The world of commerce is constantly changing, and this year may have sparked one of the biggest changes in commerce the world has ever seen. The economy took a massive hit around the world during the first and second quarters of the year due to the COVID-19 pandemic.
Millions of people lost their jobs, which resulted in a huge decline of discretionary spending, and millions of shoppers who would have been flooding the streets of malls around the world opted to stay home.
Many businesses, who traditionally did business in person, scrambled to find ways to keep their doors open. When physical locations had to be closed down for safety, consumers were left with online shopping as their only way to buy what they needed.
Throughout the last few months, e-commerce has exploded and has shown no signs of slowing down. Online companies have experienced huge successes during the pandemic, but there are challenges that each company continues to face today, and important steps the companies should take to ensure that their business continues to thrive.
New Demand for E-Commerce
Even now, six months into the coronavirus pandemic, less and less people are shopping in person, and the demand for e-commerce continues to increase. Stores have taken proper precautions and experts argue that it is now safe to shop in stores as long as protocols are followed, so why does e-commerce continue to grow?
We believe that as more and more people discover just how easy and convenient it is to shop online, the industry will continue to steadily grow even as the pandemic ends. E-commerce has made significant improvements over the years, and many shoppers were not aware of just how easy it is to online shop.
Once a person transitions over to online shopping, many hardly ever return to crowded malls or tiny stores to make their purchases.
The growth of the e-commerce industry has not been without its challenges. For one, many online companies are now being faced with the need to expand their distribution.
Growth is almost always positive, but when companies aren’t prepared for the amount of growth they’ll face, they end up selling out of products and leaving customers to shop elsewhere. In Q2, from April to June, for example, consumers spent $200.72 billion dollars with online US retailers.
That number is 44% higher than it was during Q2 of last year; this is evidence that online retailers must anticipate unprecedented sales and quickly expand their distribution centers. This might mean that companies need to adjust their capital budgets and make new sales forecasts to keep up with the growth they could have as the year progresses.
When purchasing a new product, especially technology-related products that are being used to work from home, many people need their products extremely quickly. Companies are now spending a lot of time and money to develop ways to effectively deliver products without huge wait times.
Amazon, for example, has spent billions of dollars developing its own network of delivery drivers so it doesn’t have to go through 3rd parties like FedEx, UPS, or USPS.
While this won’t be the possible option for smaller companies, each e-commerce company must consider whether it’s in their best interest to work with Amazon or if they should continue to use their own website for sales and then ship and deliver through a shipping company.
Supply Chain Challenges
The coronavirus did a huge number on international supply chains, and online retailers are forced to examine different ways to fulfill the demand of the market. The tech industry has had particularly high demand due to the shift of many workers from office to home.
On the flip side, the tech industry has faced particularly difficult shortages and other problems with their supply chain. To understand these shortages, you must understand just how much the demand grew for certain tech products – compared to last year, Q2 saw needs for notebook computers increase by 45%, tablets increase by 37%, monitors increase by 87%, printers increase by 54%, and keyboards and mice increase by 62%.
These huge, unanticipated increases in demand were challenged by the fact that mega-factories in China, like Foxconn, were forced to shut down for a period of time. Due to the huge amount of shutdowns in China, some retailers are searching for new places to manufacture their goods, and it would be smart to consider finding various countries that could manufacture goods in the case the one country faces future shutdowns.
As the world continues to evolve through the pandemic, e-commerce businesses should anticipate more and more growth to their sector. Consumers are finding out just how easy and convenient shopping from home is, and it will only continue to get better.
Companies need to make sure they have solid supply chains and reliable manufacturers; they should look for multiple manufacturers to import products from in case shutdowns continue in different parts of the world.
There is no doubt about it: e-commerce is the way technology shopping will continue into the future.