When the coronavirus pandemic hit and the world went into lockdown, it felt like the rulebook was ripped up for retail. But as the weeks go by, what patterns have we seen emerging — and what can we learn from them, to help us in an uncertain future?

This ebook will explore the impact of COVID-19 on the retail industry to date, and more importantly, the lessons that online retailers can take.

Read on to learn more about the current state of the e-commerce sector, and how you can take action to ensure that you’re optimized for the current climate.

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Introduction

It goes without saying that the pandemic is, first and foremost, a humanitarian tragedy. While it’s important to monitor and react to the effect that coronavirus is having on businesses, the economic impact can’t be compared to the tragedy experienced on personal levels.

With this being said, retail plays an essential part in people’s day to day existence. As an industry, we have a collective responsibility to respond effectively and ethically to the situation we find ourselves in.

The world is watching retail very closely. The importance (and fragility of) supply chains and fulfillment methods has been

brought to the forefront of the public psyche. Consumers are looking not only for reassurance, but also for authenticity.

The job of retailers has always been to meet the ever-changing needs of society. While the challenges posed by coronavirus are unprecedented and previously unthinkable, as an industry we already have the skill set needed to bring us through this storm.

Decisions need to be made more quickly, and solutions realized with a greater degree of urgency. But ultimately, retailers are still acting on the basic supply and demand principle that has always underpinned our industry.

The smartest retailers will be looking for the changes they can implement swiftly and with confidence, to achieve incremental wins that add up to big results. Read on to learn how...

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Chapter 1: 
Brace for Impact — 
How Has the Pandemic 
Hit Retail?

As shutters came crashing down on shops across the world, lockdown’s impact on physical retail was immediate. The effects on e-commerce are far more nuanced, and will continue to evolve.

With all non-essential stores closing, the logical assumption was that e-commerce would boom, as shoppers were forced off the high street. The reality is proving to be much more complex, as we witness huge shifts in consumer behavior and the industry rushes to adapt.

The Good News

In the very broadest terms, the pandemic has seen a general boost to e-commerce as a sector. Many — but by no means all — verticals are seeing increases in both revenue and order volume. The sector is also expanding as we witness the migration of businesses that were previously only represented by physical stores into the online space.

Many of those switching to an online operation are smaller firms in the B2C space. Typically, local businesses are scrambling to make online stores which, although they might not win any design awards, are functional and quick to deploy. E-commerce is providing a powerful lifeline to these enterprises.

Some will have made a reluctant leap into the online space out of necessity. But we can expect to see many businesses retain their e-commerce capacity even after lockdown lifts, won over by the convenience and opportunity provided by an online store.

In addition to smaller local businesses, even giants like Aldi are changing their e-commerce practices. The popular supermarket made its first move into the online groceries space, offering home delivery of a range of essential food parcels.

 

It will be interesting to observe if these larger retailers retain or expand their new e-commerce capacities following lockdown. It seems unlikely that any would take a step backward and withdraw services they’ve created an infrastructure for.

Another trend worth noting is the move by some brands to close their physical stores permanently and move to a solely online operation – bad news for the brick and mortar stores, but a boost for the online sector. Cath Kidston announced the closure of its 60 remaining stores at the end of April. While the retro retailer had been struggling to make ends meet in its physical stores for some time, COVID-19 was cited as the final nail in the coffin.

If we consider the long-term benefits of the current situation, it’s safe to assume that the e-commerce industry will see an increased audience as a result of the pandemic. Businesses will enjoy an influx of first-time customers, forced off the high street and with fewer pre-existing loyalties to other online brands.

More broadly, as we look for silver linings, segments of society that previously avoided or were wary of e-commerce are now finding themselves relying on it and becoming more

accustomed to its use. It’s interesting to note that although the service has experienced some significant disruption (including large delays in delivery times – its key selling point), Amazon Prime membership is surging during lockdown.

The Bad News

Of course, it’s not all increased traffic, new stores and boosted revenue. The e-commerce industry has also suffered from some significant issues as a result of the pandemic. One of the most apparent problems has been the struggle to cope with sudden and substantial demand pressures. This is as a result of the spike in the number of orders, compounded by the reduction in warehouses’ capacity due to social distancing measures.

Out of stock items have been a huge issue for many retailers, too. Seeing sold out items in stores that are usually very well stocked has become commonplace. As supply chains are impacted, this has been especially problematic for items such as furniture that are usually kept in lower local stock and largely shipped or constructed to order.

Supply chains have been impacted across the board, as the countries of origin for many of the most popular e-commerce verticals (Indonesia for fashion and China for electronics) have been severely affected by the virus and restricted the operation of factories, storage and shipping facilities.

There’s also a PR angle to the problems that the pandemic has brought. Many popular brands have faced criticism for keeping their online businesses running, and the subsequent working conditions of their employees. ASOS were a prime example of this, with staff walking out and very publicly calling for a consumer boycott.

Another significant issue for retailers (both on and offline) has been the stagnation of stock flows. Retailers with no online outlet for sales are taking the most significant hits here. Primark, which famously trades purely offline, is seeing a loss of £630m each month and also took a £284m hit in unsold, pre-ordered stock. Huge sales are being predicted for when non-essential stores can open their doors.

The uncertainty hanging over the lifting of lockdowns means that retailers will be reluctant to place large orders with suppliers beyond those already contracted. The impact of the pandemic is being felt right along the retail supply chain.

The Platforms’ Response

Let’s take a look at how the major e-commerce platforms have responded to the virus outbreak. Shopify saw an initial drop in stock price but has since seen a strong recovery with its value rising to an all-time high. Having had to cancel their annual Partners’ conference, Unite, they’ve pivoted to take the event online, and additionally rolled out a raft of other merchant-focused measures including free email marketing for all plans, and an extended 90-day free trial.

Adobe has matched this three months’ free use with their Magento Commerce offering, as well as their Commerce Launch Package, and a range of Adobe tools to help assist SMBs as they shift their operations to online channels.

BigCommerce has also brought out a three-month free trial, and is emphasizing 0% transaction fees and an advanced marketing tool kit to help retailers make it through this challenging period.

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Chapter 2: 
Highs and Lows: 
Which E-Commerce Verticals 
are Being Hit Hardest?

You’d think that with non-essential physical stores shuttered, all verticals would be seeing a boom thanks to trade being forced online. However there are clear winners and losers emerging as a result of the pandemic — and it’s upending some of the trends we thought were here for good.

Riding High: The Winners

In terms of broad wins, brands with centralized supply chains are finding themselves in the strongest positions. The same goes for fulfillment. The more control that brands have over their sourcing, storage and shipment, the quicker their response has been. As a sector, DTC is in a very strong position with regard to this.

With long queues and empty shelves facing worried shoppers in physical stores, the online grocery sector has seen a huge spike in trade. This is partly a result of customers’ reluctance to shop in person, and partly due to stockpiling behavior inflating volume and AOV.

With health at the forefront of people’s minds, personal care has been a vertical driving a lot of growth. Data shows that hand sanitizer sales jumped 420% and vitamin sales by 78%. Masks sales have grown by 590%.

Online grocers have also seen inflated growth. In China fresh food-related sales on JD.com jumped 215 % during a 10-day period in February 2020. Food delivery services such as Grubhub and Uber Eats have also seen a big boost, to the extent that they’re scrambling to recruit drivers. This trend is only set to continue as the novelty of home cooking wears off for those in lockdown.

Meal kits subscriptions — once ridiculed for sourcing their own ingredients — are now benefiting from a simple supply chain that they have control over. With greater autonomy and less reliance on others, they’re able to react in an agile and responsive way to meet increased interest in their services head-on.

accustomed to its use. It’s interesting to note that although the service has experienced some significant disruption (including large delays in delivery times – its key selling point), Amazon Prime membership is surging during lockdown.

The Bad News

Of course, it’s not all increased traffic, new stores and boosted revenue. The e-commerce industry has also suffered from some significant issues as a result of the pandemic. One of the most apparent problems has been the struggle to cope with sudden and substantial demand pressures. This is as a result of the spike in the number of orders, compounded by the reduction in warehouses’ capacity due to social distancing measures.

Out of stock items have been a huge issue for many retailers, too. Seeing sold out items in stores that are usually very well stocked has become commonplace. As supply chains are impacted, this has been especially problematic for items such as furniture that are usually kept in lower local stock and largely shipped or constructed to order.

Supply chains have been impacted across the board, as the countries of origin for many of the most popular e-commerce verticals (Indonesia for fashion and China for electronics) have been severely affected by the virus and restricted the operation of factories, storage and shipping facilities.

There’s also a PR angle to the problems that the pandemic has brought. Many popular brands have faced criticism for keeping their online businesses running, and the subsequent working conditions of their employees. ASOS were a prime example of this, with staff walking out and very publicly calling for a consumer boycott.

Another significant issue for retailers (both on and offline) has been the stagnation of stock flows. Retailers with no online outlet for sales are taking the most significant hits here. Primark, which famously trades purely offline, is seeing a loss of £630m each month and also took a £284m hit in unsold, pre-ordered stock. Huge sales are being predicted for when non-essential stores can open their doors.

The uncertainty hanging over the lifting of lockdowns means that retailers will be reluctant to place large orders with suppliers beyond those already contracted. The impact of the pandemic is being felt right along the retail supply chain.

The Platforms’ Response

Let’s take a look at how the major e-commerce platforms have responded to the virus outbreak. Shopify saw an initial drop in stock price but has since seen a strong recovery with its value rising to an all-time high. Having had to cancel their annual Partners’ conference, Unite, they’ve pivoted to take the event online, and additionally rolled out a raft of other merchant-focused measures including free email marketing for all plans, and an extended 90-day free trial.

Adobe has matched this three months’ free use with their Magento Commerce offering, as well as their Commerce Launch Package, and a range of Adobe tools to help assist SMBs as they shift their operations to online channels.

BigCommerce has also brought out a three-month free trial, and is emphasizing 0% transaction fees and an advanced marketing tool kit to help retailers make it through this challenging period.

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Chapter 3: 
Coronavirus Operation: 
How is Customer Behavior 
Changing?

Unprecedented times mean that even as people’s online spend increases, their faith in the convenience of e-commerce may be somewhat shaken. Delivery times are now often estimates, once unshakable marketplaces have reduced or withdrawn popular services, and prices are often inflated or items out of stock. So, what are the main changes to customer behavior we’re witnessing?

More Caution When Spending

With many people either out of work or furloughed, and no clear picture regarding an end to the pandemic, economic uncertainty has placed consumer confidence at an all-time low.

Retailers should keep this in mind, especially given the decrease in impulse buying and greater research a customer is likely to undertake online before making a purchase.

An Expectation for Extended Returns

Extended return periods are being offered very broadly by online retailers and are an expectation if not a necessity for shoppers now. Retailers are prominently advertising extensions in order to win consumer confidence.

Extended returns pose something of a double-edged sword for retailers. While confidence to place an order may be increased, people are also likely to buy multiple sizes or variants (especially if they’re less used to shopping online) meaning higher volumes compounding social distancing complications when it comes to processing returns.

Payment Trends Shifting

Buy Now Pay Later services are seeing an increase — especially in categories such as home improvements — allowing consumers to spread the cost in uncertain times.

Our partner Klarna observed an increase in demand for their flexible payment offers, in particular for purchases made on marketplace sites. They noted “more monthly active app users in the first quarter of 2020 than in the fourth quarter of 2019, when Black Friday and the holidays typically prompt a huge surge in shopping”.

Mobile vs Desktop

While data here is still emerging, it will be interesting to observe the effects of the pandemic on the share of traffic and conversions across mobile and desktop devices.

Previously there was a clear trend towards higher mobile traffic, but higher desktop conversion. Now that people are stuck at home, and especially working from home, will we see that share of traffic and conversion leap on desktop?

Loss of Trust

With the barriers to selling online so low, sadly many will view the pandemic not as a tragedy, but as an opportunity. Theft of packages has increased as delivery drivers are instructed to avoid touching door knobs and gate latches, resulting in parcels often being left further from residences. Counterfeit goods on marketplaces such as Amazon have also been an issue. The platform has been responsive, but given the scale of the problem, it can be expected to have a negative impact on the public’s general experience and opinion of e-commerce.

In addition to inflated prices and misleading fake, or non-existent products, the public’s faith in the reliability of e-commerce to deliver goods at short notice, in unlimited quantities has been shaken.

Against that backdrop, this period could help the established brands who are getting things right. All the more reason to double down on customer relationships and great online store shopping experiences during this time.

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Chapter 4: 
The Helping Hand of 
On-Site Search 

Perhaps now more than ever the e-commerce community should be looking towards specialist assistance to help them through this period of uncertainty. SaaS solutions can help minimize disruptions in a time of crisis by helping to bridge the gap between retailer and customer. Good customer relations are going to prove key to surviving these trickier times.

On-site search is an area that offers substantial broad-ranging benefits — to retailers and customers alike. This chapter will highlight a few key areas in which online retailers can leverage a more sophisticated on-site search solution to help mitigate the disadvantages of the pandemic.

Ensure Your Customer Experience is Second to None

As mentioned in the previous chapter, consumer confidence in e-commerce may be somewhat shaken. Things that have been taken for granted up until now (especially by younger, digitally native customers) are now uncertain.

This means stores should double down on all elements of customer experience that they can have more certain control over. Flawless UX is a great place to start.

Although stores may be seeing more traffic online, they’re also facing tighter competition. During lockdown people may have more time on their hands to make comparisons and purchase decisions. With this in mind, it’s vitally important to make user journeys as smooth and successful as possible.

On-site search plays a huge role in achieving this, improving the experience of your most highly motivated, and profitable customers.

Leverage Your Search Data for Improved Customer Insights

Shoppers’ behavior is highly likely to be in flux as a result of the pandemic. Klevu can give valuable insight into how your customers are using your online stores (and how this use might be changing).

Data insights are crucial at the best of times, but never more so than now. On-site search data can help retailers gain a clearer picture of demand meaning you can keep one step ahead with supply — so important at a time when supply chains are under added pressure. What’s proving popular? What do people assume you sell? Could/should you be providing it?

Protect Resources and Save Time

Efficiency is an important element of any e-commerce team, but with the potential of a reduced workforce due to illness, or operating at lower capacity due to remote working, it’s important to make the very best use of your time and resources. Time to lean hard on automation and machine learning.

Klevu is quick to install (often with no developer input needed) and gets up and running right away, meaning you start to benefit instantly. Imagine being able to remove manual merchandising from your “to do” list, safe in the knowledge that search results were perfectly optimized for maximum conversion...

Help Reduce Out of Stock Disappointment

Customers are being confronted by the reality of severely reduced stock levels on a daily basis. Although out of stock items are becoming less of a surprise, it’s still a disappointing shopping experience.

While retailers are doing all they can to minimize disruption to their supply chains, they can also be mitigating the poor experience of frustrated shoppers leaving empty-handed. This can be achieved via on-site search by redirecting from out of stock items, and suggesting alternatives with custom banners.

Use copy creatively and empathetically to connect with your customer base and foster a sense of togetherness and support through tougher times.

Boost Products With a View to Lockdown Conditions

On-site search is all about creating a seamless and intuitive experience for your customers. With this in mind, manually boost the products that you know will be popular during lockdown (i.e. loungewear, sanitary items, wellness).

To help ease the effects of the pandemic on your store, you might consider boosting those items that are easiest to fulfill or quicker to dispatch. You could also boost those with the greatest margins, to help you through the leaner times, or those which will clear old stock and free up warehouse space for items with higher demand.

You could even go one stage further and create custom collections with our landing page builder.

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Chapter 5: 
Inoculate Your Business:  
Future Proofing in the Age 
of Coronavirus 

If COVID-19 has taught us anything, it’s that nothing in retail can be taken for granted. While we can make predictions, the future is ultimately unknown. But as the pandemic throws up new revelations and challenges to the world of retail on a daily basis, we can continue to adapt and respond in an agile and considered manner.

As we round out this guide to surviving and thriving as an online retailer in the time of coronavirus, here are three key areas to double down on that will benefit retailers operating within all sectors.

Listen to Your Customers

All lines of communication need to be open at this time as behavior shifts in ways we couldn’t have predicted, at unprecedented speed. How are interactions with your brand evolving and shifting? This will determine the direction that you need to take — so take every opportunity to learn.

Customer experience is key at this time. When other elements of e-commerce feel chaotic, this is one area where merchants can still exercise control. As well as actively listening to your customers, making incremental improvements to the buyer journey can help ease the path to conversion.

At a time when consumer confidence is unstable, your audience’s experience should be seamless and frustration-free. Working with Klevu as your on-site search partner will give a real edge here, with superlative search experiences fostering loyalty and building trust in otherwise uncertain times.

Respect the Supply / Demand Principle

Supply and demand has always been the bedrock foundation of retail. While both supply and demand are changing in ways we couldn’t have imagined a year ago, the basic principles remain the same — and it’s up to retailers to respond swiftly and effectively.

Use this as your north star when it comes to getting products moving to avoid stagnation and stock flow issues. In addition to leveraging your own experience and deep knowledge of your vertical, this means taking full advantage of the data you have access to.

By working with Klevu, you gain a clear advantage here. Access to a goldmine of data reflecting customer intent can provide valuable insights into demand. Use these analytics to create highly targeted SEO campaigns and promotional messaging, and inform your future buying strategy. Daily reports ensure that you’re on top of changing behaviors as they emerge and develop.

Streamline Your Processes

Now is the time to gain every timesaving advantage that you can. E-commerce teams may be operating at reduced capacity right now, so adding to your capabilities by deploying third-party solutions with a reliable ROI is a smart move.

By automating certain e-commerce tasks and leaning more heavily upon machine learning (for example, removing the manual element from your merchandising) you lift a considerable load off a team that’s already under pressure.

Klevu has been designed to save teams time at every stage — and that includes installation and set up. As a powerful “plug and play” solution, you don’t need to allocate valuable resources to getting up and running, or build out your own infrastructure at a high developer cost.

Conclusion

The challenges and changes thrown up by COVID-19 may seem huge. But we’re learning every day, and e-commerce retailers are nothing if not resilient and adaptive.

Consumer behavior has unquestionably shifted. It will continue to change, and no one knows how many of these changes will be permanent. Online retailers need to adopt a growth mindset — exploring the ways in which incremental improvements to processes, systems and technologies can amount to a more resilient, profitable and sustainable business.

The e-commerce brands that come out of this situation stronger will be the ones who’ve risen to the challenge in an agile, proactive manner.

Now more than ever, adapt your store to provide the very best experience possible across desktop and mobile. Ensuring your third-party support is firing on all cylinders can have a hugely beneficial impact on your experience of this crisis. On-site search in particular, as a safe investment that drives sales at the same time as increasing efficiency, could prove one of your hardest-working allies at this time.

Schedule a demo to learn more about how Klevu could help you gain an edge in these challenging times.

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