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COVID-19 and the race to go ONLINE

The COVID – 19 pandemic resulted into global lockdowns across FY2020-21 while some countries continuing the lockdown throughout FY2021-22 as well. As a result of these massive lockdowns and panic most of the stores were forced to remain closed except for grocery stores and pharmacies. The public movement was restricted and all businesses through out the world experienced major losses.

These lockdowns have resulted into a dramatic rise in e-commerce businesses and increased online retail sales’ share of total retail sales from 16% to 19% in 2020, according to estimates in an UNCTAD report published on 3 May. Here is a look into top ecommerce giants of the world and the percentage growth during the year 2019 and the year 2020.

Sno

Company

HQ

(%) Change FY19

(%) Change FY20

1

Alibaba

China

10.2

20.1

2

Amazon

USA

21.0

38.0

3

JD.com

China

19.1

25.4

4

Pinduoduo

China

104.4

65.9

5

Shopify

Canada

48.7

95.6

6

eBay

USA

- 4.8

17.0

7

Meituan

China

33.0

24.6

8

Walmart

USA

47.0

72.4

9

Rakuten

Japan

13.6

24.2

 

Almost all the eCommerce companies posted 100% year on year growth except for a few.

1. Rush to Go Online

With the stores closed and movements restricted, many SME’s and new start-ups that were reliant on their in-store sales saw a sudden strategy change. Suddenly everyone needed an online presence. This can be validated by looking into revenue numbers of online and ecommerce services giant, Shopify.

Shopify posted a 67% increase in its Monthly Recurring Revenue (MRR). This means, the revenue expected from recurring payments of users that are billed monthly. Thanks to a wave of new merchants joining the platform.

As the consumer behaviour has seen a major shift, Netimperative reports show that almost 92% of all eCommerce CMO’s expect a growth in their online business. The top brass is also more confident about attracting new online customers than before the pandemic began.

 

2. Importance of Social Media Presence

Another thing that happened during COVID-19 lockdowns was increased hours spent by people on social media. With an almost 75% increase in per person social hours, more and more brands started strategizing about their social media and digital presence to have more conversions.

Apart from the social media usage, there was a major behavioural change that was noticed as well. 79% of survey respondents agreed that UGC (User Generated Content) highly impacted their purchasing decisions, compared to just 9% who said they were most impacted by an influencer.

This shows the increased importance real-life reviews from fellow customers, rather than sponsored content by large scale influencers. 66% said they had been inspired to purchase from a new brand after seeing social media images of that brand from other consumers.

 

 3. Boom in Performance Marketing

With all steps in place, an online store and well curated digital content strategy, the next step was to bring the potential customers to the websites to make purchases. Digital advertising saw a sharp growth as a result of all newly created online stores trying to get as many eye balls as possible.

Total social ad spend by brands globally has risen by 40% during the pandemic with highest ad spends on brand awareness campaigns followed by traffic and engagement campaigns. Since the introduction of iOS 14.5, the conversion tracking has become difficult which has made brands to go more towards brand awareness campaigns than conversion and traffic campaigns.

Global social CPM (Cost per 1000 Impressions) has grown 41% YoY, now standing at its highest of an average of $6.77. This is one of the highest CPM’s recorded on paid media channels.

All marketing channels, Facebook, Instagram, Snapchat, TikTok, LinkedIn, Pinterest and Google have seen a double digit growth in revenue from digital ads and this trend will continue till the end of 2024.

 

More and more brands continue to go online, with more and more businesses trying to convert their products and services available at a click. The eCommerce boom is far from over and is here to stay through 2023 and 2024.

This strategy shift would define the growth and demise of several brands over the next 3 years.

 

Ricky Khatwani, Head of Performance at McCollins Media