In today’s day and age, convenience has become an impetus for the way we live our lives. This is especially true in the retail sector where consumers are always looking for easier, quicker and cheaper ways to buy goods and services. eCommerce giants like Amazon, Shopify and Walmart have capitalized on the need and dominated the online retail space in the last few years with annual revenue in the billions. As the novel coronavirus spreads across the nation- confining us to the safety of our homes, demand for online goods and services has surged. There’s no doubt that once we overcome this pandemic eCommerce companies will emerge better than before.
Online Shopping Gives A Dramatic Boost to eCommerce
With the stay-at-home orders imposed by governors of various states, many Americans stuck at home have turned to online shopping to stock up on essentials. This led to website crashes and delayed orders as e-commerce businesses struggled to keep up with the unprecedented levels of demand of eCommerce. Amazon had to hire 100,000 workers in March to manage their orders.
The Numbers Speak For Themselves
Since the beginning of March, the demand surge resulted in a spike in sales numbers for many eCommerce companies. Between March 12th and 15th, there was a 210 percent increase in the dollar value of orders for grocery chains. Many retailers also reported a 74 percent hike in the volume of sales as compared to 2019. Research conducted by eMarketer also showed that the value of food and beverage sales this year will be $32.2 billion.
In addition to a sales spike, many eCommerce businesses have also benefited from an increase in their stock prices. Amazon’s stock reached a record high on April 16th and was up 28 percent from the previous year. Other stocks like Netflix and Whole Foods also received a lot of attention in March when stay-at-home guidelines were imposed. Netflix’s growth jumped by 15.8 million which was a 107 percent increase compared to 2019. As stock prices of many major companies hit rock bottom, investors turn to eCommerce companies for a glimmer of hope.
The Fall of Brick And Mortar Retailing And The Rise Of Ecommerce
While eCommerce stores are in their heyday, brick and mortar stores have suffered the brunt of the COVID-19 crisis- famously termed the ‘retail apocalypse’. As social distancing became the norm, many physical stores were forced to shut their doors to avoid the spread of the virus. This left companies in the dark as many of them were not in a position to shift to an online business model. With little to no sales in the books, many employers had to furlough their employees.
The unprecedented levels of unemployment led to a decrease in spending on non-essential items for many individuals, giving an unexpected boost to the eCommerce industr. Even with grocery sales at their highest, many economists predict consumer spending will decrease by 41 percent this quarter. This is despite the $2.3 million stimulus package sanctioned by the government in April. Retail sales declined by 8.7 percent in March, which was its lowest since 1992.
Given the daunting figures, experts believe that the country officially entered a recession in March of this year. In the United States, a recession is not defined by a drop in GDP but a decrease in activity levels across the economy. Unlike the recession of 2008 (which was a man-made crisis), the economic downturn we currently find ourselves in is a result of forced shutdowns and unexpected lifestyle changes. Although rates may stabilize eventually, the road to recovery for many businesses and individuals in a post-COVID 19 world will be a long and arduous one. But one thing’s for sure- eCommerce is here to stay, and it’s hear to lead!
Written By: Divya Prem