This may seem a bit of a peripheral subject compared to the issues around the current Covid-19 or coronavirus pandemic. But for anyone in ecommerce and affiliate, it’s important to be looking at how this can affect ongoing business. We’ve spoken to a number of Publisher Discovery users who are already reporting significant shifts and responses.
It is fair to say that the net effect on the world’s population and the global economy can only be guessed at at the moment. With entire populations in lockdown around the world, the spread of the virus is being tackled. The overall impact won’t however become clear for some months yet.
In business terms, many projections suggest that the economic hit is likely to be much worse than after the recession following the 2008 banking crisis. However, other industry commentators are putting a more bullish light on things and looking for some kind of silver lining. eMarketer is showing a slight downward adjustment to it’s own adspend projections for this year, as PerformanceIn reports.
While governments are doing their best to protect and support businesses financially, opportunities can come from the huge shift to online buying. As Charlie Calabrese from Partnerize put it “We see several of our top brands on an uptick while people are working from home. In these strange times people seem to be finding comfort in ‘retail therapy’.” That is a trend we are hearing from several other clients in the retail sector – though it is not a comfortable situation for any brand to acknowledge.
There has been a widespread move to WFH as the online conferencing apps are reporting. As Connective3‘s graph shows – it is certainly a boom time for this particular software sector.
Meanwhile millions are now getting the hang of applying the discipline needed for home working, there are quite a few using retail therapy to get them through!
The almost immediate effect on the fashion sector is an obvious result of this. Mark Russell of Optimus noted that restrictions on people’s activity had the most effect on demand and sales dropped overnight. The three largest UK online clothes retailers, Primark, M&S and Next have in fact suspended online sales.
There are positive signs though. The recent Econsultancy piece shows that online retailers are seeing and predict an increase in ecommerce activity both in the UK and US markets, as this graph illustrates:
When viewed across the wider markets worldwide, regional differences in actual shopping behaviours show up:
We have spoken to a number of our users across sectors. The travel sector has been hugely hit with airlines mostly grounded apart from freight and diplomatic travel. Many were shocked at Marriott’s decision to suspend their affiliate program with links on affiliate sites going to a network 404 page. Others are staying online, on the basis that consumers will still be placing bookings for later in the year. Many OPMs are advising clients not to pull back on affiliate programs to help maintain their affiliate relationships through this tricky time.
Mark Russell advises clients: “Remember your affiliate programme is built on relationships and has taken time to develop, and what affects you is also affecting your publishers”. He adds “If you are going to make changes or pause your programme be open and honest with publishers to maintain your future relationships“. John Vickers of Affiliate Future adds, “Publishers have long memories and they are likely to work with advertisers who support them during this time. The brands who treat their publishers well could have a much stronger affiliate programme once the economy bounces back“.
The same hit has applied to tickets, events, and any sector in the broad entertainment sector. Conversely, pure online businesses are thriving. Mike Brandy from leading Meta automation provider ub.io reports that “travel and event meta has been naturally affected, but some verticals for example broadband are seeing numbers increase significantly due to the nature of their business“.
Online Groceries has shown a massive growth, starting in China in February where online sales for fresh foods tripled. This has been mirrored in every market as shoppers try and minimise their exposure. UK supermarkets are reporting a 2-week wait for an online delivery slot.
John Vickers reports that the travel sector is obviously very strongly affected. He added “we are seeing a big spike across online retail especially in home & garden, pet and drinks retailers, where we are seeing a 3x increase over 2019“. Master of Malt have seen increased sales of spirits, and has “seen an uptick in customers wanting to buy products that aren’t generally top sellers for us, such as beer“. Stephon Anthony of MoM added that “logistics and supply chain partners are managing the increased demand“.
Liz Gazer of AM Navigator added that as well as food and drinks, “delivery services, health and wellness, financial, insurance and distance learning had a strong showing.” She adds, “Mobile-ready retailers will see even better results as more consumers are shopping from the sofa”.
At Publisher Discovery we are seeing a big increase in affiliate managers looking to strengthen their affiliate base. It’s not just the food sector growing. We are also seeing interest in online training courses. For one merchant in the outdoor/survival space, their revenue has increased substantially from ~$12k in January to ~$600k in February and March. In the AU market, catch.com.au has experienced a significant increase in traffic and sales across most home product categories.
Some brands are capitalising on the need to stay home as reported in The Drum. Some brands have drawn criticism for a ‘business as usual’ stance or treatment of their staff. Equally many others have been applauded for their response. We’ve added some of the network responses in the Sources at the end of this post.
For those retail groups who have still not adapted properly to ecommerce, the pandemic is likely to be either a massive wake-up call or a massive threat to their very existence. Forbes outlines some of the sectors that are most likely to suffer in a recent article. Warren Shoulberg mentions that over 150 retailers have closed their ‘bricks & mortar’ operations. Without online to fall back on this could be the final straw.
Where Do we go from Here?
This is a global issue and no-one knows how it will all pan out, let alone the effect on affiliate by coronavirus. As with any economic hit, the stronger operators will survive and thrive after the effect of the coronavirus dies down, as it undoubtedly will. It is likely that it will be another ratchet click that moves consumers to increase spending online. Retailers will have to move more fully to ecommerce-first operations, with the high street as just a showroom.
As such all online channels will be strengthened and because of it’s compelling ROI, the affiliate sector more than some others. Those retailers who come online more effectively will need this support. Influencers, sector specialists and good old cashback/coupon affiliates will help to drive the volumes needed for merchants to emerge stronger.
We of course would say that this is the ideal time to examine your own affiliate programme and look to strengthen it. Our free trial should help with those efforts of course, so do feel free to take advantage of that.
In the meantime almost every government around the world is advising reduction or elimination of social interaction. So, we’d urge that for as long as this last you stay safe and we look forward to meeting you again at one of the future affiliate events.
Awin – Response to Coronavirus
Partnerize – Partnering in uncertain times
Affiliate Future – Update on Covid-19
CommissionFactory – Update on Covid-19
Econsultancy – How is coronavirus impacting the retail industry?
Divante – What ecommerce. Managers Should Know
The Drum – Capitalising on Staying Home