To keep their businesses afloat, brick-and-mortar retailers are looking for new ways to reach customers in their homes.
Many business owners have recently pivoted their operations from brick and mortar to e-commerce, relying on shipping and curbside pickup to keep revenue coming in. While this might seem like a temporary fix, experts believe the virus may have fundamentally changed some aspects of small business in America, especially for businesses with physical locations.
According to Gabe Giordano, associate professor of business and chair of the Analytics and Information Systems Department at Ohio University, these changes closely reflect our "mobile and fast-paced lives" and could be here to stay.
"Certainly, some of the innovation that has come out of this situation is valuable and will last," Giordano said. "Before the COVID-19 situation, there was already a trend towards more online ordering and storefront pickup – and many customers will continue to use these options."
How COVID-19 changed the conversation
As we deal with a disease that's hard to detect, easy to transmit and lethal to certain demographics, it's easy to understand why people were quick to adopt a shelter-in-place lifestyle. Since most of the American economy relies on retail and the procurement of things, it was only a matter of time before brick-and-mortar businesses would be forced to adapt. [Read related article: How Long Can Small Businesses Survive the Coronavirus Disruption?]
Late last month, a study commissioned by e-commerce platform Yottaa sought to understand the virus's early effects on brick-and-mortar stores and online shopping. Conducted by Retail Systems Research, the survey polled nearly 1,200 adult American shoppers about how they planned to adjust their shopping habits. It found that 90% of shoppers were "hesitant to shop in-store" because of the disease, with a majority saying they would either eschew in-store shopping altogether or visit a physical store only when "absolutely necessary."
Even more telling is that approximately 93% said they expected to shop online either more or at the same level as they did before the pandemic surfaced.
"With most experts predicting the effects of this outbreak to continue for several months, it can clearly be expected that the online shopping trends exposed in this research will only increase in the days and weeks to come," said Steve Rowen, managing partner at Retail Systems Research. "As a result, store-based retailers are in for a long and difficult journey."
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How businesses are changing
Since nonessential brick-and-mortar retail spaces are closed throughout much of the country, small business owners are looking for other ways to sell their wares. How they opt to do that depends on the nature of the business.
In addition to setting up e-commerce shops and selling online, retailers like Yards Brewing Co. in Philadelphia are offering curbside pickup and delivery services. Others, like Tiki Tiki Board Games in Woodbury, New Jersey, have adopted some outside-the-box methods, such as setting up an outdoor locker system that customers can use to pick up their products on their own time.
According to Austin Mac Nab, CEO of VizyPay, these methods are just the natural progression of things the restaurant industry has been doing for decades, with online and over-the-phone payments facilitating the transition from buying items in person.
"The restaurant industry has always had a takeout component as part of their business model, but with the current restrictions, this has become their lifeline," he said. "We are seeing a big demand from small business owners for mobile payment options to allow for curbside payments as well as online ordering. This move has allowed them to keep the doors open and retain some of their staff."
Another major change that has cropped up from social distancing guidelines is the interest among today's consumers in supporting local small business, rather than major online retailers like Amazon. Mac Nab said people "want to support their favorite local spot," but only if they can do so on their own terms.
"It seems there has been more of a push to shop at small businesses, because the public is more aware of them getting immediately impacted by what's going on," he said. "With our Look Local First campaign that we launched well before this all happened, we have seen an enormous amount of traction from business owners and consumers stepping up and helping each other. Business owners need to make it easy for customers to do business with them, whether that's online ordering and payment, curbside pickup, or delivery."
The switch to e-commerce may be hard, but rewarding
Online shopping and curbside pickup are far from new phenomena. Americans have been shopping online since 1994, and curbside pickup, which has retailers and restaurants bringing items to a customer's car, has been going on even longer. Yet today's push for more convenience and instant gratification is bringing the concept back in a big way.
A study conducted by CommonSense Robotics last April revealed that the number of American retailers offering click-and-collect services, also known as "buy online, pick up in-store" (BOPUS), more than doubled from 2,451 in January 2018 to approximately 5,800 in December 2018. Around that same time, estimates from research firm Cowen and Company suggested that BOPUS would become a $35 billion industry by this year.
"The availability of in-store and curbside pickup has filled a key need for flexible fulfillment," eMarketer principal analyst Andrew Lipsman said at the time. "Consumers are always looking to save time shopping. But, for a variety of reasons, they may feel more comfortable picking up items in person, whether it's for security or because they need that order today."
Those figures came out in a pre-COVID-19 world. The current reality exacerbates the idea as businesses are forced to adjust for their survival. Yet, if the BOPUS trend was always destined to be so popular and lucrative, why didn't more businesses adopt the process earlier?
According to Giordano, it was the potentially difficult process change that kept most small businesses from embracing more of an e-commerce mindset. While there are now online retail business platforms to make the transition easier, the process of changing from brick to click takes time.
"Reaching out to customers virtually, updating online inventory information in real time, and processing shipments is much different than what many small businesses traditionally do," Giordano said. "Making these changes is a lot of work. This is especially true for employees still working, since most small businesses have temporarily downsized."
As companies either sink or swim in this new normal, Mac Nab said, the ones that adapt will be able to not only survive the storm, but set themselves up for a more lucrative future by providing a good shopping experience and leveraging their online presence through social media.
"For the most part, business owners are resilient and are adapting to this new reality," he said. "Times are tough and sales are down, but a lot of the changes we are seeing businesses make are going to help them stay relevant and more successful in the future."
Pitfalls to avoid when making the switch to e-commerce
If you're now considering making the switch to an e-commerce store or thinking of ways to improve your ongoing coronavirus response, make sure you have a plan and resources for the switch, or it may do more harm than good to your reputation moving forward.
The top three things that respondents said would make shopping harder online during the crisis were unavailable inventory, no free shipping option and a poor shopping experience, such as a slow website.
Those three things were no surprise to Giordano, who said that newly online retail businesses could suffer if they can't meet customer demands.
"Some businesses are trying to sell in new ways, but they aren't able to fulfill all orders, answer customer questions, or provide customer service at expected levels – all which can damage reputations," he said.
Though plenty of mistakes can happen during this transitional period, Giordano said this shift will ultimately be the way forward for most small businesses. Their decisions now could impact their futures in a major way.
"The question moving forward will be how many resources they put towards this part of the business, and how much they put behind their traditional brick-and-mortar operations," Giordano said. "This will be a challenging decision."