Is the Corona-Uptick in Ecommerce Sustainable?
COVID-19 has driven lots of shopper traffic to ecommerce during 2020. In Finland, online shopping and especially grocery shopping through digital channels has been booming. Is the sudden spike in growth sustainable, or will it fade away?
When the COVID-19 lockdowns began in Finland from mid-March, it felt as if the whole country became a ghost town. Every Finn was somehow affected by the sudden halt in everyday living, as most were confined to their houses and apartments with minimal interaction with other people.
According to Google’s mobility data in Finland the foot traffic to shopping centers and restaurants dropped to less than half of normal and even grocery and drug stores saw a 20% drop in footfall. Since people still needed to cook, wear clothes and, you know, do stuff despite the lockdown, demand for everyday supplies did not die down, it shifted. According to Posti’s data, many Finns began doing their everyday shopping online. In fact, during the first week of April alone, Posti delivered a million packages to Finnish households.
Local Companies and Online Grocery Stores Grew Quickly
One winner in Finland were, luckily for the Finnish economy, local companies that offer domestic products. Based on the weekly corona-tracking data gathered by ToinenPHD, a Finnish marketing agency, the demand for domestic products had grown more than 30% during March and April, when compared to the previous five weeks. The growth has sustained each week, which seems promising for the future of domestic ecommerce businesses in Finland.
Ville Vasaramäki, Head of SME Services at Posti, would argue that the news coverage of amazing growth numbers for, for example, the likes of Amazon has a misleading shade to it. Ecommerce growth is not going just to the global ecommerce giants. “Amazon’s growth is mostly from their domestic market in the USA. In Posti’s data we can see that specifically domestic ecommerce has been growing. Especially sporting goods, clothing and home interior categories have grown clearly, and drug stores have seen a definite growth in deliveries during April 2020.”
Especially online grocery shopping had not just grown but pretty much exploded. Based on Kesko, one of Finland’s two gigantic grocery store conglomerates, online grocery shopping grew a staggering 800% by the end of April. Although, according to the statistics gathered by ToinenPHD, the growth had slowed down after people had had their first try at shopping food online.
Great Customer Experience Is Key in Sustainable Growth
“In global comparisons, Finland has been a bit slow with adapting to the opportunity to buy groceries online. Now, with the coronavirus, we got a true accelerator for making the delivery processes more efficient. With processes that now got tested under immense pressure, we may see diamonds forming,” says Vasaramäki. According to him, the cooperation between Posti and companies that are preparing to set up their food and grocery delivery systems, has gotten a boost forward because of the epidemic and sudden surge in demand that came along with it.
Vasaramäki would further add that the ecommerce businesses that can keep up high sales volumes even after the COVID-19 sales spike share something in common: as long as ecommerce makes things easier for consumers, that is reason enough to return. If the experience is not that much easier than shopping ‘the old way’, consumers will have less reasons to keep shopping online and this would make the sudden COVID-19 uptick in ecommerce temporary.
What Is Next for Ecommerce After COVID-19?
Vasaramäki can see that the package delivery numbers for Spring 2020 are on par with a typical Christmas season. So far it is not very clear how long the exceptional coronavirus situation will affect consumers’ lives, but Vasaramäki would argue that there will be a return to a normal of sorts. Still, it seems that this new normal does not mean that demand for ecommerce will quiet down to pre-coronavirus levels.“
The move from brick and mortar stores to online shopping is now accelerating. The clear winners are domestic ecommerce businesses and online grocery stores. The losers will be the companies that cannot adapt to the new situation. With the growth of demand, supply will grow as well, and the companies that have bad products or services will be washed out first,” Vasaramäki concludes.
Ecommerce has helped consumers tide over the lockdown period of Spring ‘20, and has seen tremendous growth while doing so. Perhaps the highest online shopping volumes will not equal ‘the new normal’, but will open an opportunity for ecommerce to become an even more familiar part of consumers’ way to shop what they need. To hold on to the new, higher shopping volumes, ecommerce businesses will need to focus on offering the smoothest possible experience for their customers.
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