FROM BRICKS TO CLICKS; THE CHANGE IN CONSUMER BEHAVIOUR
By: Emmanuel Ohanwe
Tags: Startup, Ecommerce, Consumer, Entrepreneurship, Covid 19

COVID shatters the bedrock of economies

Billion-dollar social networking platform — Facebook — has partnered with Canadian eCommerce company — Shopify — to set up Facebook shops. Businesses have previously listed products on Facebook but Facebook shops would enable the upload of their catalog which becomes visible on all Facebook apps including Instagram. Shopify, within 2 days of this announcement had a 2% rise in their stock price. For investors and stock traders, it is a good time to be bullish for all that they care. Investments are gradually shifting to online shopping and one might be curious to know what the future holds in e-trading. For most entrepreneurs, this is the time to rethink their models and embrace the changing times. No one actually wants to take the route of Kodak, Blockbuster, or Nokia.

The obvious and undeniable transition from bricks to clicks is sharpening the senses of entrepreneurs, influencing their business models, their value offerings, customer acquisition techniques, and retention strategies. To remain ahead of trends, businesses have sought to understand the dynamics of eCommerce, its driver, and its future. Technology may have not been embraced in the past but it has now met humans in a helpless state where we could speak of no better choice than ‘leverage’.

Technology is increasingly changing the way we live, associate, and trade. Online shopping has never known limits and boundaries after the advent of the internet, as businesses begin to mortgage their physical properties for the purchase of digital assets, opening up opportunities for Fintech startups, logistics, and freight firms. Every business owner now seeks to own and democratize their delivery system since a huge part of their revenue stream can no longer be sustainable by outsourcing. Even though this is quite a considerable decision to make, the cost of setting up a logistics system as an appendage is still out of reach for most startups, and this provides a huge opportunity for entrepreneurs looking to pivot or claim their part of the market share that the new-normal have provided in the online space. So businesses can now spring up with a value proposition of fast, safe, and accurate delivery with no casualty to worry about. It is an interesting time in our modern history. It is not gainsaid that delivery systems aren’t new in the business world, but the advent of this pandemic has opened up a whole new experience, opportunities, and challenges to deal with, we must therefore take an informed, updated, and calculated approach.

Prior to the Covid 19 pandemic, eCommerce was largely appreciated by the knowledgeable few who cut off the unnecessary offline shopping time for some clicks that get their orders to their doorsteps while focusing on more productive tasks. So many businesses went online even if it meant launching on a borrowed or shared space while maintaining their physical stores. The closest thing to an offline purchase was the BIPOS (buy-online-pick-up-in-store) model. Amazon gave room for people to own online shops without owning manufacturing equipment or warehouse, and new businesses sprang up that were not in existence some decades ago. Although online purchase has maintained a humble steady increase before this decade, it has leapfrogged with no visible pattern nor forecast in this decade, this is primarily because of the pandemic coronavirus; and as business owners, it is our duty to constantly update our knowledge on customers’ needs, behaviors, perception, and even fantasies.

Consumers are quick to make changes to their spending behavior when they perceive slight alterations to their custom repetitive activities. Factors like crises, economic policies, migration, technology can affect how humans spend, when they spend, what they spend on and who they entrust their purchase. It is in human nature to be in control of situations at all costs, feel safe and smart, and this happens with little or no customer or product education. To think that when the Covid 19 broke out, no one needed some tutorial courses to stock up their kitchens, get personal protecting kits, shop safely online, learn online, etc. people never wanted to miss out on the idea of making swift smart choices in critical conditions. This was practically influenced by the following customer behavioral pattern according to NIELSEN INVESTIGATION

Proactive health-minded buying (purchasing preventative health and wellness products). Reactive health management (purchasing protective gear like masks and hand sanitizers). Pantry preparation (stockpiling groceries and household essentials). Quarantine prep (experiencing shortages in stores, making fewer store visits). Restricted living (making much fewer shopping trips, limited online fulfillment). A new normal (return to daily routines, permanently altered supply chain).

Source: Bazaar voice Network data

Part of what marketing week has considered a determining factor in the changing customer behavior is workplace disruption. Of 2800 respondents, 36% maintained their regular salary and work hours, 22% have experienced lay-offs, while 8% are anticipating some sort of change based on their company’s current situation. The remaining 34% have experienced either reduced hours, reduced pay, lay-off. This has shaped their new spending habits and mode of spending. For the layoffs, they have inadvertently switched to a survival mode, basically shopping for necessities. Others now find it easy that while working from home on their PC, they can open a new tab on their browser to quickly make a purchase that gets to their doorsteps before they get done with their remote work. Having to do their work, stock their kitchens, get health products and entertainment kits across a table on their mobile device is a whole new and soothing experience for many. This is influencing customer behavior from groceries to wears, to food and beverages to health and safety products, consumers now feel safer making purchases online.

Source: Bazaar voice Network data

Retail platforms according to statistica have undergone a 6% global traffic increase between January and March 2020. Overall, retail websites generated 14.34 billion visits in March 2020, up from 12.81 billion global visits in January 2020. In the U.S, retailers are recording a 68% growth on year-over-year revenue growth as of mid-April above an earlier peak of 49% in early January. For Africa, especially Nigeria, the coronavirus (COVID-19) pandemic is not abating despite concerted steps by governments, private sector players, multilateral organizations, and other stakeholders to halt the rate of transmission. In the face of the escalation of the pandemic, the Nigerian government and 36 state governments are strengthening enforcement and compliance of residents with the stay-at-home order aimed to check the movement of people. By implication, Nigerians will stay at home for longer days, weeks, or even months. In a fact-finding amongst 6200 brand retailers, there was a 21% increase in online shopping and 25% in page reviews in comparison of March 2019 and March 2020.

Only 1 out of every 3 persons claimed that they have been able to get everything they need quite easily — Means 1 in 7 persons couldn’t get all they need

This is an indication that the screen time of an average consumer has taken an upward leap and they are now beginning to try the new things they were either skeptical about or just had an inexplicable apathy for. For large established businesses, there will be a need for brand consistency, consumers should be able to identify offline products they are accustomed to online and still maintain a level of confidence to buy. Noodles offline should remain noodles online: offerings, tag lines, logo, packaging, etc should be sustained and consistent, and real seamless feedback systems should be built into individual offerings to enable them to understand the current views and concerns of their consumers in this new market place. Practically, only a few consumers would return back to making offline purchases if their hearts are won over in their newfound mode of trading while the few that come back offline when we finally call it a bye to this pandemic may not return back to their old service or product providers. Some shuffling of customers amongst businesses will be visible. This is anyways for businesses that have found their way online.

Before the pandemic, respondents’ main priorities when purchasing were quality (48%), price (47%), and brand (24%). Now, they’re mostly focused on availability (49%), price (36%), and quality (34%).

An interesting thing to note as an entrepreneur and investor is that product scarcity, unavailability, or simply product/service out-of-sight of most established brands is forcing consumers to try new, promising and appealing alternatives. Here lies an opportunity for new market entrants with new products or existing products that are yet to get market validation. It is a good time for entrepreneurs to launch new alternative products to replace the existing unavailable products in order to gain market worthiness and testimonials for deeper market penetration. This new normal will produce new losers and new winners. It basically will upturn the table, leaving strategic, thoughtful, and swift entrepreneurs afloat. As the lockdown persists in most countries in Sub-Saharan Africa, people are beginning to shop for a little more than necessity. With the skepticism of getting infected and the human consciousness of staying safe at all cost, life is resuming indoors, work and leisure activities have somehow been made implementable in our homes giving rise to increase in page views of non-necessity products and services with few exceptions like luggage and bags which according to a report by marketing week recorded 4%, this is understandable since movement restrictions have been the most practicable measure that governments of nations have enforced to tame the pandemic. While food and groceries still maintain the top 3rd position with 66% page view, there are some explanations to be made about games and toys which comes second in the chart with 90% page views in April.

Source: Bazaar voice Network data

It is an indication that people are beginning to move up their spending to cover up entertainment, leisure, and wants while seeking for ways to increase their earnings from their homes. We are adjusting to the new normal and that is a reality we must all embrace as entrepreneurs, investors, and stakeholders. While this pandemic is not affecting just our defined end consumers, entrepreneurs who are equally affected by the pandemic should begin to replicate their survival hacks into the ‘elements and make-up’ of their offerings. We are not totally in the dark, it is a global pandemic and we are all end consumers to certain products even though we wear the entrepreneurship badge, having this consciousness would help businesses make and create relatable experiences in their offerings.

Remaining afloat as an entrepreneur is being dynamic and informed with superior offerings

Stay-at-home orders will gradually take a chill, and panic buying will drop but the consumer behavior would have found succor and trust in distance buying. The human mind is quick to adapt. Entrepreneurs should upscale their value offering, credibility indicators, insurance packages, improve delivery times, updating product descriptions on web pages, utilize ratings and reviews across their products. In the interim, there are millions of consumers creating and reinforcing new online buying behaviors and habits. In many families, online grocery, apparel, and entertainment shopping will replace stores. It is important that businesses begin to consider setting up online stores, set up their delivery channels or make formidable partnerships with logistics companies, improve efficiency and customer experience, shift their expenditures to capturing the attention of their offline connections who have moved online and new customers who are simply looking for better offering.

Part of what we should expect to a reasonable extent is overcrowding but not saturation. With the increase in awareness of customer migration from offline to online, there will be huge competition amongst similar brands with identical offerings, and this would give more options to consumers. It is important that as a business owner you don’t try to influence the choices of your consumers but rather find yourself in all the options, with that you are inescapable. You could launch out by having your offerings at different cost ranges to serve customer needs per time. The times we are in gives no guarantee to consumer earnings, a customer might be buoyant today and down in cash tomorrow, pushing them away could be an opportunity for them to explore better offerings at a relatively affordable cost. Have a touch of your brand across value chains and in the worst-case scenario, strike partnerships across your sectors’ value chain that keep your customers within sight and reach, helping you have real-time analytics of their spending habits and track changes as they come by. For some businesses it is time to go beyond the normal, build emotional bonds with customers, sell less to them, and care more — that is the greatest art of selling, review pricing, give discounts and bundle products, improve customer service and delivery. Some orders might be wrongly made by customers or wrongly delivered by staff or even get damaged during delivery, how you manage situations like this is a total game-changer if the customer repeats your service/product again or not.

Millions of online customers changing their behavior at the same time to opt for more time-saving and convenient routes puts a considerable strain on eCommerce and online retailers today. How entrepreneurs choose to react will define the future of eCommerce. And this is worthy of note for all players in the entire value chain of eCommerce. Frictions and bureaucracies across the value chain should be reduced without compromising the security, trust, and integrity of dedicated platforms. This would largely tell if the new-normal ushers in a total change in the way consumers shop and the future of eCommerce in general.

Ohanwe Emmanuel

Emerging tech| Business developer

eeiohanwe@gmail.com

www.emmanuelohanwe.com