As the COVID-19 pandemic continues to disrupt global supply chain processes and businesses worldwide, consumer shopping habits have changed, causing many companies to switch to online channels to maintain sales.
This guide provides an overview of the things you should take into account when taking your business online, as well as steps you can take to maintain your business amidst the pandemic, including:
Restricted access to brick-and-mortar stores has led to a spike in shopping on marketplaces and websites. At the end of June, Europe’s year-on-year pure eCommerce revenue grew by 109%. Similarly, retail eCommerce has averaged revenue growth of 112% year-on-year.
Despite an influx of consumers opting to use online services, product performance has varied, with reports of sales increases for gym, home ware, grocery, gardening and personal care products. On the other hand, consumer spending has fallen in categories such as fashion, footwear and travel accessories. Notably, established brands within trusted channels have maintained a strong presence in digital markets.
In Europe, despite disruptions to Amazon’s Fulfillment by Amazon (FBA) service, Amazon largely maintained it’s market leader status. Services such as Amazon Fresh have also capitalised on the increased demand for online groceries by offering free same-day delivery from supermarkets in the UK. Globally, this led to a strong Q1 performance from Amazon, increasing net sales by 26% year-on-year to reach an overall $75.5 billion worldwide.
Although there is a lot of uncertainty regarding COVID-19, current consumer sentiment is a useful indicator of future spending patterns; a survey conducted by PWC in May 2020 revealed some notable changes in shopping patterns during the pandemic, including that consumers are expected to change what they purchase once business returns to normal.
While spending on travel, and leisure activities and products is decreasing, health, beauty and personal care, groceries, and home improvement for both DIY and home furnishings are expected to continue performing well. Local and ethical shopping practices are also on the rise, driven by shutdowns of stores and permittance of essential journeys only. 24% of consumers are now shopping more frequently in small shops or independent retailers.
Even when brick-and-mortar stores reopen fully, 42% of customers, (31% aged over 56 and 42% aged between 36-45), intend to shop more frequently online.
It is now more essential than ever to utilize online channels. To take advantage of the opportunities presented by online channels, businesses should take the following steps:
“Businesses with a omnichannel strategy can capitalize on the strengths of each eCommerce platform to capture new consumer sub-segments; brands can achieve more frequent purchases by engaging with shoppers on multiple platforms, as well as retaining an average of 89% of customers from channel to channel.”
With more than 150 million Prime customers around the world, Amazon offers access to a high volume of customers with purchase-intent. Additional support from advertising tools enables you to target your desired consumer demographics. Fulfillment support provides flexible options for global delivery, while recent enhancements to Amazon Shipping have made the service available to all online retailers, even businesses without a store on the marketplace. Access to multiple markets also strengthens cash flow, as you’re able to take advantage of global holiday seasons and peak sales periods.
Whether you’re just beginning to sell on Amazon or you’re looking to optimize your current sales process, there are a variety of factors that should be considered to create an effective cross-border strategy on Amazon Europe. Sellers should note that Amazon uses unified systems for Europe and North America to enable businesses to sell across multiple countries within those regions. However, separate accounts are required to sell products in each region.
Selecting the correct fulfillment solution to match business requirements is essential. Sellers on Amazon can choose between Fulfillment by Amazon (FBA), Fulfillment by Merchant (FBM), or adopt a hybrid option of the two.
FBA is suited towards sellers not interested in fulfillment, whereas FBM enables businesses to use their own fulfillment infrastructure while also benefitting from Amazon’s userbase. FBM sellers should be aware that setting the right item pricing is essential for winning the buy-box from products set in FBA. Businesses registered with an Amazon European marketplace account using FBA for inventory storage can utilize local Amazon fulfillment centers across Europe to fulfill orders across all territories using the same inventory.
Due to recent shutdowns in Amazon FBA warehouses, particularly in regions such as France, a hybrid solution has become a viable option for businesses requiring flexibility in shipping. Using independent or third-party fulfillment can help sellers ensure that stock levels are consistently maintained across all sales channels. This also enables shipping worldwide from local fulfillment centers. It is recommended that sellers, especially with stock across multiple channels, opt into using a fulfillment software system that can automate stock management and fulfillment across all business channels. This can drastically reduce the necessity for manual input.
Each channel has different customers and therefore communicates with its users differently. Understanding the type of content that works for each platform can make a big impact on customer experiences. For instance, Amazon has stated that, on average, sellers using A+ content can increase sales by up to 3 to 10% as it educates consumers about the brand and products.
“The content on the marketplace should also be continuously refined as new customer data becomes available to ensure that any low-performance keywords, search terms or images are removed.”
In addition to channel-specific content, sellers should localise products whenever entering new markets. Studies have shown that 56% of consumers state that having information in their own language is more important than price, but linguistic accessibility is only part of the process. Researching cultural and local backgrounds for consumers in new markets is highly beneficial for creating effective content, marketing or a sales strategy, based on how consumers use the item. Investing in localized content also reinforces the perception of efficient brand communication and presence.
Furthermore, colors, use cases, product interactions and lifestyle photography are essential tools for improving the product’s relevancy to local cultures. A study of Fortune 500 companies conducted by Salesforce has shown companies that localise their content were two times more likely to increase profits in those markets.
Advertising practices can make a drastic difference in brand awareness and conversion rates. With a variety of advertising tools such as Sponsored Products, Sponsored Campaign and DSP, sellers can boost exposure, increasing the chances of conversion. All adverts are calculated using a cost-per-click model, so charges only occur when a customer clicks the ad. Sellers can set daily budgets to control spend and set bids per click.
Be sure to use automated campaigns to gain insight into high-performance keywords before launching any manual advertising campaigns. The advanced insight generated from the customer data can then be extracted and refined, allowing you to gain a better understanding of the target demographic. When launching products in new territories, using product targeting campaigns to advertize against existing competitors within those markets is effective for building brand awareness. Utilizing discount codes, free shipping, product bundles, and sourcing local products or materials can help sellers engage consumers, and capitalise on the emerging trend of conscious consumerism.
Based on current shopping patterns and Amazon’s market position, seller tools, and customer base this is an ideal time to expand internationally using digital channels to target a growing market of consumers that have adopted eCommerce platforms and are expected to stay post-pandemic.