Coronavirus: How it Affects Online Retailers and What to Do

Coronavirus outbreak in the United States is already beginning to negatively impact certain industries and businesses. Travel is down, restaurants are being forced to close early and only open for takeout and delivery, and malls and other retail stores are seeing a dip in business as social distancing is encouraged.

The Pandemic has caused an increase in sales of items such as masks, hand sanitizer, Clorox/Lysol wipes, disinfectants, gloves, bottled water, vitamins, and of course — toilet paper. If you are an online retailer, you have the benefit of being open to remain open for business. Some businesses will likely see an increase in sales during this time, while others may experience a negative impact due to difficulties in getting product or a lack in demand.

While officials are working hard to find solutions to both individuals and businesses have assistance to get through this trying time, many businesses may also be able to turn to private assistance — from Facebook, for example.

In a recently released blog Facebook announced a new $100 million program to help small businesses impacted by COVID-19. With this program, grants will be available for up to 30,000 eligible small businesses in over 30 countries (an average of $3,333 per business).

So how exactly is Coronavirus is impacting various retail industries and what you can expect in the coming weeks and months?

If you are an online retailer and are wondering how the impact of COVID-19 may impact your business and what steps you can take to reduce the long-term effects this may have on your revenue, read on.

Cleaning Products

Another industry that will see a spike in sales during this time are companies selling cleaning products — especially disinfecting products. In China, there was a major spike in online sales of provisional supplies including brands selling immune-boosting products. One such example is that online sales of disinfectant produced by the Reckitt Benckiser-owned Dettol rose 643% year-on-year between February 10 and February 13.

Furthermore, executives from Procter & Gamble alerted shareholders to the fact that the coronavirus was putting pressure on their e-commerce business. With the sales from stores that sell their products decreasing as many of them were now closed or open for shorter periods of time, the demand for their products has shifted to online.

Online Drugstores

As less product is available in physical stores, more and more shoppers are going to turn to online drugstores to purchase products they cannot find locally. To help meet this demand stores like Walgreens and CVS have already waived drug delivery fees and are taking steps to ensure people have access to the medications they need.

For smaller eCommerce stores selling medications, including homeopathic medications this is a great opportunity to promote alternative medicines, especially since there is currently no vaccination or prescription available to treat COVID-19.

Online Grocery and Speciality Food Retailers

Prior to the Coronavirus experts predicted that less than 10% of the UK grocery market would be online by 2024, now that number is highly likely to change. For retailers who offer online grocery items or specialty foods, the demand is already here to provide an alternative to shopping in physical stores. Not only are more people unwilling to risk going to the store, but many food and grocery retailers are struggling to keep product on the shelves.

Additionally, panic buying is making it difficult for businesses in this industry to keep up with demand.

For online retailers, this is a great opportunity to promote generic brand products for high-in-demand items.

During the month of February JD.com saw an increase in fresh food sales by 215% during the 10 day period leading up to February 2nd. It’s likely that US retailers can expect sales in the United States to follow a similar pattern as the rate of infection rises in America. It is likely that consumers will increasingly begin to seek to limit their exposure to possible infection by making use of online grocery eCommerce businesses.

Fitness Equipment

This is another industry that is thriving during this time. As many gyms and health centers are being closed down due to the high risk of contamination at the gym. Because of this retailers selling fitness equipment should expect to see an increase in online sales, especially as brick and mortar stores sell out of fitness equipment like dumbbells, kettlebells, and other home exercise equipment.

Online Retailers Who Sell On Amazon

In the midst of the pandemic, Amazon made the decision that they will no longer accept new shipments to its warehouses for discretionary items through April 5. Until that time arrives Amazon will continue to sell all types of products on their website, however any sellers listing discretionary items will have to store and ship them on their own if they aren’t already in, or on their way to, an Amazon warehouse as of March 17.

Amazon also stated that they will continue to receive and accept products from third-party sellers and wholesale vendors if they fall into one of the following categories:

• Baby products

• Health and household

• Beauty and personal care

• Grocery

• Industrial and scientific

• Pet supplies

For Amazon sellers who do not fall into one of the above six categories, this can greatly affect their business as they are forced to quickly find alternative ways to sell their products if they don’t already have a website or online store they can sell them.

Retailers with Brick & Mortar Locations & Online Stores

For retailers who have both a brick and mortar location, as well as an online store Quantum Metrics has already found that U.S.-based retailers have experienced a 52% revenue growth rate online between Jan. 27 to Feb. 23 which is the period when COVID-19 began its rapid spread outside of Asia. During this time there was also an increase in conversion rates of 8.8% when compared to the prior year.

While traditionally in-store shopping generates more consumer spending, retailers who excel in their online offering will likely see an increase in online sales during this time.

Makeup & Beauty Retailers

Two of the largest makeup retailers (Ulta & Sephora) have made the decision to shut down their retail stores until March 31 and April 3 respectively. During this time Sephora announced that they are waiving standard shipping fees and extending their return policy to 60 days to be more online-friendly.

Despite beauty being a highly discretionary industry it often doesn’t suffer the way, other product categories do in a time of recession. Many shoppers will still prioritize buying makeup and skincare products though they may elect to go with a less expensive brand or product.

During the Coronavirus outbreak, it is unclear about the long-term effect it will have on the makeup industry. As a highly competitive industry, retailers should expect to see a dip in sales, and should also take steps to encourage consumers to continue shopping.

This is a great opportunity for beauty and makeup retailers to utilize their social media accounts to provide beauty tips and to try out website features they offer like virtual makeup try-on services or connecting with a beauty consultant on their website through a chat app.

Retailers can also try to be innovative at this time and offer new services like virtual consultations through video chat.

Toy Stores

One industry that will likely be highly affected in the coming weeks and months is the toy industry. China accounts for more than 80% of imports in the toy industry and has already reported that there is “much uncertainty” over the virus’ effect on the second quarter for toy companies Mattel and Hasbro, which could potentially face supply chain disruptions.

Already Hasbro added coronavirus to its list of risk factors to investors along with the possibility of “work slowdowns, delays or shortages in production or shipment of products, increases in costs or delays in revenue in their February earnings release. Online retailers selling toys made by these brands or other brands that get their products from China may face similar challenges with their supply chain.

Retailers with Apps

The use of apps during this time is expected to increase as initial data has already shown that app downloads may increase as people spend an increasing amount of time at home. In addition to the delivery apps, app downloads, in general, have surged as a result of coronavirus. For example, in China, app downloads over the first two weeks of February were 40% higher than the average for all of 2019.

Luxury Brands

With many individuals out of work, or temporarily displaced discretionary spending will decline which includes making purchases from luxury brands. One of the biggest reasons the virus poses a threat to this industry is that Chinese consumers have become the world’s leading luxury spenders.

Statistics reveal that in 2019, luxury goods saw 20% growth in China for the second year in a row, according to a Bain & Company report. Additionally, luxury spending by Chinese shoppers accounts for 33% of overall the global market. Retailers in this industry that also have an online presence can reach out to customers and offer to connect with their customers by offering virtual personal shopping experiences and the ability to connect with stylists.

Short Term Solutions for Online Retailers

Here are some short term solutions to keep in mind for eCommerce retailers:

• Monitor the situation — Keep a close eye on everything going on with your business from the health of your employees, to product availability, shipping times, and local or statewide restrictions for businesses.

• Maintain open communication with your suppliers, especially if they anticipate a delay in shipping times or less product availability.

• Be aware of national and local regulations for movement, especially since this can prevent employees from coming to the factory or your store to package and ship products.

• Create an action plan — This plan should cover what you will do in various situations including what happens if you or your employees get sick, products aren’t available, shipping times increase dramatically, or how to meet changing buyer behavior.

Another solution eCommerce businesses should consider is implementing a chat app on their websites to make it easy for customers to get more information and quickly have their questions answered about product availability, shipping times, and more. One such chat widget can be found on our website.