In less than four months, the COVID-19 pandemic has upended Australia’s supply chain and business processes.
During that time, it has radically transformed shopping, production, supply, business relationships and most drastically, consumer behaviour. It’s an unprecedented nightmare, but it won’t be permanent. Retailers are adapting to it and soldiering on.
Many have started selling online only, operating entirely via takeaway or offering free delivery to customers due to the sudden restrictions on bricks-and-mortar trading.
And while cash usage has been declining for years, people’s fear that it is contributing to the spread of COVID-19 has prompted those retailers still operating offline to accept only contactless payment methods. Australia was already predicted to become the region’s first cashless society by 2026. That prediction could be upon us sooner than expected.
In Italy, e-commerce transactions have spiked 81 per cent since the end of February. China, Iran, and the US are experiencing similar trends.
We’ve seen this before. Chinese e-commerce giant JD.com was previously a bricks-and-mortar electronics business staring down the bankruptcy barrel during the SARS virus in 2003. They started selling products from stores via digital forums and chat groups, inspiring founder Richard Liu to shift the entire business online. They are now one of the biggest B2C e-commerce providers in China.
While the SARS virus pales in comparison to the worldwide effects of COVID-19, millions of people who never shopped online in the past are now being forced to do so. And just like JD.com, retailers that hadn’t implemented the technology to trade online are being forced to catch up. And just like the virus has spread, they are adapting incredibly quickly.
More than 60 per cent of all Australian businesses have now been directly affected by COVID-19, with retailers and restaurants with annual turnovers of $1-5 million being the hardest hit. In mid-February, that number was only 15 per cent. What a difference a month makes.
As trade has shifted online, retailers without fast, robust and integrated business management systems are struggling. In recent weeks, all our major supermarket retailers had to cancel their online ordering processes. Not because of a rise in online traffic or a shortage of goods for an army of panic-shoppers, but simply because they didn’t have the robotic or human capabilities to deliver the massive spike in demand.
Their online grocery portals logistically became an untenable nightmare. They couldn’t fill shelves in-store, let alone complete click-and-collect deliveries online. Poor communication between their stock management, warehouses and customers led to a downfall.
Yes, it’s a difficult time. But it’s also a time of opportunity as retailers look into new digital technology to help them sail through the storm.
Making sure your retailing business has contemporary e-commerce software is now vital to satisfying your customers and keeping your profits flowing.
Before this virus struck, the most successful Australian B2B companies throughout 2019 were 81 per cent more likely to have linked their marketing and sales in one unified platform. In other words, they had digital capabilities enabling the ordering and purchasing of their products online. Only 21 per cent, however, had implemented this technology, meaning, over the last month or so, the remaining 79 per cent have been in a mad scramble to satisfy customers online.
While our economy is down, Australian retailers have a chance to reevaluate how they manage and market their business. In 2015, e-commerce was 5.9 per cent of all Australian retail sales. By 2019, this had increased to 7.2 per cent. Given worldwide trends and people staying indoors for the next foreseeable future, that number is most likely about to boom.
Click-and-collect models, marketplace proliferations, buy-now-pay-later options and increased availability of faster payments and delivery choices will fuel the next surge of online expansion and help restore revenue for Australian retailers.
Adapt and overcome. It’s the only way businesses can come out of this on top.
Change your system. Not your vision.
Adrian Floate is managing director at Spenda.