Despite the downturn in the U.S. economy, there have been some bright spots in sales and financial performance in the online space. The success of certain sectors has been a reflection of a changed consumer situation and requirements to stay at home. As many businesses begin to reopen, will these newly formed online shopping habits remain?
Plato first said, “Necessity is the mother of invention.” This concept certainly applies when you look at how merchants and consumers moved online during COVID-19. Of course, the importance of online sales was not new, but clearly, this year is an outlier for ecommerce growth. According to 2PM, Inc. prior to the pandemic, ecommerce represented 16% of U.S. retail sales. By April 2020, however, ecommerce represented 27% of U.S. retail sales. In addition, The New York Times reported that year-over-year online sales jumped 38% in April. The future of online shopping will depend on whether the move online line was temporary or rather a permanent shift in behavior.
Sales Boom in Key Sectors
While ecommerce sales increased overall, there were certain consumer sectors that showed noteworthy spikes. Generally speaking, the best performing industries presented one of the following benefits: entertainment while staying at home, a replacement for a temporarily closed business or a (perceived) safer alternative to in-person shopping. The following are just a few of the standouts.
No article on COVID-19 sales would be complete without a discussion of the grocery sector. Consumers had been slow to adopt online grocery shopping habits. There are many stories of lackluster performance with grocery sites, one example being Peapod. But since March, online grocery sales have boomed. According to recent surveys in the grocery industry, over 30% of consumers purchased groceries online for the first time this spring. According to Supermarket News, growth in online grocery jumped 40% with 49% of their survey respondents claiming that Coronavirus influenced their decision to shop online. Leaders in online grocery sales included big names: Amazon (AmazonFresh and Whole Foods), Walmart and Target. With reported issues with Amazon’s delivery, Walmart and Target have been able to close the gap in online grocery sales.
With playgrounds closed and more family time indoors, it’s no surprise that online sales for toys and games have seen significant growth. According to research by Rakuten, Toys/Games saw a 182% increase in online sales from March to April of this year, which represents a year-over-year increase of 122%. The NPD group states that the entire toy industry overall has seen an increase in 26% since last year. The leading sales are items like puzzles, legos or craft items…anything that will keep children busy while parents work from home.
Another strong performing segment during COVID-19 has been the sports/outdoors segment which includes home gym equipment. Whether it’s to battle boredom, stress or the inevitable quarantine weight gain, people are ordering workout gear in record numbers. Hand-held weights are a scarce commodity online at the moment. The category overall has seen a 131% increase in online sales. Consumers are replacing in-person classes with live streams and app workouts, using newly purchased workout items, in their living rooms and garages. Industry leader Peloton has a several month backlog for ecommerce sales–an order placed in May won’t be delivered until almost August. With gyms still not reopening in several states, and already-opened gyms facing restrictions on capacity, consumers may continue exercising at home for several months.
Will These Ecommerce Trends Continue Post COVID-19?
Online merchants want to know: will the shift in online shopping remain once brick-and-mortar stores re-open? Some believe that COVID-19 was the impetus for a change that was bound to come eventually. In the 2PM, Inc., study quoted earlier, the U.S. ecommerce sales penetration increased steadily from 5.6% to 16% for a 10 year period of time (2009-2019). But, during an 8 week period in the spring of this year, it jumped to 27%! We can assume that much of this shift to online channels was a response to physical locations being closed. In the coming months we will see if consumers completely shift back to in-person shopping.
Lingering fear will cause many consumers to remain online for the near future. With questions on infection rates as well requirements for social distancing and masks, there is no doubt that there are many who will continue to prefer online shopping. Many chains are looking to maintain the health of the retail locations by encouraging online shoppers to use curbside pickup or delivery services.
Other research indicates that many consumers that have shifted their shopping habits online will remain…not out of fear, but out of preference and convenience. For consumers who needed to overcome the learning curve of online shopping, the virus may have been the impetus for a permanent behavior change. As long as ecommerce sites can manage their supply chains and shipping logistics post COVID-19, the convenience may be enough to keep consumers online for the long term.