The Covid-19 pandemic, and resulting lockdowns and quarantines, have meant that many more people have turned to shopping online. However, at the same time, businesses around the world have moved their operations online so that they can remain in touch with their customers. So while more people than ever have been using the internet to find the goods and services that they need, there has also been an increase in competition for businesses online. Whether you sell online or advertise your business online, you should be aware of the new competition you may be facing. Not only have businesses newly arrived online but some of those already there have increased their market share.
Ecommerce Penetration Growth
According to McKinsey, the rate of e-commerce penetration in the US grew by ten years in just 90 days last year and reached 33%. This means that the gap in profit between the brands performing the best and those performing the worst has grown. McKinsey predicts that although the top quintile of industries could amass an additional $335 billion over the pandemic, the quintile that has fared the worst could lose $303 billion. Brands such as Shopify, Amazon, and UberEats have done well over the last year.
More information from McKinsey revealed that the pandemic accelerated the digitization of business customer and supply chain interactions by three to four years. Additionally, their share of digital or digitally-enabled products has accelerated by seven years. The changes companies have made aren’t short-term, either. Many expect them to be long-term changes and executives are making decisions to invest in ensuring they can keep them in place.
Keeping New Customers
Many businesses have experienced growth during the pandemic due to people moving their shopping online. However, as the pandemic comes to end, this could mean that they end up losing these customers. While e-commerce demand will likely remain high, these businesses will be doing what they can to keep their new customers. They will be using methods such as loyalty programs, promotions, and expanded product ranges to ensure they can compete with other brands.
So what has helped businesses to stand out from their competition during the pandemic? Those that have invested in customer experiences have performed well, going above and beyond to deliver excellent service to their customers. Luxury online experiences have helped many luxury businesses to recover from the effects of the pandemic, with the international online sale of luxury goods having increased 170% year-on-year in August and September 2020. This is despite the difficulties of people tightening their budgets and physical stores closing, meaning that the luxury goods sector has been particularly hard hit. Businesses using selling platforms such as Amazon Marketplace and Etsy have done well too, with an estimated additional $95 billion in products sold through the former.
Staying competitive in this environment requires businesses to keep up with digital transformation. Business owners need to think about providing digital experiences for their customers so that they can compete with others.