In hindsight, it’s obvious that COVID would cause a huge surge in e-commerce in Australia. By some estimates, Australian consumers increased spending on e-commerce by nearly 70% since March. It wasn’t always this obvious. In late March, when COVID first hit, we had a lot of conversations with nervous brands about what the impact on sales would be. We were expecting a New Zealand style stage 3 lockdown as case numbers increased in Australia. There was a unanimous feeling that e-commerce would be hit hard and most brands expected a significant decline in sales.
We prepared for the worst and had lots of strategic discussions with brands about how we could deal with these issues. What could we do if we couldn’t ship anything from the warehouse, for example? As it turned out, Australia never went into stage 3 lockdown. Then in late April, something really interesting began to happen. Most brands began to see a huge increase in their online sales. It wasn’t just Australian sales. Most also started seeing a big uplift in international sales, particularly from the US. The extent of increase for sectors like groceries and books was even larger.
In Australia, we think there's two key reasons for this. People who were able to retain their jobs, suddenly had a lot more disposable income, as they weren’t travelling or going out for dinners & drinks. For others who weren’t as fortunate, government programs like Job Keeper meant income levels were maintained for many. These two factors, combined with the fact that people couldn’t visit stores and were spending more time at home on their devices, contributed to the surge in e-commerce. While growth in categories like groceries and books is obvious, growth in other areas like fashion is interesting.
Shopping for fashion and other non-essential things gives us a sense of normalcy, which was probably missing in our lives during lockdowns. Online shopping for fashion may have provided that sense of normalcy for people that couldn’t go to the store to shop their favourite brands. We also saw larger sales and traffic increases for premium fashion brands. If the future’s uncertain, people are likely to hold off buying something very expensive eg.: electronics. But buying premium fashion is an indulgence that feels well deserved in challenging times.
The most important question then is - What next? Will these consumer behaviour trends hold true for 2021 and beyond, once we’re past the quarantine life? We believe so. Some early evidence suggests there’s been a more permanent shift in users behaviour. In Australia, as we’ve returned to near normalcy, most brands have retained higher online sales levels, despite stores being open.
Many brands we spoke to have made permanent changes to their business model. Some have taken this opportunity to shut unprofitable stores to focus on online. These were the right decisions that were long overdue. COVID has accelerated trends that may have occurred over the next five years, both from a consumer and brands perspective. So it’s not just up to the customers. Brands need to invest time and resources into creating the right online customer experience.