state of ecommerce; covid-19 - user conversion · ecommerce has altered user behaviours and the...

State of Ecommerce; COVID-19Understanding the attitudes and expected behaviours of the UK online population during, and after the COVID-19 pandemic.

March 2020

User Conversion Limited, Jutland House, Lower Ground Floor, Jutland St, Manchester M1 2BE | Company Number: 8151145

2User Conversion Limited, Jutland House, Lower Ground Floor, Jutland St, Manchester M1 2BE | Company Number: 8151145www.userconversion.com

Report Overview

As we enter into an unprecedented situation, and one that’s likely to evolve over the coming weeks, we set out to understand the UK population’s view on the role of ecommerce. We additionally explored users’ needs and their expected behaviours during this challenging time.

In the report we discuss how attitudes towards online shopping have changed. We explore how the high reliance currently being placed on ecommerce has altered user behaviours and the opportunities online retailers can harness to succeed.

The report outlines the findings from a nationally representative survey conducted with OnePoll UK (based on a survey of 2,000 users, of whom 92.20% said that they’d consider buying online).

Key Findings:

• Whilst traffic is declining, we’re generally seeing increased progression rates / lower abandonment rates across all sectors as users shift from a browsing to buying mentality

• Online confidence is high because store confidence is low, therefore we shouldn’t focus experimentation currently around usability; as users are more likely to persist with these. Focus experimentation on understanding and creating a compelling proposition

• The online food industry is driving user expectations for online services; with many users reporting concerns with delivery and stock across-industry

• Compared to contactless delivery; speed of delivery appears to be a bigger driver (especially when free) for users during this time

• If you don’t have a functional product to promote during these times; gifting appears to offer a viable alternative; with the right messaging

• COVID-19 appears to have created a long-term desire amongst those aged 35-44 for ecommerce, who previously may not have used online retailers as much

• Whilst ¾’s of the UK are unlikely to make a luxury purchase during these challenging times; there is certainly an appetite for luxury and it’s all about using content to create attachment


The State Of The Market

The COVID-19 outbreak means we’re somewhat heading into the unknown.Ecommerce Europe interviewed e-commerce associations, company members and business partners and found that 65% of respondents expect the pandemic will lead to a decline in sales, a partial or complete closure of business during quarantine measures and the release of staff.

However, if we line up that revenue performance versus other core traffic and engagement metrics (for example, Session volumes and Bounce Rate), we’re able to place that in stark contrast with how people may be changing their shopping behaviour.

¹ This Week = 11th to 17th March 2020 | Last Week = 4th to 10th March 2020

However, after the first week of government-advised restrictions on movement, we saw the following changes in Revenue (averaged across all our clients)¹ :

12%

10%

8%

6%

4%

2%

0

-2%

-4%Last Week vs Same Last Year This Week vs Same Last Year This Week vs Last Week

-2%

7%

11%

11%

-8

-6

12%

10%

8%

6%

4%

2%

0

-2%

-4%

Revenue Average Sessions Average Bounce Rate Average

-7%

-1.08%

The week before government intervention, on average our clients were performing comparably to the previous year (with some seeing a slight drop off, although seasonality is in play).

The week after intervention, performance had, on average, risen by +7% vs Last Year and +11% Week on Week, indicating for some of our clients demand not only continued to exist, but increased quite considerably.

Although we may be up 11% in revenue week on week (WoW), session volumes are down 7% and Bounce Rate is up by 1% (which is a “negative” 1%). This may suggest that buying behaviour online has quite quickly become more planned (less exploratory), and more pressured (with less interest in casual browsing or hunting for what is needed). People need online more than ever before, but our clients face an increasing challenge in delivering relevancy and immediacy.


Current Attitudes Favour Ecommerce

Two thirds (66.38%) of the UK population say they’ll be shopping online more than usual over the next few months. A somewhat unsurprising result, given the current lockdown and store closures imposed by the government.

This push towards ecommerce has undoubtedly placed a higher level of importance on online shopping; with 72% of the UK now agreeing that online shopping is more important than ever. This shift in behaviour appears to impact those aged 35-44 most; placing the highest importance on ecommerce. Perhaps as they no longer have the ability to visit stores whilst their children are at school etc.

Encouragingly, user confidence in online shopping appears to be increasing; with less than 5% of the UK saying they’re not confident about shopping online. This story appears consistent with the changes that we’re seeing to user behaviour online amongst our clients; with progress rates up and abandonment rates down; perhaps as users reduce their more cautious browsing behaviours, in favour of securing product(s). A byproduct of this however, is that traffic levels are generally down, as that shift from ‘browsing’ to only ‘essential’ purchases starts to cut through.

We’ve seen the impact that additional safety messaging can have on user success and conversion rates, specifically around the checkout, but now it feels like the importance of this may have temporarily shifted. Security and usability triggers that might have once deterred users, become less important (certainly in the short term) as users persist with experiences more.

“We’ve seen recently that a number of our clients abandonment and progression rates have started to naturally improve. There’s certainly a shift in the market currently. It feels like usability and (site-level) reassurances appear less important and what’s going to make a difference over the next few months is having a compelling proposition that meets users requirements”

Ryan Jordan, Optimisation Consultant, User Conversion


50%

40%

30%

20%

10%

0%Over the next few months I’ll shop

online more than I usually would

I feel confident shopping

online

I feel it’s safer to shop online than

in-store

I feel safe having items delivered by

a courier

Online shopping, to me , is now

more important than ever

Strongly Agree Somewhat agree Neither agree or disagree Somewhat disagree Strongly disagree

I am less likely to shop in-store once

the COVID-19 pandemic is over

Even in the 55+ age group; over 80% of respondents agree they’re confident shopping online; a figure that we’ve previously seen to be significantly lower among this demographic. There is obviously a balancing act between stores vs. online coming into play here; whereas before the risk to retail was minimal (and therefore online became the higher risk option), but now with75% of the UK agreeing that online shopping is ‘safer’ that shopping in-store; COVID-19 is undoubtedly impacting this belief significantly.

It’s important during these times to accept that users visiting your sites will place less of an importance on the security triggers that once would have been key to conversion (this doesn’t mean to say they’re not important…). At this moment in time; users are viewing ecommerce as the safer alternative to retail; and now, more than ever, is the chance for retailers to present an attractive proposition to users, that not only meets their functional requirements but more importantly, their emotional needs. This will help to build a new user base that has the potential to drive long term growth after the COVID-19 pandemic.

Even after the virus infection rates have slowed, 30% of users believe that they are more likely to move towards online in favour of retail, driven by those aged 18-44.


Additionally, users expectations are that delivery be free (50.9%) and whilst this is generally a norm for the industry (users generally self-report that they want things for free…), it does feel like something that could be particularly persuasive at this point; and potentially remove a blocker to purchasing online.

Most interesting of all? Those aged 55+ cited contactless delivery as less important than all other age groups.

It appears that users have an expectation that contactless delivery is just going to happen anyway, because it’s been adopted by all courier services. Therefore the anxiety around delivery appears to be “am I able to get this, and quickly?”. This behaviour is undoubtedly driven by the current food / supermarket behaviours where deliveries are delayed and waiting times are long due to panic buying.

However, maintaining normality and reassuring users of speedy, reliable delivery (that’s also free), appears to be an immediate opportunity to win.

Speed Is Important; Especially To Those Aged 55+

With the move towards online evident; it’s important to understand what factors are most important to users in this current situation. Whilst many sites have moved towards messaging for Contactless / Contact-Free Delivery it appears that, when asked, speed of delivery is reported as more important to users (42.80% and 51.95%, respectively).

80%

60%

40%

20%

0%Free

deliveryQuick

deliveryContact

free delivery

Extended returns

Easy returns process

Flexible payment options

None N/A; I never shop online

Other

18-24

25-34

35-44

45-54

55+


There has also been a rise in ecommerce businesses extending their returns period; however, it appears that the length of the returns isn’t an issue for respondents; more so, the logistics of them being able to do this.

It’s commonplace in the mobile phone industry to offer users ‘door step’ exchanges and returns on mobile phones; so now could be the time to reinvent / experiment with prepositions to captialise on this need, offering value added services to meet the short term needs of a user; which undoubtedly results in growth through increased customer lifetime value (CTLV).

“Covid-19 has meant we’ve taken emergency measures to safeguard our customers and staff. We quickly implemented contact free delivery across all stores, switched off cash payments and moved to delivery only to minimise customer contact. As a result of such high demand we’ve had to implement onsite messaging to manage customer expectations around delivery, utilising tools such as AB Tasty which enable fast deployment of changes.”

Gareth Luck, UK Ecommerce Manager, Papa Johns


If Food is Functional, Gifting is Emotional?

If your product doesn’t offer a functional need to users during this time; then the importance of creating an emotional connection appears to be more important than ever.

Of all industries we surveyed users about; Food and Toiletries were unsurprisingly the ones users are likely to be buying online. However, gifting appeared as a surprising category; with people more likely to buy a gift online than a takeaway - putting gifting 3rd overall in terms of likelihood to buy the categories listed below.

50%

75%

100%

25%

0%Food Toiletries Gifts Takeaway Clothes Films /

entertainmentTech Games Furniture/

DIY

Very Likely Somewhat likely Neither likely or unlikely Somewhat unlikely Very unlikely N/A; I don’t know


Food Shopping (Online) Is Driving Users ExpectationsThe move towards a higher dependency for online shopping is obviously driven by food shopping, thanks in part to the panic buying mentality in-store. This behaviour, combined with the associated risks of going in store appear to be the main factors driving user perceptions for online shopping.

We asked respondents to tell us their thoughts and attitude towards online shopping during COVID-19 and there were a few themes...

We have seen the majority of our clients, who can, move towards pushing functional products that have an attachment to the current situation (e.g. fitness equipment for the home). Those who don’t have a functional product range, have moved towards identifying an emotional connection, either around treating ‘yourself’ or others, and are now starting to see the benefits of doing so.

Online is no longer an optional consumer channel Online is now viewed as a “lifesaver” and “essential” to addressing consumer needs during this time.

1

Delivery needs to be cheap, quick and reliable Delivery is now the alternative to going to a store and having what you need the same day. While people understand that same day delivery isn’t always possible, they still seek reassurance. There is still an element of the unknown for users too, e.g. what impact is the move to online shopping having for retailers and are they still able to meet timelines:

2

a|

b|

Both from an urgent “I need this product perspective” point of view, specifically around food, which is creating a lot of anxiety To the emotional “if I buy a gift / treat, is it going to arrive on time”

3 Risk of contamination With a lot still unknown about COVID-19, there’s a lot of self reported worry around the potential for packages to be contaminated, making it a potential anxiety for retailers to consider.


Q: Tell us about your thoughts & attitude to online shopping during COVID-19


Respondents Expect Their Spending To Increase Online

56.5% of the UK population expect their spending habits online will increase over the next few months. Interestingly however, 32% of respondents suggest that this increased spending will only be during the COVID-19 outbreak.

Whilst this is encouraging for ecommerce businesses both in the short and long term, the opportunity appears to be with the quarter of the population who view their long-term spending habits shifting to online. This figure is significantly higher amongst the 35-44 year olds; with 34.4% of these respondents expecting their long-term spending habits to shift towards online.

N/A;I don’t know

I’ll spend less online

They won’t change

I’ll spend more online

I’ll spend more online, but only during the outbreak

25.8%

24.5%

32%

10%

7.7%

This short-term mentality appears to be predominantly driven by the increase in online food shopping. It doesn’t appear that this will be a long-term shift in the market once the infection rates have diminished and the government issues the go-ahead to shop in-store again.

For other industries, there is an opportunity here to demonstrate all the benefits of online shopping to persuade more of the 32% who believe their change in shopping habits are only temporary, to continue shopping this way in the long term. This means the whole customer experience, from on site to product fulfilment to re-onboarding should be effective to foster future loyalty.


“The future of ecommerce has accelerated years in a matter of weeks, and once this crisis is over things will not go back to how they were. This will inevitably create gaps to be filled. Businesses who have a compelling proposition should be designing an optimal ecommerce journey for their customers now. With the increases in traffic and revenue from ecommerce it will be important for businesses large and small to stand out from the crowd, for all the right reasons.”

Mark Leach, MD, User Conversion

Independent Retailers Could Well See A Surge

Whilst it’s likely that a number of smaller independent retailers will have to close due to the financial impact of COVID-19; there does appear to be some sort of ‘camaraderie’ within the UK population to back them, at least in the short-term.

42.2% of respondents say they’re now more likely to shop with smaller independent retailers because of impact and awareness from COVID-19.

Again, this feels like there is potential for businesses who are in this category to test their propositional messaging with users and start to tell a story which resonates with people to build that emotional connection and drive sales.

This isn’t designed in any way to be a way for businesses to exploit users (we would never advocate trying to make an emotional connection based on falsities / lies), it’s designed to demonstrate that on the whole; the UK market is aware of what’s currently happening; and they’re actively saying that they’re more likely to start using independent retailers; so now is the time to present your story whilst you’re front of mind. Don’t be scared to outwardly reference the COVID-19 situation and challenges; just keep the messaging true to your brand.

Getting this messaging right could be vital to the long-term success of many smaller independent businesses.


¾’s Of The UK Aren’t Likely to Buy Luxury Products for Themselves

In uncertain times, luxury spending will likely reduce. You only have to look at the car industry at the minute; with a significant increase in cancellations on new car sales and COVID-19 described as the “biggest immediate threat to the UK car retail sector”.

It appears people are taking the concept of avoiding non-essential shopping reasonably seriously, particularly the older generation, so “treat yourself” campaigns for this group wouldn’t be strongly advised, based on these data. However, this doesn’t mean that other age groups won’t be willing to purchase these luxury products.

Whilst high-end luxury purchases may feel the brunt of COVID-19; it doesn’t mean that it’s doom and gloom for all luxury brands / retailers. Firstly, we have to consider the change in behaviours. We know that users are more likely to be buying gifts now; birthdays, anniversaries etc. will still continue; and online is the only real way to facilitate this.

Gifting appears to be a really viable short-term proposition.

When we compare gender differences; a much higher proportion of females (53.72%) strongly agree that they’re not going to make a luxury purchase online, compared to males (39.67%).

When we ask users why they are likely to spend money on luxury items, the most frequently reported themes appear to be:

Wanting to treat themselves during this difficult time / cheer themselves up

They’re not spending as much at the moment on other things (e.g. socialising) so more money for luxuries

During these uncertain and unprecedented times, we have somewhat surprisingly seen that Flannels customers are continuing to spend their disposable income on luxury goods. This is obviously dependant on individual circumstance; but those who feel secure in their current situation continue to buy luxury goods. The disposable income which would normally be spent in bars and restaurants is being spent online – digital retail therapy.

Tom Tregelles, Group Head of eCommerce, Sports Direct

1

2


For those who did not anticipate buying luxury items during this time, their reasons were:

• Less disposable income

• Feel as though they are risking their health and the health of others (e.g. couriers) by placing orders

• Uncertainty of the situation

• No point as no-one to show it off to

• Prefer to buy luxury products in store as they like to window shop and see the physical items

Whilst the first 2 points above are very practical; it appears we can help the last 3 points:The preference to shop luxury products when you can see the physical product is a long-standing challenge in ecommerce. Better, more inspiring product imagery can create that emotional feeling that people get when they physically see a product they want. Apple are one of the most well known companies at advertising their products in an emotive and inspiring way, and their product landing pages are no different. With consumer options limited for browsing products, some attention should be placed on replicating the offline browsing experience, online.

So if you’re currently selling luxury products; consider the above themes and start to experiment with your messaging around these subjects to understand what resonates with your users at this time.


Reassure your customers on a reliable and predictable delivery service

Example: Sainsbury’s have quickly and effectively implemented a delivery prioritisation scheme to ensure the extremely vulnerable and over 70s are able to receive online food deliveries¹.

Increase your delivery fulfilment capabilities, if possible and demand is there (e.g. food suppliers)

Example: Co-op filled all 5000 temporary jobs in recent recruitment drive and want to move some business side staff members into their distribution centres and stores².

Succeeding During COVID-19

Whilst now is probably not the right time for businesses to be using experimentation to make decisions on the long term changes to their website; it’s actually a really good opportunity for business to challenge their proposition in the current climate.

The challenge for ecommerce businesses is understanding how they best create an emotional connection between their users and product; to understand the opportunity that exists within the current climate, to help engage a potentially previously untapped user base - with the potential for long term growth. If done correctly, businesses can expect to capitalise on these long-term online shopping behavioural changes, with users more reliant on ecommerce, post-COVID-19.

There are already multiple examples of companies changing their business propositions to meet the changing needs of their consumers. These companies will not only come out of COVID-19 the strongest from a financial point of view but they will also be considered more understanding and relevant, generating a more loyal customer base longer term. Key lessons include:

¹ https://www.sainsburys.co.uk/gol-ui/delivery-prioritisation² https://www.itv.com/news/2020-03-27/co-op-fills-5-000-temp-jobs-in-days-after-huge-response-to-recruitment-drive/


As we continue to adjust to our new, hopefully temporary, reality, the ecommerce landscape is changing all the time. New ideas or repurposing of old ideas will be what makes for a successful business. Trying to trade the same way at a time when things are so different will leave you behind. The importance of showing compassion as a business to help those most in need will also be met with praise and be remembered. Make decisions. Experiment with your proposition.

Don’t be scared to try something new.

Make delivery free, if financially viable

Example: M&S, BP Garages and Deliveroo have teamed up to deliver food essentials for free, to those that need them4 . Dominoes are also taking this opportunity to waive the delivery cost for their customers5. There are also countless examples in the US of companies making their delivery free6.

Focus on essential products (e.g. toiletries), if you can

Example: We are also seeing business hero products such as home fitness, education and activities; as these become more ‘essentials’ during social isolation. The demand is definitely there to provide essential toiletries, including appeals for donations to workers and people in need during this crisis7.

Focus on gifts, even if you haven’t traditionally focused on gifts

Example: Biscuiteers are moving to “Share some biscuit happiness” and “Show someone special you’re thinking of them…” campaigns during this time; actively making the emotional connection with the current situation8.

Ensure that your product offerings are in line with this new reality

Example: Morrison’s have created essential food boxes for vegetarians and meat eaters, for delivery only. Not only is this beneficial from a consumer perspective but having a pre-set list of items for these food boxes should make packing and distribution easier at a time where staff will be working at full capacity³.

³ https://www.morrisons.com/food-boxes/4 https://www.mirror.co.uk/money/coronavirus-ms-joins-new-free-21740350)5 https://www.chesterstandard.co.uk/news/18326777.dominos-begin-contact-free-delivery-service-due-coronavirus-concerns/)6 https://www.businessinsider.com/kfc-chipotle-chains-offering-free-delivery-because-of-coronavirus-2020-3?r=US&IR=T#chipotle-17 (https://www.manchestereveningnews.co.uk/news/greater-manchester-news/royal-manchester-childrens-hospital-coronavirus-17979844)8 https://www.biscuiteers.com

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User Conversion Limited, Jutland House, Lower Ground Floor, Jutland St, Manchester M1 2BE Company Number: 8151145

www.userconversion.com

@userconversion

Thank youIf you have any questions please feel free to get in touch.

state of ecommerce; covid-19 - user conversion · ecommerce has altered user behaviours and the...

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