Biz Tips: Pandemic-Influenced Trends Impacting eCommerce One Year Later

Biz Tips: Pandemic-Influenced Trends Impacting eCommerce One Year Later

Biz Tip:

Pandemic-Influenced Trends Impacting eCommerce One Year Later

Since the onset of the COVID-19 pandemic, businesses of all types and sizes have grappled with impacts on their supply chains and changes in consumer behavior as the world adjusted to a digital-first way of shopping. While retailers had to manage ongoing changes like in-person capacity limits and COVID-19 safety protocols throughout the year, many also had to navigate the changes that came with shifting to an online-first business model and the associated sales operations and fulfillment challenges that came with it.

Because of how rapidly our society shifted to online commerce, a number of growing pains have been felt across the manufacturing, retail, and services industries. The shift also created changes poised to impact commerce for the foreseeable future. From changes in consumer confidence to an extended Cyber Week, the pandemic has fueled several economic trends that were revealed and can be examined further in the Avalara Commerce Monitor.

COVID-19 cases impacted consumer confidence

Throughout 2020, the ebb and flow in the number of COVID-19 cases contributed to consumer confidence. When comparing the Avalara Retail Index to consumer confidence data, total retail sales mapped closely with changes in consumer confidence levels. In many instances, when cases rose nationwide, retail and services sales saw an associated drop the following month.

At the onset of the pandemic, consumer confidence levels and total retail sales tanked in April before beginning to rebound. The Avalara Retail and Services Indices found that for three of the four largest month-over-month increases in COVID-19 cases, a drop-off in total services sales occurred in the following month. For example, consumer confidence dropped significantly in August and was followed by a drop in total retail sales in September. When comparing these two indices, it was also found that as retailers and consumers prepared for the holiday season, the Avalara Retail Index saw total retail sales increase in October, while consumer confidence also remained relatively high.

Cyber Week turned into Cyber Month

Historically, the majority of holiday shopping sales take place the week following Thanksgiving, otherwise known as Cyber Week. Because of the pandemic, many retailers opted to forego in-store doorbusters and prioritize online shopping deals. As a result, retailers started ramping up for the holiday season much earlier last year as they anticipated that supply chains would be bombarded by the extraordinary demand on ecommerce systems and fulfillment services leading up to Christmas.

The evolution of Cyber Week into Cyber Months was seen across the Avalara Manufacturing Index and Retail Index. In years past, manufacturing sales often peaked in October just before the late-November Cyber Week sales. In 2020, the Avalara Manufacturing Index hit its year-to-date high in September — up 18% from the 2019 baseline, signaling an earlier-than-usual start to the holiday season.

Following suit, the Avalara Retail Index also showed a spike in total retail sales in October followed by a sharp decline in sales in November. The increase in October was likely the result of many strategies retailers employed to encourage customers to shop online, while also mitigating the impact on supply chains.

Some small online retailers rebounded quickly

According to the MetLife & U.S. Chamber of Commerce Small Business Index, in the fourth quarter of 2020, half of small businesses reported that they anticipated operating for a year or less in the current business climate before having to permanently close. However, Avalara Commerce Monitor included a case study of 10 small online retailers across the outdoor and sports equipment, household goods, and wellness industries with a predominantly online presence that illustrated a different story.

The case study data showed that the cohort of small online retailers bounced back after the initial onset of the pandemic much faster than the overall retail sector. The sample group in the study saw growth of 35% in total sales between March and June 2020 as total retail sales were declining overall. Because life shifted to primarily at-home at the onset of the pandemic, online retailers selling goods to support in-home or socially distanced activities performed better than other retail segments.

Similarly, although the Avalara Retail Index found that total retail sales dipped in November following a busier than usual October, our case study cohort saw steady growth in total sales throughout the 2020 holiday season from October through December.

As we look back over the past year, we find that a lot has changed about the way we all live, work, socialize, and buy. The pandemic has thrust ecommerce into the spotlight across the manufacturing, retail, and services industries and forever changed how consumers and businesses think about commerce. As many states lift restrictions and in-person activities begin to resume, it’s likely that many industries will begin to see an uptick for in-person sales as time passes. However, even as the pandemic subsides and we embark in what will be our new normal, it’s clear that the convenience and availability of ecommerce has captured the attention of consumers and changed how we all shop in some way for good.

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