Winds Of Change: How The Pandemic Has Been A Catalyst For Digital Transformation

November 26, 2020

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The pandemic has had a knock-on impact on various parts of our lives as well as the eCommerce industry, Adimo explores how the virus has been the catalyst for digital transformation...

Business has been migrating online for decades now. While the wildly optimistic projections of starry eyed 90s futurists came up short, money, businesses, and even entire industries have been shifting into the digital sphere. But many industry analysts have been frustrated by a transition which has been moving incrementally. Brick and mortar retail has tenaciously defended its high streets and supermarkets, while consumers were reluctant to give up traditional shopping experiences, even as technology removed barriers and friction from online experiences. But as COVID-19 redefined the world we live in, millions of consumers abandoned the in-store experience, as what had been a pleasant jaunt to the shops became a stressful, surreal, masked and socially distanced ordeal. Let’s take a detailed look at how the pandemic has permanently changed the way we shop.

Technology Is Driving Change

During the past few decades, we’ve learned that any time-consuming bump on the path to purchase was deeply damaging to converting eCommerce sales. Registration forms, slow checkout processes, and prolonged loading times were fatal flaws in many digital platforms. The rise of apps, personalisation, and logistics breakthroughs that led to same-day delivery capabilities had eCommerce poised for a breakout as 2020 dawned. 

Another critical change enabled by technology was the ability for vast segments of the population to work from home. This paradigm shift which “Zoom-ed” in as the pandemic struck made people more comfortable with conducting business from home, and convinced them of the risks of unnecessary trips to crowded places. Studies have shown demographic similarities between those whose jobs are suited to working from home, and consumers who are amenable to eCommerce shopping. They’re likely to be well-educated, urban residents with salaried, full-time jobs. For many, the shift to working from home opened both eyes and minds to the benefits of eCommerce.

The pandemic has also pushed many retailers to work towards automating their supply chains. Developments in AI and machine learning that have been cannily exploited by firms like Ocado are on the verge of widespread adoption, as social distancing regulations and COVID outbreaks in warehouses make automating supply chains an even more attractive proposition. As Harvard University researchers have noted, “returns to routine, job-specific skills are declining, the premium for skills that cannot be replaced by robots has been increasing; these include cognitive skills such as critical thinking, as well as socio-behavioral skills such as managing and recognizing emotions.” We’re likely to see even more jobs in manufacturing and the supply chain filled by robots in the near future.

The Power Of Platforms

As analysts at Harvard Business Review note, “Platform Firms” like Alibaba and Amazon have witnessed explosive growth during the pandemic. Alibaba’s first quarter revenues doubled in 2020, while Amazon’s sales were up 36.4% in the US and 28.3% globally during the first 6 months of this year. Steven Zhu, an analyst at Epoch Pacific, told the Wall Street Journal that while eCommerce was already well-established in China, the pandemic pushed older consumers and residents of smaller cities and rural areas online. “The coronavirus has been good for Chinese eCommerce players. Once you switch, you don’t switch back.

The trends have been similar in the US, as large retailers with well-established online sales platforms and state of the art supply chains have seen their businesses experience massive growth. Wal-Mart’s eCommerce revenues have increased by 97% during the pandemic, while other large retailers who have invested in digital infrastructure, like Target and Kroger, have seen similar growth occur.

Business has boomed to such an extent that Amazon’s greatest worry might be legislators, rather than converting customers or battling competitors. Many of its critics note that its utter dominance of the digital marketplace (Amazon controls 38% of the US eCommerce marketplace, while Wal-Mart, its closest competitor, has a 6% market share) is having massive consequences for the US economy.

Jeff Bezos appeared before the US Congress’ Subcommittee on Antitrust, Commercial, and Administrative Law this summer, and calls for regulation to curb its near-monopoly are growing louder by the day. Scott Galloway, a professor of marketing at New York University and longtime Amazon critic likens the company to the railroad barons whose stranglehold on transportation and commerce was eventually dismantled by antitrust laws. He criticizes Prime membership and Amazon’s total control of the eyeballs and logistics networks used to ship goods to consumers as massive unfair advantages, saying “Amazon already owns the rails into 115 million households in America. Do we really want one company to be the arbiter of all commerce?”

But the criticism of the monolithic Seattle corporation is ultimately proof of its success in upending the traditional retail paradigm. Investment banking firm UBS predicts that eCommerce will control a quarter of all retail sales within a year, and that 100,000 brick and mortar stores will close within the next 5 years. Their analysts concluded that “Consumers are increasingly shifting towards online shopping. Many of these shoppers may not get back to in-store shopping when the current state is over.” Amazon has thrived to such an extent that the only threat which looms on the horizon for it is the possibility of laws specifically drafted to limit their dominance of the marketplace. 

Where Are We Headed

At Adimo, we’re willing to bet that the digital transformation will continue in the coming years, with massive consequences for producers, retailers, and consumers alike. The pandemic has made a persuasive argument for shopping and working from home. Consumers who stubbornly clung to brick and mortar are waking up to the safety, convenience, and ease of online shopping. Employers are realizing that gains in efficiency resulting from working from home and automated supply chains can drive increased profits in the coming years. If you are looking for advice on transitioning your business online, or for technological solutions that will build your sales platform, book a demo with Adimo today! 

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