Shopping malls are among the top 3 likeliest places to be abandoned by Americans due to the growing coronavirus (COVID-19) epidemic. In fact, public areas already face declining traffic—Seattle business owners say the famous Pike Place Market feels like a ‘ghost town,’ after a local was found carrying the virus. Even unaffected areas are being impacted, wiping Costcos, Walmarts, and Targets out of supplies, such as water, disinfectants, and toilet paper. Brick-and-mortar store traffic is expected to worsen, which may create an opening for eCommerce websites to rise.
While it’s still unclear how and to what extent this will impact eCommerce, we can assume online shopping will rise as people attempt to limit their potential exposure. Here, we lay out the shifts we’ve already felt in eCommerce due to the coronavirus:
As consumers attempt to avoid public areas to reduce their exposure to others, we can expect a spike in online shopping. This is already the trend we’ve seen in affected areas. The outbreak in China inadvertently created favorable outcomes for eCommerce, as the quarantined country is buying goods online. For example, JD.com, a Chinese fresh food delivery service, increased sales by 215% in a short 10-day period. Another Chinese retailer, Reckitt Benckiser (from Dettol), sells health, hygiene, and home products online and reported a 643% year-over-year (YoY) increase in sales between February 10-13 this year compared to the same dates last year.
It is still uncertain how the virus will take its course in the US, however, we can assume that home and health care supplies will increase in demand. In a one week period, ending Feb. 22, 2020, US medical mask sales grew by 78%, hand sanitizer by 54%, and thermometers by 34%, compared to the same timeframe in 2019. These items, along with nonperishable foods, are seeing the most lifts right now (at the time this article was published). However, US apparel and electronics retailers have been warned to ‘brace for impact,’ since they rely heavily on Chinese manufacturers, many of which are closed due to the mandated quarantine.
While an influx in traffic is typically a good thing, enterprise eCommerce companies are struggling to handle the logistical bottlenecks and product shortages caused by the coronavirus. Even the eCommerce giant, Amazon, hasn’t been immune to insufficient supply, listing various cleaning items as “currently unavailable.”
We all know the phrase ‘what goes up, must come down,’ so in our next section, we dive into a few examples of eCommerce shortcomings already seen in the US.
Many US businesses rely heavily on global manufacturers to produce their products, or parts of them. However, many factories in China have been and remain closed due to the mass quarantines across the country. This is putting a halt to Chinese export, creating a strain on US businesses who depend on it. To put this in perspective, in the same period last year, Unicargo, an international freight company, was making 60 to 70 shipments per day. Now, the company is making 10 shipments a day, at most.
Supply chains and delivery network challenges have driven several companies, including Apple, Microsoft, and Wayfair, to lower or withdraw their forward-looking revenue estimates. Wayfair, a home furniture retailer, relies on Chinese manufacturing for half of its merchandise. Its shares fell 26% on Friday (Feb.28). Apple’s iPhone supply is “temporarily constrained,” causing its market cap to drop by a whopping $26B. Microsoft lost $54.7B in market cap due to the impacts of the coronavirus. The week of Feb 21-28 marked the worst weekly performance of The S&P 500 and Dow Jones since the 2008 financial crisis. In the meantime, the US stock market continues to drop, even after the federal reserve’s most recent 0.5% interest cut.
If the biggest names in eCommerce can’t fight off the bug, it’s no surprise other retailers are taking a hit, as well. Whole Foods in Los Altos, CA, is completely out of pasta, beans, frozen vegetables, and hand sanitizers. Costcos in Hawaii are sold out of toilet paper and paper towels, even after limiting shoppers to five packages each. Hand sanitizers aren’t to be found on the shelves of Target, CVS, and Walgreens in multiple places around the country.
Amazon and Walmart, two eCommerce powerhouses who offer same-day delivery, appear to be overwhelmed by a recent surge in orders from shoppers who have gone online after physical stores have run out-of-stock. This has delayed the delivery dates, limited the availability of items, or skyrocketed item prices. For example, a 2-pack of Purell Hand Sanitizer is being sold on Amazon for $54, and that’s at the lower price point for this product.
It’s clear that retailers selling home basics and necessities already feel some impact of Americans avoiding exposure to others. However, it is still unclear if and to what extent eCommerce sales will be impacted. Many factors may come into play to sway the pendulum to one end or another, including potential aggressive counter measures taken on the federal and state levels.
With this in mind, enterprise eCommerce companies of all kinds should prepare for an increase in traffic, stock up on supplies, track shipments, and have a contingency plan in place (e.g. limiting the number of items per purchase if you are getting near your red line, communicate both internally and externally, etc.) to ensure they are ready for whatever might happen.
A fast and reliable online experience is expected of consumers today. If you’re unable to provide what shoppers demand, you risk losing valuable customer and brand reputation, not to mention sales. Layer0 works to help enterprise eCommerce businesses consistently deliver instant experiences that drive big wins in terms of visibility, reach, and revenue through sub-second websites.
If website speed is a priority in these troubling times, schedule a consultative conversion with a site speed expert today.