As we commemorate the one-year anniversary of COVID-related lockdowns in the U.S. it’s become apparent that the way consumers have shopped during the health crisis offers a revealing look at the world’s fluctuating stress levels.
Overall, online sales were up by 50% in 2020 over 2019. It’s a dramatic increase, but it’s only part of the story. The changes in our shopping behavior varied wildly by product category over time and provided a clear proxy for the course of the coronavirus.
Looking back at Signifyd’s Ecommerce Pulse data got me thinking about Abraham Maslow and the hierarchy of needs he constructed to explain how humans’ focus moves from the basics to security to higher-level fulfillment.
- COVID-caused lockdowns and concerns over in-store shopping drove ecommerce sales up 50% in 2020 compared to 2019.
- Looking at the increased buying by vertical charts the course of the emotional roller coaster that most of us have been riding since the World Health Organization declared the pandemic a year ago.
- The pandemic-induced buying behavior and the data it produced provides valuable lessons for retailers looking ahead to a post-pandemic world.
It’s not a bad framework to use when looking at the changes in retail demand over the last year, or when looking for clues as to what’s ahead.
Responding to the zombie apocalypse
The first ecommerce spike came a year ago as states issued stay-at-home orders. The reaction was predictable: panic. Consumers frantically stockpiled with a focus on safety and security. They turned to the three Gs — groceries, gold and guns. In mid-March 2020, online grocery sales doubled week over week, according to Signifyd transaction data. Sales of gold bars shot up123%. Weapons sales were up two times compared to March 2019.
Shoppers emptied physical and virtual store shelves of toilet paper and hand sanitizer. When the toilet paper ran out, home goods retailers like Build with Ferguson saw a run on bidets.
“In the early weeks our overperformance was heavily influenced by COVID-related categories,” Brianna Walling Burwell, vice president of finance at the home improvement retailer said during a CommerceNext webinar. “We saw bidets really outperform any type of history we’ve had in selling that product, as well as deep freezers closely following, as a product that just kind of took off and skyrocketed from a performance standpoint.”
The stockpiling was our own version of preparing for the Zombie Apocalypse. Even Amazon, the so-called everything store, cleared its distribution centers of everything but essentials. By early spring, many brands, including sporting goods sellers, had lost a distribution channel that represented 30% to 60% of their sales. That marked an “aha moment” for many: They realized that to better control their destiny they needed to go direct-to-consumer.
From freaking out to hunkering down
The situation began to stabilize in April. Consumers realized they’d be able to get the necessities. They also realized they were going to be stuck at home for the foreseeable future. Their shopping patterns shifted accordingly.
Signifyd’s April data showed an astounding 682% year-over-year increase in the online sales of media, toys, hobby items and games. Those who could afford to were spending to keep their families entertained. Orders for musical instruments, for instance, flooded into enterprises such as Sweetwater, where the company CEO found himself packing boxes to keep up with demand.
The abrupt change caught online retailers off guard. After all, musical instruments are usually back-to-school and holiday-season purchases. Who buys musical instruments in April? But unprecedented times mean history is no guide. Workers weren’t commuting and with the pandemic restricting where people could go, many now had a few spare hours for the first time in years.
As the reality set in that this situation was going to last, we also saw a big spike in virtual learning devices for the kids. Chromebooks, iPads and laptops flew off the digital shelves. People began upgrading their home offices at the same time. Electronics sales in April rose 159% year-over-year and rose even higher in the following months.
All sorts of sporting goods became hot sellers around the same time, with sales up 267% over the previous April. Remember the great dumbbell shortage of 2020? Unable to go to the gym, folks sought to recreate their workout space at home. In a sign of the times, new venture funding poured into companies like Tonal and Tempo, which provide at-home exercise experiences.
Stuck at home
By the second half of the year, some brands in some verticals found themselves saddled with excess inventory. They began to discount. That helped stabilize certain categories like apparel and accessories, the online sales of which by July were up 156% year-over-year.
The next big shift in Q3: the explosion in demand for major home appliances, remodeling and garden overhauls. That contributed to purchases of kitchen upgrades.
Lead times for home furniture delivery stretched for months, as demand skyrocketed. Sales of home goods and decorative items hovered at 141% above their year-ago performance. The logic was easy: If you were going to be stuck at home for months, it was easier to justify buying a nice couch.
By year’s end, a very human urge surfaced in our data — the need to connect. Connecting in person was generally impractical and unsafe. And so, those who could afford to, upped their gift-giving. Gifting, defined by online orders bought from one address and shipped to another, was up 13% year over year in November and December.
Takeaways for ecommerce
Once COVID is finally behind us, we can hope we’ll never experience anything like it again. But no matter what, the last year offers useful lessons for merchants as they think about the future of ecommerce. Three takeaways to consider:
- Selling direct-to-consumer comes with advantages beyond being able to sell to customers whether physical stores are open or not and no matter what your resale channels’ priorities are. D-to-C allows you to build deeper relationships with your customers. It provides you with a raft of valuable data that will help you serve them better and will lead to improved customer lifetime value.
- Self-actualization occurs in context, which is important for demand forecasting. When consumers are stuck at home, self-actualization is a remodeled kitchen with beautiful, new appliances. When herd immunity arrives, travel and restaurant dinners may fill that Maslowian need.
- Beware of self-satisfaction saturation. A person needs only so many office chairs, brick pizza ovens and barbell sets. Demand for those infrequently purchased, big-ticket items will likely wane.
There are lessons in COVID’s sudden appearance. Our abilities to predict the future are limited and therefore so are our abilities to precisely predict consumers’ wants and needs. The past won’t always help us predict the future, particularly in the face of dramatic disruption, which can take many forms. Consumers’ hierarchy of needs, in other words, might be different next year and the year after that.
How do you prepare for that kind of world?
We know there will be some hierarchy driving purchasing decisions. Best to prepare by also knowing, it might not be the hierarchy you’re planning for.
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