What’s next for e-commerce?

Since Covid-19 first hit the UK, e-commerce has broken one record high after another. In February, online retail sales rose by nearly 70% year-on-year, the IMRG Capgemini Online Retail Index found. What’s more, the proportion spent online has increased to more than 36% – the highest on record – according to the Office for National Statistics (ONS).

The food sector has seen particularly high growth – a whopping 141% year-on-year in February, the ONS said. With the economy slowly but surely reopening and footfall to physical retailers returning, what’s in store for e-commerce in the ‘new normal’?

A lifeline

While many fine food retailers only made the move to online sales during the pandemic, for Will Docker of St Andrews-based Balgove Larder, e-commerce wasn’t entirely new. “Our online shop had been running for six years, with the majority of our sales coming from national and domestic tourists returning home having visited Balgove Larder in person.”

However, during the pandemic, online orders became a “vital lifeline for our business”, Will says. “Part of the success came from our adaptability. We were able to convert the café space into a packing area with same day local deliveries and next day national delivery.” With Balgove able to guarantee delivery during a time when larger supermarkets couldn’t, putting resources behind its e-commerce operations was a no brainer.

But now that the multiples have rebounded from their supply issues and customers are increasingly feeling confident about returning to physical shops, there are question marks around what will happen next. Ciaran Bollard, CEO of e-commerce platform Kooomo, believes that there will indeed be a “dip” in online sales, but he continues, “e-commerce is undoubtedly here to stay”.

Home delivery expert ParcelHero agrees that there is no going back for e-commerce, with nearly 50% of shoppers having no intention to return to their pre-Covid high street shopping habits. And despite queues forming outside bricks and mortar shops on 12th April when restrictions were eased, ParcelHero said there was no noticeable falling back in online retail bookings.

Data from Mintel also backs up this trend, with the market research group finding that 90% of Brits plan to keep shopping for their groceries online once the peak of Covid-19 passes. Meanwhile, just 5% of shoppers said they would stop shopping online. The proportion of Brits who shop online has risen from 50% in 2019 to 59% today, representing the highest level of growth in the past decade.

As the market rebalances, Mintel predicts that Britons will spend £19.4bn on online grocery shopping this year, down 13% compared to 2020. However, e-commerce will benefit from a “legacy boost” from the pandemic, with Mintel forecasting that the online grocery market will be worth £22.4bn by 2025, up nearly £5bn over pre-pandemic forecasts. “The past year has highlighted the undeniable importance of e-commerce,” Ciaran said. “Retailers looking to remain competitive post-Covid must therefore continue to bolster their e-commerce offerings in line with current demand.”

Balancing act

Establishing this careful balance between bricks and mortar and e-commerce will be an important step for every business. Ciaran’s advice for independents is to take a step back to consider what’s next for the digital side of their business “Now is the time for independent food and drink retailers to ensure their e-commerce platform continues to remain competitive and promote a truly omnichannel offering. We have seen retailers overcome their lockdown struggles by implementing omnichannel features such as click and collect, in-store returns and so on,” he says.

“It therefore seems a perfect blend of the physical and online shopping experiences may be the trend to watch going forward.” Ciaran says consumers are now used to these “flexible shopping journeys, meaning retailers should seek to maintain this in order to build loyalty and boost sales. This will be particularly critical for independent retailers, who should focus on creating the optimum omnichannel experience to compete with the likes of e-commerce giants such as Amazon.”

Like many fine food retailers, Will is prioritising his bricks and mortar shop post-lockdown – but he expects online business to continue to thrive. “Looking forward, our main hope is to be able to welcome people to Balgove once more to experience the destination and local food community, but the online store has become an integral facet of the business,” he says.

“We are expecting a slight drop in online trade as restrictions lift, but our online store will remain a key department and continue to provide for local and national customers.”

Rosie Jack, manager of Bowhouse, a food hub in Fife, launched an e-commerce website, Bowhouse Link, for local traders during the Covid-19 pandemic. “As soon as we launched the website with local traders and businesses based at Bowhouse, we had support from local shoppers,” she says. Rosie is also discovering ways to integrate online and physical experiences.

“We are welcoming the return of our market weekends, which will run in tandem with Bowhouse Link, allowing shoppers to pre-order items before collecting at the markets or selecting contactless delivery,” Rosie says.

“Ultimately,” Ciaran concludes, “retailers should be wise to the fact that consumers have picked up new habits when it comes to online shopping. And with these habits here to stay, it is important for merchants to think innovatively about how they can enhance their services,” he says.

3 tips for perfecting your omnichannel offering

Kooomo’s Ciaran Bollard offers his advice for balancing online and offline sales

• Tools such as stock synchronisation, real-time inventory updates and online and offline loyalty point collection will be critical, as well as unified customer service channels. For example, merchants must ensure all content across their site is accurate and up to date in real time.
• Offering multi-channel options will also be key, including click and collect and purchase from mobile apps, marketplaces and social media – as many channels as possible.
• Make sure all communications are as accurate as possible to reinforce a positive customer experience. It is imperative to keep communications with customers timely and update them as the situation changes.