Lessons Post Lockdown for Ecommerce Brands. Part 2

Di [email protected] Agosto 30, 2024 #ABS, #Absolute, #Accelerate, #Account, #Ace, #achieve, #Acquisition, #acquisitions, #act, #Action, #Actionable, #Activities, #ADA, #Adapt, #Add, #Adobe, #Adopt, #Adoption, #Adventure, #Advice, #Affect, #Afford, #Age, #Aged, #Ahead, #Alternatives, #amp, #Analysis, #Analyst, #Analytics, #Ann, #Announce, #Anxiety, #API, #App, #Apple, #Approach, #Approaches, #Apps, #areas, #Arent, #ARR, #Art, #Article, #Articles, #Assignment, #Assist, #Associate, #Assurance, #Attention, #Audience, #Author, #Authors, #Automated, #Avoid, #Awareness, #B2B, #Balance, #Ban, #Bank, #Base, #Based, #Basic, #Beat, #Behavior, #benefit, #Benefits, #Big, #Blog, #Book, #Booking, #bookings, #Books, #Boom, #Boost, #Brand, #Brands, #Breach, #Break, #Breaking, #Brian, #Build, #Builder, #Building, #built, #burn, #Burnout, #Business, #Businesses, #Buy, #buyer, #Buyers, #Calls, #Capture, #Care, #Cart, #Carts, #Case, #Cases, #Category, #Celebrate, #CEO, #Chain, #Change, #Changed, #Changer, 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If you read the first part of my analysis, you now know that you need to reassess your product & marketing strategy to survive this crisis. If you can adapt to changing customer needs (and find creative solutions to unexpected problems), you have a chance to come out successful at the end of this.

What lies ahead?

Well, let’s take a look at countries that are already coming out of lockdown. Read on.

Table of Contents

Stage 4: New “Freedom” and Slow Recovery

Although hard to imagine for me now, as we’ve
just learned our lockdown was extended from two to four weeks and with no means
of leaving our property, there will be an end to this lockdown. How will my
kids take all this… how will we handle being locked in the house for two
months?

Countries like Singapore, China and Japan seem to have managed to contain the spread of the virus. By slowing the outbreak, they start to see some relief on their medical systems and social distancing rules begin to relax. Fears of a recession are real, as consumers are more cautious. It may take months to years to fully recover. At this stage, essential activities are still the focus — people go back to their routines at work, school, and may even go for some initial entertainment and hospitality as “freedom” is regained. Initial spending (of their attention, time and money) on in-person experiences is something that people are likely to prioritize more – like outdoor activities, dinners and anything more intimate to celebrate interpersonal connections.

Discretionary spending starts to trickle back in but not at the rates people were used to.

Possible Changes for Ecommerce in and After Stage 4:

Nurture your newly gained audience
and learn more about the new demographics.
Check if your personas still fit
and start stabilizing your new optimization program.
Place emphasis on human connection
and community service.
Go back to hiring support,
fulfillment, online analytics and conversion teams, since all new competitors
grew just as fast, or faster. The landscape might have changed.

Stage 5: Stability and Calm as the New Normal

In China, infections and transmissions have
greatly reduced. Makeshift emergency hospitals are closing since the regular
infrastructure there can now handle the new cases.

The consumer confidence seems to be going back
to the old standards, but with a new awareness towards self-care, general
fitness and the benefits of online retail.

Certain ecommerce brands (especially online
grocery and food delivery) have just added millions of new customers to their
loyal user base, since during and before the lockdown these companies have
proven to be reliable, and convenient in stressful times, and have delivered 10
to 20 essential articles to several new segments of buyers far sooner than that
tipping point would have been reached in normal times.

Chinese online retailer JD.com has stated that
its online grocery sales grew 215% to 15,000 tons
during a 10-day period between late January and early February.

Retail, luxury, cruises, large-scale travel (big hotels and theme parks) may keep suffering as awareness and avoidance of large crowds will be etched into people and will not be easily shaken off.

The economic packages of governments are in
full effect, with local administration offices, and accountants and lawyers
working over-time to process all requests. There will be a change in mindset,
and possibly a recession in countries, depending on how fragile the economy was before the lockdown and how the government
response affected the confidence of its businesses, investors and consumers.

Regan Leggett, Executive Director, Nielsen Global Intelligence shared in an opinion piece that combined their 2018 study and new insights stating:

With all the learnings, opinions and behavior evolving before our eyes, one factor can be safely assumed: Over the coming weeks and months, consumers will be seeking greater assurance that the products they buy are free of risk and of the highest quality when it comes to safety standards and efficacy, particularly with respect to cleaning products, antiseptics and food items. In China, we’re seeing this confidence gap being addressed in some very clever ways, which may help markets that move into quarantine like conditions. Delivery riders have been a lifeline for Chinese consumers stuck at home, delivering everything from restaurant meals to groceries, but had the potential to be carriers of the virus. To allay fears, some delivery companies have set up rigorous tests for their staff and communicated the health status and temperatures of their riders as they go about their deliveries. Many restaurants have also adopted this approach and actively communicate the hygiene steps they’ve taken as well as the temperatures of the kitchen staff to install confidence.

Furthermore, social media has been awash with encouraging and humorous videos of contactless deliveries that have been popularized by KFC & Pizza Hut. The defining feature of this mode of food delivery includes a minimum of 10-feet separation between delivery personnels and the customer.

The
good thing about the transition from Stage 5 to Stage 6 is the glimmer of hope
that life can return to normalcy. Albeit a “new normal”.

Neisen
has reported that “living the new normal” is characterised by people returning
to their regular routines and traveling to work, or to school, but with the
mindset shift of being cautious about health and hygiene.

This
doesn’t just apply to people going about their lives. It’s the same story for
businesses.

For
ecommerce, the reassurances they highlighted for their customers during the
outbreak stick on as the crisis subsides. It is integrated into their policies
and impacts the way the supply chain and associated logistics work.

We
can look to China to realise how the rest of the world will shape up in the
weeks and months that follow. With large segments of its population hit by the
infection, China has done a commendable job of controlling the spread and its
people are now returning to normal ways of living.

It will be interesting to note how these individuals, isolated for a prolonged period, will interact with their surroundings and resume habits, including the habit of relying more and more on ecommerce.

Possible Opportunities for Ecommerce at Stage 5:

Online businesses that have gained
probably 100% new users within 2-3 months will have the chance to build on the
trust and confidence they have been able to win under these special and trying
circumstances.
Brands with clear stock
descriptions, investment in logistics, clear messaging, fast sites,
well-optimized shopping carts, responsive deliveries will stand out from their
market peers and are here to stay.
Luxury and specific
travel/hospitality industries won’t bounce back for probably up to a year after
the lockdown, and only when the human craving for connection and adventure
becomes a primal need again.
Administration offices,
accountants, and lawyers will be swamped with bailout packs and lead generation
in those areas will be key. Focus should be on acquiring new customers between
the moment the bail-outs are announced and the economic packs are received to
assist businesses and people that need help.
Businesses that lock in the best
customer support specialists, usability experts, conversion experts, speed
optimizers, and developers in this boom will win market share.
Self-care (gyms, fitness
equipment, mindfulness, yoga, spiritual practices) will experience a boost,
gardening and time with family (games) will be in high demand for up to a year
after the lockdown is lifted.

Stage 6: Mindset Shift

So,
how long will the “new normal” last?

Human behavior takes time to change and studies show that takes around 66 days. Once habits are built, especially in trying times, they tend to be associated with feelings of safety, adequacy, and convenience because they afforded these feelings when things were out of control.

Jim Nail, a principal analyst at Forrester asked this week if “people will revert back once they’re able to return to their normal routines?” Adexchanger shared some interesting things from leading experts:

Obvious behavior pattern shifts – an increase in streaming, the uptick in ecommerce and a gravitation toward online food delivery – were accelerating long before the novel coronavirus even existed. Even spending more time at home, which is now being officially enforced at different levels across the country, was already on the rise in the form of “spiritual cocooning,” especially over the last four years, said Kate Muhl, an analyst at Gartner.

Brian Wieser, global president of business intelligence at GroupM shared that:

Although the data coming out of China points to a 20% drop in commerce-related activity for the months of January and February, ecommerce was actually up 3% (…) Ecommerce was reasonably widely used before, it was not universal for everything and everyone, but now where you can use it you will, and it might become more of a default way to shop for some product categories; once a new habit like that starts, it might not shift

So now that we know that some of the shifts we are seeing in daily lives across the world will become mindset shifts, and eventually behavioral legacies for the next generation, what broad patterns can online brands expect to see?

Education Will Change, Drastically

As of March 13, the OECD estimates that 421 million
children have been affected due to school closures announced or implemented in
39 countries. While in Spain it’s illegal to homeschool, we now see that this
is the way schools will have to interact with students and trust parents to
incorporate the homeschooled children or children in lockdown, back into the
educational system.

The stigma around “home schooling” will be
mitigated to a large extent, since homeschooling will (and is being) vocally
supported by the aware and the conscious as something to stick by, even if the
effects of the pandemic start to slow down. Social media is full of positive
images of parents turning their homes and gardens into “kid laboratories” and
teaching them about plants, insects and other facts of life through doing and
touching, to supplement textbooks.

Even if parents do not innovate with the more “touch and feel” way of imparting education, the reliance will be on digital devices and the internet to continue with learning. While most “study rooms” are at this point in time makeshift, as the mindset shift takes root, parents will be investing in items and supplies that support healthy home education.

In India, students who are gearing up to sit for their 10+2 exams are relying on apps and live streams to attend classes. In China, over 120 million students got access to learning material through live television broadcasts. Even my 3- and 5-year-olds now have 20 new apps installed to keep them entertained and “sharp” during the lockdown. My nieces and nephews in the Netherlands spend their days around the kitchen table with laptops and tablets open to do large homework assignments. Everything is shifting rapidly.

Uber, Lyft and Similar Services Will Continue to Lift Off

The chances are high that people will refrain
from using crowded public transportation once they are out of Stage 5 and
squarely into Stage 6.

Apps like Uber and Lyft will see an uptick in
bookings and those who previously used the metro or bus services will enter the
segment of “new customers”.

However, this comes with the assumption that any company offering personal lift services and relying on drivers and their cars will institute stringent policies around hygiene. Frequent wash downs, the use of sanitizers after touching the wheels and basic respiratory hygiene will become just as important of a factor in ensuring users feel “safe”.

Mental Health Will Be the “New Gym”:

Before the coronavirus pandemic, focusing on
physical health and going to the gym used to be mundane, regular, and even
encouraged.

Sadly, open conversations around mental health
are stigmatised and often associated with weakness. At Convert, we openly talk
about being in therapy (I am!) and during these times of crisis our “buddy
calls” and “video tea and coffee times” are heavily attended by members of the
team. They are a moment for reflection, sharing, breathing and bonding.

As the world grapples with the more imminent
threat of survival, the pressure is higher than what the existential threat of
climate change could ever achieve. According to the CDC, people with pre-existing
conditions of anxiety will need to be extremely vigilant about their mental
health since forced isolation may worsen symptoms.

However, even people who have not been
diagnosed with anxiety may experience stress and burnout. It is so much easier
to be vocal about a feeling of uneasiness when the world is in chaos. And
hopefully the mindset shift of prioritising mental well-being will translate
into proactive steps to consistently feel better, as the pandemic subsides.

The old normal of being immune to stress and anxiety might not have a place in the new normal. Apps like Equanimity, Calm, InsightTimer, Wysa and PTSD Coach have shown a better way, and more apps with discreet user policies and actionable advice from experts, tailored for different users will come into the picture.

Hygiene Will Be Better Than Discounts

At the height of the infection, online brands may have adopted new hygiene
practices and measures to ensure that consumers trust them enough to order and
become loyal users.

As the spikes in infection start to flatten out, the new considerations around what constitutes a solid logistical approach and a sustainable supply chain will continue to incorporate many learnings from the pandemic, including:

Shifting models that were
previously largely dependent on brick-and-mortar stores online. Alibaba started
delivering pharmaceutical supplies through its
eco-friendly delivery arm Cainiao. While this isn’t wildly innovative, it was
not the norm either.
Building hygiene into the design
of delivery models. Think of it like the impact of the GDPR on the hygiene of
“data”. How much touching is actually needed to deliver the products? How can
the items be packaged and handed off to delivery personnel to mitigate chances
of “breach”? How can the impact of deliveries on the environment be minimised?
The rise of deliveries on
bicycles, and using greener forms of transportation will also become as
important as hygiene. We may even see the obsession with “speed” gradually
give way to the healthy obsession with “clean”. Some online brands are already
starting to modify their return policies, suspending returns until the crisis
abates. And this may become widespread. I do not view this as detrimental. More
stringent return policies may actually encourage responsible consumption –
where being responsible is not synonymous with being stingy.
Educating consumers about handling
practices. The sole responsibility of deliveries that do not spread infection
does not lie with brands. A lot of it also rests on the shoulders of the
buyers. They may listen, but they need the right guidance to actually act on
it.

We also see that companies prepare in this
sixth stage for the future increase in interest, and we can expect to see a
strengthening of portfolios.

Jeff Katzin, Partner of Bain & Partners in New York shares the idea that a Mindset Shift will define how businesses get out of this scenario:

The winners excelled in four areas: early cost restructuring, financial discipline, aggressive commercial plays and proactive M&A. Interest rates still hover near a six-decade low. Even if central bankers hold rates low during a downturn to help stimulate their economies, we expect to see rates eventually rise. This potential change in the interest rate environment will be a new regime for most management teams, and should prompt them to take a multiyear view of their capital structure and the timing of investments. A higher cost of capital will put pressure on capital spending, so if companies want to invest in technology, growth opportunities or acquisitions, the time is now. Companies that ranked among the eventual winners, by contrast, moved deliberately to capture opportunities before the recession. While they focused intensively on cost transformation, they also looked beyond cost. Think of a recession as a sharp curve on an auto racetrack—the best place to pass competitors, but requiring more skill than straightaways. The best drivers apply the brakes just ahead of the curve (they take out excess costs), turn hard toward the apex of the curve (identify the short list of projects that will form the next business model), and accelerate hard out of the curve (spend and hire before markets have rebounded).

With the idea that the mindset shift is real, and yet good businesses can indeed get ahead to take over the competition in this stage, we move into the time of recession preparation.

Stage 7: Recession Preparations or Bounce Back?

Many have lost jobs in several industries or
haven’t received salaries or are on a notice period.

We are getting to stage seven, preparing for
recession. Part of the problem in this phase is that the only way out is with
confidence. Confidence that things are getting better and the only way to get
there is by spreading confidence to everyone involved.

What a company does to prepare for the next
few weeks will impact its outcome.

A CXL blog quotes a
super interesting study from Harvard Business Review (HBR) study
of 4,700 public companies that looked at the three years before, during, and
after recessions.

They divided company responses —their “driving” strategies—into four categories. Each has a significant effect on their performance later on. Outperforming the competition depends on what strategy you pick.

Prevention. A focus on cost cutting — every decision is viewed through a loss-minimization lens. They do more of the same with less, often lowering quality and customer satisfaction. This group has a 21% change to outperform competition by 10%.
Promotion. A heedless optimism that ignores the gravity of the situation and early warning signs. Companies in this category add features when customers desire greater value and have a 26% chance to beat the competition by 10%.
Pragmatic. A haphazard combination of prevention and promotion characteristics gives 29% change to beat competition. These companies tend to over rely on reducing the number of employees.
Progressive. These companies get the prevention-promotion balance right by evaluating every aspect of their business model — making near-term changes that reduce costs now and after demand returns (unlike layoffs). This is the obvious winner with 37% change to beat competition by 10% during and after a recession. Only 23% of progressive enterprises cut staff — whereas 56% of prevention-focused companies do—and they lay off far fewer people.

Forrester shared in their update on March 16 that the potential for a recession has increased 50% over the last week.

Based on recent events, we are revising our tech market forecast for 2020 downward. In the best case, we are now looking at US and global tech market growth slowing to around 2% in 2020. That assumes the US and other major economies have declined in the first half of 2020 but manage to recover in the second half. There is also a 50% probability that US and global tech markets will decline by 2% or more in 2020 if a full-fledged recession hits. In either scenario, computer and communications equipment spending will be weakest, with potential declines of 5% to 10%. Tech consulting and systems integration services spending will be flat in a temporary slowdown and could be down by up to 5% if firms really cut back on new tech projects. Software spending growth will slow to the 2% to 4% range in the best case and will post no growth in the worst case of a recession. Tech outsourcing and telecom services will hold up better, though contract revisions could cause spending to go down, as well. The only positive notes would be continued growth in demand for cloud infrastructure services and potential increases in spending on specialized software, communications equipment, and telecom services for remote work and education as firms encourage workers to work from home and schools move to online courses.

So investments are needed and people look at
the government for help, but each leader has to chip in.

However, we cannot prevent looking at
economies shrinking.

As of today, European countries like Spain, Italy and Germany have given estimates of an increase in the chance of a recession (and economies going into the negatives) this year of 4-5%.

Sales #executives are worst affected, because no matter how much #efforts they are going to put, the #output will be zero. If they had been an #asset to your companies, please support your employees. They are going to bounce back when things get better.

So I’ll be looking with kindness and patience
to our sales team at Convert, and I hope you do the same.

The possible recession depends on each
individual country to bounce back. Italy was already weak in Europe, and Spain
was only doing slightly better before the lockdown. Specific industries are
more affected than others. Where food, hygiene and ecommerce are growing at
unprecedented rates, we have hospitality and tourism that will take a hard hit.

Harvard Business Review recently wrote about the potential impact of this pandemic on the economy. For them, the most likely scenario is that the US will bounce back to the baseline afterwards:

Whether economies can avoid the recession or not, the path back to growth under Covid-19 will depend on a range of drivers, such as the degree to which demand will be delayed or foregone, whether the shock is truly a spike or lasts, or whether there is structural damage, among other factors. It’s reasonable to sketch three broad scenarios, which we described as V-U-L.
V-shaped: This scenario describes the “classic” real economy shock, a displacement of output, but growth eventually rebounds. In this scenario, annual growth rates could fully absorb the shock. Though it may seem optimistic amid today’s gloom, we think it is plausible.
U-shaped: This scenario is the ugly sibling of V — the shock persists, and while the initial growth path is resumed, there is some permanent loss of output. Is this plausible for Covid-19? Absolutely, but we’d want to see more evidence of the virus’ actual damage to make this the base case.
L-shaped: This scenario is the very ugly and poor relation of V and U. For this to materialize, you’d have to believe in Covid-19’s ability to do significant structural damage, i.e. breaking something on the economy’s supply side — the labor market, capital formation, or the productivity function. This is difficult to imagine even with pessimistic assumptions. At some point we will be on the other side of this epidemic.

Events and large-scale gatherings are most likely not to be cash cows in the next year(s). It may take a good while for people to feel comfortable attending them again. Families will be reluctant to let their partners go to large-scale trade shows.

Coronavirus-driven event cancellations will spur marketers to explore digital alternatives and more event-like content promotion. The loss of notable industry events like Mobile World Congress, Facebook’s F8 and the Adobe Summit can have significant costs for both conference hosts and the attendees—53% of US B2B marketers consider in-person events and trade shows an effective channel for driving conversion, according to a January 2020 survey from Demand Gen Report. Whether its client and customer meetings, dinners or informal gatherings, the lack of personal touch points this year will likely have a significant impact on sales rates and lead generation

LogisticsManagement shared new insights from ABI Research’s whitepaper “Taking Stock of COVID-19: The Short- and Long-Term Ramifications on Technology and End Markets” about the SARS-CoV-2 virus outbreak. It is said that the pandemic will force companies to radically rethink their investments to make sure the supply chains are resilient. This will lead to the adoption of disruptive measures:

Light-out factories that run
lights out are fully automated and require no human presence on-site,
Increased usage of autonomous
materials handling and goods vehicles,
A more integrated, diverse, and
coordinated supply chain,
Investment in smart cities to
support community resilience with the move to virtual workspaces and practices.

Disruptions won’t only apply to production and
the supply chain. A variety of industries will be affected by the outbreak.
Spending on travel, pets, gifts and accessories may still be cut after the
lockdown, according to this survey that found that around
30 percent of the 1,000 respondents would still reduce travel and
entertainment.

A total of 56 percent said they would cut
spending on luxury goods, while another 42 per cent would travel less,
according to the survey.

Online brands have a fairly good chance of
coming out this pandemic-induced recession wiser and more focused on what
actually matters — the consumer.

This is the takeaway for most companies.

There are opportunities to explore in the right niches and markets. If your industry was saturated and you struggled to find a differentiator, now is a great time to develop one — a unique proposition that reflects your intention to make your buyer’s journey easier, and understand their concerns enough to actually invest in approaches that address them.

Times will turn for the better but countries need to act fast and lock down.
At this time, focus on supporting your team members, help them boost their
confidence, and use the down-time to build valuable skills that will give you
people ready to jump back in the fray — with unprecedented levels of loyalty
and engagement.

I’ll leave with these wise words from Tim Stewart of TRS Digital:

Spend what you would have spent anyway, but spend it wisely, on reinforcing your relationship with your team and your customers and your brand. Use a time of crisis to do that and you’ll be positioned well in a recovery market, with less competition and more able to win market share back, more quickly. In other words, in times of crisis, smart companies use data and optimise more than ever, not less. Because the best-informed businesses come through the other end annealed in the fire and stronger than ever from what they’ve learned.

Sources:

Originally published May 28, 2020 – Updated November 10, 2022

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Authors

Dennis van der Heijden

Co-founder & CEO of Convert, passionate community builder and out-of-the-box thinker.

Editors

Carmen Apostu

In her role as Head of Content at Convert, Carmen is dedicated to delivering top-notch content that people can’t help but read through. Connect with Carmen on LinkedIn for any inquiries or requests.

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Lessons Post Lockdown for Ecommerce Brands. Part 2

Stage 4: New “Freedom” and Slow Recovery

Possible Changes for Ecommerce in and After Stage 4:

Stage 5: Stability and Calm as the New Normal

Possible Opportunities for Ecommerce at Stage 5: