US online grocery sales growth by 215% – ecommerce in the post-Covid world

Published On May 13, 2020
In Retail & Consumer Products, covid, Blog Archives

Consumers have been purchasing products online for quite some time now. However, with the increase in the spread of the coronavirus pandemic, things are changing. As more stores are getting closed, more consumers are beginning to shop online. For the first time, they are also shopping in new categories such as groceries and household essentials. If online retailers can stay in business during these tough times, it will provide them with a long-term boost. The e-commerce market is one of the only industries that has not been negatively affected due to the pandemic. Since stores are closing off, and more people are staying at home, the e-commerce industry is better off than it was before.

Source: Business2Community

Has the Coronavirus Pandemic Set Any New Trends in Motion?

Ever since the virus outbreak started in China, it has spread at an exponential rate from its epicentre. The epidemic that gradually transformed into a pandemic has brought significant implications on various businesses across the globe. The US being one of the most affected regions is still scrambling to navigatethrough the disruptions caused by the pandemic. Apparently, consumer sentiments are turning pessimistic owing to prolonged lockdowns and the absence of a drug to COVID-19 contagion. Suchitra Kondali, VP at Forrester, states that ‘Consumer confidence in the US economy is bleak for the next 12 months causing consumers to purchase less – both in-store and online’.

However, e-commerce is still on the bright side as the fear of the COVID-19 pandemic has created an unavoidable preference for online shopping, right from GenZ’s to Baby boomers. As of May 10, 30% of the US respondents said that they had deliberately purchased hygiene products online instead of offline due to the pandemic (Statista).

Source: Oroinc

Here are some of the sectors whose business operations have been impacted due to the coronavirus outbreak:

  • Retailers and Restaurants – Many parts of the world have been placed under lockdown, and governments have restricted people from going outdoors. Market research shows a significant drop in foot, causing a deep distress for retailers, particularly the small and medium-sized. Major retailers like Apple, Nike, and Starbucks had temporarily closed their stores, but they have begun to reopen their stores. The reopening of stores is a sign of potential improvement in the situation. 
  • Grocery – Since most customers are now bound to their homes, they are using online grocery services to get their food supplies. Vegetable deliveries in China have increased by over 600% (eMarketer). Even the online grocery sales grew by 215% (eMarketer) over ten-day periods between late January and early February. Due to consumer’s concerns about potential contamination of food, there have been many innovations in food delivery services. Several delivery services have come up with contactless pickup and delivery options for consumers. 
  • Healthcare Products – Due to news reports of product shortages and imposed limits on certain purchases, panic buying has seen a massive surge. As a result, consumers have been visiting stores more frequently to stock up on essentials. Visits to grocery stores increased by 26.6% (Contentsquare) in the first week of March. Even visits to health food stores, vitamin stores went up by 35.6%, and the sales increased by 34.1% in the first week of March.
  • Digital Media and Tech Retail – While the sales of retail clothing and footwear sites saw a significant drop, the sales of retail tech sites grew every week. It grew by 17% (Contentsquare) by the end of February. Even the visits to media sites such as news, radio, etc. increased by 31% (Contentsquare) during the same period.   

What are The Challenges That the E-Commerce Industry Might Face During the Coronavirus Crisis?

Though experts say that e-commerce business will be better off in the long run due to a virus outbreak, there are a lot of uncertainties surrounding the industry right now. At present, the global impact of the pandemic is not known. Here is a list of challenges the online retailers might face:

Source: Ecommercenews

  • Changes in demand and revenue – In the past few weeks, the weekly growth of average revenue saw an increase of 52% (QuantumMetric). This is due to more consumers turning to online shopping because of an increase in demand for supplies.
  • Conversions on products that take longer to deliver – Since the global supply chain has been disrupted, there have been high demands on inventory and delays in shipping. Even Amazon is having a hard time delivering on its two-day delivery promise.
  • Lack of confidence in consumers – Over 42% (SGB Media) of retailers have reported that their customers are displaying a lack of confidence. 82% of retailers believe that the virus will have some impact or even a significant impact on their businesses.
  • Inventory shortages – As more people indulge in panic buying, many industries are faced with inventory shortages. Over 40% (digitalcommerce360) of retailers are expecting inventory shortages throughout the year. 
  • Supply Chain Issues – Many retailers are currently experiencing a massive strain on their supply chains. As a result, there is a rise in shipment delays, technical glitches, and labour shortages. 
  • Stringent Enforcement of Regulations – Since many retailers are taking advantage of consumers in a panicked state, the government is enforcing strict laws against such practices. 

Another considerable challenge that major ecommerce companies could face is Amazon’s aggressive moves to gain more market share. This could negatively impact small-scale retailers. Another risk is that, as the stock market is plummeting, consumers are losing their wages. Furthermore, workers are being laid off at a record rate, which could significantly minimize growth in short-term sales. Amazon has placed massive orders for all kinds of merchandise. The approach they are using says that Amazon thinks that if they have the supplies, they will get the sales. Amazon is making the most of the coronavirus crisis by trying to assert its dominance in the market. The e-commerce giant is trying to garner sales from the inability or unwillingness of the consumers to go to physical stores. Amazon not only intends to be the biggest player in the market, it wants to dominate it. It has already taken multiple efforts to do so. The company has its own shipping system and cloud computing infrastructure that competing firms depend on to transact business. The coronavirus outbreak has only further paved the company’s path to turning the public marketplace into one that is privately controlled. 

Will the E-commerce surge continue in the upcoming days?

E-commerce was anticipated to be a highly preferred mode of shopping in the upcoming decade owing to improvement in technologies and the foreseen shopping habits of the digital generation (Millennials and GenZs). However, the COVID-19 outbreak has turned the anticipation into reality way sooner than expected. Furthermore, the pandemic has exhibited how consumers, regardless of generation have favoured online shopping in the digital age in times of uncertainties. Also, the pandemic circumstance has highlighted the benefits of digital transformation for businesses in real-time which will encourage many stores and brands to move online once the lockdown drill comes to an end.

Having said all that, will the e-commerce sales continue to rise even after the COVID-19 crisis?

In retrospect, parts of the ecommerce industry are benefitting from the coronavirus outbreak. However, the absence of a vaccine along with the lingering fear of COVID-19 is expected to keep ecommerce in the front line even after countries resume activity after the pandemic.

According to research by Capgemini, most Indian consumers appetite for online shopping is expected to increase from 46% (current-day figure) to 64% in the next six to nine months.

Also, Siddharth Talwar, partner at Lightbox Ventures, puts forth the question of the decade – “Will consumers feel safe enough to hit the retail spaces like malls, markets, and restaurant again?” He then posits that the fear will linger for an extended period post COVID-19.

Overall, consumers are more likely to look beyond price tags and marketplace discounts in the new decade. Though the situation is bleak at present, modern-day businesses can see e-commerce as the light at the end of the tunnel and the new normal for us when it will come to shopping.

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Simran Wadhwa
Simran Wadhwa
About the Author

Simran has grown alongside SG Analytics for the past 13+ years. She joined the company as a Human Resource professional, specializing in recruitments and engagement management. During her tenure, she has built a diversified portfolio for herself and the company; moving from HR to Operations and for the past 9 years has been zealously pursuing and farming network for sales. She attributes her love of sales to her understanding of different client cultures and personal connect. Simran is a fun loving workaholic who embraces new challenges like old friends.

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