Why Pivoting to E-Commerce Is the Only Way Forward for Retailers to Survive

by Dan Khasis

The coronavirus pandemic has hammered brick-and-mortar retailers hard. Giant retailers like TJX Companies had to shut down all their stores and their revenue fell by more than 50 percent in the first quarter. In fact, Coresight Research estimates that around 20,000 to 25,000 stores could close this year. To mitigate the rising losses and keep businesses afloat, many traditional retailers are closing their stores, investing in e-commerce, and streamlining their businesses as a greater percentage of sales are headed online.

The changing customer requirements to shop online only has also been a primary driving factor behind the shift, as many Americans no longer feel safe shopping in stores. for example, a survey by Engine found that American consumers are spending 30 percent more online to increase their safe-at-home activities and limit the risk of exposure. According to another survey by PYMNTS, almost 36 percent of U.S. consumers are now buying retail goods online.

Does Shifting to E-Commerce Benefit the Retailers?

At least a quarter of brick-and-mortar retailers launched e-commerce stores since the coronavirus hit. The shift that would have taken years is now happening in just a matter of a few months or even in a few hours, and has become a savior for many retailers. The following stats are proof:

  • E-commerce associated with selected brick-and-mortar retailers saw a 52 percent average increase in their weekly growth rate and an 8.8 percent increase in the conversion rates compared to a year ago.
  • 26 percent of the respondents in a survey said that they don’t think they would have survived the pandemic without expanding to e-commerce.
  • Within seven days (between March 23 and 30), e-commerce marketplaces witnessed a 14 percent increase in volume.
  • The online growth has helped the world’s largest fashion retailer Inditex SA mitigate a 44 percent drop in first-quarter sales.
  • Online sales grew by almost 50 percent at the peak of the pandemic.
  • Target has witnessed a 141 percent increase in digital sales in the first quarter of this year.
  • May generated $82.5 billion in online spend, up 77.8 percent YoY.
  • E-commerce has gained $52 billion in extra online spend since the pandemic began.

How Are Retailers Adapting Their E-Commerce Strategies?

Retailers of all sizes moving to e-commerce are making innovative technological, marketing and operational changes to attract and provide a seamless shopping experience to their potential customers. For example, a brick-and-mortar fashion and apparel retailer named Editorial Boutique pivoted to launch an e-commerce store in just 48 hours. It linked its site with the Instagram shopping feature where customers can schedule a free virtual shopping session with their team of stylists.

Similarly, Majestic Meat Co, a premium meat distributor for restaurants in Salt Lake City, which lost 85 percent of its business overnight due to the pandemic, pivoted to add an online ordering system on its website and announced the changes on social media. The word spread faster and turned the trajectory of the business.

Wendy’s has also built out its website and app to create a more robust ordering system that can be updated in real time, while Target is expanding its curbside grocery business to meet rising consumer demands. Furthermore, Zara’s parent company Inditex SA, plans to invest a whopping $3 billion to boost its e-commerce operations.

Many retailers are even investing in route optimization apps to plan well-optimized routes for their drivers to make deliveries on time and keep up with the rising customer demand.

Can the Shift to E-Commerce Help Retailers Sustain in the Long Run?

Reports say the average consumer doesn’t expect the pandemic to end until February next year, meaning that retailers can expect at least a couple of months of increased online orders. That doesn’t mean the growth or demand to order online will fade after the COVID-19 pandemic is over. According to a report by Sense360, 62 percent of shoppers who ordered at least one new product category for home delivery plan to do so again after the pandemic has ended. This indicates that consumers are going through a behavior change they expect to sustain.

Long story short, when life returns to the new normal, there will be new business as usual and adapting an omnichannel strategy is the way forward for retailers to stay futureproof. By having a strong integrated presence both offline and across online shops, retailers would be better placed to survive declining sales in any channel.

Dan Khasis is a shipping & logistics expert and the CEO and Founder of Route4Me, a global route optimization company.

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