Commerce is changing: here’s what you need to know

COVID-19 has had an effect on every aspect of our lives.

This is especially true in the way we spend. Economic confidence is down, spending habits have changed, and ecommerce demands have shifted into a new gear. 

Our latest commerce report gives the full rundown of how the commerce landscape has changed as a result of the pandemic.

Here’s a snapshot of what you need to know. 

1. Consumers’ financial reality is hitting hard.

In Q4 2019, 19% of internet users globally expected the economy in their country to get worse in the next 6 months; by Q2 2020 this figure stood at 36%. 

In Europe, the picture is especially stark:

7 in 10 internet users in Europe expect the economy in their country to get worse in the next 6 months.

And while consumers often feel detached from their own economies, those expecting their personal finances to get worse has doubled in the same time frame (from 10% to 20%).

Countries all over the world are facing economic hardships, albeit to different extents. For instance, by mid August 2020, nearly 10 million employees had been placed on furlough in the UK. Meanwhile in the U.S., it’s estimated 1 in 5 workers are collecting unemployment benefits.

As a result, consumers in these countries are adopting practices to save – 3 in 10 have switched to buying a product from a different brand because they offer lower prices. 

This financial conservatism has resulted in the adoption of numerous money saving services including online auctions, online marketplaces, voucher apps, buy-now-pay-later schemes, and price comparison websites – the latter of which 1 in 4 internet users in the U.S./UK have used in the last four months.

2. Online shopping is accelerating, but growth is largely from existing shoppers.

In July, 49% of all internet users across 15 countries said they plan to shop online more frequently once the pandemic is over, increasing from 43% in April.

The outbreak has, unsurprisingly, accelerated demand for ecommerce, but what’s more interesting is understanding where this growth is coming from.

Consumers in APAC, South Africa, and Latin America were most inclined to say they’ll shop online more frequently after the outbreak. Whereas, Europe and North America fall slightly behind. For instance, just 28% of consumers in France say they will, compared to a high of 59% in India.

Among those who didn’t shop online pre-lockdown, 31% have begun doing this during lockdown and plan to continue doing so afterwards. 

While this may sound significant, the majority of internet users were already shopping online before the outbreak.

When we add these new users to the existing online shopper base before the pandemic, the growth isn’t as substantial as many might assume. This method indicates that the increase in the total online shopper base so far due to lockdown stands at just 6%. 

Ultimately, it’s clear that COVID-19 has propelled demand for online shopping from predominantly existing users.

3. Online grocery sees the greatest growth, but China is the exception.

Looking at the categories that have seen the greatest increases in online demand, grocery products stand out.

Although China is the top market for purchasing groceries online; with 47% of consumers having placed an online grocery order in the last month, this has fallen from 58% last year.

In other markets, COVID-19 continues to accelerate this trend.

Between Q3 2019 and Q2 2020, the percentage of internet users who’ve purchased grocery items in Europe has steadily increased from 20% to 24%; a small, but statistically significant increase. In North America the difference is even greater, growing from 21% to 31%.

In our COVID-19 April research we found that among UK internet users who said they plan to shop online more after the pandemic, half said they’re now more likely to order groceries online for home delivery. In China, however, just 38% agreed.

The UK online grocery market is forecast to grow 76.2% to £19.5bn in 2020 following the significant uplift in demand amid the COVID-19 lockdown restrictions. 

Retailers are taking note: Amazon, for example, is keen to bypass traditional supermarket loyalties and carve out its own slice of the industry. In the UK, it’s announced that larger orders on Amazon Fresh will be free to members of Prime.

Elsewhere, Tesco is responding by introducing free delivery to its Clubcard Plus members.

4. Safety is the new must have.

Globally, 58% of consumers say they’d rather shop online, compared to 42% who’d rather shop in-store. The only region more in favor for in-store shopping is Europe, but it’s marginal at 52%.

Physical retail is by no means obsolete, but it must evolve with the times – hygiene factors are absolutely paramount and the new “must haves”, with convenience also being key. 

In the U.S./UK, 44% of internet users say that effective safety measures would make them more likely to buy a product in store, while a third want quicker ways to pay.

To encourage consumers to return to stores, retailers must keep safety front-of-mind in everything they do. This goes beyond social distancing and wearing face masks. Consumers also want safer ways to pay, and we’ve seen greater demand for contactless payments.

Two-thirds of internet users in the U.S./UK have started using contactless payment methods more because of the COVID-19 outbreak.

Like with many trends accelerated by the pandemic, the most significant changes seen in contactless payments in 2020 have stemmed from regions and demographics where behaviors have traditionally been the most difficult to shift. 

Europe, North America, and particularly baby boomers have been the leading drivers of adoption of mobile payments.

5. Changing media habits are allowing brands to reach older generations more easily.

Enduring a lockdown indoors, consumers around the globe began to consume more media; 71% of internet users have purchased digital content in the last month.

Despite this, since the first two waves of our COVID-19 research in March and April, the numbers saying they’re spending more time doing various in-home and media consumption activities have trended downward. 

This is especially true of young people. However, for older generations, it’s a slightly different scenario. For baby boomers, the data indicates a deepening of engagement across lots of media, but particularly for digital media such as social media and online TV – typically associated more with younger age groups.

This has opened up new opportunities for brands to engage with older consumers in the purchase journey in ways that might have previously been overlooked. For instance, 1 in 4 baby boomers now use social networks to actively learn more about a brand.

Not only are older generations’ media habits becoming more diverse, but new users are also flooding the market. 

Across 18 countries surveyed in early July, 38% of people who said they weren’t watching TV streaming services before the outbreak now report doing so. When we add these fresh users to the existing base of TV and film streamers, this represents a 12% growth during the outbreak in these markets.

There’s no doubt COVID-19 has accelerated a number of trends across the commerce landscape. For an in-depth understanding of the complete story, make sure you check out our new commerce flagship report arming you with the key trends to know about the global commerce landscape in 2020.