In the past, we gave reasons as to why you should start an online business in a down economy and why right now is the time to put yourself in position to take advantage of the inevitable Revenge Spending phenomena. For this post we give concrete data backing up our previous blogs on why you should start an online business now, or, if you are already an online seller, why you need to put a plan in place for Revenge Spending.
Despite negative economic conditions, there has been significant uptick in eCommerce sales. This is to be expected as brick-and-mortar stores close down due to the novel coronavirus. However, the numbers have been surprisingly staggering in eComm’s favor as sales have not been strictly from essential products. This is particularly surprising since 22 million people have filed for unemployment in the United States and one would expect that non-essential products would be at the bottom of the list when it comes to the list of purchases. The increase in online purchases suggest a multitude of things, but, most importantly, that consumers have more hope in a recovery sooner than later. And while they are stuck at home, comfort during self-quarantine is of the utmost importance.
We’ve gathered data from our own surveys over the past couple of weeks as well as data from other sources. We are not suggesting that our current state will predict the future, but what we believe is that things will inevitably change and there will be a new norm.
eCommerce has been fairing much better than expected as consumers are turning to online shopping. There’s data supporting this. Since the first week of March, revenue is up ~96% for online sellers.
While we found a mixed bag of what categories are selling well and what categories are not, we found that 67% of sellers on Amazon, eBay, Etsy, and Shopify are either up or breaking even. Unsurprisingly, books, children’s clothing, and computer equipment are up, but items such as horse racing items are also surprisingly up. Custom printed t-shirt sales have expectedly decreased.
Here are some quotes from our respondents:
“I’ve spent a lot of time listing” – from a few respondents, alluding to increase of sales, thus, having to list new items or re-list previous items that have already sold
“I am up…up…up!” – Lee Rozinski, selling books on eBay
“I am down and have yet to have a sale since November” – Kaitlyn Franzen, selling home décor and baby category on Etsy (although, she has reported that she has made some sales since responding to our post)
“Mine are WAY down” – McKenna Wentworth, selling custom printed t-shirts on Shopify and Etsy
Since we already knew there was a correlation between the current situation and what categories are selling well, we were also hoping to find if there were particular marketplaces where items sold the best or didn't have much luck. We did not find a trend for any marketplace.
As sales increase online with an indefinite end to the madness, existing online sellers are scrambling to find the best strategy to put in place to continue to increase sales while brick-and-mortar only stores seem to be either refusing to sell online or struggling to put a plan in place to get online and generate sales. Klaviyo, an online marketing platform, is reporting that 42% of their respondents believe that brick-and-mortar stores will remain shut down until end of May.
With at least 1-1.5 months in self-quarantine, people are finding ways to adapt and be more comfortable at home. This is where we have seen a new term develop, "new essentials".
As people attempt to adapt to a new norm, essentials such as food and beverages are remaining stable, but “new essentials”, which are products that are important to a particular consumer to feel comfort at home, have increased significantly since the beginning of the year. While not what Maslow had in mind in the “Physiological Needs” section of the pyramid, these are certainly unprecedented times that calls for a new norm. Some are cautious, but people are still buying things to help them feel more comfortable in quarantine. Some people are buying more beauty products, gardening tools, and gym apparel to help them feel more comforted or help them work out at home.
No doubt, self-isolation will forever change how we all shop with focus on “new essentials”. We foresee this continuing even after a cure or vaccine is developed for COVID-19.
As we mentioned in our latest article here, brands must plan now to anticipate the inevitable lifting of shelter-in-place. Klaviyo goes into greater detail here on what existing eCommerce brands and brick-and-mortar only stores must do to put themselves in position to take advantage once the ban is lifted.
Now, more than ever, we are witnessing a once-in-a-lifetime opportunity for eCommerce brands to put their foot on the gas as consumers are being forced to learn to purchase online. The norm pre-COVID will not be the norm post-COVID. We are not suggesting physical retail will go away anytime soon, but we believe that the foothold they have had in terms of market share will continue to decrease and decrease even more rapidly as consumers become more comfortable with buying online.