Costly eCommerce Growth, COVID-19 Bonus Pay, China Retail Slow to Recover

By Cleveland Admin

COVID-19 created an unprecedented shift to eCommerce, representing a significant change in eCommerce acceleration. While many brands have seen tremendous growth since the start of the crisis, eCommerce represents a headwind to profitability for omnichannel retailers. According to our research, 29% of manufacturers have already seen key omnichannel customers looking for funding to offset the impact digital has had on the bottom line. Asks are typically coming in the form of cost concessions as well as greater participation in high-margin marketing activations. We expect more manufacturers to receive funding requests from their omnichannel customers through the remainder of the year considering the negative-margin implications online continues to have on profitability.


COVID-19 Bonus Pay
Amazon announced plans to deliver a “thank you” bonus to its frontline employees that worked during June, amounting to $500 million dollars for the company and $500 for full-time Amazon FC employees. The bonus, a temporary wage boost of $2/hour, ended on June 1 after being distributed to employees in March and April. Lowe’s also recently announced it will pay a one-time $300 bonus to its frontline workers, following Walmart’s approach in late May.


China Retail Slow to Recover:
Our research suggests retail sales in China seem to be experiencing a “Nike Swoosh-Shaped” recovery with the growth rate slowly climbing up after a dramatic drop in February. We expect retail sales in China to improve at a slower pace in the coming months, as both stimulus benefits and pent-up demand fade.

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