Digital transformation, ecommerce and pandemics.

16 June 2020 / Digital transformation | Work

It takes a global pandemic to emphasise the importance of digital transformation.

Suddenly, the whole world was heavily leaning on the Internet – and the infrastructure started to creak.

According to the results of Coronavirus Consumer Tracker, conducted by Internet Retailing, “…up to 47 percent of UK consumers’ online orders have been affected by busy and overwhelmed services during the coronavirus pandemic.

Even web giants such as Netflix had to limit bandwidth, Ocado struggled to keep up with demand, and bicycle retailers have reportedly up to 20,000 bikes which have already been sold and awaiting delivery.

But not every business has been so fortunate. Those companies that rely on physical presence –  bars and restaurants, cinemas and theatres, hotels and airlines have all found it very tough going.

Retailers have also been drastically hit. Although, in this case, it might be worth asking “Why?”.

Online shopping for high-street staples has been available for years, if not decades.

We learn our lessons and we move on. In the old  world failure took six to 12 months. In the new world it takes six to 12 days” – Ecommerce Director of Pure-Play Retailer.

We use ecommerce for books, technology, fashion, opticians, homeware, pharmacies and the rest – so why have some retail businesses not been able to easily switch their sales online? Truly progressive retailers know exactly what customers want and can get it to them quickly, no matter what channel they shop through.

Many blame the global dominance of Amazon for their woes.  Amazon accounts for 30% of all ecommerce in the UK and almost 90% of UK shoppers have used the online store.

However, in pre-lockdown conditions, ecommerce only accounted for 20% of all retail in the UK, leaving 80% on the high-street. So this could go some way to explain a sector-wide lack of investment.

But it looks like we may have reached a tipping point.

Covid-19 lockdowns have provided an introduction to new options in online shopping for many users. Whilst some users have previously been happy to only use Amazon, retailers such as Boohoo, Laithwaites and Ocado have all seen demand from new customers.

According to Emarsys – “Amid concerns from the Office for Budget Responsibility (OBR) that the UK economy is likely to shrink by 35% this spring and 13% for 2020 as a whole, ecommerce is […] growing at 83% year on year in the last two weeks (17/4/2020) — the highest growth since the outbreak of coronavirus.

Data and analytics company, GlobalData, says, “With over a quarter of shoppers now planning to spend more online after the COVID-19 restrictions are lifted, retailers with a limited (or no) online proposition must consider investment in order to remain competitive.

There is no clearer example for companies that an omnichannel approach needs to be adopted. For some this means investing more heavily in existing online infrastructure, for others a boost in digital sales, marketing or social and for others a deeper understanding of customer data.

There has also been a shift in online demographics. Or Lenchner, CEO, Luminati Networks says: “Our online data […] shows that older consumers are now embracing online retail and are currently using e-commerce at a rate 15 percent higher than the same time last year.”

With these older demographic consumers often comes increased disposable income – a factor that cannot be ignored after these months of retail austerity.

So what should retailers do now? As Dave Evans writes in Forbes, the solution to many business ills post pandemic, is “digital transformation“.

This is not just about ecommerce and websites either. Covid-19 has shown the weaknesses in many supply chains and the lack of agility within a multitude of businesses. Those with well-structured IT systems have weathered the storm significantly better than their less technologically counterparts. Obviously this aids the transition to a (albeit temporary) purely online customer shopping experience, but digital transformation, at a fundamental systems level, can help businesses in many other ways.

Digital transformation can enable businesses to pivot quickly in the face of market change, it can help create more agile supply chains, and it can make manufacturing more competitive and resilient.

Outside of the manufacturing process, digital transformation can help integrate bricks and mortar operations and online fulfilment to more fully support the omnichannel customer experience.

Businesses must be able to make use of customer and market insights to move forward – and this will be even more important as online sales grow. As will the ability to securely help and service these customers.

At Freedom People, we believe that now is the time to focus on digital transformation – and to invest in the future of your company. The world is rapidly changing and we will all have to embrace that change to thrive.