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Corona pandemic's effect on e-commerce


André Mikalsen

Founder, Mikalsen Utvikling

6 min read

If there is one thing that we can all agree on, it is that the global pandemic, Covid-19, has had a huge effect on our consumer behavior. No previous event has caused e-commerce to grow as strongly as the Corona crisis. Everyday life has changed for most of us and with a new everyday life, our consumer behaviors also change, both in physical stores and online. But what does this upheaval really mean for the companies operating in the market?

Who benefit from the current situation?

Some industries are experiencing a sharp decline in sales as a result of the pandemic and must therefore rely on government subsidies to keep their head above the water until sales and demand pick up again. On the other hand, other industries and companies experience a greater commitment, higher pressure and increased sales as a result of changes in consumer behavior.

The question we should ask ourselves is whether the increased demand has arisen by itself, or whether the e-commerce players have found new channels for sales that may not have existed before?

The answer is probably multifaceted and too extensive to be fully covered in this article. However, the responsibility to prevent the spread of infection lies with both consumers and companies, and when many activities in society are severely restricted due to spread of infection measures and restrictions, a natural consequence is that we choose to shop online rather than in physical stores. This makes the situation especially challenging for those companies that depend on customers physically visiting their businesses (for example nightclubs, cinemas, hairdressers and the like). At the same time, new needs for products and services have arisen and hence we see that new players are emerging.

It is important to emphasize that there is a significant difference between ruthlessly "exploiting" the pandemic that some companies do by, for example creating an artificial shortage in the product inventory, or rather contributing to a simpler and safer everyday life for those who have to stay at home due to of the risk of infection. A good and safe offer in times like these will always be welcomed by consumers, and the companies that prioritize safety will probably win in the long run.

Infection safe deliveries

The thing that perhaps is giving e-commerce the most momentum right now is consumers' fear of leaving their home. As a consumer, you may only make the essential turns to the grocery store, and instead of going from store to store in search of the perfect winter jacket, you may instead search online. Of course, this means a reduction in sales for physical stores, but with a strong digital offer, companies can still reach out to their customer group - it's just a matter of finding new solutions. Several companies that previously only used one sales channel are now expanding their offerings by, for example, offering home deliveries. More and more companies have started offering free shipping and safe home deliveries to the door at the same time as they have had large sales campaigns to attract customers. These strategies mean higher costs for companies, but in the long run it will result in loyal customers. Consumers are looking for flexible and infection safe shopping alternatives - and the companies that succeed in meeting these needs will often win over those players who are just looking to make quick money at the expense of consumers.

The Corona pandemic's impact on the labor market

As a result of the Corona crisis, unavoidable redundancies and lay-offs have arisen as a result of cost savings at the affected companies. For many new jobseekers, it can now be a challenge to enter the labor market.

CVGuru in Norway, a company that helps job-seeking Norwegians to tailor their CVs and applications, has in recent months experienced an increased demand for its services. According to CVGuru, this form of digital service is particularly successful because it meets one of the needs created during the Corona crisis, i.e. more people looking for new jobs. In addition, it offers consumers a safe and flexible way to consume the services digitally.

Growing e-commerce - not just a temporary consequence

The Corona pandemic is not solely responsible for the increased traffic in the e-commerce industry. This is a trend we have already seen explode in recent years. According to PostNord, e-commerce in Sweden increased from SEK 77 billion in 2018 to SEK 87 billion in 2019, which is an increase of 13%. Before Covid-19, PostNord and HUI Research's forecasted that e-commerce would grow by 11% in 2020, but now e-commerce is assumed to increase by as much as 33% to SEK 115.7 billion. During the second quarter of 2020 alone, e-commerce increased by 49% compared to the same period last year. Of course, the Corona pandemic has accelerated the development of e-commerce, but for a long time we have also seen that e-commerce has been well on its way to becoming the new norm for shopping and selling - and with the effect of the Corona pandemic, we are only seeing an even stronger increase. Furthermore, we can only speculate, but it is natural to assume that the increase in e-commerce is not just a temporary consequence of the current situation.

Digital marketing

Of course, the rapidly growing e-commerce also means increased competition among the players operating in the market. As more and more consumers turn to online offers, many companies need to become better at promoting themselves through marketing in order to attract their customers. André Mikalsen, founder of Mikalsen Utvikling which offers services in digital marketing, comments that they have experienced flourishing competition across all channels, especially since many companies now also have to find new ways to cover up what they have lost.

Customer groups that previously preferred physical stores are now looking for simpler and safer alternatives online. If you have a web shop, it can therefore be a good idea to expand your target group to several customer segments. One way to reach your new customer group is through targeted campaigns on, for example, Facebook and LinkedIn. There you can easily tailor your campaigns by identifying and segmenting customer groups.

A society without Corona - the way forward for e-commerce

It may not feel like it now, but one day the Corona crisis will be nothing but a memory. When we return to a more normal life, we can expect that consumer behavior will have changed permanently. However, where e-commerce is heading in the upcoming decade is still uncertain as the way we act is redefined for every technological advance we make as a society. With the entry of smartphones, e-commerce almost exploded overnight - and it's hard to speculate on what innovations lie ahead. At least we know that e-commerce is here to stay.


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