“Nothing will be normal again" or “everything will creep back to how it always was”. When reviewing the impact of the COVID-19 pandemic there are certainly very different viewpoints on what happens next.
We have been protected in our digital marketing bubble, where the pandemic has forced customers online, diversifying spend across many niche brands and providing growth for online retailers of all sizes. This bubble may have been a safe place to reside in, but with the travel and hospitality industries in tatters, and the physical stores opening back up again, is it about to burst?
I’ve been in the privileged position of having the ability to explore the Awin network’s trends data in granular detail during the pandemic. Launching our new Client Partnerships department in January, we were in the early stages of initial partner meetings and sector level strategies when lockdown kicked in. We therefore placed an enhanced focus on exploring sector level trends - and what a turbulent landscape we found. However, initial fears were soon set aside as we saw smaller online brands flourish. Customers were stuck at home and wanted things. Things from office equipment, to seeds, to leisurewear; and the internet was there to provide it for them.
Awin saw huge uplifts across niche sub sectors, and witnessed a real diversification of the advertiser base with a 5% swing in commission spend from brands to SMEs. Travel lost full share of wallet, whilst takeaway volumes surpassed Valentines’ day peaks. Telecoms saw some initial peaks before evening out, whilst Health & Beauty saw sustained uplifts of up to 70%. The Home and Garden sector boomed, as did the Electrical sector, as consumers stocked up on second fridges and home office equipment. Athleisure led the virtual catwalk as sportwear sales spiked.
So where can we turn to understand how these pandemic trends will impact us in the future? There is one place that has been through a similar experience and is now the global leader of online retail – China. The SARS epidemic in 2003 set off their online shopping revolution, and in 2020 China is estimated to overtake the US as the largest online retail market, with 41% of all sales happening online (eMarketer).
In 2003, the internet was a very different place to the one we know today. In China, JD.com was a small chain of 12 stores that had launched an ecommerce site. The SARS epidemic forced the founder Richard Liu to close all but one, and focus on selling products from the website by posting on chatrooms and forums. After particular interest from users of the CNbest forum, he set up an affiliate agreement with them. The increased online demand due to SARS coupled with an early adoption of the affiliate channel led to great success, and JD.com is now one of the largest online sales drivers in China. Alilbaba had a similar journey. They were more established when the SARS epidemic hit, but sales still grew 50% that year and they also launched Taobao, which within two years surpassed Ebay to be the number one online market place in China.
Despite China becoming the largest online retail market in the world this year, their overall ad spending is only half the size of the US in actual terms. Their online growth since SARS isn’t due to ad spend, or even down to just one factor, but instead a myriad of constant innovations and a culture of embracing change.
It is estimated that 88.3% of internet users in China will make an online purchase this year, and that 41.2% of all retail sales will take place online. Customers in China increasingly prefer to do the lion’s share of their shopping online, and their choice of retailer is more varied, even with the giants that are JD.com and Alilbaba. There is a focus on user interfaces in China, and they lead the world in terms of ease-of-use, making it easy for customers to spend online. These include world-leading digital payment solutions which helped early online adaptors, and a mobile first approach with 80% of ecommerce taking place on mobiles (Tenba). Customers in China expect ease and innovation, which in turns continues to fuel the online retail industry’s growth.
The SARS epidemic kick-started Chinese digital growth, but it certainly isn’t the only factor in China’s online success. In the UK we need to take heed of the level of entrepreneurship and innovation that has propelled Chinese ecommerce, and not rest on our laurels and assume that the level of online growth seen in the current pandemic can be sustained if we don’t adequately support it. Customers want things, and they want them quickly and easily. If online can’t provide that experience, then for many it will always be preferential to head to their local shops.
Whilst the digital marketing bubble doesn’t look set to burst just yet, over the last few months the world has been turned on its head. Community and connection have been shown to be alive and well in so many ways, and wholly torn down in others. When explaining to my four-year-old daughter what a phone box is on one of our daily walks, she looks at me in astonishment, “You mean you had to leave the house and walk to a small red box to call someone, and not even with a picture?”
We are an adaptive species and the new normal will be just that, the new normal.
