Have you already received messages from local online retailers informing you about the possibility of ordering online despite the quarantine? More and more businesses are trying to leverage theCOVID-19 (SARS-CoV-2)outbreak to avoid (or at least mitigate) the inevitable recession caused by the virus. Will they succeed? We try to find the answer below. The following article describes the coronavirus impact on e-commerce and retail. Let’s figure out what’s going on around and why people are so obsessed with the COVID-19 pandemic.
Where Businesses Can Get Help During The Coronavirus Outbreak
Before going any further, we’d like to introduce you to the resources that provide aid for businesses during the COVID-19 pandemic.
Offline2on.com is a community-led cross-platform initiative aimed to support merchants in the wake of the COVID-19 pandemic. The platform is designed to connect businesses with the resources, developers, external platforms, and all the necessary partners.
Yes, even such giants as Adobe try to save businesses during the crisis. The company offer support and resources small and mid-sized companies need to navigate this challenging time. The provided programs include:
3 Months Free of Magento Commerce & Marketo Engage;
Magento Commerce Launch Package;
Free Magento & Marketo Engage Training.
Besides, you can leverage Adobe’s Acrobat, Connect, Talent, and Portfolio.
You may have already heard the word “coronavirus.” It refers not only to the current pandemic but also to several other viruses, responsible for such diseases as MERS (Middle East respiratory syndrome) or SARS (Severe Acute Respiratory Syndrome), and, of course, one of the most popular search queries of 2020 – coronavirus or COVID-19. When you examine all these viruses with a microscope, you may spot a similarity: the virus particles called virions have a so-called “crown.” As for the current iteration of the notorious malefactor, it was discovered last year in Wuhan, China. People suffered from pneumonia, which began as an ailment similar to flu. However, a more detailed examination showed that the disease was not common pneumonia. In fact, it was an unknown type of coronavirus.
The virus leverages the same algorithm its counterparts use: a microscopic particle enters a human body, occupies a local cell, and multiplies inside. Although dozens of illnesses exist around us, our body has a reliable security system that rapidly reacts to gate crashers. The immune system begins to attack uninvited guests and strives to kill them right after they enter the organism. Due to the ability to remember old viruses, our body can quickly get rid of them if they ever appear again.
However, new malefactors may be unspotted. At the same time, old guests may evolve and change, making it hard for the immune systems to recognize them. That’s why every new virus dramatically impacts not only our health but also daily lives, even though it is not as deadly as other ailments – just like in the case of COVID-19. Let’s see how COVID-19 compares to past outbreaks.
For instance, the 1918 Spanish flu epidemic was the deadliest flu season, with 500 million cases and over 50 million deaths. The death rate was about 2 percent. As for the seasonal flu, it usually covers up to 9 percent of the population – about 1 billion infections. The global death rate is around 0.1 percent (between 291,000 and 646,000 deaths). The 2002–2004 severe acute respiratory syndrome (SARS) had 8,098 global cases and 774 deaths. Its mortality rate was 15 percent. But it was not the deadliest pandemic. Between 2014 and 2016, ebola killed up to 50 percent of those who got sick. However, it wasn’t as contagious as COVID-19 since the virus spreads through bodily liquids, such as sweat and blood, during the last stages of the disease. Only 28,652 cases were registered, with 11,325 deaths.
As for COVID-19, it is associated with over 127,000 cases and over 4,700 deaths. Both numbers keep growing, but the global death rate is estimated at 3.4 percent. However, certain age groups are seeing a death rate of just 0.4 percent. The virus is unpredictable and dangerous because it may be transferred from one person to another if the symptoms are not present.
Another problem is that coronavirus is associated with coughing, high temperature, and shortness of breath. However, these symptoms are similar to other illnesses, such as cold or flu. So, they do not necessarily mean a patient has the virus.
COVID-19 rapidly transfers from person to person, which is the biggest problem when it comes to the global economy. People have to be isolated to reduce the impact of the virus. And you may have already witnessed the consequences of the COVID-19 quarantine. Luckily, it’s highly unlikely that coronavirus can be spread through parcels, meaning that the global and local delivery should not be frozen. So, how does COVID-19 impact businesses all over the world, considering the situation described above?
Coronavirus & Businesses
It seems that nothing can prevent coronavirus and its impact on business and consumers. We witness changes all over the globe. Both the public and private sectors bend with the wind to slow down the spread of the illness. The full economic consequences are still unclear. However, the impact already seems dramatic: thousands of events were canceled, trade centers, restaurants, and bars are closed, conferences are held online, people stay at home to work remotely, etc. All industries are rapidly changing. Below, we shed light on how the coronavirus pandemic impacts supply chains, telecoms, digital media, payments, fintech, banking, etc.
The world has already experienced a significant disruption to supply chains. COVID-19 destabilized manufacturing facilities in China. However, it is a much bigger issue than China alone: much of the rest of the world is in distress. Even thou some manufacturing operations are getting back, coronavirus could deal a blow to many businesses all over the globe. The disruption is already starting to impact the shipment of goods. And it seems that the situation persists, ending up with the virus resurgence in Q4 2020. Thus, it will probably hit the holiday season, when many retailers make the bulk of their profits.
The decline of the parcel volume started in February 2020, and it continues to fall. Just check this material: Coronavirus wreaks havoc on retail supply chains globally. Since people in China and other regions were forced into quarantine, this led to partial or full shutdowns of factories, resulting in the break of supplies. The rapid spread of coronavirus across the globe only escalates the crisis.
Events & Telecoms
Numerous events have already been canceled or postponed. The spread of the coronavirus was the main reason Mobile World Congress (MWC) didn’t take place on February 24-27 in Barcelona. Besides, Facebook canceled both the F8 developer conference and Global Marketing Summit. The Google Cloud Next event was switched to the online-only format. The same is about IBM: the company had to livestream its developer’s conference.
Not only manufacturers, wholesalers, and retailers are affected. Many festivals and concerts were also canceled or postponed. However, some shows took place online. Rather than call off the show and leave their fans hanging in the wake of coronavirus, Code Orange played a gig in an empty venue. The band used Twitch to livestream the event.
Unfortunately, the online alternative is not as efficient as the one that takes place offline. While more people than a venue is suitable for may follow the event, attendants cannot communicate with each other, speakers, performers, and other participants. Thus, online alternatives help reduce the fallout from canceled events, but the forgone in-person business opportunities still provide a notable impact.
The growing need for remote interactions has highlighted a need for more rapid internet connections, which may result in 5G adoption in the long term. The faster connection standards have been already used to combat coronavirus in China, providing remote physicians with access to 27 hospitals treating infected patients. At the same time, the necessity to switch to remote work caused by public health concerns forces employers to increase their reliance on enterprise teleconferencing tools and raises the demand for 5G connectivity.
Coronavirus will negatively impact global media ad spending. Of course, the Chinese market is affected the most, but as the pandemic spreads all over the globe, other regions also slow down activities, resulting in reduced total ad spending.
Also, companies dependent on China might cut down their ad expenditures to mitigate economic losses. Due to social distancing and isolation measures, out-of-home ad spending could possibly see a negative impact as well.
Some companies will also postpone online campaigns if they cannot operate in the current conditions. For instance, night clubs or bars are closed during a quarantine, so running an online advertising campaign for them right now is useless.
However, the opposite effect is possible, as well. For example, a restaurant is closed for visitors, but it still has the opportunity to prepare food and deliver it to remote customers. In this situation, it is necessary to inform potential buyers about the new services. Since everyone is isolated, online ads introduce the most efficient way to achieve this goal.
The cancellation of significant events also results in a reduction in worldwide ad spending. At the same time, the coronavirus pandemic is likely to boost digital media consumption. People have to spend more time at home, communicating less in person. They pay more attention to social media, streaming services, online gaming, etc.
As mentioned above, numerous events already took place online. It is an example of how to stay safe but connected to your customers. Local and global businesses have to follow this example, adopting new tools and leveraging digital media assets. It is the only way to survive during the outbreak of coronavirus. Marketers already explore the potential of virtual events (as we’ve mentioned above, more people can participate) and streamline the new content forms, whether it’s information about products or their digitalized version (like livestreams).
To reduce the number of contacts with possibly contaminated surfaces, the World Health Organization recommends contactless payments over cash. It may limit the spread of COVID-19. In South Korea and China, for instance, all money received at the central bank stays in quarantine. After that, it is disinfected and put back into circulation.
The rise of online payments is also caused by the necessity to stay at home and order goods online. Although most e-commerce stores provide cash-on-delivery payment options, the quarantine boosts the number of noncash payments.
Due to the increasing amount of online sales, delivery services might see a wave of new customers. Consumers will probably continue avoiding public places, looking for digital services to fulfill everyday needs. Delivery of food and on-demand goods is expected to rise dramatically within the next months.
Depending on how long the pandemic lasts, delivery companies might need to provide better conditions to help consumers afford their services. At the same time, they might have to exceed the territories they operate upon to reach new clients.
Another vital aspect is related to consumer trust. To maintain it, couriers not only have to demonstrate good health but also offer “contactless” delivery options. Both conditions will reduce risk and increase loyalty.
Since the virus slows down economies globally, fintech funding totals will decrease for 2020. A less funding-friendly environment is also enhanced by the unclear magnitude of coronavirus, the related economic uncertainty, and much higher risks of investing in startups. In these conditions, consumers are likely to wary of investing, switching to various savings options. Recent stock market fluctuations caused by coronavirus and multiplied by the fear of a global recession motivate them to look for more reliable alternatives.
It is also worth mentioning that the reduction of consumer spendings may force small and medium-sized businesses to bridge the demand gap with the help of loans. As a result, moneylenders will get an opportunity to boost their businesses. The necessity to seek out external funding sources seems inevitable for those small and medium entrepreneurs who wish to stay operational.
While banks may not be closed during the quarantine, the pandemic could reduce total branch visits, not to mention the situation when they are forced to close branches or reduce their working hours. Consequently, digital banking is going to become the primary channel for more and more customers across the world. Thus, banks that already enable customers to handle a wide range of functions online will benefit from the situation, while those with more limited offerings will be negatively affected.
Also, note that numerous central banks across the globe have been making emergency rate cuts to mitigate the impact of the rising coronavirus pandemic. It leads to higher loan activity from banks but discourages them from offering higher interest rates on savings.
Both people who can’t go to work and businesses that can’t operate online or remotely could rely upon short-term loans and credit activity. Even if they are not able to switch to remote work, people and businesses still need to pay for rent, food, and various on-demand goods. This group may increase the demand for small and medium-sized loans.
When it comes to healthcare, coronavirus may also dramatically change the industry. The overall panic regarding COVID-19 caused endless queues in clinics, forcing people with syndromes of cold or flu to attend specialists. However, it was far from being the safest way to get help. In this situation, digital health firms have an opportunity to fill in gaps in care, providing patients with the ability to seek advice from their homes. With more people choosing virtual care, telemedicine providers will experience substantial upticks in use.
Besides, companies specialized in AI-powered remote monitoring tools also face the rise of demand for their products and services. The need to implement remote patient monitoring systems is essential, as never before.
The necessity to get access to the latest updates on coronavirus also changes the healthcare sector. Agencies that providing frequent updates on the ailment may experience the demand for their work.
Extra computing capabilities and the need to synchronize data between drug developers and laboratories may raise the importance of cloud technologies that might potentially exceed the opportunities related to the collaboration between different organizations all over the globe. The current situation may lead to a growing number of integrations between researchers, pharmaceutical companies, and developers as they concentrate their efforts on fighting coronavirus.
In light of recent events, the pharmaceutic industry experience growth as well. People want to purchase drugs and goods aimed at the prevention of the virus or its possible treatment. Even alternative medicine is growing since people seek for hope even in the most unexpected places during rough times. While China – one of the largest global producers of hemp – cannot export either cannabis products or raw material, the production of CBD goods in other countries is rising rather dramatically as the demand for them goes up.
It seems that e-commerce is the best way for retailers to survive the coronavirus pandemic. Since not many customers want to visit brick and mortar stores (if they are not closed), providing services online seems promising. However, things are more complicated than they may seem at first blush.
According to this material, online sales associated with selected offline retailers saw average growth. The revenue increased by 52% and conversion – by 8.8% between January 1 and February 29 compared to the same period a year ago. People want to avoid public spaces to eliminate risks associated with coronavirus. It motivates them to shift to online purchases. As a result, some online retailers may experience growth during the quarantine. Below, you can see positively impacted industries:
If you still don’t have an online website, it’s time to create one. Nowadays, numerous platforms let you do that. You can get a basic online storefront with minimum time and money and then migrate to a more fully-featured solution or start with a robust online store from scratch.
However, in the long term, things may not be that bright. If the economy falters, but the quarantine remains, the overall volume of sales will go down. For some products, it will stay constant or decrease a little bit (e.g., food and basic goods), while other areas will experience a decline (e.g., cars and home appliances). The longer the pandemic remains, the deeper the reduction will be.
Retailers of home appliances and other goods that are not really necessary during the coronavirus pandemic already offer discounts to engage potential customers. If you also belong to this category of entrepreneurs, consider this strategy the way to stay afloat. As for the most negatively impacted industries, they include:
There is an issue associated with a specific age group. Since many older people are not very internet-savvy, that could be a problem when it comes to online ordering. At the same time, for those over 64, the fatality rate of coronavirus is 2.7%, with a possible low of 1.5% and a potential high of 4.7%. Other age groups show lower rates. Thus, older customers who potentially prefer brick and mortar stores over online purchases are under higher risks. In this situation, you should help your parents and grandparents order products online if they are unable to do that and still want to visit local grocery stores.
As an e-commerce merchant, you may consider the pandemic as a perfect time to make your services more customer-friendly so that even less internet-savvy users would be able to place orders on your store online.
At the same time, you may provide the ability to create orders on behalf of your customers. A client calls your manager and chooses goods to order. The manager creates a new order from the admin and passes the information to your delivery department. The latter sends the order to the customer. However, this interaction usually assumes the cash-on-delivery payment method, which doesn’t eliminate all the risks. But it is still much safer than staying in a queue in a supermarket.
Existing Online Customers
However, not all customers are affected by the pandemic from the perspective of their shopping habits. Many people already prefer to order everything online. Furthermore, some of them also work remotely so that the coronavirus quarantine may only change the way they spend their spare time. Or may not.
For people who prefer to work in an office, visit public spaces and spend time in a crowd, COVID-19 changes everything. They need to adapt to new conditions. As an e-commerce merchant, you can help them switch to new shopping habits. Provide engaging services and user-friendly shopping experience with intuitive browsing and checkout.
While everything is clear with social networks and services that provide digital content – they experience growth since people have to spend more time at home – how can small local businesses that were never presented online survive during the coronavirus pandemic?
While various beauty services cannot switch to the online model, lots of other businesses can successfully adapt to new conditions. Thus, most courses and educational programs can be held online. This model has already been used long before the pandemic since it is the only way for people to combine their full-time jobs with education.
Individual lessons are also possible remotely, for instance, on Skype. Since public events are canceled, many musicians are left with no work. However, some of them started to teach online. If you want to improve your skills and have lots of spare time due to quarantine, find a professional who will help you with your hobby.
As for people holding classes online, coronavirus provides the ability to leverage Facebook or Instagram to promote the provided services. Since potential clients spend more time there, ads on social networks become more efficient. It is only necessary to choose the right targeting.
Another possible model is associated with a full-fledged e-commerce store which seems more profitable in the long term. You can create different digital content during the COVID-19 pandemic and continue selling it online after the quarantine.
Psychological counseling is another thing that can easily exist on the Internet. Furthermore, the demand for it will rise if the isolation is prolonged. Specialists can help people remotely with no need to risk, contacting possibly ill patients. Ads on social media platforms should be an efficient way to reach clients.
There are numerous more services that can be easily transformed to fit the online model and survive during the coronavirus pandemic limitations.
Since some countries canceled not only international traffic but also intercity communication, B2B e-commerce is more important than ever. While salespeople are still important, they have to focus on reaching customers via digital channels. The pandemic shows that even B2B partners spend more time on their smartphones than with laptops. Thus, more experimentation in innovative digital experiences is a good idea. Provide partners with the most user-friendly and intuitive shopping experience that doesn’t consume much time but let them quickly understand what exact products you offer and which of them they need. If you want to become a winner in this situation, it is time to change, and Magento 2 can help you.
The bare minimum for B2B merchants during the COVID-19 pandemic include the following steps:
Ensure your product information is relevant and accurate;
Mark out of stock items to prevent your partners from ordering them;
Follow fair market pricing and don’t abuse the situation;
Ensure exact delivery dates and inform your partners about possible delays;
Discuss how products should be delivered or fulfilled considering the situation;
Help your communities, if possible.
Coronavirus & Magento
Now, let’s take a look at the situation behind coronavirus and Magento. It doesn’t seem that the platform will experience a notable growth during the pandemic. However, we think that it is the right time to pay attention to Magento 2 and the outstanding shopping experience it offers. Our favorite e-commerce platform introduces a reliable way to go online for both retailers and wholesalers. Consider the following ways to leverage Magento 2 right now:
If yourbusiness doesn’t operate during the pandemic, you can use this time to create a new Magento 2 website without losing sales. Use the gap to return after the quarantine with the renewed online store and increase sales, engaging more customers.
If you don’t have a business, it is time to start right now, since you have tons of free time. How to do that when you are isolated? The dropshipping model is suitable for this situation. Of course, some supply chains are locked in China, but you can find partners that operate in your country.
If you already have a retail business that is not presented online, its time to create your digital storefront. As we’ve mentioned above, you can get a basic website on a less sophisticated platform and then migrate to Magento 2 when the coronavirus pandemic is over.
If your retail business is presented online, but your website is not intuitive and powerful enough, it’s time to move to a more user-friendly storefront. We can help you with the migration: contact our support for further information.
If you are a wholesaler without an e-commerce storefront, quickly create one based on Magento 2 Commerce and leverage its B2B features. The platform provides a set of tools that dramatically simplify your interactions with business partners. You can find all the corresponding features here: Magento 2 Commerce B2B Exploration.
If you are a B2B merchant with a website, you may also leverage Magento 2 to provide your partners with a better working environment and, as a result, gain their trust and loyalty. We can help with the migration of B2B entities!
The impact of coronavirus on the global economy is enormous. It already caused so many negative consequences, and it doesn’t seem that the virus will disappear within the next few months. Rather than vanish with the new warmer season, it continues to spread. While specialists predict its hiccup during the summer season, it will likely enter the full swing this fall again. However, it is not a reason for panic. Keep calm, help your local community, and try to get the most out of the situation. COVID-19 is not forever. Watch the following course to be more optimistic: