The abrupt closure of brick-and-mortar retail stores as a result of the COVID crisis is having the expected effect of driving consumers to e-commerce—and in particular large marketplaces like Amazon—to fulfill their shopping needs.
A new report from IPG Mediabrands Canada’s Reprise Digital says that e-tail is poised to become a “COVID battleground” for brands, with the fight for awareness and purchase intent expected to be particularly intense on online marketplaces like Amazon.
“Demand isn’t going away, it’s just shifting,” says Kevin Bishop, Reprise’s vice-president of digital performance. “People still need certain products and services, and the way they’re going to get them is through e-retail. If you as a business have been hesitant [to pursue an e-tail strategy], now is the time to stake your claim, because that’s where demand is shifting.”
Some categories continue to experience massive consumer demand during the current crisis, with the video game category seeing purchase levels similar to Black Friday, and the grocery and baking categories surpassing their typical Christmas highs.
And after plunging in the immediate wake of the COVID crisis, so-called “shocked” categories including jewellery, apparel and cosmetics are slowly coming back.
Bishop predicts there will be an “attention boom” on digital channels during the crisis, and says that shopping behaviours acquired at this time will persist long after life returns to normal.
The importance of Amazon
Consumers are seeking stability during a stressful time, says Reprise, and they’re placing trust in large online retailers like Amazon because they believe their scale will ensure they receive items in a timely manner.
“Amazon essentially sets the standard for what people expect when it comes to e-commerce,” says Bishop. “But it’s not necessarily just for purchase—it also performs a very important role when it comes to research and people trying to vet their decisions.
“A prominent presence on Amazon is important,” he adds. “It’s just one tool in the toolbox, but it’s a prominent tool. For a lot of brands that don’t have their own direct-to-consumer apparatus, it’s a big factor in making sure they control the space in which they play.”
While e-commerce customers are more focused on key items like grocery, Reprise says that non-essential brands can become part of those orders by directing the traffic generated by online activity such as Google Ads and social campaigns to those platforms.
Lessons from SARS
While e-commerce was not as fully developed as it is now, Reprise says that the early 2000s SARS outbreak provides some lessons for brands on how to counter the negative impact of the COVID crisis.
Online and offline integration is key, says Reprise. In China, SARS led to a significant increase in online-to-offline platforms—such as click-and-collect—that were better able to supply increased customer demand. Reprise expects an uptick in similar solutions to appear in the wake of COVID, pointing to Estée Lauder ramping up activity around its online consultation service and in-store booking function.
Reprise says that brands should also supplement short-term plan with a long-term strategy. Alibaba, for example, introduced the online shopping site Taobao during SARS, which “significantly changed” the e-commerce giant (sales on Taobao exceeded three trillion yuan in 2019).
Reprise says that brands also need to prepare for a post-pandemic surge, saying they should have promotions ready to address increased demand. “Successfully navigating a social and economic crisis like this can be a springboard for a lucrative periods that follow,” says Reprise.
Don’t Go Dark
Brands have a natural inclination to pull back on advertising spend whenever a major crisis arises, but Bishop cautions that consumers are continuing to spend or planning their future spending. “If [brands] move out of the space, that’s going to allow their competitors to gobble up business demand,” he says.
This is particularly true of challenger brands, says Reprise. They are evaluating category and competitor keywords, and moving quickly when they find a gap that they can fill efficiently, doubling and even tripling marketing budgets. This is giving them a foothold as stuck-at-home customers are discovering and purchasing these brands.
“There’s going to be a lot more consumer trial,” says Bishop. “People are going to be forced to try things, and they’re going to make a decision on what works for them. Canadians will be open to new possibilities.”
Move spend to digital
Generating foot traffic is less important at the moment, which means that brands should direct spend to where customers are gathering, evaluating, and searching, says the Reprise study.
It’s imperative for brands to maintain their branded SEM to prevent competitors from owning their sponsored ad placements. “It is equally important to maintain a strong presence in category terms, to keep a strong defence against feisty, nimble challengers.”
But while saying that increasing spend is a “critical” tactic, Reprise says that brands can also attain gains by redeploying sales efforts to new channels in both the business-to-consumer and business-to-business segments.
This proved to be a key tactic in China, says Reprise, noting that when the cosmetics company Lin Quingxuan was forced to close 40% of its retail stores, it redeployed its more than 100 beauty advisors to become online influencers who used digital tools like WeChat to engage consumers digitally. As a result, its sales in Wuhan alone were up 200% over the prior year’s sales.