25.11.2020

The Future of Commerce: What’s After Covid?

  • The pandemic accelerated the evolution of commerce, increased the importance of the electronic sales channel and inspired innovation in the purchasing process, but it is still unknown which of these changes are temporary and which will stay with us for more than 6 months.
  • Among the more important changes is the activation of the new 65+ age group in online trade, which before the pandemic was very distrustful of the processes taking place on the Internet
  • This year, digital transformation has shown its strength. Some companies have made a pivot and survived the worst market turmoil due to timely implementation. This is a lesson for entrepreneurs delaying digitalization, as another pandemic may be the next test.

The pace at which the digital transformation of businesses, especially commerce, is progressing this year is unprecedented. It is not a revolution, but rather an accelerated evolution, because the appearance of the pandemic has become a catalyst for market changes that had to happen sooner or later. Importantly, in terms of business, this phenomenon has affected B2C and B2B models to a similar degree and undoubtedly, like the pandemic, has a global reach. Experts debating during one of the panels of the conference “The Future of Commerce” organized as part of the SelectChicago FDI 2020 series, tried not only to summarize what has already happened in commerce due to the coronavirus, but above all to outline the direction in which the industry could go.

How the major players do it

The changes observed globally in the recent months leave no doubt that e-commerce was the driving force of trade and consumption, and in the case of many technologically delayed companies, a lifeline. What scale of changes are we talking about? In the world’s largest economy, according to Adobe Digital Insights, in the period of March-August 2020, Americans spent as much as USD 107 billion more on online shopping than was forecasted before the outbreak of the pandemic, and the turnover generated by e-commerce accounted for 27% of total retail sales.

During this time, we recorded as many as 130 days when the daily turnover from online sales in the US exceeded USD 2 billion. For comparison, last year there were only two such days, excluding the holiday season. Moreover, this was the situation we had to deal with every day from the beginning of May to the end of June. On the other hand, from the perspective of retailers, these are record-breaking sales results in the electronic channel, which in their case grew by an average of 68% y / y by the end of August.

– analyzed Tory Brunker from Adobe.

Other data compiled by IDC shows that the digitalization of sales channels is also progressing very quickly in B2B companies, and it is the fastest in industries such as production, automotive and finance. According to experts, buying in the B2B model is developing and will continue to grow faster than in B2C, and companies in this segment intend to benefit from the boom in e-commerce – according to the IDC study, as many as 96% of them changed their sales models to be more conducive to the development of e-commerce.

Post-pandemic trends in commerce

By 2030, people over 65 will make up about a quarter of Europe’s population. There is a lot of work ahead of retailers to properly care for this social group.

Retailers are investing more and more in e-commerce, because their customers are increasingly using this channel. The percentage of people who only shop online increased to 14% from 4% a year ago. At the same time, the presence of the baby boomer generation is becoming more and more visible in e-commerce. These are today’s 65-year-olds who, forced by the pandemic, tested and found out about online shopping. The restrictions that effectively kept them away from e-commerce have faded out today. Before the pandemic, only 15% of this age group shopped online. Today they are buying this way almost as willingly as the young. The question is, what percentage of these people will remain with online shopping after the pandemic.

– said Piotr Wrzalik, Managing Partner at Unity Group.

On the other hand, another expert emphasized that it is wrong to focus on the problem of who will remain and who will leave e-commerce. It is more appropriate to think about developing both sales channels.

After the pandemic, customers who have experienced online purchases will most likely not give up. But this does not mean that they will abandon shopping in traditional stores permanently. They will simply become multi-channel and will successfully fulfill their shopping needs both online and offline.

– commented Michał Przybysz, E-commerce Director at Gemini Pharmacy,
adding that multi-channel sales mean greater value of customer purchases.

The shape of further changes in the trade market will also be determined by the popularity of purchases in e-grocery and FMCG sectors.

Digital transformation – time for action

Despite the changes catalysed by the pandemic this year, the digital transformation of business is either a key motto for entrepreneurs or it is otherwise neglected by them. But if it’s done properly, in fact, it can pave the way for big increases. Such companies just have to be aware of the complexity of this matter.

Before the Covid era, many companies had still underestimated the enormous value that digital transformation brings. And in fact, the change affects almost every area of ​​their operation, starting from such basics as accounting and the legal department, and ending with a long-term development strategy. […] Now, the transformation is still a challenge for them, but it is significantly accelerating, because there is a huge need for change in order to respond to customer needs.

Michał Przybysz comments further.

Each digital transformation should start and be subordinated to the business model of a given company. That’s why many businesses now have an important lesson to learn. Currently, the question is no longer whether it is worth investing in the digital transformation process, but how to do it quickly and cost-effectively, because each day of delay aggravates the difficult situation of many companies and makes it impossible to take advantage of the upcoming changes.

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