I’ve lost track of the number of times people have asked me if I think the shift in consumer spending from physical or traditional retail to online retail will continue.
The truth is, the swing was already happening, with online retail already growing quickly each year prior to the global pandemic taking hold. Online retail spend has rapidly escalated from around 10% of total retail spend, to 16% in early 2021 (according to the Australian Bureau of Statistics).
Australia Post’s eCommerce Industry Report 2021, released in March, showed a whopping 9 million households shopped online in 2021, including 1.3 million households that did not shop online in 2019, for a total of more than $50 billion, 57% more than than the previous year.
While some e-commerce retailers needed to find bigger wallets to hold their hundreds, it wasn’t the case for all, as what was widely regarded as a tailwind for some online retailers could potentially be seen as a headwind for others. The equilibrium between supply and demand has rarely seen such shock during this pandemic, as people responded in obvious ways, like cancelling holidays and restaurant visits, and stocking up on things like… toilet paper.
There’s no doubt some retailers were offered a dud hand — online stores that sold party products or cocktail dresses for example, saw sharp declines during lockdowns, losing as much as 80% of their daily sales overnight during peak closures.
On the other hand, certain categories within online retail got the winning numbers in the COVID-19 lottery, such as homewares and home entertainment devices, and of course online gym equipment retailers.
Bricks and mortar retailers generally have a right to feel hard done by. Although there’s no doubt some have managed to adapt and prosper — like JB Hi-Fi, which reported a 12.6% increase in annual revenue — they too had a winning ticket in the COVID lottery, selling goods that are perfect for a lockdown through a strong online presence.
Of course with the boom of e-commerce has come the prospectors; Google trend data shows search volume in Australia for the phrase “how to sell online” has never been higher than it is now.
For newcomers, or those considering taking the plunge into online retail, beware that all that glitters is not gold (unless you’re selling toilet paper and face masks!). Just because I can locate the timing belt in my car doesn’t mean I should go ahead and change it, because, as my wife will tell you, I’m no handyman.
The same applies to an online newbie: while setting up an online store is simple — thanks to DIY platforms like Shopify — it only accounts for about 1% of the job. Online retailers need to consider product as one of the absolute keys to growth — it always has been, always will be.
Although it’s easy to say retailers should have always been agile, and all the other buzzwords, the reality is that evenly matched businesses could have been performing brilliantly pre-pandemic, and fallen off a cliff mid-pandemic; while one was appointing administrators, the other could have been ringing the bell at their IPO.
So if you’re planning to dip your toe into the e-commerce sphere, or currently waiting for the next pandemic, here’s hoping you draw a winning ticket.