Coronavirus Impacts on the Online Retail Industry
As coronavirus cases started surfacing in the U.S. earlier this year, many turned to the internet for information. Google search trend data from March 2020 showed a significant spike in the number of searches related to the coronavirus. With the number of cases rising and lockdowns throughout the world causing businesses to close their doors, the online retail industry is expected to boom.
More people than ever are opting to shop online due to this pandemic event, ordering everything from entertainment items to groceries. Online retailers are already seeing a significant shift to customers ordering essential items. While there are a lot of challenges ahead for the retail industry, the key to moving forward is to collect and analyze data to develop a growth strategy that works with changing market conditions and shopping habits.
We at GrowByData analyzed and compared revenue and price competition data from February 2020 and March 2020 for various e-commerce industries to check the immediate impact of the coronavirus pandemic and to see how it has impacted the online retail industry.
Impact in Revenue Growth by Retail Verticals
The graph below shows the average revenue growth rate by various retail verticals. For example, arts and entertainment have seen revenue slow down by as much as 40, while the food and beverage vertical has seen the highest growth rate (53 percent).
Impact in Market Competition
The graph below shows the weekly average of products and sellers advertising and competing daily in the Google Shopping market. From the first coronavirus news flashes coming out of China to the rising number of cases in the U.S., the market has seen a steady downward trend in the average number of products and sellers competing in the market.
As shown in the graph below, the health and beauty, apparel and accessories, healthcare and medicine categories all show decreases in the number of products and sellers competing in the market. Meanwhile, categories including food and beverages, toys, religion, and health and wellness have had growing competition in 2020 so far. The home and decor industry have seen the average number of products offered decrease, but number of sellers competing in this category has grown drastically.
Impact in Price Competition
Though the number of products and sellers competing in the online retail market are slowly decreasing, price competition seems to be increasing among those sellers remaining in the market. On average, 13 percent of sellers are making price changes. Of those 13 percent, 51 percent lowered prices and 49 percent raised prices.
The graph below shows the average monthly growth rate of price changes happening across retail verticals. Most verticals have seen competition increasing in 2020, with only toys, games, hobbies and crafts seeing decreasing price competition.
The data indicates the following immediate impacts in the online retail industry as the Coronavirus pandemic started in the world:
- Consumers are shifting toward shopping online for essential priorities, with categories like arts and entertainment slowing down, and food and beverage sales going up.
- The supply chain is impacted, resulting in the number of products available in the market going down.
- Google Ads competition is slowing as the number of sellers competing is also in a bearish trend.
- Price competition is in a bullish trend, despite more products and sellers leaving or staying out of the market.
Prasanna Dhungel is co-founder and managing partner and Sagun Shrestha is a requirement manager and content writer at GrowByData, an enterprise retail data platform that offers retailers, manufacturers and advertising agencies competitive data for merchandising, advertising, pricing, channel management and corporate strategy.
Prasanna Dhungel is Co-Founder and Managing Partner of GrowByData, an enterprise retail data platform that offers retailers, manufacturers and advertising agencies competitive data for merchandising, advertising, pricing, channel management and corporate strategy.
Dhungel drives the content marketing initiatives and this article. Prasanna launched GrowByData, has architected the firm’s data strategy and drives the growth. He has 20 plus years’ experience in big data. Previously, he was Vice President at Valence Health (now Evolent Health) and at D2Hawkeye (now Cotiviti Health). He has an MBA from Kellogg School of Management, MEng from Princeton University and BS with Honors from Cornell University.
Sagun Shrestha is a Requirement Manager and Content Writer at GrowByData, an enterprise retail data platform that offers retailers, manufacturers and advertising agencies competitive data for merchandising, advertising, pricing, channel management and corporate strategy.
He has been associated with GrowByData for over 4 years and has helped build the firm’s products such as Product Information Manager, Product Feeds, Data Acquisition Engine and Competitive Price Intelligence. Sagun writes about retail, dynamic pricing, advertising intelligence and ecommerce trends to help GrowByData partners and customers. The GrowByData Content Marketing team was also involved in the finalization of the article ready for publication.