Although more than a month to go from 2020, it can now be clearly stated that the online market within the trade has become one of the winners of the crown virus epidemic. After the Christmas period, however, the end-of-year season is still to come, the outcome and dynamics of which may never have been more a more knowledgeable equation. In this new, changing market environment, buyers’ reactions (and financial opportunities) have also become much more unpredictable.
What we already know for sure: record sales marked the first 10 months of 2020
So far in 2020, all factors have served to strengthen online retail, which has had a negative impact on other sectors. This is confirmed by the traffic figures for the last 3 quarters. The impact of the coronavirus on e-commerce was felt indirectly in the first quarter of the year but became truly decisive for the second quarter. While most of the trade has virtually stagnated, the first quarter of the online market has increased by 21%, while the second quarter alone has increased impressively by 47%. Although the third quarter has already closed with slower dynamics during the summer months (+19%), even with these “weaker” three months, we are still witnessing the fastest growth in 5 years. As a result, the online turnover of the first 9 months of 2020 exceeded the same period last year by 30%, reaching a gross level of HUF 526.5 billion.
Research also shows that the 2020 increase in traffic was most significant in the areas of technology and computer goods, DIY, and home equipment, as well as FMCG, which includes food and drugstore and household products. Sales of technical goods from online sales increased by 84% year-on-year in the second quarter only, and the third quarter brought a further 28% expansion to the sector. It is telling that in 2019, online traffic in the technology sector could not expand to this extent even in the last holiday quarter.
Overall, trade can be happy to end a ‘zero plus’ season
The prospects of Hungarian traders during the festive season, laden with viruses, restrictions, shopping time bands, and shorter opening hours, are by no means bright. In terms of the entire Hungarian retail market, years of dynamic growth have been broken, so overall trade can definitely be a more subdued year-end season, similar to last year’s level.
At the same time, it seems certain that, like the spring period, many purchases will again be diverted to the online market thanks to the restrictions, so e-commerce can continue to do well.
Exactly how much, in turn, depends heavily on the current epidemic situation and possible further restrictions in place until mid-December: will there be closures, restrictions, whether the virus will appear in the trade or in logistics providers, even if they remain open, how safe will it be to hunt for gifts in shopping malls?
The crown virus is narrowing the number of people gifted at Christmas this year
The season may also be affected by the plans to give gifts to fewer people for Christmas in 2020 as one of the obvious effects of the epidemic. In the case of extended relatives, acquaintances, and co-workers, the lack of gift-giving is understandable, as we may not be able to meet everyone in person during the holidays. Because of this, while last year we prepared an average of 8 people with surprises, this year this list is limited to the narrowest family and close friends, i.e. 5-6 people.
According to public research by GKI Digital and Árukereső.hu at the end of October, this year the budget for gifts is on average HUF 52,300, an increase of 8% on the previous year’s data. In view of the narrowing of the number of gifted, an increase in spending above inflation is expected and the value of gifts per capita will increase.
The scenario could change in 2021
As the epidemic has upset the peak period of various product circles within the year, several classic product categories have slipped from the top of the sales charts this year. During the last six years of domestic Black Friday promotions, these top products have typically been technical, consumer electronics, computer goods, and home appliances. This year, demand for laptops, home appliances, smart TVs, game consoles, and other computing accessories has peaked during the spring due to the virus.
Although these articles will continue to be highly emphasized this year among the highly advertised “showcased” products, toys, books, clothing, and beauty products play a greater role in the field of discount products than in previous seasons. In addition, there are several actions related to home furnishings, home furnishings, DIY, and FMCG products. Technical items include mid-range mobile phones and small and medium-sized household appliances (e.g. coffee makers, kitchen robots, hairdryers) rather than TVs and laptops.
The total value of planned purchases is being pushed up by price increases due to the rise in the euro exchange rate, but as lower-priced items are more pronounced among popular products, basket values have declined overall compared to 2019. At the same time, the transaction number and the resulting package number will in no case be less, so logistics providers can expect an even greater increase.
Recent studies suggest that since 2014 e-commerce has considerably increased at the growth rate of 265% and is projected to increase way higher. Hence the future of e-commerce is bright and people have been getting most of their success only from their e-commerce business.
So e-commerce is and will be a smart business to get rich with no headache of accounting, inventory, etc.