue to be among the most popular ones for distant selling.

While most of the industries mentioned above may have increased their sales, others are not doing it quite well. Such an example is the category of luxury goods. Their sales have already dramatically decreased. It is expected to continue this way in the future months. Fashion, tourism and service-based sectors are also having extremely bad period with the pandemic.

Online businesses must think about additional resources and payment methods

As more consumers will likely turn to online shopping, the capacity of the available ecommerce websites is not enough to cover the market demand. That leads to order processing and delivery delays. In situation like this, outsourced warehousing and fulfillment services are the best decision to consider.

Except resourcing problems, the online businesses face the impact of the cash on delivery (COD) orders. In Western Europe this kind of payment hardly exists, or it has low usage rate. However, in other countries or regions (e.g. the Balkans) the COD remains the most preferred payment method – sometimes reaching up to 80-85% of all ecommerce orders. In order to prevent the spread of coronovirus, carries stopped accepting parcels with cash on delivery. Alternative methods are card on delivery or prepaid orders (via some of the popular payment gataways). This restriction has a huge negative influence on the businesses that send their orders with COD. Naturally, they should adapt accorddingly to the situation. On top of that, closed or stuck borders and customs have caused delays on international cross-border transport.

Since consumers are changing their behavior, so do merchants as well. We are now facing a period of localization of the business to the global requirements. Switching to “survival mode”, merchants are changing their processes according to the newest customer behavior. Habits are powerful and get more powerful over time. Even if coronavirus gets into control at some point, customers’ fear will stay for months ahead, even for years. We are not expecting malls to die, but more and more consumers will switch to online for good.Ecommerce has been growing as a trading method, so we do expect to be like that in future. It will suffer somehow the COVID-19 disease, but it will recover faster than any other type of business. And when it happens, it will be even more powerful than it was before.

Global Trends Pushing Cross-border Ecommerce Sales

The global ecommerce market is growing every year

The global ecommerce market is growing every year, with retail online sales expected to reach $3,54 trillion in 2019 and grow by 19% to $4,21 trillion in 2020, according to eMarketer. By 2023 it is expected for to reach almost double the growth, up to the mind blowing $6,54 trillion. This means that there are plenty of opportunities on the market (in many different categories), so if you want to be benefit from them, you have to be well prepared for the fierce competition. Both on a local and global scale.   

As an ecommerce business owner, maybe you’re considering starting cross-border activities – either all around the world or just in one neighboring country or region. It’s definitely sure exciting, but it’s also quite a challenging endeavor. There are many things you HAVE TO consider and carefully plan out, in order to avoid unpleasant surprises or even fines from controlling institutions.  

How to do it?  

This short guide will help you get a better understanding of the seven key challenges online shops face when they start their cross-border activities. If you manage to organize your business in a way that solves all of them, you will have a much firmer base for the launch of your business in another country. Of course, this guide isn’t too detailed, but it should be useful for you as a reference point. We hope you will find it useful. 

But before we dive deeper in the details, let’s see what factors had the most impact on the amazing growth of ecommerce businesses in the last years.

Here are the factors that have impact on the growth of ecommerce

One of the key components you need to understand to get the full picture is the overall drop in international logistics and courier prices. It’s now much cheaper to move stock from one country to another than it was before. Last mile delivery also costs just a portion of the price it was several years ago. The infrastructure of courier companies has also improved a lot and nowadays same day delivery and quick delivery up to 1-3 hours are a must for every serious player in the field.

Another factor that facilitated the cash flow between merchants in different countries is the global expansion of payment gateways and fintech companies. That made it much easier and cheaper to arrange payments between producers, importers, distributors and resellers. In the last few years companies like TransferWise, Revolut, Paysera etc. have seen a significant increase in their customer base, mainly because people were looking for better options to move money from one country to another and avoiding the expensive bank fees for international transfers.

Manage your activities by yourself or use outsourcing services?

The growth of ecommerce business also created continuously increasing demand for somebody that could help online shops focus on their core activities and not on time-consuming daily operations. Outsourced fulfillment services allowed business owners to free more time for improving the product or service and to avoid losing too much money because of seasonal drops in sales for some product categories (like sun protection cosmetics, camping equipment, heating appliances and many many more). Complex and time-consuming daily operations like storing, picking, packing and sending the items plus managing the returns for the ecommerce website now have a quick and easy solution. Both Amazon and Shopify are investing a lot of money into the development of these services, but there are also excellent smaller local or international fulfillment companies that you can use if you want to be independent of the giants but still need to outsource these activities.

SaaS and open-source platforms for ecommerce allowed people who have limited (or even lack) technical background to quickly build small online shops and to start selling their products in a matter of weeks. A huge portion of all ecommerce websites today are either one-man shows or very small companies. The good news is that some of them are already growing significantly. Of course, most of the ones who don’t take the business of ecommerce seriously are struggling.

Make processes automated and save time and resources

Automation of all aspects of the operations and marketing made it possible to scale the business a lot without having to hire too many people. That allowed entrepreneurs to cut down on operational costs or to reinvest more money back to their business. Machines, robots and algorithms can perform simple or complex tasks much quicker, with no mistakes and without needing rest, like people do. As a result, there is much more time available for the development of better products or for the improvement and optimization of operations.

All the factors mentioned above contributed a lot to the global development of the ecommerce business. The amount of stock that moves cross-border as a result of online sales is incredible. We can confidently say that there was never a better time to start selling abroad. By that we don’t mean that it will be easy (as you will see if you read the next articles), but only that current conditions allow anybody who wants to launch or develop further its online business to do it much faster compared to previous years.

Stay tuned for the next article in the series, where you’ll learn more about how to choose the business model that is best for your type of online store.