Pandemic Has Pushed Ecommerce Forward 5 Years – IBM
As COVID-19 continues to have a fundamental impact on all aspects of life, it has emerged that the pandemic has accelerated the move towards ecommerce and away from in-store purchases by 5 years.
This is according to IBM’s U.S Retail Index, which shows that businesses that have not embraced ecommerce have seen sizeable declines in sales during the pandemic, with omnichannel retailers who invested in ecommerce reporting much higher levels of sales. In Q1 of 2020, department stores and other non-essential retail saw a 25% decrease in sales, and then a 75% decrease in Q2. IBM expects that 2020 will continue to be a difficult year for these sorts of retailers, with a 60% decline forecasted for the overall year. In contrast, ecommerce is expected to grow by 20%.
IBM suggests that in order to compete with other retailers, department stores will need to make the move to omnichannel fulfillment capabilities quickly. Online services that have become increasingly popular during the pandemic, like Buy Online, Pay In-Store (BOPIS), or curbside pickup will need to be implemented by these stores in order to drive traffic.
Those who embraced omnichannel early have reaped the rewards. Walmart and Target reported strong earnings in August, after having invested heavily in ecommerce. In Walmart’s last quarter, ecommerce was up 97%, while Target grew its same-day fulfillment by 273%.
According to the report, these figures are not just a COVID-fueled fad, but are likely to have long term implications for the retail industry. Although there was already a transition happening away from physical stores, the pandemic has accelerated this transition to the point that the industry has been pushed ahead by 5 years, according to IBM.
Nike Ends Ties With Wholesalers To Focus On Digital
Nike has announced that it will no longer be selling to a number of major wholesalers, as it continues to move towards a digital-focused direct-to-consumer business model.
The company is cutting ties with a number of “strategic-partners”, which include names like Zappos, Belk, Dillards, Boscov’s, Bob’s Stores, Fred Meyer, EBLens, VIM, and City Blue. The result of this decision is that 1000 stores will no longer feature Nike products.
Since naming John Donahoe as CEO in January 2020, the company has taken measures to bring sales onto their own website, and away from third parties, a plan that analysts have noted allows the brand to “take control of more of its own destiny”. In the company’s 4th Quarter (March – June 2020) the Nike app saw registrations double, and Donahoe, who came from ecommerce site Ebay, says that he expects that 50% of Nike’s sales will come via digital “in the foreseeable future”. The brand has invested continually in ecommerce, which helped online sales grow to become 30% of the brand’s total revenue in Q4.
Facebook Joins Instagram With New Ecommerce Features
Facebook has announced it will be bringing the ‘Shop’ feature on Instagram to the main Facebook app, with ‘Facebook Shop’.
With COVID-19 forcing retailers to focus on their digital sales, Facebook has accelerated the push towards offering ecommerce features on its apps, with the biggest development being the recent introduction of the redesigned Instagram Shop.
This section of the photo-sharing app allowed users to browse through products, with clothing curated by their favorite brands and influencers. Now the company has announced they will be testing a very similar feature on the Facebook platform. The new feature will be for brands to sell items, rather than peer-to-peer selling, like on the already existing Facebook Marketplace section.
The director of Product Management George Lee has said the feature will be “Unique to the Facebook app”.
“That’s not to say that there aren’t learnings across the board,” he said. “[Instagram Shop and Facebook Shop] probably look slightly different on day one, and the goal is not to have them be cookie cutters of the same experience.”
The company is announcing new tools to go with Facebook Shops, like new layouts, real-time collection previews, and features that will allow new sellers to automatically create a shop in Commerce Manager. Shop users will also be able to message businesses easily, with access to Messenger, Whatsapp, or Instagram Direct included in the new Shop design.
Live selling is also being tested by the company, which would allow business to run demos or show off a product in a live video while showing links to browse or purchase the products in question. Currently, live shopping is only available in the U.S.
“We’ve seen live shopping take off in other parts of the world,” said Instagram’s vice president of product Vishal Shah. “The pandemic has really changed behavior from a consumer perspective, so we’re moving as fast as we can to bring out these tools to help [businesses respond].”
The checkout feature, which will allow consumers to complete purchases without leaving the Instagram app, is expected to be available “in the coming weeks”. This will be run through Facebook’s Commerce Manager, or partner platforms. Importantly for brands, Instagram will not be applying a selling fee for checkout users during 2020.