No-touch purchasing and social distancing are becoming our new realities during the period of quarantine. Businesses and consumers have no other choice but adapt to toughening measures taken by governments to suppress the spread of coronavirus.
The retail industry of today mainly depends on changing consumer demands for specific fast-moving consumer goods (FMCG) categories, including exponential sales spikes in cough medicines, and missing health-related products, cleaning and disinfecting goods. However, there are some categories of products (e.g., bread machines and weights) according to Stackline research that have experienced surprising upticks in sales in March.
Another factor that influences the retail industry is the stockpiling of basic needs products by panicking consumers. With stricter rules for self-isolation, frenzied lines at large supermarkets have reduced somewhat as shoppers move online. The contagious nature of the virus pushes many people in those groups at risk towards online grocery shopping. In the US alone, March 2020 sales grew up by 233% compared to August 2019.
Another survey also reports that about 31% of Italians and 50% of Chinese started buying more products online rather than in-store due to the quarantine.
As people are forced to change their priorities and buying habits, retailers of different sectors learn how to adjust their online stores to increased traffic spikes, logistics difficulties, while grappling with other multiple challenges.
5 Ways Digital Commerce Business Strategy can Cope with Challenges during the Pandemic
Challenge #1: Skyrocketing Public Demand in Delivery and Shipping
Retailers who have to switch rapidly to doing business completely online are under major strain these days. The thing is that even those eCommerce platforms or physical stores with a strong online presence can no longer guarantee swift delivery and shipping. Even Amazon announced restrictions on shipments of specific types of products to allow it to restock and refocus on the delivery of the most essential items during the COVID-19 outbreak.
Panic and stockpiling aren’t the only factors that retailers and eCommerce vendors should consider. There’s also:
- Shortage of human resources for processing the increased number of orders.
- Lack of adequate delivery workforce, which creates a waiting line for delivery slots. In the UK, for example, large chains of supermarkets such as Tesco, Waitrose, and Sainsbury’s have limited the availability of delivery slots and prioritized them for elderly people.
- Limited warehouse capacity of large eCommerce platforms that provide fulfillment services to other smaller e-tailers. If you use the fulfillment center of platforms like Amazon, you may also feel high and dry, having no other choice but to look for other delivery options for your non-prioritized products.
- Stringent shelter-in-place and stay-at-home rules make retailers halt their online orders. L Brands, a parent company of famous fashion brand Victoria’s Secrets, had to close its distribution centers and factories, unable to fulfill online orders properly.
- Customer satisfaction and loyalty rates will most likely drop if your digital transformation eCommerce strategy fails to quickly adapt to new difficulties.
Actions to take
- Form a crisis response team responsible for creating digital campaigns focused on communicating to your consumers your approach to delivery and shipment optimization.
- Create a separate digital channel for informing consumers about upcoming free delivery slots or shipment changes.
- Always keep your consumers updated and explain what measures you’re taking to meet their demand.
- Enable the pick-up option for consumers in your distribution centers or checkout-free stores with specific hours to visit your brick-and-mortar stores and thus, physically interact with fewer buyers.
- Be mindful of those age groups that are at the highest risk of catching the virus. Provide prioritized slots to them, and explain to your frustrated loyal customers your approach to slots allocation. The UK supermarkets, for example, leverage government data to identify what orders are made by elderly people to provide them with free slots first.
- Cooperate with delivery services of restaurants and cafe chains and backup facilities to expand your warehouse. Freshippo, Chinese grocery stores, hired couriers of small closed shops, restaurants, catering services and cafes and laid-off employees of small businesses to extend their delivery capacity. And when delivery services were no longer permitted to access specific infected communities, the Alibaba chain and JD.com used a last-mile delivery approach enabled by opening more deposit boxes for supplies and adding improved application functionality.
- Driverless deliveries. Smart cars, drones, and robots are simply on point these days. The Chinese were the first to test their capabilities, delivering goods to hospitals and supplies to gated parts of Wuhan city.
Challenge #2: Safety Concerns of Both Employees and Customers
At the front lines of keeping grocery stores operating, their employees daily run the risk of getting infected. According to the Washington Post, thousands of grocery workers caught coronavirus and 41 of them already died in the US. Retailers of large brick-and-mortar stores and owners of e-stores with huge fulfillment centers already take special safety measures.
Actions to take
- Provide your staff with disinfectants, disposable masks and gloves, check their health daily and inform your consumers how seriously you treat the whole situation. Target online store, for example, updated its main page and added a detailed explanation of what visitors should expect at their physical stores.
- Safeguard your employees minimizing their contact with customers and other employees leveraging robots’ and chatbots’ help. Broad Branch Market uses self-driving robots to deliver orders to customers while Walmart employs robots to restock shelves, clean the stores, sort out boxes of items and bring them to a specific department.
- Use all your digital channels to reassure customers that your employees are protected. Describe digital transformation services that your distribution centers and other facilities are changing to ensure maximum safety and cleanness.
Challenge #3: Supply Chain and Inventory Issues
With closures of airspace and borders globally and Chinese manufacturing industry grinding to a halt for over two months, supply chains are on the brink of major disruption today!
For many fashion, car, technology and medical brands, China has always been a cheaper alternative for manufacturing their goods. This reality along with the increased demand for specific goods are the reasons why 75% of companies across different industries already report interruptions in their supply chains.
Actions to take
- Find backup supply chain sources to cover demand. Partner with local manufacturers, farmers, distribution and delivery centers, etc. Case in point: one of the creative ways to replenish your grocery supplies is to contact restaurants and cafes that are currently struggling to remain afloat by selling out their stock of groceries.
- Implement tools for better supply chain and inventory visibility that help you to rapidly react to the changing conditions during the crisis.
- Introduce analytics and monitoring systems to predict possible changes and how they influence your suppliers’ and subcontractors’ performance.
McKinsey has recently defined a list of urgent actions that retailers and e-tailers should take to adapt their supply chains to the new market demand.
Challenge #4: Poor user experience and unprecedented increase in traffic
The capacity of many smaller e-stores can’t match the number of visitors and orders they’re trying to place per an hour. The UK’s online shopping service Ocado had to shut down their website for some time after the amount of traffic on their website looked like a DoS attack. This was a necessary measure, which allowed implementation of both technical and operational improvements on their website.
Actions to take
- Optimize your website load time (load balancing, lazy loading, etc.), implement backup and disaster recovery solutions, manage traffic spikes with environment optimizations, auto scaling, or up-/downgrades.
- Rethink your approach to delivery slots allocation by segmenting your customer base.
- Reduce your assortment focusing on those categories of products that will be the most needed during the pandemic.
- Limit the number of items one person can order from your website and the quantity of a single item if it’s in high demand these days.
- Ensure that your strategy during the crisis takes into account the needs of B2B customers and is capable of handling all difficulties with fulfillment of their orders.
- Provide your clients with up-to-date information about the available assortment, out-of-stock items, approximate dates for restocking.
- Allow your customers to track the status of their delivery.
- Integrate chatbot into your website as an alternative channel for customers to use to address their issues. It will also allow your support team to redistribute their time and effort to solving the most critical issues.
These are hard times not only for the entire eCommerce and retail industry, but also for your stressed consumers and employees. Therefore, your primary actions should be directed to mitigating safety risks, ensuring the continuity of your business and updating digital transformation strategy.
Depending on your current e-store and delivery capacity, build an effective COVID-19 response strategy leveraging the latest tech advancements and experience of those countries that are successfully managing the crisis.
If you are considering digital transformation for retail and eCommerce contact our team for digital transformation consulting.