E-commerce

How COVID-19 has impacted online retail sales so far

In these crazy times, we are all concerned about the health of our families and staff, especially those at high risk, such as frail parents and grandparents.

I have a friend with Type 1 diabetes, who has an estimated 7 per cent mortality rate if infected. We need to keep ourselves healthy for people like that.

Of course, we are also worried about the future of our businesses, our own jobs and the jobs of the people we employ.

Retail in general almost certainly has a difficult few months ahead (toilet paper sellers aside), but how about online retail?

In the days of quarantine and self isolation, is this an opportunity for online retailers? And if so, how do we forecast in such an unprecedented period?

I spoke to 15 Australian online retailers across a range of industries – including fashion, beauty, exercise equipment, baby, toys and more – and sizes. The smallest turns over $5 million a year; the largest well over $100 million. All data was provided on condition of anonymity. 

The question I asked each of them was this:

What was the change in revenue in the week from Tuesday, March 10 to Monday, March 16, compared to a month ago, Tuesday, February 11 to Monday, February 17.

Here is the result:

The average is -1 per cent revenue month on month, but as always, there’s a lot of detail lost in averages.

All this data was provided with strict anonymity, and the range of categories was too wide to be able to provide any category-level analysis. But still, here are some insights:

• A few of the winners are beneficiaries of stockpiling. My informal survey didn’t include any toilet paper suppliers, but I did speak to a few retailers offering essential/desirable supplies that would be handy in the event of a quarantine. 
• Some of the biggest losers are companies that sell highly social products, or products that are generally used in public. 
• There are a few anomalies, which I don’t have a good explanation for. For example, my survey included a few fashion companies, and some reported quite negative results, and others quite positive. 

Here are some things to consider when forecasting:

• At the moment, many people are spending money to stockpile essential items, which may temporarily divert funds from more discretionary purchases. 
• Even if you can predict sales, you need to be working closely with your suppliers and logistics providers. They are facing their own set of challenges and may not be able to meet their normal order volumes or delivery deadlines. 
• Warehouse staff can’t work from home, so you need to consider how you will respond if there’s an infection at your warehouse. I’m hearing rumours that warehouse staff are calling in sick already, and warehouses are understaffed. 
• Will Australia’s internet infrastructure be able to cope with the massive influx of workers – and possibly soon students – working from home? This remains to be seen. 
• Discounting seems to be all but inevitable. Even if you are one of the winners, it’s likely your bricks-and-mortar counterparts aren’t so lucky, and you may need to follow their lead. 

The biggest question to ask yourself is what is the opportunity for your business? Any change – even a bad one – presents an opportunity. 

Stay safe!