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The Impact of COVID-19 on Online Retail

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The Impact of COVID-19 on Online Retail

Online supply store DK Hardware examines how the pandemic is changing the habits and overall consumer behavior of online shoppers.

After more than a month of confinement, we all dream of the day when everything returns to how it was before, and we can resume our not so old habits. However, it is more realistic to think that COVID-19 has come to stay and that, after this first devastating wave, the entire population will have to remain extremely responsible and we will suffer the consequences of this pandemic for longer than we would like. We do not stop living one of those moments in history in which the foundations of our society are shaken and we experience profound changes that will prevent us from returning to the point where we were a few weeks ago.

This first month of confinement is forcing us to adopt new habits and customs that we will maintain once the state of alarm is lifted, customs that will leave consequences in multiple aspects of our lives. In this post we are going to focus on everything related to new buying habits, otherwise, it would be too long.

Change of Habits

One of the first pieces of news that hit us all hard was knowing that we could only step on the street to buy basic necessities. When we found out, we all ran to loot the supermarkets as if we had seen the four horsemen of the apocalypse arrive. Once the first moment of panic was over (fear is very powerful and completely irrational), we gradually adapted to the new situation and discovered that these small forays into the streets in search of food, medicine, within others, it was anything but pleasant: lines surrounding the supermarkets with people more than 1.5 meters dressed from top to bottom with gloves and masks, security measures to access the premises, lonely buyers fleeing from anyone who invades their personal space … measures completely justified and that we must respect, but that makes it almost traumatic to go shopping.

But this change does not stop here: during the last month, we did not know very well if the rest of online retailers dedicated to the sale of products that are not essential items would continue to operate normally. This uncertainty took its toll on this ecommerce, but once the doubt was cleared and, seeing that the orders were made and arrived relatively normally, we found the second great change in habits: buying everything that we need or want in online stores. Yes, even supplies for your home.

Has your bathroom shower window broken, and you cannot go to your usual store? You can buy it online. Have you been thinking about changing your kitchen’s plumbing system now that you’re spending more time at home? Well, you can buy it online. Companies like DK Hardware, one of the largest online home improvement retailers for a variety of hardware manufacturers all over the United States and Canada, have your back.

Think Global, Act Local

Online retail is there to satisfy your needs and now it has more prominence than ever. This situation is causing many SMEs and local businesses that saw that the online channel was only a complement or did not even consider working on that channel, have woken up from one day to the next and now consider it their priority (and if not I don’t know what they are waiting for). While many companies, both large and small, keep their productivity levels in check thanks to the option of telecommuting, many businesses are going digital so as not to be left behind and remain part of the game.

And After This, What?

The post-coronavirus world will be an even more digitized world in which the battle to get users to choose us will be even fiercer: let’s not forget that a large part of the population does not have the purchasing power it had before the pandemic and that the longer the confinement lengthens, the longer and more severe will be the economic crisis that the country is facing. In these circumstances, these factors will be key:

Price: The price war will continue to be something that online retail has to live with. The excessive stock in the warehouses together with a society that is going to look at the price with a magnifying glass, will force the stores to have competitive and attractive products.

Loyalty: With so many new players on the board, it will be more difficult to get your buyers to be loyal and make recurring purchases in the same store. Therefore, establishing a good loyalty strategy is going to be mandatory.

Omnichannel: It is more important than ever to attract and retain users, so we cannot forget the power of working multiple channels at the same time, building a powerful brand image and with the aim of being more in contact with our users: social networks, email marketing, SEO, SEM are some of the examples of channels that must be perfectly coordinated and that will work as one.

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Featured in the Best Online Shops 2020 – Newsweek, DK Hardware is one of the largest online home improvement retailers for a variety of hardware manufacturers all over the United States and Canada.

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PREVENTING TRADE IN ONLINE FAKES

Online Buyer Beware

U.S. consumers spent over $600 billion dollars with U.S. merchants online in 2019. For consumers, online shopping is enticing for its convenience. With credit card in hand, shoppers can easily compare prices, make a purchase, and have the products shipped directly to their homes. The ability to sell online has transformed the ways in which manufacturers, shippers and retailers conduct business.

The evolution from brick and mortar to online stores has also made it more convenient for illegitimate businesses and criminals to pass off counterfeit products, which has attracted the attention of the U.S. government. Since November 2019, a flurry of government activity has focused on protecting consumers in the e-commerce environment.

Trade in fake goods 3.3 percent of world trade

Political Hue and Cry

The Senate Finance Committee examined online counterfeit goods last November when it issued a bipartisan report highlighting two key fact findings: U.S. businesses have difficulties preventing the sale of counterfeit goods online, and e-commerce platforms have no affirmative obligation to police counterfeit goods listings or to proactively remove suspected counterfeit items.

In January, the Department of Homeland Security (DHS) issued a report titled Combating Trafficking in Counterfeit and Pirated Goods, in which DHS found that e-commerce has contributed to a shift in the sale of counterfeit goods in the United States. As consumers increasingly purchase goods online, counterfeiters are increasingly producing a wider variety of goods that may be sold on websites alongside authentic products. The report adds that American consumers shopping on e-commerce platforms and online third-party marketplaces now face a significant risk of purchasing counterfeit or pirated goods.

A week after the release of the DHS report, the White House issued an Executive Order “Ensuring Safe and Lawful E-Commerce for U.S. Consumers, Businesses, Government Supply Chains, and Intellectual Property Rights Holders”. The Order implicates express carriers and the international postal system as contributing to the problem of imports of contraband and counterfeit goods.

American brands 24 percent of fake products seized

House Bill 6058, the SHOP SAFE Act of 2020, was introduced in early March in the House of Representatives. The bill proposes to impose contributory trademark infringement liability on e-commerce platforms unless they take steps specified in the legislation. The legislation received immediate support from several prominent industry associations.

The American Apparel & Footwear Association’s CEO stated that “more needs to be done to prevent counterfeit products from unknowingly entering the homes of American families.” In support of the bill, the CEO of the Personal Care Products Council stated that “counterfeit personal care products damage businesses, disregard regulatory protection and more importantly threaten consumers’ health and safety,” adding the Council encourages “Congress to establish a system that makes online marketplaces and others responsible for ensuring that products on their platforms comply with U.S. laws and regulations”.

Two days later, House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) stated that the convenience of e-commerce “has come at a devastating price: a proliferation of dangerous counterfeit goods that endanger consumers and property, and an army of counterfeit merchants from overseas that undermine American small businesses with unscrupulous tactics.”

Counterfeit medicines

Hiding on Plain Sites

In general, the owners of intellectual property (copyrights, trademarks, patents) have had a lot to say about the online platforms and marketplaces that host e-commerce. As summarized in the Senate Finance Committee’s report, e-commerce platforms place the burden of policing and enforcing intellectual property (IP) on the IP owners, suggesting they do not have a duty to police counterfeit listings or proactively remove suspected counterfeit goods from platforms.

The proposed SHOP SAFE Act of 2020 would place a greater burden on platforms. By taking steps outlined in the legislation, platforms would be able to avoid liability for IP violations.

During the week the SHOP SAFE Act was introduced and a hearing held to address the issue of e-commerce threats to consumers and the economy, a technology company, PreClear, announced it is using “technology that pushes out the border and prevents infringing goods and potentially harmful goods from being exported to the U.S.” PreClear’s founder is quoted as saying that the technology is in use 24/7 and rejects thousands of non-compliant items daily.

There is no doubt that the sheer volume of infringing and other non-compliant merchandise available to consumers on the internet begs for a solution. The question is whether protection and enforcement begin after the items are in the stream of commerce in the United States or before the items ship to the United States. One of the missing variables in the trade policy equation remains how to prevent infringing items from leaving the country of origin in the first instance.

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Tim Trainer was an attorney-advisor at the U.S. Customs Service and U.S. Patent & Trademark Office. He is a past president of the International AntiCounterfeiting Coalition. Tim is now the principal at Global Intellectual Property Strategy Center, P.C., and Galaxy Systems, Inc.

This article originally appeared on TradeVistas.org. Republished with permission.