In case you haven’t yet been inundated with phrases like, “these are uncertain times,” just so you know, these are uncertain times—particularly for marketplaces around the world figuring out how to serve customers under quarantine and prepare for an unknown future.
To answer questions and provide guidance about how COVID-19 is affecting the international market and how brands are navigating the challenges it presents, BWG Connect hosted a Q&A session with Pattern’s Chief International Officer, Chris Vincent.
China’s marketplace was the first one affected, so it’s been the first marketplace to recover somewhat, Vincent said. While every market is different, China can serve as an example as the world moves into a “new normal.”
A lot of initial impact in China had to do with supply chain, Vincent explained, so brands and businesses that were reliant on international shipment of goods coming into China were virtually shut down due to COVID-19. Brands and businesses that had on-shore supply chains saw less of an impact. Certain brands even saw an uptick in business.
“We saw a slight impact in terms of overall performance for some of our brands, but brands that were focused on traditional areas that people look to for health, supplements, anything that promotes healthy living, really hit quite a boom,” Vincent said.
Digital channel growth in the U.S., EU
Anecdotal evidence suggests that brands promoting healthy living are also seeing an uptick in the U.S. and Europe, according to Vincent. Overall, and it comes as no surprise, digital channels are seeing great growth, more than previously predicted, while “offline” or traditional brick-and-mortar stores are struggling, even in China, where things are slowly returning to normal.
“There is a bit of a cultural shift happening there, which I think we can see translating into Western markets,” Vincent said. “There’s still a hesitancy for people to go out (and shop) like they did before.”
Expanding to international markets
For brands already established in China, Vincent said it’s likely business as usual, although there may be some shop closures and a heavy reliance on digital channels. That means digital channels in China will become a crowded competitive market, but Vincent said it’s still worthwhile to look at for brands looking to expand their reach.
For elsewhere, like Europe and the U.K., brands already working with Amazon have likely seen tremendous growth over the last few months. This is because of Amazon’s ability to respond to supply chain issues other businesses and brands have faced. While there have been issues with delivery times in Italy and Spain, and the French government forced Amazon to temporarily close warehouses, “We haven’t really seen any business cope as well with the shutdown as Amazon has,” Vincent said.
Diminished supply chains for producing goods and the potential of a recession has caused some brands to make rash decisions, and other businesses leaving the marketplace entirely have created holes in supply chains. With this in mind, Vincent said, as a brand looking at opportunities to go international, now could be a great time to do it.
“If your business is sound, and you’ve got a good financial footing, and you’re able to supply extra product to different international locations, I would say that the competition you’re going to face, while it might be fiercer in the short term, is actually going to be less because business are going to go out,” Vincent said. “There’s going to be less supply, less options available from brands going forward.”
Brands also should consider markets like the Middle East that tend to fly under the radar, Vincent said.
Preparing for the “new normal”
Circling back to the idea of a “new normal” and a change in how people shop, Vincent said Pattern has been in talks with several beauty brands, which have traditionally relied on big box stores and salons for a large percentage of sales and distribution, who are worried about future shelf space and how they’ll serve customers.
Manufacturing is also going through changes as brands who previously relied on one manufacturer seek to diversify and mitigate future risks, or are canceling current manufacturing orders.
Vincent advised against making any rash decisions while trying to capitalize on emerging trends and preparing for whatever shopping of the future will look like. Vincent’s most important word of caution was to brands looking to liquidate assets, as unauthorized sellers could be a problem that gets worse before it gets better.
“We’re playing to our strengths, and I would encourage brands and businesses to continue doing that. The new normal is certainly going to be different. Whatever that is, I think there is going to be some element of distancing globally,” Vincent said. “We think that digital and marketplace channels are going to be the king, at least for the short term.”
Reach out to Pattern to see how our international ecommerce consultants would make an international transition easy for you, even in “uncertain times.”