Article

Aliya Zaidi
Aliya Zaidi 10 March 2020
Categories B2B, B2C, Innovation & Trends

How Is Coronavirus Affecting Ecommerce and Digital Marketing?

The coronavirus outbreak is highlighting the realities of changing consumer behaviour in the digital age. In this post, we look at the potential impact on ecommerce and the digital marketing industry.

1. The impact of fear.

Looking at the broad economic picture, coronavirus is having a massive impact on the stock market. An event such as a global health scare, creates widespread economic uncertainty which is seen through a fall in the stock market. London's FTSE100 share index has fallen dramatically, and similar declines were seen in other European markets.

There will also be other declines due to operational disruptions and an impact on supply chains. Given the origins of the virus in China, this means that fewer goods that are made in China will make it to market. According to Forbes, even the large global players are struggling. Apple isn't able to bring as many iPhones to market, and Tesla has put its business in China on hold.

2. Uncertainty around ad spend. 

The  reduction in the availability of goods may lead to senior management holding back their advertising dollars. If fewer goods make it to market, companies will see less bang for their buck from advertising. Given the potential for wasted ad dollars, naturally, ad executives will pull back from investing in ads.  

Analysts are making the assumption that the coronavirus will be resolved by around June, which why they have forecasted ad spend to be down in the first half of the year, but have not changed estimates for the second half of 2020. Needham analysts have lowered their estimates for Facebook's ads business in the first half of the year.  The New York Times has also reported a slowdown in its advertising business due to uncertainty around coronavirus. 

 3. Events being cancelled or postponed. 

Many marketing events have already started to be cancelled or postponed, and if the situation gets more severe, there could be further withdrawal from events. Advertising Week Europe, SXSW and Mobile World Congress have already been cancelled, as has Adobe Summit (US). And last week, Facebook announced its F8 developer conference was no longer taking place.

In the case of Adobe Summit, the event is taking place as an online event. One impact of the virus may be a resulting shift to webinars and other events being hosted online, as companies and institutions avoid large-scale gatherings. There is also likely to be more emphasis on syndication of content through digital channels and online lead generation, with advertisers and vendors still needing to get out their message and maintain sales pipeline.   

In response to growing uncertainty around events, business messaging app, Guild has set up the group CREO or Coronavirus Response for Event Organisers, a peer support group for anyone due to run an event within the next 6 months. 

4. C2C reselling with prices hikes as a result of panic buying. 

One consequence of any disaster is panic buying. If you've been grocery shopping over the weekend, you may have noticed a lack of hand wash, hand sanitiser or toilet roll on the supermarket shelves, as consumers start to stock up and invest in bulk buying. 

Research from Liberty Marketing indicates that retailers' own brand hand sanitiser are being sold for more than 5000% RRP online, on eBay, as a result of the coronavirus outbreak. 

Coronavirus_and_Hand_Sanitisers___Flourish-(1).png

5. A shift to ecommerce.

As a result of panic buying, the supermarkets in particular may become increasingly crowded. In addition, as shoppers avoided retail outlets, there may be a shift to online shopping to avoid the risk of catching infection. In China, JD.com, has seen an upsurge in the sales of household staples such as rice and flour, with sales quadrupling compared to the same time frame in 2019.  

Panic buying is putting additional pressure on the food delivery network. However, it is difficult to predict what items consumers will stock up on if the spread of the virus continues.

Potentially, the opportunity for retailers lies in acquiring sales from new customers who wouldn't normally shop online. For brands, it's essential to put the concerns of customers first, and keep an eye on how consumer behaviour changes in response to the crisis.   

6. A dramatic change in the way people work

This is the most significant health-related crisis that has happened in a truly digital age, and one consequence could be an increase in remote working. In Seattle's tech hub, many workers at Amazon and Microsoft have started working from home. In China, Microsoft Teams has seen a 500% increase in Microsoft Teams meetings, calling, and conferencing, as well as a 200% increase in the use of Teams on mobile.

As an example, Zoom Video Communications has seen its stock price soar, and has posted better than expected fourth quarter results. 

In summary

It is important to keep in mind while the shift in consumer behaviour is a short-term trend, the changes may have a long-term and lasting impact. As ecommerce represents a bigger share of overall retail sales now compared to other periods, the long-term impact on digital is likely to be greater during this crisis than compared to other health scares.

For brands, the key to mitigating the impact of coronavirus lies in putting the customer at the heart of marketing and keeping an eye on changing customer behaviour, particularly in response to changing ecommerce trends. 

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