|Bonus Content |
The COVID-19 pandemic has caused the next big economic recession since the Great Recession in 2009. For most online shopping brands, this is the first-ever recession they’re facing. Estimates suggest that ad spend will likely reduce by 30-60% throughout 2020 and possibly beyond. HBR, in a study, found that companies that cut marketing costs faster and deeper than their rivals have the lowest probability (21%) of pulling ahead of the competition once times improve!
During these times, it is important to know how consumer behavior has shifted, what impact it has had on metrics – particularly new users and user activity, how online shopping brands and marketers are responding to this change, and what channels can businesses leverage during these times. To help Online Shopping brands with this, Ravi, the CEO and founder of MoEngage, recently spoke to Ronen, the President and Managing Director of APAC at Appsflyer on a webinar. You can check it out below:
A major difference between the Coronavirus Recession and the Great Recession is, that, unlike last time, the impact of this recession is going to be more or less evenly distributed across geographies. Instead, the degree of impact will vary more by industry.
A recession, however, is no reason to halt your marketing and advertising efforts. In fact, if you look at historic recessions, the brands that came out stronger, were those that saw a long period of success after:
Undeniably, the biggest shift in direct-to-consumer e-commerce has been witnessed in Southeast Asia. Consumers have moved away from an ‘on-the-go lifestyle’ to more ‘safe in-home consumption’. While brands might see a slight dip in online shoppers, this shift from offline to online is predicted to continue for the coming months, with downloads and DAU numbers to average well above the pre-COVID times.
There is a mass migration from offline shopping to online, especially to mobile apps, where the download numbers increased by about 122% in April. Customers who are already accustomed to purchasing online will increase their online spending even further while those who have traditionally spent little to nothing online, will be forced to increase or start.
Verticals within online shopping that have seen an increase in demand are gloves, medicines, food supplements, grains, and rice, packaged foods, milk and fresh produce, dishwashing supplies. Here is an infographic of verticals within online shopping that have seen an increase in demand. Grocery has seen the biggest growth. Since the beginning of March, the daily activity for grocery shopping has risen by about 54%. This is followed by essential services like medicines and sanitization products. Social distancing has converted all of us into better cooks and since ordering food has taken the backseat, home cooking supplements and prepared meals/kits have increased in demand. In fact, according to a recent survey by Neilsen, 89% of consumers in Mainland China said that they will be more willing to buy daily necessities and fresh products online once the pandemic is over.
Governments have clearly differentiated essential services like vitamins, personal care, and fresh meat and vegetables from non-essential services like clothes, luxury items, and beauty products. But even as restrictions ease, people are going to be hesitant to shop physically, and are going to continue shopping for non-essentials online.
The COVID-19 pandemic has led to an increase in new customer buying patterns. Shopping brands are now upgrading their marketing strategies in order to support retail, e-commerce, buy online pickup in-store (BOPIS), and home delivery. Long term goals for retail brands should be:
As businesses focus on navigating this crisis, technology will continue to play a critical role in these changing consumer dynamics. Accelerating technology adoption will be a powerful catalyst for brands that want to survive.
E-commerce in Southeast Asia is projected to grow explosively and exceed US$100B by 2025 – and a significant role in this will be played by merchants who will spend efforts building online direct-to-consumer businesses. It is paramount for retailers to understand the unique consumer needs and priorities of different groups – what segment of users are regularly shopping and their frequency, which product category is in high demand and what isn’t, what combinations of products are shoppers purchasing the most, and so on. The dependence on machine learning will not only increase but we will see a lot more brands invest in platforms that provide intelligence and insights like these. Understanding what products are most important to consumers across different categories will not only drive loyalty but allow brands to identify the attributes that consumers are willing to pay a premium for.
MoEngage’s intelligent cloud platform allows online shopping brands to identify and understand user behavior through a simple integration.
You can request a demo of MoEngage here.
Every step between a customer and purchase is “friction,” and product marketers are constantly working on reducing this friction to increase more purchases. This is being done by eliminating as many redundant steps as possible. E-commerce has a natural advantage on price and selection over traditional stores, but due to COVID-19, the convenience factor for e-commerce seems to be on the rise. In North America, Best Buy generated 81% of last year’s sales without a single customer entering their stores (source)! They’ve been able to weather this pandemic well precisely because of their recent investments in frictionless commerce—which enabled their quick pivot to curbside pickup, which then enabled them to continue selling all of the different kinds of consumer electronics people need right now.
Examples of frictionless shopping experiences
Brands have also started diversifying to other essential segments, either through partnerships or on their own, to engage and delight their users. A few retail brands have already procured material and have started producing PPE, handwashes, and sanitizers. In March alone, there were a whopping 152 new sanitizer producers that entered the market, contributing to 46% of category sales in that month!
Consumers appreciate businesses with their own e-commerce platforms. Proprietary e-commerce platforms with strong, stable supply chains have a clear advantage over dealer merchant platforms that rely on external logistics. This has inspired businesses to pivot to online services (mobile apps) and platform partnerships:
A survey of more than 35,000 consumers globally by Kantar found that only 8% of customers thought brands should stop advertising during the coronavirus outbreak. However, 78% of consumers believe brands should help them in their daily lives, while 75% stated that brands should inform people of what they’re doing and 74% preferred companies to not exploit the situation.
Early 2020 campaigns were quickly outdated and became irrelevant to the situation, leading to brands struggling with communication. The longer brands remain dark, the more users they lost to those who actively communicated. For many consumers, a lack of communication translated to a lack of care for what they have faced. Here is a campaign run by Blibli, an e-commerce unicorn in Indonesia, which has been very vocal during this time.
These are the common winning traits we’ve seen in those retail brands that have remained functioning during these times.
1. Empathy: It is vital to remain relevant to consumers’ emerging needs. You don’t have to remind your users that they’re in a pandemic – everyone knows that – instead focus on their needs. A good way to start is by observing what product categories your users are interacting with the most – essentials, fresh produce, home cooking supplements, personal hygiene, etc. Then centralize your communication around these categories – for example, you could start sending push notifications about the ready-to-cook meals and two-minute products (popcorn, noodles, soup, etc) on your store. Another example would be showing an advertisement on social media about ingredients for healthy food and fresh produce.
2. Trust: Consumer trust is more valuable than ever in these times and brands can leverage content here to win back user confidence.
3. Authenticity: The last thing consumers want right now is a brand making false promises. If there are changes to your policies – for example, a guaranteed 24-hour delivery, make sure your users are made aware of it and it is communicated clearly. Similarly, if there are certain products that are out of stock (OOS) – which is the biggest challenge faced by most brands in this recession – make sure those products are marked accurately. This is the best way to repair broken relationships while strengthening new ones.
This is a three-part series of how brands can continue marketing during a recession. Check out the other two parts about finance and banking, and OTT media below to know more.
MoEngage’s intelligent cloud platform allows online shopping brands to identify and understand user behavior through a quick and simple integration. You can request a demo of MoEngage here
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