News and Trends

COVID-19 Online Sales Impact Data

March 11, 2020 By: Tamara Gaffney

Listening to the news, it is clear that every business is being disrupted by COVID-19 and turning to digital as the (only) answer. At Quantum Metric, we were curious to look into our data to see how the COVID-19 news has impacted the digital landscape so far.

We have visibility into over 420 million online and mobile user sessions a month, so we investigated the aggregate data for the past 13 months (that’s a total of 5.5 billion sessions) to quantify the impact on retailers. The results confirm what we already suspected: consumers have also turned to digital!

Brick & Mortar Growth Rate Up 52%

We typically see a spike in ecommerce on February 14th, but a side-by-side comparison of brick and mortar e-tailers’ growth rate from last year held against this year shows a 52% increase.

 

Brick and Mortar Store Weekly Online Revenue Growth Comparison

 

We attribute the growth to lack of availability of local brick and mortar supplies (out-of-stock consumables and shipped from China inventory), and an overall desire to limit in-store exposure. It is worth noting that the growth rate spiked the week beginning February 17th and has declined by the week of March 2nd. It is possible that online inventories are beginning to run low, but more likely that consumers have already purchased what they need. Future weeks of analysis may see the growth rate index invert if consumers shift the timing of their purchases more than the amount of purchases overall.

Conversion Rate Up 8.8%

One of the most difficult e-tail metrics to move is conversion rate. This is defined as the total number of purchasing sessions divided into the total number of shopping sessions overall. Conversion rates during the month of February jumped by nearly 9% as shoppers demonstrated the same kind of buying urgency that we typically see during Cyber Monday.

 

Conversion Rate Gains Feb 2020 versus Feb 2019

 

Patterns amongst retailers who sell consumables like household cleaning supplies demonstrate much higher frequency of shopping with smaller average order values. The resulting impact to retailers will likely be higher shipping costs as more small boxes go out. Shipping companies will love this trend as they generally make more per individual box than they do on heavier boxes.

Regional Patterns Show Little Variation

We anticipated seeing different patterns of online shopping for consumers along the more heavily impacted West Coast. The analysis, however, when broken out by consumer location, actually showed a bigger spread in growth rate trends across the Mountain, Central and Eastern regions.

 

Online Retail Revenue Growth Rate by Region

 

Post Valentine’s Day shopping typically declines as consumers have become skilled at shopping on “deal” days. This year, however, we saw upticks in growth rate in all regions. The West Coast didn’t peak as high or last as long as the rest of the country.

While that might seem strange, West Coast consumers have a history of buying more online than consumers in other regions. The higher overall purchasing averages in the West make it more difficult to increase the growth rate curve. The lack of regional differences lend credibility to the theory that much of the digital shopping surge is coming from national news coverage as opposed to specific local needs.

Assessment for Retailer Revenue

Investors may be wondering if these online shopping trends could be used to predict an unexpected and surprising upside amongst brick and mortar retailers. In store shopping still makes up the largest proportion of retailer revenue, but some of the stockpiling will certainly be incremental.

 

We believe, however, that the biggest upside of the COVID-19 shopping surge will be felt by retailers who have already built excellence into their digital products. Shopping trends are moving towards higher frequency, lower revenue shopping carts, so retailers are increasing their focus on building loyalty. Without a doubt, the digital retail experiences customers have been having these past few weeks, good or bad, will have a lasting impact on their ability to build much needed loyalty into their consumer-base.

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