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The coronavirus will change commerce and consumer behavior

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The numbers tell the story: COVID-19 has changed the way consumers shop and what they shop for. 

Ecommerce sales are up. Brick-and-mortar traffic is down. Luxury goods are not as much in demand as they were pre-coronavirus. Restaurant and entertainment receipts are expected to suffer. Household staples and health-related goods — toilet paper, bottled water, hand sanitizer, face masks, bleach — are in high demand. Luxury goods, not so much.  

We are living in a different world than we were before Jan. 30, when the World Health Organization declared the coronavirus an international public health emergency. In fact, we are living in a world that is different from what it was 48 hours ago or 24 hours ago.

The questions now are: different how?  And for how long? 

  • Coronavirus precautions have led to a decrease in store visits and an increase in ecommerce spending
  • Consumers are purchasing groceries and health-related products that they haven’t historically bought online in large numbers.
  • Habits consumers develop while self-isolating might well lead to permanent changes in buying habits

“When a lot of people are self-quarantined or staying in their homes and being in a lot less public places, we’re going to see a shift in behavior,” says Shelley Kohan, founder of retail consultancy Shelmark Consulting. “We’ve talked about how ecommerce is supposed to grow over the next few years, but this is something that’s going to happen in our first quarter that is going to change behavior in quarters two, three and four.” 

Retailers understand that while the health of their employees, families and communities are the top priorities, they must also prepare for rapid changes that will affect their businesses and how they serve their customers.

Store visits are down 3.3% in light of the coronavirus crisis

The shift in consumer behavior in the face of the new coronavirus has already led to a 3.3% drop in store visits, Prodco Analytics reported about a month into the health crisis. It also is no doubt fueling the dramatic increase in ecommerce sales in recent weeks. 

Online spending in the U.S. was up 52% year-over-year in a three-week first quarter stretch measured by Quantum Metric. That tracks with data from Signifyd’s Commerce Network, which shows a 50% increase over last year in March’s online sales figures.

And while the increase in online spending is understandable given health officials’ advice that citizens work from home and avoid crowded public places, like malls and stores, retail experts say the change in shopping preferences is likely to have an effect long after people are out and about again. 

Andrew Lipsman, of market research firm eMarketer refers to the phenomenon as a “step-change,” a short-term change in reaction to a specific event that creates a new, higher plateau for a certain behavior. 

“During the holiday, a time with more concentrated buying activity, consumers spend more online, creating a step-change, meaning the consumer may not return to past behavior. We may see this type of similar behavior unfold over the next few months,” Lipsman was quoted as saying in a column Kohan wrote for Forbes

The shift to buying online is certainly telling. Even more telling is what shoppers are buying online. In China, which was the first country to grapple with the virus outbreak, fresh food sales on were up 215% in mid-February, according to Digiday. Mead Johnson parent Reckitt Benckiser saw sales of its Dettol disinfectant rise 643% year-over-year in the midst of the outbreak, the site reported. 

Sales on Signifyd’s Commerce Network also reflect consumers’ pressing needs, which are creating tremendous spikes in March. Face masks sales, for instance, were up more than 800% this month compared to the beginning of the year.

Bleach sales increased more than six times and hand sanitizer  — when it was available — sold at a rate 181 times higher than before the world health emergency was declared.

Coronavirus-inspired shopping habits are likely here for the long term

And while those products are extreme examples, the wild increases illustrates another point that Kohan made both in our conversation and in her Forbes piece: Not only are consumers doing more of their purchasing online, they are likely buying things they hadn’t bought online before. And after going online for those purchases, it’s likely consumers will embrace the shopping experience. 

“Once they start doing buy-online-and-pick-it-up at the grocery store and they start doing home delivery, that behavior is going to change going forward,” Kohan says of consumers who are staying home. “They’re going to say, ‘Wow that was pretty easy to get online groceries delivered to my front door. Why am I not doing this all the time?’”

The coronavirus is a reminder, a dramatic one, that retailers need to remain nimble for any number of reasons. Seasonal spikes, natural disasters, unforeseen fads, promotions and flash sales all stress retailers’ inventory management, fulfillment performance and their efforts to avoid lost sales due to fraud and abuse. 

That reality means retailers need to be able to scale up quickly to handle order spikes. Successful merchants have turned to automated systems to improve order flow, inventory insights and fulfillment. 

Machine learning systems have also provided retailers with an edge when it comes to managing fraud and shopper Abuse Prevention. The sad fact is that there are those who will take advantage of bad situations. Look no further than price-gougers who one consumer advocacy group found were selling $13 disinfectant wipes for $220 and Purell hand sanitizer for $49.95 on Amazon’s marketplace, according to The Wall Street Journal.

Fraudsters also look for opportunity in times of distress and confusion. As COVID-19 becomes our new reality, retailers face the challenge of high order spikes and big runs on products that usually are not in such high demand.

Fraud and shopper abuse can be hard to detect during order surges

Fraudsters seize the chance to take advantage of manual fraud review teams that are overtaxed by unusual volume. And assessing customer claims that something didn’t go right — a package never arrived, the product that did arrive was not as promised — become harder to rigorously assess. 

Again, a new breed of fraud management can remove those stresses from a merchant’s list of worries. Signifyd’s Commerce Protection Platform, for instance, automates order flow, while protecting merchants from fraud and abuse, all of which maximizes conversion. 

The AI-driven solution allows retailers to instantly and endlessly scale their operations — and it provides a financial guarantee. The financial security means that merchants won’t find themselves becoming overly conservative when screening for fraud and bad shopper behavior, which leads to unnecessarily declined orders. 

No question, these are times when everything seems a little bit upside down. And as uncertain as it all feels today, we will look back one day at the early days of the COVID-19 crisis and marvel at all that has changed. 

Some changes will be profound. Others will be in how we live our day-to-day lives —  including how we shop, if we’re consumers, and how we sell, if we’re retailers.

photo by Getty Images

The COVID-19 crisis is changing the face of business day-by-day, hour-by-hour. Read our weekly report, including data on changing industry trends in the time of Coronavirus.

Mike Cassidy

Mike Cassidy

Mike is the head of storytelling at Signifyd. A former journalist and a retail geek, he covers ecommerce and the way technology is transforming digital commerce. Contact him at [email protected].