It’s E-Commerce, stupid!

When the Clinton administration claimed the famous

“It’s the economy, stupid!”

as their campaign motto the phrase soon became common knowledge. In times of the Corona crisis this message has earned an even more far-reaching connotation but also a bitter taste. Yes, the economy affects everything but also, everything affects the economy.

In times of COVID-19 the same applies to the role of E-Commerce. Yes, we have all heard about E-Commerce revenues going up during the last weeks. From toilet paper to face masks, from yeast to meal kits, from flour to bread machines. But this up rise does not only affect categories that are needed just now during the crisis, it does also affect categories like food that had been low in E-Commerce almost by default (especially in Germany).

A NEW NORMAL

But there is more to this development. We see fundamental changes in consumer behavior that are about to last. Some first evidence of our studies in the food sector shows that more than 30% of consumers will show ongoing behavioral changes in their consumption and buying patterns for food.

“It’s E-Commerce, stupid!”

A new Kantar study across Europe’s three largest e-commerce markets (France, Germany, UK) shows that the share of consumers that do more than half of their total purchases online has increased between 25 and 80 percent (depending on the category) since the outbreak of Covid-19.

“The future is — and this is of course accelerated by Corona — totally digital. Even the last consumers, who have been happy to go to shops up to now, suddenly have a new family member called Amazon.” (Carsten Maschmeyer, German investor)

With E-Commerce becoming the ultimate new normal, companies need to accelerate their strategy development and think about E-Commerce in new ways. And they will have to rethink whether Amazon is going to be the perfect new family member or not. These days, some of our customers also see the downsides of being dependent on Amazon, many Amazon resellers have lost almost all their business over the last weeks because Amazon has deprioritized their business for delivery.

E-COMMERCE AFTER PANDEMIA

In order to react appropriately any company must rethink their E-Commerce strategy, especially in the context of a highly altered reality in online buying behavior. Starting right now and accelerating over the course of 2020 we will see:

• More, smaller, single brand E-Commerce shops in vertical niches.
• More local platforms that bundle those small E-Commerce shops to relevant offers (as we see with local buying platforms right now to support small offline retailers).
• New ways for local/last mile logistics that overcome existing barriers (and mistrust because of the risk of infection).
• New content-driven E-Commerce platforms that combine authentic and locally relevant brand promises (and community support) with unique offerings — think meal kits from your favorite gourmet restaurant (like www.goldbelly.com)

REDEFINE YOUR E-COMMERCE STRATEGY NOW

For most companies these developments shouldn’t come as a surprise, but for some they definitely will. And they will likely be losing market share in the next two years.

Of course, you have defined an E-Commerce strategy for your brand, but it’s likely that strategy has defined E-Commerce as an add-on. Or just as a minor part of your miraculous omni-channel strategy? Hence, let’s get serious know and treat the digital distribution channel as a real powerhouse. Here is your job, only two things:

1. Redefine your E-Commerce strategy on a much broader level. On a level that stops mitigating channel conflict risks and instead drives bold steps in owning direct-to-consumer pathways. Start your own shop now if you don’t have one — and if you have one build the leads generation based on reduced CPMs we see during the crisis now.

2. Reap the low-hanging fruits in the current turmoil and the coming recovery phase. Ask yourself:

• What sales increase is possible in existing channels, including product adaptations, bundling or development?
• On which additional channels can and should our products be offered — within and beyond the category’s E-Commerce shop (think skincare sold on fashion shops)?
• How can we increase our sales by optimizing digital marketing — from campaigns to PDP design and content optimization?

The uplift potential for each company will differ a lot, but in most cases they will be substantial. In one of our recent engagements we have shown potential uplifts of 135% (low scenario) to 310% (high scenario) driven by measures that will be implemented over the next two years.

OUR E-COMMERCE TOOLKIT

The Bloom Partners E-commerce Toolkit helps answer those essential questions for our customers in a structured way, thereby modelling the individual sales uplift-levers. After only 4 weeks, our customers not only have a perspective on how e-commerce sales will behave in the future, but also which key activities must be implemented to realize the full potential.

Now is the time to prepare for the new normal! Especially when (large parts of) the economy will bounce back you want to be the first off the starting block. And win the race already on the first yards!

Originally Published by Dr. Markus Pfeiffer, CEO & Founder @ Bloom Partners GmbH

Bloom Partners is a digital growth firm based in Munich and Berlin, Germany. We support the ambitious to unlock digital growth opportunities by bringing together the right people, strategy, and technology. Find out more about our digital services here.