The COVID-19 pandemic has undeniably impacted ecommerce in 2020.
While the exact impacts have varied by market, current conditions have forced shoppers to turn to online channels more than ever before. And as a result, ecommerce as a whole is booming.
But, how has it affected the ways in which customers behave?
Consumers' needs, activities, and resources have changed. It is only logical that their purchasing patterns would evolve, as well.
As an example, let's explore customer data for a women's fashion brand that specializes in high-end everyday essentials.
This company has been heavily impacted by COVID-19, its monthly sales have declined since the start of 2020.
This has occurred despite the fact that March brings new product launches for the brand and, typically, a surge of revenue from new customers.
During the pandemic, customer acquisition seems to have been a struggle for the business.
With the COVID-19 pandemic at large, this sales spike never occurred in March of 2020. As a result, revenue was down just over 33% from March of 2019.
In March of 2019, much of the sales volume came from new customers. First-time shoppers contributed 59% percent of the monthly revenue.
However, only 48% of the monthly revenue came from new customers in March of 2020.
Consumers felt wary in this time - their jobs were insecure, the economy was fragile, and the world was filled with uncertainty. And it seems that, as a result, customer acquisition was heavily impeded.
Shoppers were most likely reluctant to try out a new brand.
It's evident that the needs of customers have been significantly altered by the COVID-19 pandemic.
With widespread stay-at-home orders in place, shoppers do not have the same interest in work apparel, and certainly not for formal or going-out clothing.
Meanwhile, there has been a surge in demand for fitness apparel and equipment, as well as home-related products.
Since this brand emphasizes work-ready outfits, they were noticeably impacted by the pandemic.
This is reflected in the products that were sold during this time.
This graphic illustrates the percentage of monthly revenue that came from each product the brand carries.
Before 2020, no one product, or group of products, contributes a remarkable proportion of the company's sales.
The customer base seems to enjoy the assortment of items that are available.
But, starting February in 2020, two products really stand out and comprise the bulk of monthly revenue.
These two products alone were responsible for more than 33% of the brand's sales in March of 2020.
Product A is a stretch pant, and Product B is a an oversized top. Neither are overly formal or trendy, but they are both useful in current conditions.
The needs of consumers have drastically changed since the beginning of 2020. This not only manifests itself in the brand's revenue, but also in the demand for particular products.
Average order value (AOV) refers to the average amount spent per transaction. Essentially, it tells us the typical revenue that a merchant receives in a purchase.
As we mentioned above, March is typically a big month for this brand, with new products being released and heavy promotion to drive sales.
March of 2019 is a prime example of this hype and excitement - its average order value of $333 far exceeds the brand's overall AOV of $224.
March of 2020, however, is an entirely different story.
While there was still an increase in AOV from January onward, March of 2020 saw an average order value of only $216. That is $117 less per order than the year before and $8 below the brand's average.
Put simply: those who were willing to purchase during the pandemic still were not willing to spend as much as usual.
With an estimated return rate of nearly 30% across ecommerce, no discussion of customer behavior is truly complete without examining returns data.
Most definitely, the COVID-19 pandemic has impacted returns management.
Supply chains have been halted, customers are under a variety of stresses, and merchants are - in many ways - just trying to keep up.
In order to see how the pandemic is impacting customers' returns behavior, let's start by looking at return rates.
For this brand, the return rate generally increases from January through March. This is mainly due to Final Sale designations that occur at the beginning of the year, which prevent shoppers from returning items.
Regardless, the main difference we see in return rate from 2019 to 2020 is in the month of April.
In early 2019, to peak of return rate happened in March, lining up with the time of new product launches.
However, in 2020, the return rate was substantially higher in April than it was in March. In fact, it was 6% greater.
But why did the brand see a continuing increase in return rate?
Return reasons summarize why products are being returned, and give us a glimpse into what went wrong from the customer's perspective.
If the pandemic has affected returns behavior, return reasons would be an excellent place to look.
The return reasons for this brand paint a clear picture of COVID's impact on returns from the perspective of the customer.
There is a fairly dramatic shift toward “Changed Mind," especially in the months of March and April, which represent the onset of the pandemic.
It seems as though, in the midst of the pandemic, shoppers were more likely to return products to this merchant because they were not confident about their purchase decision.
This is likely a direct reflection of the financial and social uncertainties that consumers experienced during this time.
If my job is at risk, or if I am going to work from home for the foreseeable future, why would I need more clothing?
Often, reasons for returns embody the very same reasons why shoppers are hesitant to purchase in the first place.
So the goal isn't just conversion, it's retained conversion.
The COVID-19 pandemic has impacted almost every aspect of life, and is showing few signs of slowing down.
However, savvy merchants can learn from these times to better understand, appreciate, and serve the needs of consumers both now and in the future.
At the end of the day, the winners will not be the brands that sell the most value to customers - the winners will be those who create the most value for customers.