COVID-19 ecommerce predictions for EMEA & APAC
In late 2019 we published 2020 ecommerce predictions from our senior leadership team. Fast-forward five months, and so much has changed in the world that we felt it was time to update them to reflect the new realities and opportunities for those who sell goods online.
Global lockdown measures as a result of the pandemic have aggressively shifted consumer behaviour and according to a new Global Shopping Index report, the number of unique digital shoppers rose by 40% year-over-year (YOY).
Our ecommerce experts based in Europe, the Middle East, Asia and Australia highlight what brands and retailers should consider as part of their post-COVID-19 ecommerce strategies for survival, recovery, and future growth.
Pattern’s General Manager for Europe Nicola Hollow predicts that services and products traditionally sold exclusively through independent retailers will shift to ecommerce. “We can expect consumer brands and manufacturers to be hindered by the closure of physical stores and begin to refocus priorities on direct-to-consumer and marketplace channels as they realise how over-reliant they have been on bricks and mortar.
"Countries who have previously been slower to ecommerce such as Italy and Spain will experience a significant boost in ecommerce penetration, as marketplaces become prevalent channels. We’ve seen this trend first-hand through Pattern’s COVID-19 ecommerce trading results in the past two months and expect this will repeat itself across Europe as we continue to witness the COVID-19 ecommerce effect.”
She expects omnichannel retailers to reconfigure their operations in response to the increased pace of the migration of sales online: “Retailers are going to be cash-strapped for the foreseeable future, even those with strong ecommerce businesses. More stores will permanently close, with larger premises potentially being used as dark stores to support the increased demand in ecommerce and lack of warehouse space and availability.
“Pressures on marketing investment will require a refocus to more cost-effective channels such as social media and SEO. With the need for agility, more brands will look to work with flexible resources to allow them to scale without increasing their fixed costs in this time of uncertainty.”
Pattern’s General Manager for ANZ Merline McGregor agrees; she believes there is no longer a choice to be made between physical and digital retail. She says: “Organisational structure and embedding digital acumen within your business will become more important as retailers and brands realise that the depth of their own digital knowledge is very shallow.”
“We can expect that channel diversification will accelerate as the uncertain future of physical retail plays out and brands look for different routes to de-risk their revenue streams. Optimising your D2C site is key to ensure that you are investing in commerce-driving activity.”
Australian-based Principal Consultant Sheriden Baxter adds: “Australia has experienced a significant offline to online shopper migration, and a robust digital marketing acquisition strategy will be paramount in capturing these new customers. We expect loyalty programmes will also be a key focus area to drive repeat purchases both online and offline once physical stores reopen.”
Building on this theme, Pattern’s Director of Consulting Kerry Lee advises that retailers and their strategic partners must rethink their ecommerce strategies to establish an omnichannel experience that’s fit for the future. She says: “The ecommerce sites of large retailers have faced stiff competition from smaller, nimble D2C sites that have benefitted significantly from the huge surge in consumer demand. Brands, wholesalers and distributors alike are recognising this, and we can expect to see an increased investment in D2C from brands looking to gain more control over their distribution and alternative routes to market.”
“Those with growing D2C channels during this period, will focus heavily on CRM, in an attempt to retain this new customer base beyond lockdown. Converting offline customers to online targeted customers will be the core strategy for brands looking to sustain their growth.”
“I predict that a new omnichannel experience will be established over time as global digitalisation accelerates. As we come out of lockdown, consumer expectations will recover to pre-COVID levels with quick delivery, site usability and immediate response times to customer service enquiries becoming the norm as they once were.”
Pattern's Chief International Officer Chris Vincent believes that the biggest global marketplaces with strong logistics infrastructures - such as Amazon, Tmall and JD – will do even better in 2020 than he would have predicted at the start of the year. “These marketplaces are positioned to take market share, both through extended lockdown periods, and once countries relax restrictions on their populations. For sure there will be a significant global economic downturn which will impact spending patterns. While we don’t yet know the shape of that, we can start to see the impact of COVID-19 on the global ecommerce market and they play to the strengths of marketplaces: product selection, availability, fulfilment options and price.”
He explains: “Supply chain issues are hurting brands and retailers, who are struggling to manufacture and move product to where it needs to be to fulfil current demand. We know that some retailers and distributors will not survive the next few months. In China we are seeing both the cost of warehousing and fulfilment rising substantially now, and if this trend translates to the West it will prevent brands from expanding their direct-to-consumer web channels as a replacement in the way they may hope. In general, marketplaces’ logistics networks have stood up to the challenge, and are often the quickest replacement for this loss of other routes to market.”
“We are also seeing major brands consolidate their ranges to deal with supply chain issues and a requirement to conserve cash. This, along with brands going bankrupt, will create gaps in selection. Product choice is a key reason for consumers to visit Amazon and Tmall, and they are already excellent at making selection available for purchase cross-border. We expect them to be quick to leverage their global catalogue to fill product gaps that emerge at a country level; as well as potentially launch private label ranges in the case of Amazon."
“Finally, the scramble for cash means that discounting on non-essential items will increase as brands and retailers chase declining discretionary spend. Again, marketplaces thrive on discounting, and are the online destination of choice for consumers looking for a bargain.”
Pattern's General Manager for Greater China Arthur Cheung warns Western brands that that there will be a squeeze on their margins when selling online to Chinese consumers for two reasons:
“The cost of ecommerce warehousing and fulfilment has risen sharply in the after match of COVID-19 because manufacturers are using that space to store raw materials and finished products that they cannot export to the West at the moment. Fulfilment costs have also risen as delivery staff are being paid more. Brands must bear these costs and cannot pass them on to the consumer by raising prices at the moment. Not only this, but the end-to-end fulfilment process is likely to be more complex with longer lead times when delivering products cross-border.”
“The other squeeze on margins comes from the need to participate in longer promotions, as the bigger marketplaces try to make up for lost sales earlier in the year. Tmall has announced that it’s promotions for 618 Festival will take place for the whole of June, rather than the two weeks around the 18th June as has occurred in previous years. We expect that JD.com (who created 618 Festival) will also extent its promotions periods. Consumers working in manufacturing jobs particularly are likely to have seen their incomes fall in the last few months, and where they are still making purchases they will be looking for very good deals.”
China was already such a digitally mature market that the changes in customer behaviour expected in Western markets will be less pronounced in China.
He explains: “Grocery sales moved online during the lockdown, and we expect online market share in this category to stay higher than it was before COVID-19. However, in other categories, most people who want to buy online were already doing so, and so there will be no big shift in how people make purchases because it had already occurred before the pandemic.”
Arthur Cheung adds that he believes Alibaba will do everything it can to make Double 11 (Singles’ Day) a success once again, and a focus on selling some unique and high-value products in order to bring excitement to the shopping festival. However, there will be winners and losers within this: “Some brands and Tmall Trade Partners are still not up and running as normal in China, and have either been closed or running a very reduced operation since Chinese New Year."
"They will now struggle to build the trading momentum that is required to be allowed to participate in official Double 11 promotions with Tmall. At the same time, there will be more competition on the platform as Tmall is working hard to recruit new brands and making commitments about the exposure and revenue they will generate in order to get them on board.”
White total retail sales may be down year-on-year in many regions, there are still opportunities for expansion and growth through online channels, particularly marketplaces as they provide a relatively low cost of entry compared to opening stores or launching a localised ecommerce site.
Principal Consultant Sheriden Baxter explains: “Brands and retailers may look to expedite international expansion plans to drive incremental revenue growth. More brands and retailers will look to marketplaces as the point of entry to new markets due to speed to market and cost minimisation.”
One region with clear marketplace growth opportunities is the Middle East. Pattern's Managing Director for MENA David Quaife believes that brands who can quickly leverage marketplace channels in the region will be able to take market share from those who struggle to adapt to the shift to purchase online.
He explains: “During this time, businesses who can adapt quickly to changes in consumer demand will trump omnichannel retailers who struggle to keep up with the demand on their online channel. This is an exciting time for marketplaces in the MENA region to gain share and new customer bases; with Noon launching Dubai Mall online, Amazon listing more global sellers and planning to launch in Saudi Arabia in the coming months.”
Our latest infographic report provides insights into customer behaviour and Amazon's offer in 12 key markets, including Australia and the UAE.
Chief Commercial Officer Jeremy Wilson who leads our Private Equity Practice predicts how PE funds will behave in response to the pandemic.
“The vast majority of existing investments will have been hit badly by the lockdown, and for many investors cash preservation will be a key focus. Investors are reviewing their existing portfolios with a view to exiting those investments that are likely to suffer in the longer term from the impact of COVID-19.”
“Costs associated with rent, staff and stock will have all faced scrutiny over the last few months and this will continue as PEs look to diagnose challenges and stabilise portfolios. Business plans post lockdown must be reviewed completely to develop resilience to potential shocks in the future. Anticipating and accounting for future market disruptions will become an essential element of due diligence for private equity firms.”
However, it’s not all bad news for the sector: “We can expect investors to build their investment funds to take advantage of buying opportunities that will arise at the end of lockdown. Several fundamentally sound businesses are currently facing liquidity challenges and require funding from strategic investors.”
He adds: “There will also be a move from investors into the support services around D2C models; recent discussions with third-party logistics providers have indicated large investments into out of town distribution parks and ecommerce warehousing. Similarly, demand for technology that supports or enhances the online buying experience will grow significantly, with retailers such as Curry’s crediting their virtual capabilities as a major factor as to why sales have held up so well.”
Global Head of Marketing Joanna Perry believes that continued social distancing requirements across the world, combined with increased nervousness from consumers about germs, will increase the rate at which retail sales migrate online for some categories.
“Evidence from China and the Middle East - where non-essential stores have already started to re-open - suggests that once consumers are allowed out there can be a bit of a dip in online sales as people enjoy their relative freedom. However, once the novelty of being allowed into stores wears off, the reality of the inconvenience of shopping while observing social distancing regulations will hit home.”
“In many markets the number of shoppers in store at one time is being policed, shoppers may be required to cover their faces and they will be nervous about touching products, testers and display items that they don’t know who else has touched. For categories such as beauty and fashion in particular, this will take away some of the added value experience of shopping in a store."
"Why travel to visit a store and buy make-up or clothes, if you can’t test the items or try them on before purchase? This increased friction in the offline shopper journey reduces the competitive advantage that stores have over online channels, and will also make some stores increasingly unviable to operate.”
Brands and retailers must closely assess their online sales channels, to ensure that they are associated with excellent online selling experiences. There is no better time to look at how your business model must change, and mobilise to implement your post-COVID-19 ecommerce strategy.
To discuss how we can help to define your digital strategy, help trade your direct to consumer website or support your marketplace presence please contact us at UK@Pattern.com.
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Walmart.com has announced important changes regarding the “Was Price” and promotions on the digital marketplace. These updates make it more important than ever to optimize your price through implementing proper strategies, controlling your distribution channels, and being intentional about your pricing strategy.
And, as with all digital marketplaces, succeeding on Walmart.com requires performing well in all areas of The Ecommerce Equation. Which means as you optimize your listings’ pricing, as well as traffic, conversions, and availability, your revenue increases.
Pattern has the resources ecommerce brands need to optimize on marketplaces for each factor in the ecommerce equation. We have the technology and strategists to help you improve your traffic, the brand dedication and passion to help you achieve greater conversions, connections to econtrol specialists who help brands regain marketplace control, and the data you need to be able to make smart forecasting decisions for better product availability.
Below, we’ll cover how Walmart.com’s recent platform changes impact ecommerce brands’ ability to drive traffic and conversions for their products and how to strategize around them to work best in your brand’s favor. But first, let’s go over the changes themselves.
Walmart.com’s newest changes reflect their mission to be the leader in low, everyday pricing. Therefore, Walmart’s customers come to the platform and expect low prices no matter what. Overall, these updates give consumers more visibility into the value they’re experiencing and hold brands more accountable in the pricing information they display.
Due to Walmart’s updates, in order for your products to qualify for a strikethrough and show “Reduced Price” or “Clearance” flags on Walmart.com, your product’s promotion must be at least 10% off the “Was Price.” (Note: “Reduced Price” is the most common type of badging. Your teams can request this badge when filling out promotion upload files.)
To specifically qualify for “Clearance,” the product needs to be discontinued and no longer replenished after selling through the remaining inventory.
Although “Rollback” is sometimes seen on site, it is a form of 1P-only badging.
Walmart now prohibits promotions lasting longer than 365 days.
Walmart’s “Was Price” was previously loosely defined and manually inputted on Walmart.com as an MSRP. Now, stricter rules are in place with regulations in the broader market to encourage enforcement and protect consumers.
The “Was Price” is now defined by these terms on Walmart:
Either the 90-day median price paid by customers for the item on Walmart.com (excluding special promotions like holiday campaigns, limited time deals, rollbacks, and clearance);
Or the median price offered by Walmart or Marketplace sellers for the item on Walmart.com for at least 28 out of the last 90 days (excluding special promotions like holiday campaigns, limited time deals, rollbacks, and clearance).
To protect your “Was Price” from price erosion, be intentional when planning promotions. To be most effective in your promotion, you’ll want to be able to give your customers a large enough discount to qualify for the slash-through and reduced price badging.
Without the right pricing strategy in place, your products are in danger of falling into deeper and deeper discounting as you chase the ability to achieve slash-throughs and proper badging. Without the slash-throughs and badging, you’ll lose the ability to easily communicate the increased value of your product and the traffic and conversions you’re trying to earn by running the promotion in the first place.
It’s important to keep your products’ prices as steady as possible to protect your promotion periods. As you prevent high-low price fluctuations, you’ll be able to use slash-through prices and promotional badges like “Reduced Price” and “Clearance” to your advantage in driving better traffic and conversions for your listings.
Without the ability to display badging, a promotion falls flat even if the price has been dropped. With steady pricing over time, you’ll be able to keep a stable “Was Price” and ultimately enjoy more rewarding promotional periods long-term.
It’s important to remember that the “Was Price” policy also applies to 1P and other 3P sellers representing your products on Walmart.com. Unfortunately, your other strategies will be ineffective if other sellers are breaking your MAP policy or playing the high-low price game. So, it’s more important than ever for brands to be conscious of their distribution channels and keep rogue and unauthorized sellers in check.
By allowing Pattern to be the authorized seller of your brand’s products and working with Vorys eControl law firm to eliminate rogue sellers, you can be confident in creating and executing a powerful selling strategy on Walmart.com and other digital marketplaces. As a 3P seller partner, Pattern is truly invested in our partners’ success, we’ll help you to create and execute a strategy that truly prioritizes the long-term performance of your products on digital marketplaces.
Contact us today to learn more about the changes on Walmart.com and how you can optimize your performance.
If you’re in the global ecommerce space, you are most likely aware of Amazon, and probably selling your products on the marketplace. With over $470 billion in sales in 2021 alone, Amazon stands as the third largest company in the world based on revenue. The ecommerce giant is a household name in the U.S. and working hard to grow its market share across five continents worldwide.
Having your products available on Amazon and being competitive there, though, are definitely two different things. If you want to really succeed on Amazon, you’ll need specialized insight into how Amazon works and how to make it work for you. So, for many brands, it’s a great idea to work with an Amazon Search Engine Optimization (SEO) agency.
At Pattern, Amazon SEO optimization service is one of our key competencies. We understand that technology, data-driven insights and expertise are the most important tools brands can leverage to win top listing spots on digital marketplaces. With expert teams and years of experience, we help brands conquer the Profitability Death Spiral as they compete with other products and sellers online. We offer Amazon SEO agency services as a core solution to brands that need more resources to get ahead.
An Amazon SEO agency serves brands by improving their products’ rank and listing performance on Amazon. They make strategic decisions about ad spending and placement that lead to higher traffic, conversions, and revenue for ecommerce brands.
A great Amazon SEO Agency partner will:
Unfortunately, many Amazon SEO agencies profit in unfair ways from your brands’ perceived success based on the ROAS numbers they provide. This is done through including branded search terms in ROAS reports, which naturally skew listing performance.
Let’s say, for instance, your brand is called “Annie’s” and you sell lollipops. Your brand has a very high likelihood of winning the top listing spots on Amazon for lollipop search terms that are paired with “Annie’s,” your brand name. So, SEO agencies will spend your ad money on those terms and report a very high ROAS.
To avoid scenarios like these, it’s best to look for an agency that either calculates their profits on metrics other than your ROAS scores or weighs branded search terms differently in the performance metrics reports. Regardless of your Amazon SEO agency’s cost structure, you should align onbranded search terms before committing to a scope of work.
A great indicator of a high-quality Amazon SEO agency is the level of insight they can provide into your competitors’ listing positioning and how it compares to yours. Data fanaticism is so important at Pattern that we’ve developed proprietary technology to display this exact information with precise detail for every brand we work with. In fact, you can find our free version here to see how you compare to some of your top competitors based on ASIN.
It’s certainly possible to improve your Amazon search performance with blind spending strategies. But a truly great solution will help you to know where your dollars are at their most powerful and competitive.
Amazon’s A10 algorithm prioritizes customer satisfaction—it wants to show consumers the best products that align with their search intent to improve conversions and sales. So, the best way to gain momentum on Amazon is to work on incremental wins.
Improving your performance on more obscure search terms that align with your customers’ search intent is a great way to increase ROAS for the long term. A10 will reward your success with better rankings on higher-volume search terms and the virtuous cycle can help you conquer your most-coveted listing spots. And the best part? This process of gaining momentum, if done right, will naturally decrease your ad spend over time as Amazon recognizes your value and works with you to keep your products at the top of consumers’ search results.
As an Amazon SEO specialist, Pattern knows how to help your brand win better success for long-term profitability on Amazon. With our data-driven tools and brilliant teams of ecommerce experts, we help brands with listing management, content optimization, Amazon ad strategies, and more.
Contact us to learn more about our SEO optimization services.