As I write this we are now five weeks into the Southern European lockdown and have some very early insight into likely effects and trends.
The biggest surprise: of the 570 retailers we are monitoring across the world only two - yup, just two - have permanently closed. And in both cases, these seem to have little to do with Coronavirus:- Redcoon.pl was due to be closed as owner Ceconomy redirects its sales to the core MediaMarkt Polska website (following a similar strategy at Redcoon.de and Redcoon.at), whilst Dion Wired in South Africa has been struggling for a while. Owner MassMart (recently purchased by Walmart) has two other perfectly good, similar brands, Game and Incredible Connection.
Indeed we otherwise see 99.5% of all retailers we monitor actively trading online - the only other retailer that 'temporarily suspended' online sales is GameStop New Zealand. Surprising perhaps, but this may be due to operational reasons as to how online orders are fulfilled across Australasia.
The obvious trend we see is a massive move to online shopping.
Whilst Amazon, of course, has had a huge increase, our analysis indicates that its share of online has dropped - all other online retailers have had a much bigger growth possibly as Amazon just simply runs out of stocks. We saw an interesting comparison on ChannelAdvisor's April 22 Presentation showing Walmart market place online growth far exceeding that of Amazon (or indeed eBay).
This is illustrated will in the a graph from ChannelAdvisor tracking market places - we should note that this is marketplace sales only and Amazon has been restricted by stopping some new marketplace deliveries. Still it demonstrates the bandwidth issue that Amazon has that provides opportunity for others:
So what other observations do we see?
Will Coronavirus help Ceconomy?
It looks like struggling Ceconomy, owner of MediaMarkt, Europes largest brown-goods chain, will finally get access to re-financing that it needs. Ceconomy has been struggling with its move online, likely because its manager-owned stores (typical MediaSaturn store managers own 10% of the store) are resistant to supporting 'centralised' online revenue, and its secret sauce; fast, regional pricing and ranging, is annulled somewhat online. The group has apparently applied for €2bn funding from KfW, the German Development Bank.
So Coronavirus may, ironically, provide a path to funds for Ceconomy and support their move online.
Technical implementation of e-commerce
Unlike many other categories, many of the electrical and software e-commerce retailers seem to have coped, technically, very well. Outside of Amazon and grocery we are seeing little queuing systems and slot management that has made shopping at large retailers so challenging. if anything brown goods and tech specialists will likely benefit as people become more patient with longer delivery schedules.
Digital retailers are booming
With reports of retail top-up cards selling 5x last year and other publishers seeing 3x revenue through PSN, we expect to see 3-5x sales growth in PSN, Epic, Steam and other digital stores. This, of course, makes sense given that consumers are locked down at home.
Games releasing as normal during the crisis
So far, we have recorded few changes in product release dates. Indeed, if anything we have seen some online games releases brought forward to take advantage of people being cooped up at home. Game Time top up card sales have gone through the roof with one retailer reporting a 5x growth on previous months.
Physical copies still seem to be selling well. Some publishers have cleverly brought forward physical product release dates so that deliveries can still happen on time. It will be interesting to see if this translates to higher sales.
So what are we watching over the next few months?
Will this be the rise in of smaller online retailers? The Amazon 'focus on key products' and very high volume in grocery potentially means that smaller retailers suddenly become a lot more desirable and decreases the pain bump in using them.
Will digital retailers maintain sales after lock downs are released? We expect a bounce back once lockdowns are gradually eased. Indeed, people having been cooped up for months are likely to look forward to visiting shops. Lots of questions including consumer trust of distancing measures etc.
Will the reseller/retailer mix change in computers and computers parts? With the dramatic increase in people working from home, will companies buy less and rather expense employee home equipment bought at retail? Does this mean a reduction in reseller and VAR sales and an increase in retailer and online sales?
Will suppliers continue to extend credit? The crash of retailers such as Toys R Us was accentuated by supplier fear of their failure reducing credit terms, which turned a challenging situation into an impossible one. Lets face it, TRUS as successfully moving online and given a lower debt burden may well have traded its way and still be operational.
We expect retailers that successfully execute online to gain large shares and emulate the growth of JD.com in China from a small set of physical stores to the massive online retailer during the SARS epidemic.
How will clothing retailers cope? Will we see the rise of 'Loungeware' and other home categories?
Channel Advisor COVID-19's Effect on E-Commerce https://go.channeladvisor.com/NA-COVID-19s-Effect-on-E-Commerce-WBN-Q220.html