COVID-19 - Good news for Digital Retailers
Pre COVID-19 the only real growth in retail was ecommerce. The changes created by the virus have caused a sharp and permanent acceleration of this trend.
A close relative works for an internet-only wine retailer. It is a successful business with a clever business model. Delivery is speedy and the wine quality is reliable. If you were to believe my wife, I’m their best customer.
A quick check of this retailer’s website tells you that their target market is the under 40 age groups. This has provoked numerous family discussions where I suggest that the baby boomers should receive more love. The response is “We are doing well and growing. If it ain’t broke, don’t fix it”. A week after the COVID-19 outbreak I ask how the business is tracking. It has more than doubled. Unsurprisingly, wine has been one of the “essentials” that we have stocked up on. Ten weeks later, the story is similar. Sales are just as strong and showing no signs of softening. Knowing the answer, I ask “Do you think a lot of the new customers are baby boomers?” Yes, of course, they are. In theory it takes 3 weeks to form a habit. In the digital world, it takes 3 purchases. They have grown market share and found new customers, thanks to COVID-19, without really trying.
In March Kogan’s sales were up 30%. In June the investor website, Motley Fool reports that it has grown to 100% and margin has improved by 130%. Habit is defined as “A routine of behaviour that is repeated regularly and tends to occur subconsciously”. COVID-19 has changed or entrenched our spending habits forever.
The moral of the story is simple. The incredible growth in ecommerce that started as a matter of COVID-19 necessity for many consumers is now a habit that will endure when life returns to the “new normal”. This is particularly true of baby boomers and slow adopters. COVID-19 has, in fact, been a huge win for digital retailers and the pendulum has swung even further away from bricks and mortar.
Author: Bernie Bicknell, Partner nem Australasia
This article is based on research and opinion available in the public domain.