Interview with SME Online Retailers: Experience of the Corona Crisis
At the beginning of the Covid 19 pandemic, we all wondered what impact the crisis would have on online commerce. As a result, we asked the business and online industry experts about the do’s and don’ts that need to be considered now. We listened to the crisis experts, but how is the SME online merchant really doing?
We have recorded this insight here by asking SME online merchants from various industries about their experiences with and their lessons from the Corona crisis. The answers could not be more different.
Experts versus affected people
Now, of course, it is not only online merchants who care about business. The gastronomy sector, for example, has been hit much harder by the pandemic. But economic worries are only one aspect of our current fears. If the media is talking about health, doctors and virologists are being interviewed. If it is about political issues, politicians and political scientists have their say.
Quite early on, however, a trend has developed to make those who are actually affected heard. Whether nurses, parents in the home office or those affected by short-time work: we are interested in individuals and their personal stories. They share our fears and perhaps even give us courage and inspiration. Reporting about these people and letting them have their say is also a gesture of appreciation.
We ask the affected SME online merchants
When the media focusses on the impact of the Covid 19 pandemic on e-commerce, either dry industry data is released or reports are made through major online retailers such as Amazon and Zalando. Small and medium-sized enterprises (SMEs) in e-commerce, on the other hand, do not get much attention. We want to change that.
Caution in the fashion industry
The fashion industry is not among the beneficiaries of the crisis. Nevertheless, a well-known online retailer remains confident in the industry. The only fear relates to the possible length of the crisis:
As online retailers, we are a little luckier than stationary retailers. Due to the lockdown, they have a very, very hard time. We are confident that the online business will remain relatively stable, at least in Germany. On the condition that the crisis doesn’t last too long. Because then it will also be difficult for the e-commerce, especially in the fashion industry. Who needs a new jacket when you’re not going out anyway?
The online retailer initially reacted cautiously to the changed crisis situation. Nevertheless, he was quick to respond to customer needs:
We were very cautious and didn’t want to take any hasty measures because nobody knows how the situation with the virus will develop. Apart from that, we try to keep customers up to date and now provide information on our website, for example about contactless parcel delivery from our parcel service provider.
Crisis situations sharpen the focus on the essentials. For the online merchants in the fashion industry, this means:
You must always be prepared for everything! I would argue that the majority of people did not see such a situation coming and neither did we. Several production sites and reserves are the be-all and end-all here. Reserves, in order to survive such a crisis as a company and to be able to continue to pay the full salary of the employees.
Collapse in demand for event and party supplies
The measures to break the chain of infection have an extreme impact on retailers who sell products related to event and party supplies. According to Stackline, demand for event and party supplies fell by 55% in March 2020 compared to the previous year (March 2019). The reason for this is obvious, as a online merchant in the industry tells us:
Weddings are cancelled or postponed.
In this case, the drop in business is a full 80%. This experience will have an impact on future business. When asked what will change in the future, we get a clear answer:
To put ourselves in a better position. In different industries and not just one line of business.
Future focus on online business in sun-, wind- and privacy protection
Some sectors benefit from the exit restrictions. One example is online shops with products related to sun, wind and privacy protection, which are facing increased demand. To work around the house is the hobby of choice in the Corona crisis. An online retailer in this industry tells us:
I have two mainstays. One is the installation of awnings in and around the region and my shop. The first one has completely broken away because nobody wants to see me and the traffic in the shop is really increasing without me having done anything. So now I want to do more.
The stable online business in this time of crisis is sharpening the focus on digitalization and brings with it some learning. The online retailer comments on the consequences of the experiences of the last few weeks as follows:
To do more online. We had a bad SEO agency, many hoster changes and neglected everything. For example, that we had implemented a tool like uptain all the time, but hadn’t fully used it.
Doubling of orders for e-cigarettes
Confident and confirmed feels an online retailer who specializes in trading vaporizers.
As online retailer, we are benefiting absolutely from the crisis. Our order volume has almost doubled according to the current status. I think we are emerging from the crisis stronger and feel rather confirmed that the paths we have taken so far were the right ones. We want to build on this.
The unexpectedly high demand is leading to challenges in customer support, but the online retailer knows how to overcome them.
Due to the higher order volume, support requests have increased accordingly, and we also have to adapt our processes somewhat in purchasing goods to meet the unusual demand.
As expected, the crisis is affecting some industries more than others. In any case, online merchants should adapt their online shop to the current crisis situation, as it will not disappear overnight, although the restrictions are already being slowly eased.
Frequently asked questions about interview corona
Which lessons did SME online retailers draw from the Corona crisis?
Three lessons stand out. Be prepared for anything: several production sites and financial reserves make it possible to survive a crisis and keep paying full salaries. Spread the business across different industries rather than relying on a single line of business. And strengthen the online channel: one retailer admitted to neglecting SEO and hosting and to never fully using a tool already installed.
How did the crisis affect demand for event and party supplies?
Demand collapsed. According to Stackline, demand for event and party supplies fell by 55% in March 2020 compared with March 2019, and one retailer in the segment reported a drop of a full 80%. The reason was straightforward: weddings and similar events were cancelled or postponed. The consequence drawn was to spread the business across several industries instead of one.
Which online shops benefited from the crisis?
Shops selling sun, wind and privacy protection benefited, because working around the house became the hobby of choice and shop traffic rose without any additional effort. A retailer trading vaporizers saw order volume almost double and considered the previous strategy confirmed. In both cases the crisis shifted the focus towards digitalisation and the online channel.
How did online retailers in the fashion industry experience the crisis?
Fashion was not among the beneficiaries, yet online retailers fared better than stationary shops during lockdown. One retailer expected the online business to stay relatively stable in Germany, with the main risk being a long crisis, since few people buy a new jacket when they are not going out. The response was deliberate rather than hasty, focused on keeping customers informed, for example about contactless parcel delivery.
Why do crisis reports on e-commerce often overlook small and medium-sized retailers?
Crisis coverage of e-commerce tends to fall back on dry industry data or on major online retailers such as Amazon and Zalando. Small and medium-sized enterprises receive far less attention, even though their situations differ widely by industry. Letting affected retailers speak for themselves shows what the figures hide and is also a gesture of appreciation.
What challenges does a sharp rise in orders create for online shops?
A sharp rise in orders brings its own workload. Support requests increase in line with order volume, so customer service capacity has to grow with it. Purchasing processes also need adjusting to cover unusual demand and keep goods available. Retailers who plan for these effects can treat a demand spike as confirmation of their strategy rather than as a bottleneck.
How should online shops react to a crisis situation?
Adapt the shop to the situation instead of waiting for it to pass, because crises do not disappear overnight even as restrictions ease. Keep customers informed on the website about anything that affects their order, such as contactless parcel delivery. Avoid hasty measures while the situation is unclear, and use the time to strengthen digital channels that keep running when other revenue sources stall.
