Is e commerce the safest industry to be in during the COVID-19 pandemic?

A number of reports have shown there has been substantial growth in the Australian e-commerce industry during the last quarter, suggesting the e-commerce space could be one of the safest industries to be operating in during the COVID-19 pandemic.

In the absence of being able to shop for items other than groceries, Australians have begun to opt for the next best thing: purchasing things virtually.

A report titled COVID-19 – Retail’s survival and revival from KPMG Australia describes two waves of expected demand for purchasing items in the e-commerce space.

The first wave of demand for the e-commerce space relies on the shock impact of consumers finding themselves in lockdown. Shoppers who would usually spend their weekends shopping now find themselves at home, or limited by reduced opening hours or social distancing when they do go to brick and mortar retail stores.

Despite the impact the pandemic has had on employment, the report says there are still people who are out there shopping:

“They may be more conscious of expenditure and buying different products, but they are still shopping. The queues are invisible but they’re crashing servers and online fulfilment processes around the country.”

The lasting effects of this first wave will depend on the capability of businesses big and small to reach demand. Business owners have had to move online, where previously they may have only offered the option to shop in-store. Businesses that have always operated online may have had to ramp up their efforts to ensure that demand is being met.

Similarly, a report by Australia Post in May showed how online shopping led the delivery of parcels to increase by 80% from last year, but the deliveries weren’t solely focused on the essentials. In the week leading up to Mother’s Day, there was a 140% increase in the volume of fashion deliveries, a 140% increase in the volume of arts and crafts items, and a 140% increase in the volume of beauty product deliveries.

According to KPMG, the second wave will see the e-commerce space continue to grow as consumer confidence is re-built following the initial shock of lockdown. As many people of working age begin to settle into the new normal of working from home, and gain confidence that they won’t lose their job, they may begin to spend more. On top of that, consumers who would have originally always opted to visit a store instead of ordering online may now find their experience with shopping online, and its convenience, would make them more likely to shop online again.

“Activity will return to shopping malls but digital will likely play a much larger role,” said the report’s authors. “Retailers with truly omni-channel experiences will be best positioned to benefit during the early recovery period.”

kpmg-growth-chart-e-commerce-boom

So is e-commerce the safest industry to be in during the coronavirus pandemic?

Yes, is the simple answer, but, it depends on what products your business is selling.

While it’s hard to garner an idea of when life will return to normal, it is likely that e-commerce industries will continue to boom long after all lockdown restrictions have been lifted, based on the uplift that was witnessed after the Great Financial Crisis.

The data shows Australia is behind in customer penetration in the e-commerce space, however, this gap leaves space for smaller businesses to go digital and craft their online presence at a time when everyone finds themselves spending a lot more time online.

The e-commerce space isn’t going anywhere fast; it has acted as a life-saver for many during lockdown and there will be an ongoing impact incited in both consumers and felt by business owners in the coming years.

The data continues to show that there is a gap for businesses to fill in particular categories, including grocery and liquor; health and beauty; recreational and other goods; and homewares, appliances and apparel.

kpmg-growth-e-commerce-growth-table