Five months into the novel coronavirus pandemic and it’s clear that the public health emergency is the most significant event of 2020. The pandemic has been recognized as a global health crisis of almost unprecedented proportions and has, so far, affected practically every area of human life.
Perhaps one of the clearest indications of the impact of COVID-19 has been the drastic shift in focus from physical to digital business. With the realities of social distancing measures and closing of non-essential businesses, companies have been scrambling to provide a digital option for their customers.
Majority of companies have incorporated an e-commerce element, at least for the time being. Even as certain states and countries around the world begin to ease their lockdown measures, it is becoming clearer that the future of business may just be digital.
For most businesses, the challenge is to take the value they provide and bring it to their customers at home. Those who cannot find an answer to that question may find themselves out of a place in the future that seems to be shaping up.
This article considers the statistics and data on how COVID-19 is affecting e-commerce and the legal issues arising as a result.
COVID-19 fueled e-commerce explosion
The start of the pandemic heralded an explosion in consumer activity (both in-store and e-commerce) which is mostly stimulated by panic buying directed at suddenly dwindling health supplies and the need to prepare for lockdown measures.
Although the panic buying was not surprising, the fact that toilet paper was a headline product in the rush was particularly confusing. This is especially considering the fact that it has no virus-killing qualities and cannot be used to wipe down infected surfaces.
It got so bad that in March 2020, the second and fourth most searched products on Walmart’s online channels were both for toilet paper. As physical stores ran out, Google searches for toilet paper increased by 14,928% and reports filtered out that consumers were not only snapping up the product but were also stockpiling toilet paper.
Since lockdown measures entered into full effect, e-commerce activity has grown, outstripping previous records set in the industry. For instance, it is reported that in the US, retailers’ online YoY revenue growth was already 68% better than 2019, by mid-April. Online retail orders outstripped 2019 levels by 146% by April ending and online conversion rates increased by 8.8% in February.
Although increase in sales has not been uniform across industries, some of the best performing products, according to Nielsen, include:
- Health and safety products such as masks, sanitizer and toilet paper
- Shelf stable products such as dried beans and fruit snacks
- Food and beverages
- Online streaming services including Netflix, Disney+ and Hulu
The statistics indicate that more people are turning to health, nourishment and entertainment and this is where sales are up. In other industries such as fashion (which has seen a 20% drop in monthly sales), things are going in the other direction.
But importantly, there are more businesses that are pivoting to rebrand themselves and provide value for consumers, even from home. Legal services and baking are just two examples of this.
Legal issues of concern
For many businesses, e-commerce was either a mere fad hosted on their website or an effort to keep up with current trends, at best. But due to COVID-19, the ability to provide relevant digital services is fast becoming an important element of survival during this period.
As more businesses develop and scale up their e-commerce offerings, there are several legal issues that arise:
Cybersecurity
Considering the increasing presence people on digital spaces, it is expected that cybersecurity incidents will become more prevalent. In fact, there are already numerous reports that indicate cybersecurity threats are multiplying at an alarming rate. According to the World Health Organization, the UN agency itself has seen a 500% increase in cybersecurity attacks since the start of COVID-19.
As more businesses make the conversion from physical to digital, they must pay close attention to the security of their online spaces. Businesses owe a legal obligation to customers to ensure that their technology solutions do not unnecessarily expose people to risks. For instance, they should provide secure platforms so that customer card details cannot be ripped or copied while being sent over the platform.
Businesses that fail to do this may incur legal liability. To ensure that they are not exposed, it is necessary for them to invest in the latest security softwares, install update patches, and overall improve their capacity to deal with threats.
Data privacy and protection
By default, e-commerce platforms require certain user information. Most require personal and contact information, which which will be directly housed on the business’ database. Several others save passwords, store geo-location data and other personal information for a better shopping experience.
While data privacy legislation is still being developed in many US states, such as Washington and California, it is necessary to ensure that best practices are put in place for handling and protecting this information. In the Philippines, the Data Privacy Act 2012 imposes specific obligations on businesses.
Ideally, each business should have its own data privacy and protection policy in line with best practices. These should clearly show what information is being collected, how it is being used and the limitations on its use. Strong processes and procedures shall be put in place in order to keep the data secure and destroy (or return) it when it is no longer useful.
A future of distance shopping?
Clearly, the effects of COVID-19 will shape consumer behavior for years to come considering this gradual shift from physical shopping to digital. In fact, up to 24% of consumers say that they won’t start to feel comfortable shopping in a mall until at least 6 months after the pandemic.
