The past 20 months of C-19 have enhanced the dynamism of the e-commerce industry. From dawn to dusk, the industry, unparalleled, has seen every possible rise and decline. Perhaps you are wondering if this industry has ever seen a decline in its timeline? Well, it has. The seller community in e-commerce holds a majority in the market. The number of fluctuations they faced is myriad as every shift in the market affects their business.
And even though e-commerce seeks profits now and then, it had some advantages and disadvantages during the pandemic.
On our way further, we will discuss some factors associated with the post-pandemic situation of e-commerce. These factors have led to the unstoppable growth of the industry. However, some of the challenges have caused concern for e-tailers on many grounds. Due to this, systems beyond e-commerce have also changed. Take the US as an example. The US population of 329.45 million people is shifting towards online buying and selling. So, the intense competition faced by offline stores has put them at a deficit.
Before we dig deeper, we first need to make sure you have a clear understanding of the facts and the current situation, whether you are an aspiring e-tailer or an ardent industry watcher. Once you have analyzed all the market factors, you will find it easier to smooth out your e-commerce journey ahead.
Massive Road to Competition
As the industry is maturing, there are more and more entrants in the market. The e-commerce market is already flooded with more than 12 million websites, each selling unique products and services. While we spoke of SARS COV-2, it caused sales to plummet in stores, big retail marts, and mom and pop stores.
And as we all know, the majority of the world has shifted towards the online marketplace. Alongside, the big players like Amazon and Walmart grew stronger. Such high competition in the market is affecting the sales figures and growth of every other e-tailer. These brands can compete better as they already have an established clientele.
According to Inviqa, 59% of Millennials browse products on Amazon first before moving to any other e-tailer. As we spoke of an established customer base, these brands are now coming ahead with their enhanced distribution mechanism that covers the daily necessities for people. According to OECD calculations, the Amazon grocery branch alone could meet the 60% increase in demand. To expand their business and begin the monopoly reign, Amazon has expanded its pickup services to 150 stores. These extensions of services by big brands cause constant stress for merchants.
Rise in Expectations
Every buyer has gone comfortable with the online market. During the virus outbreak, every seller ensured maximum comfort to buyers by exceeding their expectations. With delivery packages arriving at nearly every doorstep, all age groups have found their products online. In the US, 21% of adults order groceries online every day. But are these customers ordering from a single store? No, a customer remains loyal only to better service and affordable products. A savvy shopper will purchase from an e-tailer, who will offer discounts, exceptional delivery, and the best virtual shopping experience.
Surprisingly the concept of Direct-to-Consumer (D2C) is also responsible for raising the seller’s stress of performing better. D2C eliminates the middleman and directly sells to end-users. It decreases the product price, allows for frequent discounts, and enhances the personalized experience for the user. AI, virtual assistants, and augmented reality used in these online stores set the expectation bars for a seller on a whole new level.
Physical stores have become intertwined with technology. The owners of movie theaters, gaming zones, swimming pools, and gyms create stamp tickets to avoid overcrowding. By following the Covid guidelines, they are also able to make sales in their physical stores. In contrast, many store owners who lack a website or an application miss out on the opportunity to operate their stores profitably. It is one of the best complementary sales strategies for those sellers whose roots are in brick and mortar stores.
These instances put pressure on sellers to reduce prices and invest more in technology for better products and services. Hence, all this leads to low profits earned with a liability remaining for the seller to cover their cost. Few have reached break-even during this fighting while “Amazons” of the world continue to pull in big sales every minute.
Entry Barrier for SMEs
The lifeline of the SMEs in this industry is somewhat challenging to understand. We spoke about AI, Augmented reality, and high-quality products to derive maximum sales. But when it comes to small enterprises that have just made their presence online, growth becomes challenging. Consider this, a bakery that rose through seed funding would be incapable of utilizing the technology of this level. In the era of robots and drone delivery, they barely can afford the distribution charges. Distribution is necessary as it is one way of ensuring global delivery of your product. As a result of limited facilities, sales are low, similar to a physical store in these times.
SMEs become vulnerable in the e-commerce market and hence are mostly eaten away by the big fishes. In many cases, the government is stepping forward to assist these ventures financially. In addition, eBay has waived off its registration charges and product listing charges for eligible sellers. With more coming, many countries like Japan and Brazil are a step ahead in support.
Shift in Product Demand
Talking about money, the sales graph of e-commerce is over the top. Despite the hardships, sellers are earning profits because of their products and services. But these profits are not uniform for every product. We know the necessities are increasing as the online market is expanding. This statement is good for sellers whose products are in demand.
Post C-19, the increase in the sale of groceries, disposable gloves, masks, sanitizers, clothing, and medicine is increasing. But product sales of suitcases, formal attire, liquor, and branded kitchenware have decreased. These products were never an essential requirement for users, and today they are no longer in demand. These sellers never reach breakeven. The costs associated with e-commerce such as advertising and listing products, keep increasing and lead to debt. As a result, they exit the market due to continuous losses.
E-commerce is not always about profits. If one chooses its inventory carefully, then such situations may never happen. Rather than spending time crafting a product page, you might want to focus on selling the product wisely. While some of the repercussions of C-19 are temporary, in many cases, such as those above, they are long-lasting as well.
End Note
We presented situations that an entrant or an e-tailer should consider while entering the industry. One common thing in these factors was the presence of competition. Competition dominates the market and the movement of the commodity as well. But having said that, many firms in e-commerce have grown immensely because they know what it takes to survive. The ideal distribution channel, consumer-centric product, and technology can go a long way. These elements should be the priority for investment.
We know that customers sometimes fail to adapt to your selling strategy. For a seller, e-commerce is a tough road and as Ergode, we make your journey easier. We infuse quality at every stage of the sales process. Along with quality, we recognize the pulse of every fluctuation in the market, and hence, we prepare strategies accordingly. Using brand positioning, we present products on the top marketplaces, which creates a solid customer base for our sellers. As brands and sellers have associated with us, it has worked wonders. You can benefit from us as well, do not think twice to contact us.
