When considering the impact of COVID-19, organizations are typically quick to frame the concept to convey how it has affected their business operations. Questions like “how has your organization handled a virtual workforce” and “was the infrastructure in place to support this change” are among the first to be asked.
However, over the past three months, there has been a 129% year-over-year growth in U.S. & Canadian e-commerce, and a staggering 146% growth in all online retail orders. While it is crucial for organizations to assess how they will operate in this new environment, it’s equally important that they are informed about how COVID-19 has further changed the buying habits and trends of their consumers. Additionally, it is important for the office of finance to know how those trends will affect their workload and close periods.
Below are three factors that have contributed to the increase in e-commerce purchases and what they mean for the office of finance.
In the initial stages of the COVID-19 outbreak, panic buying became a common occurrence. As essentials such as soap and toilet paper became rare commodities, buyers searched online to find these items. However, this influx of internet purchases quickly led to both brick-and-mortar as well as online stores struggling to keep up with demand.
While stores have somewhat recovered, many industries are still desperately trying to produce enough goods to create the same availability that existed pre-COVID. Because of this, the amount of intercompany transactions has increased dramatically as organizations under the same corporate umbrella provide their co-companies with necessary materials for production.
Contact with COVID through packaging
Experts have found that the virus can live on surfaces from hours to days, depending on the material.1 Because of this, buying online has become an attractive option for buyers. With typical shipping times lasting several days, and shipping conditions making for a tough environment for COVID-19, it’s unlikely that the virus would survive on items purchased online.2 Additionally, in order to curb the risk of contracting COVID through surfaces and other shoppers, online ordering with an in store pick up has become an attractive option for many consumers.
While there are certainly still purchases made in the brick-and-mortar stores, an abundance of caution has led to an explosion of these types of e-commerce purchases, and thus more transactions that need to be reconciled, creating more tasks for the office of finance.
Beyond an evolution in how people buy items, there’s been a dramatic change in what people are buying. Many industries have expected fluctuations in their revenue, such as travel taking a hit and subscription services skyrocketing. However, industries such as “Toys & Games” as well as “Beauty & Care” have seen substantial growth as well.
The impact of this change is dependent on the industry that an organization is in. Nevertheless, organizations that may once have had a grip on the number of transactions, both online and in brick-and-mortar stores, that would have needed to be reconciled will now have to deal with an unprecedented number of transactions.
As time goes on, we will all settle into some new form of normal. However, the impact that COVID-19 has had on the e-commerce industry will have long-lasting effects. In order to overcome this change in circumstance, the same level of change needs to be echoed into how those transactions are being handled. Currently, the standard of manually processing and verifying each transaction through spreadsheets is a time-consuming and inefficient endeavor. A spreadsheet-based approach to the reconciliation process wasn’t designed for the sheer volume of transactions that organizations are facing today. By automating this process and removing the manual processing associated with it, organizations can comfortably handle increased transactions and redirect their accounting teams to more value-adding work, such as handling any discrepancies or providing insight into how their organization can best handle the current circumstances.
To learn more about how an automated solution can benefit your organization during these unprecedented times, visit our retail and e-commerce resources page.
Written by: Caleb Walter
1 Please note that as experts continue to study of the virus, these numbers may change.
2 Please note that while it is possible for COVID-19 to spread through surfaces or objects, this is not currently thought to be the main way the virus spreads.