Consumer Spend Is Shifting to Ecommerce: The Untold COVID-19 Story | Sponsored Content

Consumer Spend Is Shifting to Ecommerce: The Untold COVID-19 Story | Sponsored Content

This article was contributed and sponsored by Klaviyo.

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Whether by desire or by necessity, consumers are moving their spending online. And some of these consumers, who rarely or never bought online, may not go back to shopping like they used to. As a result, brands are increasingly pivoting to a direct-to-consumer business model and many ecommerce businesses are experiencing sizable growth.

Even before the coronavirus pandemic, ecommerce sales represented the bulk of overall retail sales growth in the US—$600 billion in online sales accounted for 56% of overall retail growth last year. And projections say ecommerce sales may go as high as $6.5 trillion in 2023.

If ecommerce as a whole is up, why is business confidence so low?

There is no disputing that consumer spending is down versus the same period last year, as a result of the coronavirus crisis. There is also no question that the pain has been especially sharp for traditional brick-and-mortar stores. Retailers with modest or no ecommerce presence are moving quickly to change their business trajectories. If you’re in a similar situation, check out this guide outlining how to move your brick-and-mortar business online.

But there’s a bigger story here—some ecommerce categories have never seen a better stretch for sales.

“Many of our clients are having their best sales ever over the last four to six weeks, even as compared to last Black Friday,” said Dean Dutro, cofounder of Portland, Oregon-based digital agency, Worth Commerce.

One natural skincare and beauty brand, Naples Soap, illustrates the challenge—and opportunity—many businesses faced in recent weeks. Prior to the last several weeks, the bulk of their sales came from several retail locations. With those closed, the company had to move entirely online. Over the last 30 days, they have tripled online sales.

Dutro sees a common thread for the brands performing well in recent weeks: “They engage with their customers. They have a relationship.”

Dutro’s experience with clients is not an outlier. In fact, 43% of ecommerce merchants report increasing sales, according to recent studies.

To better understand how the coronavirus crisis has impacted consumer behavior, we turned to our own customer database—analyzing billions of transactions across more than 32,000 brands. Not only have ecommerce sales been growing ever since stay-at-home restrictions took effect, but April’s average daily sales are 39% higher than March’s averages.

The brands that are seeing the most growth sell new essentials. These are any items that help you feel more comfortable at home, and typically fall under the office supplies, health and beauty, housewares, home improvement, and toys and hobbies categories. For our health and beauty customers, for instance, sales have increased 53% since March 15, when stay-at-home orders first took effect. Home and garden sales have also increased, up 54% since March 15. We expect increased sales growth for new essentials as stay-at-home restrictions remain in place.

These are just a couple of examples of ecommerce categories that the data suggests are currently thriving. You can view vertical-specific sales trends here. It’s challenging to tell these stories, though, for at least a couple of reasons.

Narratives often lump retail together as a monolith, leaving little oxygen for ecommerce businesses (beyond giant marketplaces like Amazon and Walmart) to tell their story. Moreover, there’s a human component: It can be hard to tout success when so many others are struggling.

Still, the world’s response to COVID-19 is having an ancillary effect on consumer behavior that is unlikely to revert back to its pre-COVID state. And the ecommerce brands that adapt to this monumental shift will emerge as victors later on.

Explore Klaviyo’s ongoing research and insights to help you strategize by visiting their COVID-19 Resources Page.