COVID-19: How the Coronavirus is Affecting E-Commerce

The coronavirus, which causes the disease COVID-19, has drastically impacted the global economy, upending routine life for millions of people worldwide. Since the outbreak on December 31 in Wuhan, China, there have been more than 827,419 confirmed cases and 40,777 deaths across 206 countries and territories.

The World Health Organization (WHO) declared COVID-19 a global pandemic on March 11, 2020. On March 17, the European Union closed the borders of 26 countries including Italy, France, Germany, Sweden, and Spain, barring non-essential travel and new visitors from non-bloc countries. Today, more than 100 countries have issued similar travel restrictions, including the US, UK, Canada, Australia, and New Zealand.

In the US, several state governments including New York and California have issued “shelter-in-place” orders to residents, barring large public gatherings and forcing businesses like restaurants, bars, gyms, and malls to temporarily shut their doors.

The federal government has also asked U.S. citizens to practice “social distancing” (remaining 6 feet away from others) in order to halt the contagious spread of COVID-19. As a result from this precautionary measure, labor supply has been severely disrupted for retail, entertainment, and service sectors of the economy especially hospitality, transportation, sporting events, and restaurants.

The International Monetary Fund (IMF) expects a global recession to occur this year due to the coronavirus, suggesting that the economic impact of the coming recession will be commensurate with the 2009 financial crisis and that recovery from its impact will likely not occur until 2021.

In the U.S., the socioeconomic effects of the virus have been particularly dramatic. At the beginning of January, unemployment was at a 50-year low, wages were growing, and the stock market was booming. Today, the Federal Reserve has estimated that unemployment could hit 30% as a result of the virus, and the S&P 500 fell 12%, its worst decline since the “Black Monday” event of October 1987.

Chief U.S. Economist at Morgan Stanley Ellen Zetner stated in a March 21 New York Times article that small businesses will be particularly affected by this new economic downturn due to smaller credit limits and less cash in the bank, a combination that will leave “a swath of small businesses that simply won’t be able to survive.”

As a response to this crisis, the Federal Reserve injected $1.5 trillion in relief funds into the stock market on March 12 and slashed interest rates to 0% on March 16 hoping to increase lending.

The extent of the economic loss COVID-19 will cause the global economy is not yet fully understood, though its symptoms will take shape in the coming months through losses in supply chains, demand, and financial markets, affecting international trade, housing, and business development globally.

The Corona E-Commerce Boom

One result of the coronavirus is the exponential rise in e-commerce as customers flock from brick-and-mortar stores to the web. While certain businesses are hard hit by the coronavirus, others are thriving.

The greatest beneficiaries are online retailers, third-party marketplaces like Amazon and Walmart, online streaming services like Netflix and Hulu, and door-to-door grocery delivery services like DoorDash and Postmates. With retail foot traffic plummeting (studies suggest by between 30% and 40%) as a result of shelter-in-place advisories, customers have turned to the internet to get what they need.

One delivery service, Instacart, experienced a 218% increase in download activity in March over February. Walmart Grocery saw 160% growth over the same period and retail giant Target experienced similar month-on-month growth in downloads for its mobile app Shipt.

A recent report on e-commerce trends found that month-over-month online sales have increased by 20.3% between February and March, with health, home, food, and pet supply categories trending upwards. E-commerce businesses are posed to see a substantial growth in long-term business but face threats from a potential decrease in discretionary consumer spending and supply chain interruptions.

The coronavirus represents a momentous shift in both the public and private sector, further moving customers and businesses out of physical retail stores and into e-commerce.

Despite this online boom, many businesses are cutting their ad spend. The Myers Report suggests that ad spending could decrease by $3 billion in 2020. While some businesses are reducing ad spend, forward-thinking businesses are doubling-down on third-party marketplaces (like Amazon and Walmart.com), social media platforms, and digital streaming services due to the massive influx of new visitors engaging with these platforms throughout the day.

As major trade shows, festivals, and sporting events face cancellation, the opportunity to reach targeted customers in high volumes online has never been more advantageous. As online shopping traffic grows and ad spending decreases, cost-per-clicks will theoretically decrease, which translates into lower cost-per-acquisitions and a larger profit margin for advertisers. Strengthening online marketing during this crisis will help businesses oust competitors who are slow to react as market trends shift.

The coronavirus crisis will hopefully be over soon, but over the coming months and in the long-term consumer habits will have shifted toward e-commerce and online marketing. Now is not the time to panic. Now is the time to invest.

Social Influence: We Want to Help!

As a digital marketing agency, we are aware of COVID-19’s impact on your business. We’re here to help. In response to the pandemic, we’ll be offering the following complimentary services through April 1st:

1. Complimentary E-Commerce Consultation: Get a free 30-minute consultation with an industry-leading Amazon and Google Shopping e-commerce manager, a service valued at $250 USD. We’ll discuss your current marketing efforts, the state of your particular industry, and build you a custom e-commerce strategy that will enable you to thrive during these uncertain times. Sign up below for a free consultation by April 1st and get a 25% allowance on any of our e-commerce services.
2. Complimentary Instagram Optimization: Get a free 5-day trial to our Instagram optimization service. Get brand awareness by engaging with your target demographic en masse to ensure that your brand doesn’t fall behind. Sign up below and get our Instagram optimization service at 50% off if you decide to subscribe after the free trial expires. No risk, no commitment, and no credit card necessary.
3. Complimentary Social Media Consultation: Get a free 30-minute consultation with a certified social media manager. With quarantine orders across the world, social media has experienced an unprecedented spike in traffic. Between Q4 2019 and Q1 2020, Instagram campaign impressions increased by 22%. With companies cutting ad spend and social media traffic increasing, cost-per-clicks have never been cheaper. Sign up below by April 1st for a free consultation and get a 25% allowance on your next Facebook/Instagram ad campaign. Start taking advantage of the growing social media audience today.