As nations around the globe work to stop the spread of COVID-19, citizens have had to change their way of life to keep themselves and others safe. Office buildings, retail stores, and schools have shut down. Many people are either out of work entirely or they’re working from home. Some households are juggling remote working with homeschooling their kids and looking after older family members. With so much upheaval, global consumers’ needs have shifted dramatically. Cross-border e-commerce has the potential to be a lifeline for home-bound shoppers, provided that these brands offer the right category mix and a seamless shopping experience.
Challenges and opportunities
This unprecedented time presents unique challenges for e-commerce sellers and their customers. But there is also opportunity. In a survey by Digital Commerce 360, 30% of e-commerce retailers said they still “somewhat” expect to see an increase in online sales during this challenging period due to demand for certain products during the pandemic. While this may seem like a low number, which might not be surprising given the current market uncertainties, there are product categories with potential for growth right now. As a cross-border e-commerce retailer, it’s more important than ever for you to be there for global shoppers to capture demand for your product as it increases either now or later once the crisis subsides. But how you respond now will be remembered by your customers long after this pandemic is over. Furthermore, there are many ways global online merchants can build lasting relationships with customers in the markets where they do business even during global crises. Sometimes, it’s as simple as sending your customers a message to let them know a product they wanted is back in stock. It could also mean sharing important information with them on the latest safety measure your business is taking to ensure both employees and customers are safe.
What global shoppers want: Thriving categories
We previously talked about contingency planning when there has been a market disruption. Catering to the needs of cross-border customers during a pandemic may also require rethinking your merchandise offerings. A review of the trending categories in March 2020 compared to the previous year shows a marked change in what consumers are buying online.
Retailers couldn’t have predicted that COVID-19 would cause a 190% spike in demand for toilet paper, but there are other categories in demand that should come as no surprise. With more consumers staying at home, and with school-age children having to learn remotely from home, the electronics category is heating up. Computers and monitors saw a 40% increase in sales in March. Similarly small appliances had an unexpected boost as people shelter-in-place and spend more time cooking. One example is bread machines, which in the U.S. alone enjoyed a 652% spike in sales compared to the previous year. Considered an essential business, Bed Bath & Beyond revealed that their bread-maker saw a 400% increase and vacuums sales doubled. It stands to reason that with millions of people staying at home, they want to make their living space more attractive, especially as these stay-at-home orders stretch on for weeks. In the U.S., retailers such as Lowe’s and Home Depot have seen a boost in online sales, driven mainly by purchases of appliances and DIY materials.
With gyms and fitness centers closed, consumers are purchasing workout equipment for home use, including items such as weights and even stationary bikes and treadmills. According to a report issued by Profitero, search terms like “workout equipment” increased by 14 times on Amazon since the beginning of April, reflecting the high volume of demand from consumers. Similarly, athleisure and comfortable clothing has really taken hold as “casual Friday” becomes a daily occurrence. Comfort has taken on a whole new meaning, and the rise of demand for leggings, yoga pants and pajamas reflects this shift. In the U.K., for example, consumer demand for pajamas sets rose by 160% in the month of March.
Baby and pet care are following similar trends. Baby products are seeing increased growth, particularly online, and sales are expected to continue increasing in the coming years. Pet food has also seen a surge in demand during the pandemic, and in fact, online pet food retailer Chewy.com recently announced its plan to hire 6,000 more employees to keep up with the increased demand. Beauty and personal care products are another category experiencing growth. L’Oreal’s online sales in the first quarter of the year jumped and hit 53% worldwide year over year, reflecting the interest consumers are taking in their personal care and health right now. And some brands are starting to produce their own beauty products or expanding into new categories in health and wellness: Glossier announced that the brand is releasing its first hand cream this month and is donating thousands of units to health care workers.
What can cross-border retailers do about this?
While some of the demand for these categories may be temporary, there is opportunity right now for cross-border e-commerce to assess their product assortments and look for adjacencies that might show stronger demand right now. For example, it might make sense for some apparel companies to add product categories for athleisure or loungewear now that consumers are spending more time at home. It might be possible that work-from-home will become the new normal even after the pandemic, in which case it could be worth a longer term investment in this category. Similarly, beauty brands that once sold high end, luxury items may decide to invest in affordable and accessible lines of products, from moisturizers to soaps and sanitizers, which consumers will continue to demand now and in the future. This is true as well for other high demand product categories. While it might require some out-of-the-box thinking to find those opportunities in adjacent categories to offer customers, it would be well worth it.
From a cross-border perspective, it is important to think about which markets hold greater demand for certain products. For beauty and wellness brands, there may be an opportunity to ramp up assortments available to cross-border online shoppers in APAC (even during COVID online sales for L’Oreal’s beauty brands in China grew 67% in the first quarter of the year). For apparel companies, there could be an opportunity to develop affordable loungewear, casual wear and athleisure to offer consumers in countries that plan to extend the shelter-in-place directive longer than others. In general, e-commerce businesses that are diversifying and developing new product lines to support their business in different markets are well-positioned to survive this global crisis. It’s time for brands to adapt faster to market disruptions and respond more effectively to customer needs. Looking at data on which products are selling is important, but pivoting to capture that demand is critical.
The power of the discount
In addition to your online store’s category mix, promotions and discounts can go a long way with your global customer base during this time. Unfortunately, an economic downturn is accompanying this pandemic, with millions of people around the world either laid off or furloughed. However, retailers can still build positive relationships with customers by offering special deals. In Italy, one of the countries hardest hit by the pandemic, retailers are taking an aggressive approach to discounting, with 40% of goods sold in the country being reduced by an average of 37% compared to before the pandemic, and retailers in other countries are demonstrating similar patterns. It’s also important to consider the products and categories that are discounted. During this time, it’s worth considering giving discounts or special offers to customers on popular product categories, such as the ones previously discussed. This might go against some brands’ typical merchandising and promotion strategies, but it will help cut through the competition. Buy-one-get-one offers are one way to encourage customers to spend more and increase order value, which can help to offset costs around shipping promotions. Now that most shopping has turned to the internet, shipping promotions, particularly free shipping, are even more important for online retailers in order to compete and fulfill customer expectations to build loyalty and repeat purchases.
Excellence at every touch point
Above all, understand that consumers will remember the cross-border e-commerce retailers who put their needs first and found innovative ways to deliver great service and necessary products during the pandemic. With so much fear and uncertainty around the COVID-19 outbreak in nearly every country, retailers can make a positive impact and find ways to help make shopping easier for consumers. For starters, brands can make sure that their cross-border e-commerce websites are localized and easy to use by displaying prices in local currencies, providing local payments, offering direct international shipping and localizing the checkout. Brands can also focus on developing messaging in each country that is sensitive to the current health and economic conditions in that region. Retailers can also ensure that international customers, who are already concerned about their financial futures, don’t receive any unpleasant surprises in the form of unexpected taxes and duties when their order arrives at their doorstep. It’s also vital for retailers to be transparent about any changes in cost and lead times for delivery, especially for essential items that customers are counting on receiving quickly.
To speak with a Flow expert about ways your cross-border e-commerce business can be nimble and make the necessary changes to thrive during this time, get in touch with an expert today.