1b. Discuss the opportunities and challenges for e-commerce businesses in the age of COVID-19.
Connecting digital lives: together and apart at the same time
Social distancing is a global phenomenon resulting from health restrictions and businesses have adapted physical spaces to prevent the spread of illness and the virus. According to Markham (2020) social distancing and social presence are two dichotomies that suggest that we can be present socially together online. Physicality and sociality are not similar, suggests Markham. The importance of connectivity is emphasised during periods of absence and customer experience management (CXM) is being reshaped to support physical connections (KPMG, 2020).
Digital virtual ethnography is a common approach to studying digital culture and the use of digital media in everyday life and can help us understand social contexts where people are immersed in digital life (Bryman, 2016). Through social observation we can see changes in social behaviour due to social distancing adapting to new ways of interacting through digitally mediated communication.
This demonstrates that people will continue to develop connections online to organise socially and will socialise online through social networks that existed prior to COVID-19, taking these relationships to new platforms and online communities to both create and preserve existing social behaviours, routines (like Friday drinks) and businesses-to-consumer relationships. There are social benefits to this as people develop genuine, authentic and personal connections online without anonymity.
Digital business models leverage on the opportunities provided by digitisation and the digital economy: Amazon Australia
Most academics would argue that the benefits of digital marketing are supply side, as successful digital marketing creates business advantage. Many businesses were unprepared for the COVID-19 pandemic and the disruption it has caused to international business, increasing business focus on health and safety, and e-business solutions to create contactless transactions in retail. Elsewhere, disruption to global supply chains has shut down entire industries uncovering gaps in digital capability. Technology aids social distancing in physical shopping environments, and retailers such as Coles and Woolworths have focused on making consumer experiences seamless with improved technology during the pandemic.
Prior to COVID-19, e-commerce businesses such as Amazon Australia’s primary strategic focus remained on optimising supply chains, developing more advanced inventory systems. Managing increased web traffic and fulfillment operations is an issue during times of increased trading for online retailers. Successful global businesses such as Amazon have experienced supply chain shortage and logistics bottlenecks (CNBC, 2020). Globally Amazon’s advertising business is successful, and locally Amazon Prime is growing in profitability (SMH, 2020). Other businesses like Coles are accelerating their digital transformation to save money on marketing costs (AFR, 2020) as some local media businesses have gone bust due to the economic downturn and their digital marketing strategies (Bauer Media).
The macro economy: Australia
The Australian macro economy has been reshaped by international events through the slowing of international trade and restrictions on international and local people movement and this has affected most industries. The economy is expected to continue to experience a downturn, with anticipated third period of negative economic growth in September 2020 (Reserve Bank of Australia, 2020).
To help the economy recover, businesses are encouraged to empower themselves to expand, invest, innovate, and hire people. Household income levels will change as unemployment grows. The Australian newspaper predicts that Australians will split between affected and unaffected prosperous households, and that workers, firms and industries will change (The Australian, 2020). In the economy in general, there are less permanent positions available and demand will come from people who seek new sources of income. The gig economy has grown due to the economic environment where short-term employment is more common due to uncertainty. Gig economy growth will help the economy to recover (KPMG, 2020).
Opportunities and challenges for e-commerce businesses
Digital marketing tactics can be used by e-commerce businesses to capture new audiences in geographical markets to sell more and to make more profit. KPMG suggest that digitisation of tasks will shift the skills needed by organisations, and skilled workers will need retraining to support these newer e-commerce ventures. Large, medium and small businesses will need to embrace new models of digital business to survive the economic downturn resulting from the pandemic.
Barker. et al. Social Media Marketing: A Strategic Approach, 2nd Edition.
Bryman, Alan. Social Research Methods. 5th ed. Oxford: Oxford University Press, 2016. Print.
Chaffey, Dave, and Fiona Ellis-Chadwick. Digital Marketing: Strategy, Implementation and Practice. Seventh edition. Harlow, England; Pearson, 2019. Print.
CNBC. Tech. 30 July 2020. https://www.cnbc.com/2020/07/30/amazon-amzn-earnings-q2-2020.html.
CNBC. Tech. 14 July 2020. https://www.cnbc.com/2020/07/14/amazon-rolls-out-shopping-carts-that-eliminate-checkout-lines.html.
CNBC. Tech. 21 January 2018. https://www.cnbc.com/2018/01/21/amazon-go-automated-grocery-store-is-poised-to-launch.html
KPMG. Traditional business models won’t be enough in the digital commerce era. 2020. https://home.kpmg/au/en/home/insights/2020/05/predictions-after-covid-19/traditional-business-models-not-enough-in-digital-commerce-era.html.
Social distancing versus social presence. Annette Markham. Blog. 20 March 2020. https://annettemarkham.com/2020/03/social-distance-vs-social-presence/.
Reserve Bank of Australia. August 2020. https://www.rba.gov.au/publications/smp/2020/aug/international-economic-conditions.html.
Roberts and Zahay. Internet Marketing: Integrating Online and Offline Strategies. 3rd ed. Mason, OH: South-Western, Cengage Learning, 2013. Print.
In Covid fight, we can also build new growth engines.Editorial. The Weekend Australian, 8-9 August 2020.
The giant is coming: the true cost of amazon to retailers and workers. The Guardian. Business. https://www.theguardian.com/australia-news/2017/sep/27/the-giant-is-coming-the-true-cost-of-amazon-to-retailers-and-workers.
Tuten. and Solomon. Social Media Marketing. Pearson Education, Upper Saddle River, NJ USA, 2018. Print.