How to capitalize on the next e-commerce opportunity

The Covid-19 pandemic has changed consumer behavior significantly, giving rise to four distinct consumer segments. To know more about it, read the first part of this article here.

Although consumers from around the world are expected to tilt towards e-commerce, in the aftermath of the pandemic, the scale will vary across product categories and markets, finds an expansive EY study. Understanding this dynamic is extremely important for businesses to capitalize the rising e-commerce opportunity, especially as the holiday season is about to unfold globally.

Chinese consumers are more likely to shop online, while consumers from UK are slightly less likely to choose online channel as their primary shopping channel. On the other hand, consumers of countries like Germany and France are less inclined to shop online, as depicted in the below chart.

                               Image source: EY

Looking at the category level, we find, the consumers in US, France and Germany are more open to buying technology and apparel online than buying fresh food. However, when these findings are compared with market penetration figures from before the pandemic, significant opportunities can be identified. For instance, pre-Covid, globally only 3.1% of packaged food was purchased online as opposed to the current projection of 10%, which portrays a handsome three-fold or US$163 billion growth opportunity.

Categories most likely to be bought online

As demonstrated by the below figures, online sales is positioned for a great leap across the different product categories. Notably, the categories that are expected to grow most are also the categories where consumers are most likely to demand and value better service and advice while buying a product.

                   Source: EY

Big growth categories – technology, beauty and cosmetics, shoes and accessories also represent the segments where consumers say they will value a sensory experience before making the actual purchase. Especially for clothes and accessories, consumers still feel the urge to touch and try the product before buying.

This signals a potential risk of showrooming, where customers might visit the store to try a product and then buy it online from the site offering the best price – making it essential for businesses to offer a smooth omnichannel experience coupled with the best price point in order to complete a sale.

Spending projections for the season’s sales events

In the coming holiday season, 61% consumers are expected shop mostly online, while 30% consumers are likely to shop both online and in-store equally, and only 9% are projected to buy from stores. Data suggests, globally 42% consumers plan to spend less than the previous year in the special sales events, while 13% plan to spend more.

Interestingly, 72% of consumers are postponing purchases until sales events, in which they are planning to participate primarily through online channels. Thus, business’ online proposition is crucial for both long-term growth and boosting growth right now.

Perfect customer experience – key to future growth

With e-commerce becoming so huge in scale and value, so quickly, businesses must also ensure quick response. Business leaders must understand the consumers more intimately and design digital experiences befitting their needs. Enterprises must be ready to move fast, seek customer feedback, and be ready to iterate at breakneck speed.

Revisiting customer journeys and identifying decisive moments will help businesses to upgrade their customer journeys with necessary changes that can nudge the customer in the right manner and at the right time to trigger a purchase.

Most importantly, organizations must not try to replicate in-store experiences online and think afresh. Brand experiences must be immersive but also new and innovative. Sometimes a brand re-positioning might be the answer to attract the right audience.

Bottomline is, to thrive in the new normal or Deep Covid, business leaders must think creatively and transform their organizations in response to the behavioral shifts of the consumers – faster and bolder, the better.