Introducing the Threekit Virtual Shopping Index

Our Virtual Shopping Index is our ongoing effort to monitor the COVID-19 crisis and its impact on commerce.

thumbnail_eCommerce

 

Update 4/21/2020

Since we created the Virtual Shopping Index on March 27, 2020, there has been significant data flow indicating peoples’ increased dependency on eCommerce for both essential and non-essential goods.

 

eComm Boom Continues

According to an insight tracker by Emersys and GoodData, pure play eCommerce revenue was up 37% in the first week of April compared to the same time last year. Additionally, orders were up 54% overall.

 

Sectors on the Rise

Not surprisingly, sectors that experienced a historic transaction volume increase over the previous year seem to correspond with objects and activities “of the home” or related to communication.

  • Home products and furnishings: +97%
  • DIY products: +136%
  • Garden essentials: +163%
  • Electronics: +26.6%
  • Telco: +18.6%

Conversely, Travel and Online Dating transactions were down 44% and 9% respectively.

 

The Online Grocery Shift

As noted in our original update, despite online grocery delivery being broadly available for several years, it had never really had its moment. The current landscape may change that.

According to a 1,500-person survey, conducted by RBC, 42% of respondents purchase groceries online at least once a week, up from 22% in 2018.  

But perhaps more importantly for long-term impact, 55% online grocery shoppers surveyed said COVID-19 is “leading them to permanently boost their willingness to buy groceries online.” And of the people who don’t buy groceries online, 41% (up from 19% in 2018) said they would do so in the next six months.

The mass act of “practicing” ordering groceries online has us even more bullish about its growth potential in the months to come. We’re altering our VSI projections to show a 80%/20% split between in-store and eComm sales. Not a majority shift by a long shot, but still hugely significant considering  that eComm only accounted for about 3% of grocery sales as of January 1, 2020.

(Projection updated 4/21/20)

update projection 4_21

 

The eComm Scramble

Some of the more disconcerting data we’ve discovered is the degree to which many companies and brands were caught flat-footed by the COVID-19 crisis.

According to a Profitero and Kantar survey of 200 brand executives just prior to the crisis, only 17% believed their organizations were leading competitors in eCommerce. The vast majority (71%) said they were playing catch up.

At Threekit, we’ve been hearing more from brands/businesses who need to quickly upgrade their online experience to compensate for lost store sales. This could mean getting interactive and configurable 3D product experiences online, using our Virtual Photographer essentially replace cancelled product photoshoots or adding augmented reality to drive buyer confidence. There is no shortage of ways we can help make the eCommerce experience work harder for you during this unprecedented period and into the future.

Original Post 3/27/20

This week, we spent some time developing the thing that brings comfort to any team during periods of tumult and uncertainty—perspective. A truthful thread of logic that gets us out of the moment and helps us all to see the big picture. 

We always start from what we know. First, this is an opportunity to learn—a rare occasion where we’ve had to institute massive behavioral change, seemingly overnight.  Such a shift, while uncomfortable, will reveal a lot about our society’s collective capacity to adapt to new behaviors, as well as each individual’s response to those changes—namely, what she can tolerate and what she may actually learn about herself.

And the same goes for commerce.

This marks an inflection point in retail. Some business disruptors come in the form of game-changing products or technology. Some, unfortunately, come in the form of global crises. In either case, by definition, disruption means irrecoverable change.  For better or for worse, things will never quite go back to the way they were before.

eComm’s growth has been steady over the past 10 years, but it has never supplanted in-store shopping.

  • Overall, some 51 percent of Americans prefer to shop online, while the remaining 49 percent would rather go to a store
  • E-commerce is growing 3 times faster than traditional retail, with a growth rate of about 15 percent compared to 5 percent growth for brick and mortar stores

However…

  • People spend 64 percent of their shopping cash in stores, compared with 36 percent online 

In other words, there hasn’t been a watershed moment where consumers gave themselves permission to buy “anything and everything” online. They’ve never been forced to, and old habits die hard.

It’s easy to see in the following breakdown of purchase preferences by category, pre-Covid 19.  

 

Pre covid buying-1

 

We believe that this period is that ‘watershed moment’ and that this chart will look fundamentally different in 6 months.  So, we’re introducing the Threekit Virtual Shopping Index to track this change.  

Here’s a view of buying behavior at this moment (no surprise, and quite literally by force, eComm is the primary buying channel, with the exception of grocery/essentials).  

 

real time buying

 

This isn’t forever, and there will be a correction when stores and restaurants re-open.

But, until then, buyers are going to experiment with virtual shopping in a way they never have before. They may discover that the thing they were always sure they needed to see in person—the watch, the sofa, the shoes—are kind of fun to shop for online. They may also find that, while they most definitely miss getting out, they don’t miss getting out to go shopping. Old habits will be forced to die and new ones will emerge in their place.

Here is our projection of the index in about 6 months: 

 

post covid

 

In some categories (electronics, furniture/home, apparel/shoes, tablets/smartphone/computers), we see there being a “majority shift”—more people buying virtually than in-store.  

But we’re going to keep ourselves honest. We’ll be tracking and updating this over the next several months to respond to news updates and economic shifts. It’s going to be an interesting time of change, and we hope it’s insightful for you as well.   Check back in as we observe it together.

 

Article Categories: ecommerce, virtual shopping

Share this article