How lockdown triggered the digitalization of businesses
Ivan Glazachev shares his thoughts on the changes in e-commerce — from B2B payments to full cycle of online customer interaction
Russian e-commerce market has gained a significant momentum during the lockdown. Right now, we can already outline a few ideas of e-com development both during the shelter in place directives and during the “new normal” post-covid life.
Conservatives move online
Obviously, the great part of e-com boost is attributed to the fact that conservative users who prefer to shop offline have entered the e-commerce scene. According to the VISA survey, 38% of users have tried online shopping for the first time during the lockdown (or, according to another study from DataInsight, 10M new users in Russia have started using this opportunity). Curiously, social media and messengers have become an important element of and tool for shopping. Social media built engagement and interest for specific goods and services, but also became a point of sale. Thus, shopping has become a completely virtual experience, from search and comparison to payment and delivery. The experience was positive, and the customers are ready to continue shopping online even after a quick comeback to the brick-and-mortar stores once the measures were lifted.
How business went digital
Small business was quick to adjust to online sales. Here at Yandex.Checkout, we’ve witnessed a 33% growth of new merchants in comparison with the previous year. Our partners at VISA have concluded upon the results of the survey that 76% of businesses are optimistic about digitalization, and 52% see the potential for future growth.
Tourism and entertainment events have decreased significantly: the turnover has dropped by 48% in comparison with the corresponding period of 2019. Unfortunately, these industries provided for limited opportunities to compensate for the fall, forcing the workers to wait until the safety measures are completely lifted.
Apparel, shoewear, and accessories, electronics and appliances, beauty products and health-related goods and services, goods for hobbies and leisure, as well as food delivery have demonstrated the greatest growth during the lockdown.
Shelter in place has triggered foodtech industry (in the segment of small business, food and groceries delivery has increased by 66%). Prior to the pandemic, brick-and-mortar stores started to pave their way into e-com and delivery in order to increase the frequency of shopping. Also, a number of companies offer groceries delivery in 20 minutes, which creates a strong competition to small local stores and marketplaces that have also started selling groceries. The delivery itself is also contactless, and there are options to order and pay for other people. Such client-oriented approach helps to retain customers.
Health and beauty products have increased by 80% during the lockdown. Not only pharmacies are benefiting from the pandemics, but as the overall personal awareness of health and immunity has increased, the sales of vitamins and supplements has also spiked (by about 25%). Note that brick-and-mortar beauty stores have obviously suffered, but only those with own e-commerce platforms were able to reposition the sales and ease the situation for themselves. Also, the drugstore model is not popular in Russia, but with the pandemic and increasing competition with online marketplaces, brick-and-mortar stores are trying out the new format.
Self-employed
Self-employment is a legal form for individual entrepreneurs, and the segment performance is close to small businesses. Firstly, the segment has grown by 30% month-to-month, which attributes to the flexibility and super swift reaction to changes. The amount of average transaction is higher there than for small businesses, and the involvement of contactless payments is also greater: on average, self-employed workers received payments via contactless methods 17 times a month.
Educational videos and courses were hurt greatly despite the fact that online education was the leading segment of all digital goods.
Clothing and shoes from local and unique brands, home decorations and niche food products were of extremely high demand: up to 500% growth in turnover!
B2B payments
Remote work has enabled fast and easy payments between businesses: the major problem of B2B payments is the document workflow that is time consuming for both parties. The payment itself is instantaneous now, yet the requirements for signatures, invoices, records, and other papers are the problem. In 2018, Yandex.Checkout and Sberbank launched the service of B2B payments which decreases the time of the transaction between legal entities from 1–3 days to 1–3 minutes. The beginning of lockdown saw a spike in demand for this service from both medium-level merchants and huge corporations.
