Accelerated e-commerce, Covid has revolutionized the sector

[bitheerani42135]

Online commerce has been growing in a structured and steady way for twenty years, and the health crisis accelerated the movement. There was a disruption. Successive lockdowns led to a shift in consumer habits from in-store to online. The growth curve was oriented upwards and, in 2020 and 2021, it became more vertical. The internet allowed millions of people to continue to consume, feed themselves, educate themselves, equip themselves, and entertain themselves. Stores and businesses were able to maintain their activity. And behind the commerce, production was able to continue. E-commerce therefore played a very important role in social utility and economic shock absorber. On the business side, there was also a very strong acceleration. Brands did not discover e-commerce with the health crisis, but they accelerated their transformation by increasing investments and expanding more rapidly online, because it was the only way to continue their activity. Without this outlet, the consequences would have been dramatic for stores and brands. Remember, everything that wasn't "essential" was closed. People who wanted to shop were forced to go online. The growth in online sales for brick-and-mortar stores like Leroy Merlin, Boulanger, Fnac Darty, and Ikea was four to five times greater than the e-commerce average. This is normal, since their stores were operating at a slow pace when they weren't closed due to lockdown. Even the food sector accelerated because, at the height of the crisis, people were sometimes worried about going to stores and so they ordered online. Today, customers are returning to stores; there's a phenomenon of communicating vessels. Online sales in the second quarter of 2022 are currently down compared to the exceptional period of Covid, but they have increased by more than 20% on average since 2019, before the pandemic. A milestone has been reached. In e-commerce, the €100 billion mark for products and services in France has been surpassed. But at the same time, only 14% of retail trade is conducted online. There is therefore still significant room for growth. This sector is creating jobs and will continue to do so.

Since the health crisis, are there any new consumers ?
People who previously didn't shop online have come to shop online, forced to do so by the health crisis, particularly in the food sector. More than half of new customers have maintained their online habits and are combining the two niches, online and in person. Since they bought online and it went well, they returned. Some customers, particularly those who didn't shop online before the crisis, have quite naturally turned to the store chains where they used to go physically. Online sales growth rates have reached 200% for some large general stores, particularly during periods of lockdown. Consumers have fully embraced the multi-channel dimension. We easily switch from one to the other in a natural way. We go online to get information. Then we go to the store where we're not obliged to buy. We go home, think about it, and finish the purchase online. There are more and more click and collect services, that is, people who buy online and travel to pick up the product. There is also e-reservation. For example, in fashion, you reserve a garment and go try it on in-store. Several major fashion brands have successfully developed this service. When you buy in-store, it is no longer uncommon for the salesperson to offer to send you the receipt or invoice to your email address. This saves paper while making life easier for the customer. Finally, when you pick up your order in-store, you often also take the opportunity to buy an additional product. Stores have understood this. That's why they have recently invested heavily in click and collect, which helps attract customers to the store. In short, before, the two worlds evolved in parallel and we sometimes tended to pit them against each other. The health crisis has only confirmed the complementarity between the channels. It established the concept of unified commerce. The French want their store to have a website. It has now become an extension of the physical store. The Internet has reinvented the in-store shopping experience. It's a new customer journey for consumers. They move from the store to the internet or from the internet to the store, using their smartphone, of course, during the same purchase. This is what we call the "seamless" customer journey. Everything is now interconnected to make the customer's life easier.

Have smartphone sales increased ?
The mobile phone has become essential. Mobile traffic on major e-commerce sites is higher than that on computers. It has become an essential tool. Consumers are increasingly using their smartphones for their purchases, including in-store. It's the e-commerce dream. It's open 24 hours a day and is with us at all times. It has become consumers' favorite personal shopper . We use it on the street to check if the store is open, and in-store to compare. We also use it a lot at home because it's easier to use than a computer and is often permanently connected. There has also been a strong development of applications, and improvements in online payment have helped to democratize its use. Paying online is no longer a barrier to purchasing, but this has required strengthening security measures to reassure consumers, especially among older consumers, who were still hesitant when it came time to pay. E-retailers and banks have developed new tools to meet this security expectation while ensuring a certain fluidity in the online purchasing process. First, by introducing payment validation via SMS code, and, in recent months, via banking applications. For the past three years, fraud figures have been declining, according to the Banque de France, and online commerce continues to grow. We're therefore heading in the right direction.

Have retail groups invested heavily in e-commerce ?
They have invested massively. The Covid crisis has led them to accelerate their marketing, logistics infrastructure, and recruiting digital skills. I am very confident in the future of e-commerce. When a company invests €300 to €400 million in a logistics center, it doesn't stop overnight. We are in a phenomenon of mutualization. The more customers we have, the more orders we have, the more we can invest in service quality and innovations, which are very important in this sector. For example, artificial intelligence greatly helps logistics. It allows for more efficient inventory and delivery management. The same goes for the robotization of logistics centers. In addition, there are new 3D machines that allow for custom packaging, to save on plastic and cardboard. Another important point is that these new developments have a germany mobile database impact on the environment. For example, the original packaging provided by the manufacturer may be sufficient, and this avoids over-packaging a less fragile product with shipping packaging. This allows companies to save on raw materials and transportation costs. Another example of innovation is augmented reality, which allows you to view furniture or clothing in 3D at home before purchasing it. You take a selfie and virtually wear the garment to see if it fits you well before buying it.

What about the second-hand market ?
This is a truly major consumer phenomenon, which is also being driven by specialized websites. This second-hand offering is becoming widespread across all sites. Many brands are doing it. Eighty percent of cybershoppers have bought or sold a product online. It's a major trend, which goes far beyond a simple fad. It's changing the relationship with objects. Before, we bought to own. Today, we buy for use. This is a real change in the relationship with the consumerist act. We see this with renting. We are less interested in owning the object than in being able to use it. Major retailers, like Decathlon, have launched this new offering. The rental business model should encourage manufacturers to produce objects that last as long as possible, particularly by increasing their repairability. The longer the product is in good working order, the more it can be rented. When it comes to CSR [ corporate social responsibility ], manufacturing and usage have a very large carbon impact. Therefore, the positive impact of leasing will be significant and structuring. All sectors are looking into the issue. This affects everything from automobiles to personal and household equipment, not to mention the famous drill, which we don't need every day! It's good for the planet.

With soaring inflation, is e-commerce profitable ?
E-commerce reaches 42 million French people. These are the same consumers who shop in stores. The French are affected in their purchasing power by inflation, and they are therefore increasingly forced to choose between their different purchases. E-commerce has the characteristic of being subject to constant and borderless competition. With the Internet, your competitors in France and around the world are always just a click away. A study has proven that the e-commerce channel is less affected by inflation because comparability is stronger. Furthermore, online shopping is more considered. You can better manage your cart. You can view your shopping list and, with a simple click, you can delete products. It's easier than removing a product from your cart while you're in the store.

What are the challenges that large companies face ?
Many large generalists have become major players in e-commerce. Generally speaking, they are now facing a dual revolution: on the one hand, the digital transition and, on the other, the environmental transition. One of the major challenges is that these two major transformations, which are much more intertwined than we think, must be carried out simultaneously. Even if undeniable synergies exist between them, this requires the mobilization of resources within companies, significant investment, and innovation. This also justifies the need for a genuine public support policy, because, beyond the competitiveness issue for these companies, it is also the future of our economy that is at stake.

Is France up to the mark in terms of innovation ?
The French are very strong in retail tech. We are one of the European countries with the largest number of unicorns, and a large majority of them are linked to e-commerce and have a global reach. We have an excellent ecosystem. Its creativity nourishes large groups, which are moving forward faster thanks to startups. In e-commerce, three major areas coexist: marketing, payment, and logistics. There are many innovations in these three areas, with artificial intelligence, which optimizes performance, service quality, and transaction security. Innovation is also very present in CSR. For example, in logistics, with returnable packaging returned by mail. You receive your package, keep the packaging, fold it, and return it through the mailbox. The packaging can thus be reused hundreds of times. This innovation was launched by two French startups. Several large groups have decided to offer this service to their customers. The same goes for delivery to neighboring countries. This solution, offered by startups, is also developing. Finally, innovation can also be used to support small players internationally. This is a very important dimension of the Internet that allows them to expand beyond their borders without major investment. The Internet now offers many solutions to SMEs, for example, with the startup Weglot, winner of the 2022 Fevad/KPMG competition, which allows you to instantly and cost-effectively translate your website into any language. One more reason to go international.

What are the benefits in terms of CSR ?
E-commerce has a very interesting carbon footprint. In the vast majority of cases, French people use their cars to do their shopping, except in the centers of very large cities. With the Internet, you have a van that makes its rounds with a hundred products for several dozen people and it will optimize its route, which will save fuel and CO2 and optimize the economic model of the transport company. However, according to our studies, we know that 80% of the people delivered would have taken their car and traveled several kilometers to get to the store. E-commerce therefore makes it possible to share transport. Artificial intelligence is also increasingly used to deliver at the right time and avoid having to return a second time. E-commerce also helps combat the territorial divide, by allowing people living in rural areas to have access to the same offerings as those living in the center of Paris. This represents a real interest in terms of opening up and regional planning.

And isn't data exploitation a problem ?
This is a real issue. People are demanding transparency regarding data. We must be very vigilant. Laws are becoming increasingly strict on this subject, and the rules have been strengthened. Data is the fuel of the digital economy. The day people no longer trust it is the end of the digital economy. Companies must maintain a bond of trust with their customers on this issue. We must continue to try to reduce the need for personal data, including by anonymizing data, where possible. There is a trend toward designing algorithms that limit the exploitation of personal data. This is an interesting avenue that companies must continue to work on.

The Federation of E-commerce and Distance Selling (Fevad) has been considering new measures to be taken in e-commerce. Can you tell us about them ?
Yes, these measures are structured around three major issues: competitiveness, eco-responsibility, and inclusivity. First, the competitiveness of our businesses. We have real expertise in France in the field of e-commerce. The French market was created around pure players, companies created on the Internet, which were the pioneers. Then came companies from physical distribution. The expertise of the French in e-commerce is recognized internationally in a sector that is nevertheless highly competitive. Today, we are the second-largest market in Europe, tied with Germany, behind the United Kingdom, but far ahead of our other European neighbors. We must ensure that our businesses can remain competitive, create value, and create jobs. Then, there is also a real issue surrounding environmental protection. E-commerce, like any economic activity, has an environmental impact. It is the responsibility of companies in the sector to do their utmost to try to reduce this impact. This is a demand from customers, employees, and, more generally, society. This effort on the part of businesses must be encouraged and accompanied by support measures from public authorities, for example, in the greening of fleets, the environmental quality of warehouses, or the reduction of VAT on second-hand goods, etc. Finally, the digitalization of small businesses also remains a major challenge. Large groups have invested heavily in the digitalization of their offerings to meet the new expectations of their customers. Small traders, producers, and artisans must not be forgotten by the digital revolution. On the contrary, they must use these new tools as a lever for growth and expansion of their catchment area. Here too, support and assistance measures are necessary. Many SMEs took the plunge during the health crisis. We must therefore encourage those that are already committed to this path and encourage others to do so. We must succeed in combining proximity and modernity in commerce. This is also one of the proposals that Fevad wished to address to the public authorities.