Assessing COVID-19 Impact on Shopping Behavior

COVID-19, also known as the coronavirus, has had and continues to have drastic effects on online businesses. As retailers were planning their goals for 2020 at the beginning of the year, the coronavirus pandemic was an unforeseen turning point for most. It has had both positive and negative side effects, and different people are dealing with this difficult situation differently.

On the one hand, consumers being forced to stay out of brick-and-mortar stores could have a positive impact on online retailers. Online sales have gone up by more than half compared with the amount of sales within the same amount of time a year ago. Also, businesses that sell essentials pertinent to the COVID-19 crisis, such as health products and medical supplies, are increasing. Even though most stores were forced to temporarily close, "essential" businesses such as grocery stores or stores than sell an array of essential items, such as Dollar Tree, remain open. At the beginning of the crisis, these businesses' sales were booming. People were stocking up on items and panic buying. In stressful times, people may be buying a lot as "retail therapy." Also, there is a sense of "crowd mentality" with stocking up. For example, if consumers see shelves clearing out or they see other people stocking up, they would be feel more incentivized to overbuy out of fear of being left behind without an ample supply of resources, especially when the end of the pandemic is unknown.

On the other hand, many retailers, even online retailers, are feeling negative impacts due to the virus outbreak. Since the general public is not planning on going to big events or traveling in the near future, sales sports equipment stores, travel sites, and hotel booking sites are decreasing by 28 percent, 20 percent and 8 percent respectively. Also, the CDC-recommended precautions plus the high demand are causing delivery delays for many online orders, which can lead to dissatisfied customers. The numbers are shocking. 86 percent of shoppers expect extended return windows if the delivery is affected by COVID-19 and 82 percent indicate that they expect the business to take full responsibility for making sure products are delivered punctually and as expected. For many consumers, it is vital for retailers to, at the very least, provide proactive and transparent communication during these times. In fact, over three quarters of shoppers have indicated that if their delivery is impacted by COVID-19 and they did not receive proactive and transparent communication for the retailer, it will negatively impact their perception of that brand. To that end, 85 percent of shoppers would agree that if a delivery is delayed or canceled because of the coronavirus, the retailer demonstrates proactive and transparent communication, that retailer's brand perception will not be negatively impacted.

This pandemic is also drastically affecting people's online shopping behavior. Different age groups seem to be handling the situation differently. People from the Millennial and Gen Z eras are mostly trying to cut back on their spending, stock up on items and spend less money on experiences. However, only about a quarter of Baby Boomers and about a third of Gen X indicated that they were letting current events affect their purchases. There are also differences in the online shopping behaviors between men and women. Only about a quarter of women said that the pandemic is affecting how much they are spending on products, compared to about a third of men stating this. Also, only about 28 percent of women had said that the pandemic is affecting hoe much they spend on experiences, such as traveling, dining and entertainment, compared to about 38 percent of men reporting this. Furthermore, women are more likely to be concerned about the effects of COVId-19 while men are more frequently shopping online or taking advantage of BOPIS (buy online, pick-up in store) options.

How can online retailers positively handle the unusual situation that is affecting so many aspects of their business? First and foremost, it is very important to be both sensitive and transparent towards customers. This is a very stressful and serious situation for a lot of people, and many businesses are insensitively making light of the situation with puns or promo codes that relate to the pandemic. Secondly, how often do you get e-mails from a business you bought from one time years ago in regards to how that business is dealing with the pandemic? Many people find it annoying and a turn-off, so be sure not to over-communicate during this time. Lastly, make sure you keep advertising. It might make sense to cut costs when sales are decreasing, but the costs should not be cut in your advertising. With people at home, less-engaged and bored, this is a good time to recapture your lapsed customers and engage your higher-value customers. Perhaps consider display advertising, such as apps. App downloads have statistically soared since the beginning of the pandemic. If you really need to cut corners, consider social ads. About 90 percent of Instagram users follow brands on social media, and that kind of advertising would be free! The coronavirus outbreak may be taking business in unexpected turns, but there are definitely ways to keep things running during the duration of the social distancing time period with an unknown end date.