Technology, consumer appetites fuel e-commerce rise during the pandemic

E-commerce has escalated during the coronavirus pandemic. Graphic: Kristian Rodriquez/University of Miami
By Michael R. Malone

E-commerce has escalated during the coronavirus pandemic. Graphic: Kristian Rodriquez/University of Miami

Technology, consumer appetites fuel e-commerce rise during the pandemic

By Michael R. Malone
A supercharged e-commerce market left traditional retail stores wanting during these unusual times.

In April when the Centers for Disease Control announced new guidelines for masks to be worn in public, the online demand for facial coverings exploded. Within days, the e-commerce craft supply website Etsy welcomed 20,000 mask-makers to its platform and by month’s end, 60,000 sellers were displaying their wares.

Etsy’s pivot, which mirrored that of thousands of small businesses who shifted their own production lines to produce the kaleidoscope of crafted masks, resulted in a 17-percent boost in total gross market sales—12 million masks sold in April—according to The Wall Street Journal. Men and women in equal numbers flocked to the site, historically frequented by female shoppers, to purchase masks. And 85 percent of new customers planned to buy on the site after the pandemic, according to surveys.

“Etsy’s smart move points to the big advantage of e-commerce—that it can be agile and move quickly to adjust to where the demand is,” explained Sara Rushinek, a business technology professor at the University of Miami Patti and Allan Herbert Business School. “If you’re a retail store you might not have the shelf space or be concerned that a few months later the demand will evaporate and you’ll be stuck with inventory.”

Rushinek
Rushinek

Rushinek serves as a technology consultant to the City of Coral Gables and recently has been helping the city reimagine how commerce is conducted as it moves toward becoming a “smart city.”   

“The brick-and-mortar stores are scrambling for ways to connect with shoppers, and I’m encouraging businesses to think about a hybrid approach,” she said, highlighting that traditional stores have natural advantages that they can learn to exploit—in the best of ways.

Trust is essential to commerce

“Many times, you want to ask a question and talk to somebody. If it’s a computer, or something like that, you want to see the features and for someone to tell you about them—you have a relationship and it’s really about trust,’’ Rushinek said.

“Yet when you think about e-commerce, you wonder: Where is that trust? Where is that relationship?” she asked. “I need to be able to trust Amazon, trust that they send me what I’m asking them to, that I can return it if I need to, that the product has been reviewed in some ways, that I’m not going to just give my money and get nothing.”

Buyers want e-commerce to be frictionless, she explained, meaning an easy pass-through, one click, buy it, and have it sent to their home. The convenience factor has fueled the rise of e-commerce which has skyrocketed during the pandemic.

Michael Wilson, senior lecturer in management and director of Entrepreneurship Programs in the Miami Herbert Business School, likewise highlighted the shipping and logistical advantages of e-commerce and applauded Etsy’s recent maneuvering and growth. He cautioned though that the e-commerce world requires constant adaptation.

“It’s the Wild West again, and there’s a danger zone,” he said. “Etsy was groomed as an outcropping for the little mom-and-pop shop; but, like other online companies, they now too have become a big elephant,” Wilson said. “The only way they continue to grow is by controlling the process; if they’re going to compete with an Amazon.”

Adding credence to Albert Einstein’s maxim that “it is in crisis that invention, discovery, and large strategies are born,” Wilson promotes innovation and entrepreneurship as the appropriate business response to the demise of traditional retail and the economic turmoil caused by the pandemic.

“That’s the exciting thing and something I emphasize with my students: ‘There’s always going to be a curveball that you couldn’t have prepared for and, when it happens, you have to make quick decisions and go with it and figure out how you fit in,’ ” he said. 

In the early 1990s and before entering academia, Wilson built a 50-person internet company and saw back then the potential for online exchange.

And he knows the travails of entrepreneurship and the value of adapting to market evolutions. He operated a series of restaurants on college campuses until the transition from cash payments to credit cards with their transaction fees necessitated a change.

Wilson
Wilson

Pivoting, whether to new products or new modes of operation, are part of the risk of business, he emphasized.

“You can bet that companies never in their wildest dreams imagined being in the space they’re in, having to convert to online systems. Some will do it well and others won’t. Like anything else, the companies that get it right will have a lot of advantages,’’ Wilson said.

“The truth is this thing is happening so quickly that only the entrepreneur or the innovator that stays in lock step with it will succeed, while most of us are left reacting,” he pointed out.

Traditional retail stores need to reinvent themselves

The same technologies that have fueled the rise of e-commerce are available to traditional stores, according to Rushinek.

“The technologies are coming—and they’re here,” she said. “Let’s say a store sells cameras and a customer has questions. The shop-owner could have an expert online from anywhere in the world to explain it. You could have a show and invite 10 or so people into your store to watch and ask questions.”

Rushinek suggested that augmented reality technologies will spur the evolution of stores reinventing themselves to combine the virtual with the physical world. She offered the example of a technician connecting virtually to fix a computer, a phone, or to show how to assemble a piece of furniture—all possible via these technologies.

Both business experts agreed that our experiences as workers, learners, and consumers will continue closely aligned with online expansion, yet will ultimately be tempered by the human need for touch and community. 

“What I can be assured of is that commerce is not going to go back,” Rushinek said. “This is the same way that our way of working has changed for good. We’re seeing that people can work from home, that they’re working more and better—there are so many efficiencies.”

What’s the limit for cloud-based commerce?

Rushinek said there are variables that may dent the impact of e-commerce in the long run. “Reliability may become an issue after a while; there may be problems with fulfillment,” she said. “But, even more, I see it as people are going to be yearning for human contact and for relationship. Our need for human touch needs to be fulfilled and that’s where e-commerce is sterile.”

Wilson suggested that new technologies and the dramatic changes caused by the pandemic have spawned a new economic paradigm. The likeliest scenario for commerce will be a hybrid model, one similar to the HyFlex—a flexible course design model—that has become increasingly popular for teaching and education.

“In a word, we’re all being asked to entrepreneur our lives,” he said. “If you think about entrepreneurs, they’re junk sculptors who need to exercise a lot of skills, though not all of them perfectly.”

Amid the current crisis and standing at “a crossroads of capitalism,” Wilson said that budding entrepreneurs need a persistent mindset if they expect to succeed.

“You can’t rely on rhetoric or ‘if they build it, they will come,’ ” he said. “You have to be disciplined and investigative with any kind of decision, really understanding root causes and the why and the how you’re going to get there. Entrepreneurship is an umbrella for anyone and everyone, almost like democracy. It’s a way of conducting your life.”