It would be difficult to overstate the coronavirus pandemic’s impact on the American economy, including e-commerce. As the virus spread, unemployment skyrocketed. With more Americans out of work or staying close to home, economic output and consumer spending both fell dramatically. Even as the stay-at-home orders eased, viral outbreaks around the country continued disrupting everyday life.

These unprecedented challenges have left many businesses reeling. As the holiday season approaches, Logical Position is helping our clients develop digital marketing strategies to maximize returns during this critical period. That process begins by analyzing how the pandemic has already affected e-commerce.

Charting COVID’s Initial Impact on Digital Marketing

As we examined our client’s second-quarter digital marketing results, an important trend emerged. As the stay-at-home orders were implemented in March, more Americans turned toward e-commerce buying than ever before. To cope with this demand, leading retailers like Amazon and Wal-Mart all but abandoned search engine marketing (SEM). The absence of those major players upended the SEM marketplace. During the stay-at-home period, our statistics revealed:

  • Clicks increased by 27%.
  • Impressions increased by 36%.
  • At the same time, cost-per-click (CPC) rates dropped by 26%.

Without competition from major players, those businesses that remained in the SEM marketplace saw historically low cost-per-click numbers paired with rapidly increasing search volume. This information could be critical as brands head into the holidays.

Predictions for the Holiday Shopping Season

Holiday e-commerce revenue grows every year. This isn’t simply a function of economic health. It represents changing consumer behavior as more shoppers buy online.

While it’s difficult to make predictions under pandemic conditions, I anticipate seeing e-commerce continue to grow during the 2020 holiday shopping season. However, the level of that growth will likely hinge on virus levels and the economy’s health. Depending on those factors, we could see massive year-over-year increases, or growth that’s more in line with previous years. With that in mind, I foresee three possible scenarios for the upcoming holiday season:

  • Scenario #1: Coronavirus levels worsen nationwide, so people stay close to home. However, the economy remains relatively stable, so they still have money to spend. Under these conditions, I could envision a 50-60% increase in holiday e-commerce sales.
  • Scenario #2: Some areas are heavily locked down, while businesses are open in other parts of the country. Here, I could see e-commerce sales increasing by 10-50%.
  • Scenario #3: The coronavirus worsens alongside the economy. Here, people are stuck at home with no money to spend. This situation could result in a sales growth of 10% or less.

There’s no way to know exactly which scenario will emerge as we move into fall and winter. Regardless of whether we see explosive online revenue growth or more modest increases, they’ll likely be accompanied by declines in brick-and-mortar sales. That’s why I recommend my clients stay flexible and be prepared to respond to rapidly changing market conditions so they can take advantage of whatever e-commerce opportunities come their way.

Recommendations I’m Making to My Clients Now

In response to this uncertainty, I’m telling my clients to explore options they may have overlooked in past years. One fantastic way to drive website traffic is through Microsoft’s Bing search advertising. More than half of my new clients don’t use this resource, even though it converts better than Google. I’m also recommending that my clients begin dialing in their holiday promotions now while keeping a few factors in mind.

Beware of E-commerce Discounting

While it may be tempting to offer steep discounts during uncertain times, you can inadvertently cause lasting damage to your brand. If consumers begin viewing you as a discount seller, it can be incredibly challenging to change their perception. JCPenney is one example of a brand that tried to move away from discounting, with disastrous results. So instead of slashing prices, try developing buy-one-get-one or bundling options, which provide added value for customers without compromising your reputation.

Offer Free Shipping

Thanks to Amazon’s Prime service, many e-commerce shoppers now expect free shipping. That’s why I recommend that every online seller provide a free shipping option — even if it’s the slowest possible solution. Without a free shipping option, customers will likely turn to Amazon for their purchases.

Be Aggressive

This year, companies need to capture market share aggressively. Many companies plan out their holiday campaigns with set spending limits for paid ads. However, this approach doesn’t allow them to pounce when opportunities arise. For example, if the big players decide to skip SEM again, and CPC rates fall, brands should be prepared to fill that void with spending increases. After all, rising search volume and historically low click rates are the stuff of holiday e-commerce dreams. Not to mention, any leads or clicks you capture this holiday season can be marketed to all year long.

Focus on Results this Year

With so much uncertainty in the market, there’s little space for activities that don’t drive bottom-line results. That’s why businesses must approach this holiday season with a well thought out strategy for improving sales, driving website traffic, and collecting customer data they can use for future marketing activities. Most importantly, marketing teams must be prepared to adjust spending quickly to take advantage of new opportunities. With these strategies in place, we’ll hopefully see a successful holiday season that will carry us to better things in 2021.

Ryan Garrow is the director of partnerships and client solutions at Logical Position, an Inc. 500 company headquartered in Oregon with offices nationwide. The agency offers full-service PPC management, SEO, and website design solutions for businesses large and small, and was ranked as the third best place to work in America by Inc. Magazine.

E-commerce stock photo by Surasak_Ch/Shutterstock