Sales in ecommerce grew 20% in the first quarter of 2020 compared to last year, high above the regular peaks around the holiday season. Of course, much of this increase can be attributed to higher demand for essential goods, which shot up 200% from the beginning to the end of the month of March.
Yet these numbers feel artificial. And we collectively acknowledge that these numbers are largely aberrations under extreme circumstances. The global economy is somewhat upended as supply chains grind down or reach bottlenecks, demand for certain products spikes and drops for others, and shops either pull down their shutters or heavily restrict the number of customers allowed into their stores.
So what does this mean for supply and demand? And what does it mean for forecasting supply and demand under so many uncertainties?
A key practice for measuring the success or failure of a company’s current processes is by benchmarking — comparing your performance to your competitors, which is critical for companies (and crippling for those lacking self-confidence!). But this type of benchmarking is effective only really during calmer times, which gives you longer-term forecasts and more accurate data.
So which metrics ought to be tagged to track performance in these inquiet times?
While comparing current figures with last year is standard procedure, it’s not going to provide you with accurate data in terms of moving forward and strategically planning for the future. (Spikes in sales of sanitary handwash are not going to make you refocus your business practice to health products, because we expect sales to return to pre-pandemic levels. Or inside of the fashion industry, you’re not going to restructure your long-term strategy by focussing on casualwear on the basis that sales in sweatpants and leggings have shot up in the past 2 months.) So, in order to find firmer ground, consider finding alternative benchmarks.
Conversion per offer
With stocks piling up in many warehouses and retailers, chopping prices and clearing inventory became a primary focus. But if most of the industry takes these measures, it can lead to spiralling price cuts but lower-than-expected sales, as customers hold out for cheaper prices to come. In hopes of making higher revenues, retailers are actually witnessing diminishing returns.
So in terms of discounts, how much is enough? According to Q1 of Salesforce’s Shopping Index, the average rate of discount was 22%. Yet if we take March and strip away the other months, the rates of discount spiked to 33% in the middle of the month. When it comes to other countries, the US wasn’t the most generous; in Canada, discount rates peaked at 43% and 45% in France.
Order share by distribution method
Another metric to stick to in these times is the order share by distribution. This is particularly useful because for months now, we’ve been seeing how it works when companies and customers do business from a distance. Curbside delivery, drive throughs, and in-store pickups have all been extremely popular alternatives in respecting social distancing measures.
And as we revealed days ago, websites that provided a collection of methods for delivery after buying online saw increases in ecommerce revenue by 27% in Q1, compared to just 13% for sites that didn’t offer these delivery services. But just providing these alternatives is not going far enough. In order to move onwards and upwards, take on board the reviews and receptiveness of your customers that have experienced these emerging delivery options. Is it working? What are the weak points to tweak? Which seem more popular than others, and which can you adapt?
With storefronts shuttered, one-on-one communication between your brand and customer has been limited. In response, we have shifted even more to social media spaces to embrace both friends and family, but also brands. Traffic towards ecommerce websites via social media increased by 41% in Q1 — which is, as expected, a big jump. For the time being, social media are virtual shopping malls.
So how exactly do you measure ecommerce success via social media? Ideal metrics to highlight include the percentage of orders that are referred by social media channels; record the average number of pieces that you’re publishing across social media, whether it be tutorials, live feeds, etc.; and tie this to your level of engagement, like how many comments and likes you receive.
We recognize the extra tasks involved in building and maintaining new metrics and eventually fine-tuning fresh benchmarks. And if it lies outside of your scope, there are world-class ecommerce platforms that are built precisely for such purposes. Our favorite is Salesforce Commerce Cloud (formerly Demandware and now becoming Salesforce B2C Commerce), whose mobile-first approach fits beautifully with the expansion of social media for commerce purposes.
PS: UV is one of the world’s leading Salesforce Commerce Cloud (Demandware) development & strategy teams. Contact us to see how we can work together.