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Online trading is not a sure-fire success even in the corona crisis

by drbyos

Dusseldorf Media Markt and Saturn tried everything. Because they have to close their branches in more and more countries, both companies have focused all sales activities on the online channels. They advertise equipment for the home office in their web shops. But the additional business on the net is not enough. The parent company Ceconomy has now cashed in the forecasts for sales and profits.

Also Adidas had to close his shops and is now desperately trying to bring the spring collection to customers through his web shop. But that is anything but a sure-fire success. With discounts of up to 50 percent, Adidas offers the goods to sell at least part of them before the summer collection pushes on.

The two groups are exemplary of countless retail companies. “Retailers who already operate multichannel can now switch sales to e-commerce,” says Nils Zündorf, e-commerce expert at the agency faktor-a. “But nobody will be able to compensate for the lost sales from the branches online,” warns Zündorf, the retailer when selling on platforms such as Amazon advises.

No gold digging mood has broken out even with purely online retailers. “Orders in online retail are high, but they don’t explode,” Zündorf observes. When the governments announced the drastic measures earlier this week, the customers on the internet had also initially held back, he observed. “Everyone is rearranging, but it can be expected that online orders will pick up again significantly.”

Accordingly, surveys among online retailers show a very mixed picture. While individual retailers report sales growth of up to 200 percent, others even report falling sales. Of the 135 online retailers surveyed by the Federal Association for E-Commerce and Mail Order in the second week of March, 41 percent reported a drop in demand.

A similar picture was shown by a survey by the retailer association, which represents tens of thousands of small online retailers. In a survey of its members, in which 412 dealers took part, 55 percent spoke of losses in business. Only 9 percent said they benefited from the corona crisis in business.

There is little demand for fashion

The demand in online trading depends heavily on the product category. This is proven by the search queries on Amazon. “Immediately after the pandemic broke out, 80 percent of the top 50 inquiries on Amazon had to do with Corona. Now it is still 40 percent, ”reports Jan Bechler, founder and managing director of the agency finc3 Commerce, the companies like Bosch, Bahlsen or Unilever advises on trading on internet marketplaces.

For example, hygiene products benefit the most, but so do nutritional supplements that promise to strengthen the immune system. Sellers of home and garden items, toys, fitness equipment, food and hardware store products also do good business.

However, only a few people think of new clothes in the current tense situation. In the field of textiles, online sales have already decreased by 20 to 30 percent, reports Stefan Genth, chief executive of the German Trade Association (HDE).

In any case, only retailers who are already active on the Internet have a chance to make online sales. “Retailers who are not yet online retailers have little chance of switching to e-commerce if they have to close their shops,” explains e-commerce expert Bechler. “It is a comprehensive and lengthy process until you have set it up technically, connected your merchandise management and organized the logistics.” Opening a web shop or setting up a shop in a market place takes at least a quarter.

Due to the increased offer on the Internet, it is also becoming more and more difficult for purely online retailers to be noticed by customers at all. “Many retailers and manufacturers are currently increasing their advertising budgets on the marketplaces,” says e-commerce expert Bechler. “Anyone who does not invest in marketing now threatens to lose sales”. One can already see that the costs per click for advertisements on the marketplaces are increasing in many segments.

Employees in protective suits

And the demand is only one side. The effects of the corona crisis have also led to a significant increase in costs for online retailers. The core is usually to secure logistics and your own warehouse.

“We are now working around the clock in a three-shift operation in the warehouse,” reports Boris Häfele, Managing Director of Roast Markets, Germany’s largest online specialist in coffee. He has hired 20 new warehouse employees to keep the business running smoothly even in the new situation.

All employees are now working with protective suits and gloves have to be changed every two hours. There is a break between shifts during which a professional service provider disinfects the warehouse. “For us, these are immense additional costs,” says Häfele.

On the other hand, the crisis also gives him many new customers. Germans spend around 16 billion euros a year on finished coffee in cafes and restaurants. Häfele is now hoping to draw some of this business when people have to stay at home. But he also knows: “How many people will change their behavior in the long term is open.” The increase in sales he feels could also be temporary. He is therefore careful to expand his capacities too quickly.

What all retailers – whether stationary or online – are afraid of: that the crisis lasts so long that consumers generally limit their consumption expenditure. Consumers are already reluctant to buy luxury goods and very expensive products online.

“If the economy shuts down over several weeks, general purchasing reluctance could develop,” warns trading expert Bechler. “People who are on short-time work or fear for their job are more likely to keep their money together.”

More: Psychologist on hamster purchases: “If you see photos of empty shelves, you run into business”

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