How The Coronavirus Pandemic Affected E-Commerce Businesses

How The Coronavirus Pandemic Affected E-Commerce Businesses

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2020 has been one of the worst years in human history, and it has more or less impacted everyone. The global economy came to a crawl with restrictions bringing everything to a close. Every industry around the world was hurt, and that goes for the e-commerce industry as well. Recently Search Node researched e-commerce trends and found that the Coronavirus affected businesses in a host of different ways. 

We here at the Dropship USA work closely with e-commerce entrepreneurs and provide them with highly optimized drop shipping websites that are geared for success. Being so close to the e-commerce industry, we saw closely how the Coronavirus impacted e-commerce, and we thought we should let you know the aftermath. The Dropship USA team identified and conducted a study asking hundreds of e-commerce businesses about what they felt. After we analyzed the study, we divided the impact into the following parts: 

  • Decline Of Revenue
  • Online Profit Margins
  • Impact On The Workforce
  • Impact On Offline Sales For Omnichannel Players
  • Impact On Physical Retailers
  • Change In Strategy
  • Financial Impact

So in the following passages, you will find how the Coronavirus affected e-commerce businesses everywhere so that you can better prepare yourself for the future. We will explain each aspect and let you know what we found in our study. Now that we are done with the pleasantries, let's get down to business. Let's check out the impact of COVID!

Decline Of Revenue

We found that during the lockdown, e-commerce businesses saw a reduction in revenue. However, the number of companies that said it only made up 6%. In contrast, most did say that during the lockdown, their revenues increased in spring 2020. About 90% of companies saw their online sales increase, with 50% of them saying that they saw their sales increase by 100%. 

Once the first round of lockdowns was over, people started to go back to brick-and-mortar retailers again. However, even with that, around 86% of businesses reported increased sales while only 4% said their sales decreased. The result was expected and is consistent with what other companies have found in their studies of recent e-commerce trends.

Online Profit Margins

With the lockdowns in spring came the stoppage of life as we knew it. Things like disrupted supply chains, poorly staffed customer service, and other factors resulted in the hampering of many different industries' growth. Our study found that the impact of the Coronavirus on e-commerce businesses was a bit on the positive side. 

We found that around 38% of the companies saw an increase in online profit margins as people were confined to their homes more and their primary method of buying things became internet-centric. In the same study, we found that around 40% of the e-commerce businesses reported that their revenue stayed the same, with only 15% claiming that their revenue decreased. The impact of COVID on small online businesses was largely averted as maintaining an online business doesn't require being physically present. 

Impact On The Workforce

The world's workforce suffered a lot during the lockdown as companies started to streamline their approach. However, the impact of COVID on e-commerce businesses was a bit out of the ordinary and very unexpected. About 44% of the companies said that they had to relocate their staff while one in every three companies hired more people. However, that's not the worse of it, with 26% of companies saying that they had to fire staff during the pandemic while another 15% said they had to lower salaries to survive.

Impact On The Workforce

Now what's weird about this was the two outliers where 5% of e-commerce companies actually increased wages and about 21% of e-commerce businesses did not change at all in terms of workforce. In a year where we saw companies letting people go left, right and center, the e-commerce industry stands out with a significant amount of businesses not needing to shed workers. The impact of COVID on the e-commerce workforce is mixed, as you can see, and it was the most surprising part we discovered when researching the impact. 

Impact On Offline Sales For Omnichannel Players

We here at Dropship USA are big believers in having an omnichannel platform for e-commerce businesses. So when we were researching, it was a given that we looked at the impact of COVID on existing omnichannel players. In our research, we found that 23% of omnichannel players saw an increase in offline sales while a cool 16% were able to keep it similar to pre-pandemic numbers. However, we found that most of the omnichannel players suffered when it came to offline sales, where about 43% of the businesses said that their offline sales took a hit. 

Impact On Physical Retailers

Retailers with physical locations were heavily impacted during the lockdown. Brick and Mortar operations had to take several different measures to stay in business during the pandemic. There were new practices that retailers with physical locations had to adopt. Among the most widely adopted methods, an "in-store" pickup option was the most popular, with 31% of them adopting the practice. 

The second most popular option was home delivery service, with 26% of the businesses adopting the practice. However, we discovered that one in five stores had to shut down during the pandemic. The pandemic affected physical retailers heavily, with e-commerce businesses found it hard to operate with disrupted supply chains and found it hard to fulfill increased demand for products. 

However, other factors like lockdown, managing inventory, and overall lack of employees all hampered the regular e-commerce operation. We found that 17% of retailers found it problematic that their physical stores had to close during the lockdown. Now when we researched how the Coronavirus affected retail businesses, what we saw could fill up an entire book. However, it's impossible to write about all of it, so here are some of the things that e-commerce business with physical locations did:

  • 31% introduced in-store pickup
  • 26% introduced home delivery
  • 21% shut down physical stores for good
  • 19% introduced whole e-commerce infrastructure
  • 16% introduced touchless payment options
  • 9% introduced a mobile app
  • 7% introduced pickup lockers
  • 3% introduced new safety measures
  • 3% introduced all the above measures
  • 3% introduced phone sales infrastructure
  • 1% introduced video call options
  •  32% just stayed as is

Change In Strategy

As an operator in the e-commerce industry, we are always interested to hear about the strategies e-commerce entrepreneurs come up with. Last year we found businesses were talking about implementation, improving or changing personalization approach, site-search capabilities, and omnichannel integrations. However, in 2020 the strategic vision has changed because of the COVID-19 pandemic. According to our researchers, about 45% of businesses are focusing on digital infrastructure. Enterprises are now putting more effort into things like adjusting assortment, investing in new e-commerce software, and focusing more on online marketing channels. 

One out of five businesses we spoke to said they would intensify their actions to act faster and execute strategies without any obstacles. Our researchers also found that one in companies focuses on their physical locations while 8% of them are focusing on supply chain adjustments. The supply chain adjustments ranged anything from minor ones to completely new supply chains or logistics to support their e-commerce business infrastructure. 

Financial Impact

So we do business for financial gain, and the main reason we conducted this thorough research was to find out the overall financial impact of the pandemic on e-commerce businesses. You could say all the other implications we talked about beforehand accumulates into this one. Even though COVID-19 has wreaked havoc on businesses globally, the e-commerce industry wasn't impacted that much in 2020. 

You could even say that it was a relatively good year. We found 63% of e-commerce businesses noted that the year was a success, and 28% saying that their business was doing well even without their physical locations being open. From our survey, only 2% of e-commerce businesses said their companies suffered and had losses. 

Changing Industry Standards

So there you go, that was how the Coronavirus affected e-commerce businesses. In our quest to find what e-commerce businesses adopted to adapt during the pandemic, we found that the impact of technology and new circumstance has changed industry standards. The e-commerce industry was always one of the fastest-changing sectors, and during the pandemic, it became even faster with more recent adoptions and technology driving change. 

We also found plenty of people worldwide who were interested in starting an e-commerce operation themselves, and dropshipping was becoming a popular choice. We here at the Dropship US worked with plenty of new entrepreneurs who needed a comprehensive website that ensures steady growth. So if you are looking for dynamic dropshipping websites, then please contact us! We will help you out with everything you need. 

And with that being said, that's about all we have for you today. Let us know in the comments below what changes you had to make in your life during the pandemic. Also, hit us up on our socials and send in your thoughts and suggestions so that we can analyze your feedback. Do send them in. Your feedback helps us make adjustments and be better. We will come back soon with something new about the dropship nation. Until then, see ya!


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