The Impact of Coronavirus on Ecommerce
Last modified on April 7th, 2020
Hello 👋! Stefan Pretty here, founder and CEO of Subbly reporting to you from quarantine, on the impact of coronavirus on ecommerce.
The following is the first in what may turn into a series of blog posts addressing the impact of Coronavirus on ecommerce. As new information becomes available daily, governments are reacting in real time to both the public health crisis and extreme economic uncertainty. Trying to stay on top of government policies right now is almost impossible but it is critical for business owners all over the world.
This blog post has two primary objectives:
(1) We will answer major questions about managing your subscription ecommerce business in light of new government policies.
(2) We will attempt to provide a positive perspective by sharing some Subbly metadata, practical advice, and opinions from e-commerce experts.
Before we begin, I would be remiss if I didn’t acknowledge the fact that for many, this crisis is not an opportunity and is indeed tragic 😔. Our hearts go out to people suffering from COVID-19 and their families, or those who find themselves suddenly without income. In addition to people suffering, there are many at home attempting to live their life and that does involve shopping, whether that means food, other essentials, entertainment and so on. That’s where YOU come in!
Let’s begin breaking down the impact of Coronavirus on Ecommerce!
👉 Disclaimer: this is NOT legal advice and is based upon our interpretation of publicly available information, Subbly metadata, and the opinions and experiences of others. We recommend you do your own research and seek your own advice before making major decisions for your business. If there are any inaccuracies or outdated information in this article please let us know.
The Coronavirus Lockdown Impact On Ecommerce
It’s clear now that most governments are doing some version of a lockdown. In parts of the United States this means people have been ordered by state officials to stay at home. However, in California, the governor says he doesn’t “believe the people of California need to be told through law enforcement”. In my home country, the UK, the lockdown is federally mandated and it means that the police can issue fines for non-essential travel or gatherings of more than two people.
Unfortunately, going into detail for each specific country or region is not possible and the information would likely be out of date by tomorrow . Instead, we will say that the lockdown procedures of each region seem to be getting similarly and steadily more restrictive. This means that generally, regardless of country or region, people will be spending more time inside and will have less opportunity to go outside, even for what seemed to be okay just a few short weeks ago.
In light of this, many merchants are wondering if their business operations are subject to the lockdown 🤔, or if they should continue with everyday business functions that involve leaving their house, like shipping products. Many merchants are also wondering if the partners or companies they work with or rely upon are subject to lockdown policies.
Let’s try to clarify that.
Can I send my shipments?
Yes! 😃Postal services remain open in many major countries such as the US, UK, Canada, Germany, and Australia.
In fact, some postal services like USPS are hiring to keep up with increased online shopping volume. Other countries have opted to keep postal services open, but have reduced deliveries to only certain days a week, like in France and Spain. While national postal services may be restricted in some countries, private parcel companies like FedEx and UPS are still functioning worldwide.
Online retail is still open and encouraged and postal and delivery service will run as normal.UK Government
See here for the full document.
But what about the “essential” travel restriction?
The term “essential” has caused a lot of confusion mainly because it’s very subjective. In countries and regions with very restrictive lockdowns such as the UK, France, and parts of the United States, travel is permitted if it’s essential for work, and if it can’t be conducted at home.
So in short, you’re really good to go when it comes to shipping your boxes! 📦👏
“travelling for work purposes, but only where you cannot work from home.” – UK Government
Please refer to bullet #4 of section number 1, found here.
Residents are allowed to go to the grocery store and run errandsNYC & California (source)
What’s an essential business or service?…post offices, shipping and deliveryStay at home guidelines (source)
The bottom line
Government policies during this pandemic are extremely friendly to e-commerce businesses. Generally speaking, these policies restrict almost all physical retail shopping and encourage online shopping (especially for items typically bought in-store). Plus, essential infrastructure for e-commerce, like postal services, have not been restricted. Not to mention, e-commerce businesses can operate better than most from a home office and with remote staff.
Positive Signals in the Data 📈
The economic fallout from the pandemic is very real and many experts say we haven’t seen the worst of it. Despite this and mass unemployment, many online retailers are thriving. Admittedly the stories we hear from our merchants are mixed. However, Subbly is in a unique position to understand the macro trend because we process millions of dollars in subscription revenue for online retailers each month. From February 2020 to March 2020 we’ve seen a 14.7% increase in total subscription revenue processed.
Churn across all Subbly merchants in March was only 2.2% higher than the previous 3-month average. This is in line with normal fluctuations and does not signal to us that the Coronavirus impact is causing customers to abandon their subscriptions or other e-commerce behaviours.
The reality is, this data may change and turn negative at some point in the future as this situation is still unfolding.
Everyone can assume that products that fit into the “essentials” categories are selling well, and there is evidence to support that. There are dozens of food based subscription businesses that have added many new subscribers in the last month such as: (community-supported agriculture) CSA farms and “meal prep”. What’s been fascinating to see is the growth in non-essentials. Some of the winner categories include entertainment, education, children/parenting, home decor, and crafts.
But what if I do get stuck 🤷♀️?
If you’re in one of the unfortunate situations where you have supplier or shipping issues, after calling to check with them, then we suggest delaying your renewals of your subscriptions and informing your customers of this decision.
But before making this decision, continue reading as there may be other options and solutions.
Opportunities & Adapting
It’s not pleasant to think about opportunity in a time of crisis. Despite this, the opportunities and changes as a result of coronavirus are abundant and there will be winners and losers. Luckily for e-commerce retailers (including subscription), they will likely end up on the winning side in the short and long term.
While stock market crashes and the news coverage of it sounds dire, the reality is people are working and they are spending money (look up wealth distribution). Just differently. Of course, this is not a new revelation. The trend of remote work (and remote everything) and online shopping began a long time ago and if you’re reading this, you’re likely someone who has pushed that trend forward. However, Coronavirus impact has certainly accelerated this trend and will likely cause permanent change in how people shop and what they choose to buy online.
And for any businesses (new and established, large and small), this may mean “adapt or die”. Where are you Bear Grylls?
If you’re a brick and mortar store with few online sales or no recurring revenue, now is your horrible wake up call; it isn’t too late! If your business falls into the “essentials” category, this is your time to shine; seize the moment!
If you have an existing e-commerce or subscription business, you probably already know that advertising costs have dropped ✅ and your target audience is spending more time ✅ (and more money ✅) online. If you haven’t started using paid media, now is likely a good time to start because you can do it on the cheap.
Should I Hold Off Launching 🚀?
If you were thinking of starting your e-commerce or subscription business, remember there is no “right” time to start. Some of the largest companies today were forged during economic downturns .
With that said, these are uncertain times and doing anything new can be scary. If now is not the right time to start a new business, or double down on paid advertising, or pivot to new products, there is still a lot you can do to come out of this better and stronger.
For example, maybe now is the right time for you to call partners or suppliers to build a stronger relationship. Or maybe you have enough down time where you can sharpen your tools or learn new skills. Maybe you can do market research or planning. What have you been neglecting? That might be the perfect place to start to get productive while business is slow.
E-commerce Expert Opinions & Advice
What did we do when the pandemic got real? We called our friends and partners. From those conversations with some of the top e-commerce experts in the world that we created a special edition of our podcast, “Subscription Rockstars”.
🎧Subscribe & listen on Apple Podcasts here:
- The Impact of Coronavirus on Ecommerce is proving to be mostly positive, so far…
- The lockdown is impacting the economy and most businesses are unable to trade, however:
- E-commerce is well positioned to thrive as people are forced and encouraged to shop online
- Essential travel for work that can’t be conducted at home is allowed
- Post offices remain open
- Certain online retail verticals are experiencing outsized growth
- Subscription is thriving, Subbly has seen platform wide growth and no increase in cancellations relative to other months
- Businesses must adapt to the new reality because changes in consumer behaviour are likely to be permanent
- Now may be a good time to launch
Good luck and let us know if you have any new comments you’d like to add for our next “The Impact of Coronavirus on Ecommerce” report! We’d love to hear from you 🤘.