Reliance on Social Platforms is Becoming Turbo Charged

Customer reviews provide and interactive shopping experience, that has help companies like Amazon and Walmart outperform during the spread of COVID-19. The customer experience allows shoppers to have a voice in shaping how companies treat their clients.  With online retail sales recently overtaking merchandising sales, the social platform uses to attract customers will continue to play a dynamic role in driving sales.

The COVID-19 Impact

The spread of the coronavirus has driven traditional commerce to a standstill. Services that focus on grooming, physical activity, and social gatherings have dwindled, while delivery, virtual assistance, and cloud storage have flourished.  With consumers at home, their shopping habits quickly shifted. 

The US Commerce Department reported that the total market share of online U.S. retail sales was higher than general merchandise sales for the first time in history. Online sales are now the fourth largest sector with nearly $60-million in sales of February. 

The discussion surrounding the “opening of the economy”, is beginning in the United States, but it has already started in many parts of Asia. Recall, COVID-19 initially spread throughout China according to iFOREX India. 

 Today in China, Apple has opened all of its stores, and its beginning to experience traffic. According to reports, Apple restocked its stores with all of the new releases, including its MAC and iPad, along with recent phone releases. One of the differences between the US and countries that have already weathered the first storm of the coronavirus is the testing and technology that is available. 

While testing is ramping up, it appears that technology in the US is also gaining traction. Apple and Google, who dominate phone software announced they had teamed up to develop a tool that will enable phones to use Bluetooth to track other devices they come near to alert them that they have had contact with an infected person. If this methodology becomes the norm, as the US market comes back from its slumber, then everyone that enters an indoor facility will need to have a mobile device that will allow others that are indoors of your status as it relates to others that have had COVID-19.

The Social Experience

While tracking is an import mechanism used to understand where COVID-19 is festering, it is very invasive and will deter people from going out. This should lead to further gains in market share, for Amazon and Walmart which is likely well above their hold on market share before the onset of COVID-19.

The rise in e-commerce will come in conjunction with features that buyers need to experience when shopping online. One of the drivers behind many online purchases is access to reviews of products. Both Amazon and Walmart provide this customer experience. Reviews are promoted throughout both the Amazon and Walmart e-commerce sites. This provides a buyer with an opportunity to review the product and the service associated with the seller. Each item that's listed on Amazon has a star-rating - awarded by Amazon customers and is normally accompanied by numerous reviews of both the product and the seller.

Some have been critical of the Amazon model, which employs customer reviews which takes the place of touching or seeing the product in person. The process allows for accountability in the form of a customer review. If a product is hard to put together or the customer service is below par, you will learn about that before pulling the trigger on an item. Additionally, if there are any falsehoods, where the seller does not describe the product accurately, reviews will alter the consumer ahead of time.

Most importantly, review create consumer engagement. While some consumers will only look at the stars as an aggregate survey of the product and the seller, others will dive in. You might even consider the reviews that are seen on Amazon and Walmart, are a social platform that provides survey data and allows customers to interact. 

How Have Social Platforms Benefited Companies During the Pandemic?

Life around the globe drastically changed as COVID-19 spread around the globe. In the east, people are slowly going back to work, while in the west, it could be months before the economy fully reopens. The path to recovery will be long, and certain companies have taken advantage of a potential new normal.

Apple and Google are actively participating in tracking software, which will make their phones and software key to reopening in a safe environment.  Apple shares initially lost 30% of its value in March, but the stock price has recovered half of its gains and remains well of its all-time highs. Alphabet has also rebounded sharply, and similar to Apple is well off its all-time highs.

While Apple and Alphabet are likely to be long term beneficiaries of a “new normal”, Amazon and Walmart have been experiencing a boom in business. In March, Walmart experienced a 20% month over month increase. Amazon is seeing robust sales and has also benefited from having its delivery network. 

Amazon shares are up nearly 21% for the month in late April of 2020, rising to a fresh all-time high. While the stock price declined in March along with the broader markets, it quickly rebounded as a theme toward stocks that would benefit during a quarantine took hold. 

Walmart shares have also surged higher closing in April at all-time highs. Grocery store sales along with alcohol purchases surged more than 300% in March. 

Bottom Line

While both Amazon and Walmart share prices are elevated, there is no reason to believe that their businesses will experience a pullback in the short-term. It will take some time for a “new normal” to set in. People will want to venture out, as demand continues to rise, but social distancing will remain normal for a significant period until a vaccine is created. Until that period comes, stocks like Amazon and Walmart should continue to benefit from a social platform that engages customers to be part of an online experience.