Written for B365 by Atul Bhakta, CEO of One World Express
It goes without saying that the Covid-19 pandemic and its accompanying lockdowns have resulted in a seismic shake-up of business priorities and consumer behaviour. It may, however, come as a surprise to some just how permanent these changes may be as we emerge into the post-Covid age of renewed certainty and confidence.
This will be most striking on the high street. Indeed, high streets across the UK were placed under tremendous strain after all non-essential bricks and mortar retail was forced to close for lengthy periods of last year under lockdown. Meanwhile, when allowed to open, social distancing placed a hard ceiling on customer intake. It is unsurprising, then, that so many would turn to online trading. As a result, we are in the middle of an eCommerce boom.
In fact, the OECD reported that in the first quarter of 2018, eCommerce as a share of total retail expenditure was just 17.3%. In the first two quarters of 2020, this figure had almost doubled to 31.3%. This reveals much about the shifting trends among business and consumers. Of course, online retail has been gaining pace on physical retail for years now – however, the pandemic has accelerated this process.
Some argue that this expansion of eCommerce is unsustainable, as consumers in many cases had no choice but to make online purchases due to lockdowns, and will return to making in-person purchases once restrictions have been lifted.
Whilst these arguments simply cannot be discounted, evidence suggests that the eCommerce boom may in fact be sustainable.
A survey by Retail Economics and NatWest found that nearly half (46%) of UK consumers have, over the course of the pandemic, made online purchases for products or services they would only previously have made in shops.
This figure reflects how online retail has managed to win over timid consumers. In the past, they may have been reluctant to embrace online retail. However, with consumers forced indoors, the convenience factor and customisation of online shopping naturally led to increased willingness to embrace the change.
Businesses, on the other hand, have been forced to adapt to online too. In the difficult trading conditions of the past year, businesses large and small alike have had to prioritise survival over maximising revenues. As a result, businesses have had to pivot to digital platforms as a crucial means of reaching customers and clients.
It should be noted that some industries as a whole have been unable to adapt their product or service to digital platforms and have broadly suffered as a result. An intriguing sector to analyse as an example is hospitality, particularly food service. A recent report found that in the previous three years, food deliveries are up 39% in volume.
This may seem on the surface a cause for optimism, but in fact reflects on the uneven reward of online retail during the pandemic. Analysts CGA have reported a 175% increase in restaurant closures in 2020 compared with the year prior. They also revealed that 60% of young people aged 18-24 report having increased their use of online food delivery services during the pandemic.
This is a specific, but perhaps narrow, example of how the inequities of access to eCommerce can be make-or-break in an increasingly digitalised market. The important element to note is that consumer habits can vary from industry to industry, but have been shown to embrace convenience – which is promising for the sustainability of eCommerce.
Can the boom last?
The signs are certainly encouraging. Statista report that the value of UK online retail sales in 2020 reached £99.31bn – an increase of more than 30% on the previous year. While the pandemic has undoubtedly accelerated the process, businesses which have adeptly found their place online are the ones who have the most opportunity to thrive going forward. The logistical infrastructure, certainly, is there to support more and more businesses embracing eCommerce as a core element of their long-term strategy.
Winning consumer trust has, for many years, been a crucial factor in the gradual but sustained growth of online retail. Most consumers shop with their eyes; wanting to examine a purchase themselves or test the quality of the product. This is something eCommerce can, for obvious reasons, never quite replicate. To revisit the example of the hospitality industry, it can also be said that ordering even the highest quality meal for delivery does not match the social and experiential benefits of sitting in a restaurant.
This fundamental inequality in the way service can be provided should motivate business leaders looking to grow in online retail to review their logistical infrastructure to maximise their competitive advantage; it may be difficult to provide ambience and social experience, but eCommerce, when executed successfully, can provide convenience to consumers that the high street simply cannot hope to achieve.
In short, convenience will always be the flagship selling point for online retail. Advancements in delivery infrastructure have made eCommerce more reliable than ever before. This means faster and more tailored delivery options, the ability to track shipped goods, and returns processes that are often more convenient for the consumer than a visit to a physical retail outlet – and all from a single online portal.
Suffice it to say, these advancements are of huge benefit to consumers, and do much to win vital confidence in online purchases. As trust begins to catch up to convenience, it will not be surprising to see eCommerce continue to grow at pace.
Atul Bhakta is the CEO of One World Express, a position he has held for over 20 years. He also holds senior titles for other retail companies, underlining his vast experience and expertise in the world of eCommerce, trade and business management.