Recessions bring hard times. It’s painful to think back to the last recession and financial crisis, which wasn’t that long ago, with all of the damage it caused. Now, we’re on the verge of another recession.
The COVID-19 pandemic has caused a worldwide economic downturn practically overnight, causing small businesses and established companies to be at risk of shutting down, even permanently. But it’s not uncommon for a recession to lead to economic opportunities — 51% of Fortune 500 companies launched during a recession.
Some products are known to be recession-proof (or coronavirus-proof), including toilet paper, home goods, and groceries. Essential sectors like healthcare, grocers, household products, and fulfilment logistics are also seeing a rise in demand.
On the other hand, many local businesses are relying on support from their community to stay afloat. Artists, who have always relied heavily on the support from their local communities, are having to find creative ways to reach new audiences.
Although there are similarities between past recessions and the economy’s current situation, there are some key differences. One of them being the rise and role of ecommerce. With shelter-in-place orders across the globe, businesses are changing the way they sell due to shifts in online consumer behaviour.
Looking beyond the COVID-19 recession
In response to the global COVID-19 pandemic, many ecommerce businesses are rethinking their marketing and sales strategy for the short and long term. They face new obstacles and challenges to navigating customer behaviour and forecasting product demand, along with supply chain delays and rapid economic changes.
Fortunately, before the pandemic, the ecommerce industry was already seeing record growth, and the impact of COVID-19 has only sped up ecommerce adoption.
Although ecommerce has offered an opportunity for many businesses across markets to stay afloat, past recessions have shown some products, industries, and businesses to be ‘recession-proof’ despite an economic downturn.
8 recession-proof product types in 2020
Ecommerce consumer sales during COVID-19 are up by 52.20% across all markets, according to Common Thread Collective. While we don’t believe brands should capitalise on the pandemic, there are products considered “recession-proof” that continuously survive economic challenges.
The following products have also been in high demand during the months of nationwide quarantine:
1. Beauty, hair, and skincare products 2. Nutrition products, meal replacements, and protein powders 3. Sports and fitness 4. Home and cleaning essentials 5. Inexpensive entertainment 6. Pet care essentials 7. Food and beverages 8. Diapers and baby products
ShipBob has been closely tracking ecommerce sales trends during the COVID-19 pandemic across industries, week-over-week and month-over-month. The data is aggregated from over 3,000 ecommerce merchants who collectively ship out millions of items every month through ShipBob’s fulfilment centres.
Despite the unemployment rate jumping to 14.7 percent in April 2020, with sudden layoffs and dwindling job security, ecommerce is on the rise. However, it’s too early to declare a recession, but it is expected. More states are opening up, allowing brick-and-mortar shops and restaurants, yet we might still see a decline in customer spending overall.
Let’s dive into the recession-proof products:
1. Beauty, hair, and skincare products
History has shown that even during major economic downturns, including The Great Depression, the sale of lipstick increases, known as the “lipstick effect.” Beauty products — which include everything from skin creams to hair products — have seen a big spike since mid-March, noting 64.57% month over month, according to data aggregated by ShipBob.
Salons, barbershops, and other spa-like businesses have been forced closed across the country due to shelter-in-place orders. Now, people are cutting and dying their hair and maintaining their own skincare routine, bringing the spa into the comfort of their homes.
“I had a customer ask if he could drive to my house in San Diego to get product. He would rather go out of his way and do that than wait more than 30 days from ordering on Amazon. That’s when we went out of our way to update messaging on our site about being open, which increased conversions.”
Leo Carrillo II, CEO & Co-Founder of Hair Craft Co.
Employees who can work from home are most likely spending their work days on video conference calls. Even some news anchors are filming news segments from their home offices. It’s no wonder that beauty products are still in high demand for women and men looking to feel good and be presentable at work (virtually).
2. Nutrition products, meal replacements, and protein powders
Although grocery stores are still open, people are looking for a way to stay stocked up on food and other essentials. Nutrition products like meal replacements and protein powders not only offer a healthy alternative but come with a longer shelf life than fresh produce. They also help consumers maintain their diet plans, such as keto, low fat, and low sugar.
Meal replacement brand Ample Foods has seen a shift in how their customers can benefit from their product during the pandemic:
“We’re quickly shifting our messaging. Now we’re not focusing on how it’s a TSA-compliant, travel-friendly, quick and easy powder-in-a-bottle/just add water meal — but from purely a health standpoint, it’s a high quality meal.”
Connor Young, Founder & CEO of Ample Foods
3. Sports and fitness
Due to social distancing guidelines, many gyms were forced to close across the country. Even professional sports leagues ended up suspending or delaying their seasons.
Unsurprisingly, fitness product sales benefited from the stay-at-home orders and sales are up 112.23% month over month. To maintain a healthy lifestyle, many people are trying to do in-home workouts to stay active during these times.
In response to COVID-19, fitness brand TB12 wanted to help their customers transition to work-from-home fitness with ease. The brand pivoted their fitness bundle offering to be an “At-Home” resistance band kit to make working out from home fun and easy.
4. Home and cleaning essentials
During the beginning stages of COVID-19 there were toilet paper stockouts. Cleanliness and health are important. From toothpaste and vacuums to laundry detergent and hand sanitisers, these types of consumer goods are used every day, and many people rely on them without even thinking about them. Plus, many essentials must be replaced over time.
Ecommerce brands that offer home essentials make it easy for people to stay stocked while staying home through subscription orders. For instance, personal care brand Boie offers subscription plans for eco-friendly items such as toothbrushes, face scrubbers, and body scrubbers.
The pandemic has also forced many people to rethink their home cleaning routine, which means some cleaning supplies may continue to see an upward trend in sales for the long haul.
5. Inexpensive entertainment
According to ShipBob’s data, toys and games shipments are up 66.51% month over month. The video game industry is also seeing record numbers, especially with students and teenagers being stuck at home. Traditional board games and puzzles are experiencing an increase in sales as they provide a great, inexpensive way to entertain kids and families.
We may as well call the COVID-19 pandemic ‘Netflix-and-quarantine’ as most people are staying inside and using one of the many inexpensive entertainment subscriptions to fill their time and give them an escape from the outside world.
6. Pet care essentials
With more people staying and working from home, animal shelters are happily empty. With more pet owners means more people need access to pet food and supplies. Since March 2020, pet food brands have seen a sudden surge in sales.
Much like human essentials, pet owners stocked up on pet supplies so they can ensure their pets are taken care of while staying home. Since more families and individuals are adopting pets for comfort while being stuck at home, pet products might see a steady rate in sales.
7. Food and beverages
Grocery stores have seen an enormous surge in sales since the pandemic began with food items being the most popular products purchased. At the start of the pandemic, 31% of US households in the United States used an online grocery service, and 26% of those surveyed used an online grocery service for the first time. It’s safe to say that even during a recession, people will continue to eat and drink.
Due to advances in ecommerce shipping and logistics, it’s easier than ever for customers to order food and drink products online that won’t spoil or get damaged during transit.
“When shipping glass bottles, especially in the winter, the longer the transit time, the more likely it is to break. We see that our customers are getting their packages safer, with fewer frozen bottles exploding.”
Lindsay Louise, Fulfilment & Retail Manager at Synchro
8. Diapers and baby products
Diaper sales are experiencing 154% growth during the pandemic, according to researchandmarkets.com. People still need to take care of their little ones, and one of the essential parts of a shopping trip for new parents is diapers. To keep both the parents and the baby safe, many families with newborns have bulk-bought baby food, formula, and other baby-related products to avoid trips to the store.
4 best recession-proof businesses and industries
Some industries simply can’t shut down during a recession — especially during a global pandemic. Essential sectors such as healthcare, grocers, and others have been deemed “essential” and must stay open since they provide much-needed services and products to consumers. Here are four industries that will likely remain recession-proof:
1. Healthcare and hospitals 2. Food suppliers and grocery stores 3. Cleaning products and sanitation services 4. Freighting, fulfilment, and logistics
1. Healthcare and hospitals
The healthcare industry during the COVID-19 pandemic has been overwhelmed across the world. During a pandemic, hospitals operate at max or over max capacity. Many people attempted to check into hospitals or get tested for COVID-19, but hospitals couldn’t keep up with demand.
Many ecommerce brands are helping people stay healthy while staying home as hospitals and healthcare professionals focus on the surge of COVID-19 cases. For instance, MDacne is a digital health brand that offers personalised acne treatment subscription kits and One Drop offers a diabetes subscription service that can be delivered straight to the customer’s door.
But you don’t have to sell medical or digital health products to help support the healthcare industry during these times. To show gratitude for healthcare workers, ecommerce brand Verb Energy donated 500,000 of their caffeinated bars to healthcare workers across the country to help them get through the long shifts.
2. Food suppliers and grocery stores
People will always need food. Grocery stores were packed and emptied within the first few days of the COVID-19 pandemic. Many of them couldn’t keep up with demand and were forced to work overtime or had to source products from other manufacturers to keep up with consumer demand. During a recession, grocery stores may see a small decline in average order sales due to decreased budgets, but aren’t at risk of shutting down during a recession.
3. Cleaning products and sanitation services
People will always need items like soap, bleach, sanitiser, and other cleaning products to keep their homes clean and safe. Because of COVID-19, disinfectants and sanitisers have seen a significant increase in sales. The pandemic has caused us to rethink our cleaning routine, which means cleaning products sales may continue to rise post-COVID-19.
A great example is Touchland, a fast-growing brand that has successfully upgraded the hand sanitizing experience to a whole new level. The brand launched in 2018 and grew quickly after a successful Kickstarter campaign, and then grew even faster after the COVID-19 pandemic hit.
“We were already growing quickly when COVID began, then we completely sold out the first week of the pandemic. In three weeks, more than 34,000 customers were waitlisted on Touchland.com. We even did pre-orders to try and meet demand. Between March and May 2020, we had up to 700 orders per day and sold 10,000 dispensers to industry-leading brands in those three months.
COVID changed the mentality of hand sanitation for most businesses, and this won’t go away after the pandemic.”
Andrea Lisbona, Founder & CEO of Touchland
4. Freighting, fulfilment, and logistics
With our world being tightly interconnected, businesses and governments consistently rely on shipping and logistics to get essential products to those you need them. For instance, ShipBob’s fulfilment centre locations continue to operate with heightened safety measures in place as they saw an increase in demand in online orders that needed to be fulfiled.
There is a lot more pressure on ecommerce business owners and operators to get orders delivered to customers on time, especially if selling a high-demand product. During this challenging time, ecommerce businesses are leaning on their third-party logistics (3PL) partner to keep their business operating.
For instance, supplement brand EnduroSport partnered with ShipBob to launch their brand during the coronavirus pandemic and was able to start fulfiling orders quickly.
“They broke down all the fulfilment centre locations, gave transparent prices, and shared data points I needed to make a good decision. I didn’t receive this data from any other 3PLs. With ShipBob, I knew exactly what I was getting. Especially during the Coronavirus, this made a big difference.”
Tim Fink, Co-Founder of EnduroSport
What makes a product recession-proof?
Although ecommerce has offered a platform for businesses across markets to keep their products available to consumers, there are key factors that identify whether or not products will be recession-resistant products. Let’s discover what a recession-proof industry requires for your business model to keep afloat.
There are some products that have been deemed essential and meet our basic physiological needs. Unlike apparel and jewelry, gross domestic products like toilet paper, food, and cleaning supplies during this time are going to be in high demand, even if the price increases. But that doesn’t mean some products that may not be considered “essential” such as beauty products may surprise you in terms of demand.
That’s because some products tap into our psychological needs — they comfort us, entertain us, or simply make us feel good in times of recession.
“Following Maslows’ hierarchy of needs, if your product makes a person feel safe, soothes their ego, improves their environment, or offers something else that tick off levels of the pyramid, you can be doing well in this environment.”
Kurt Elster, Ecommerce Advisor and Host of The Unofficial Shopify Podcast
When a recession hits, many people tend to bulk up on cheap, consistently stocked products such as bread or rice. Many products like these tend to be cheap to produce and are quick to restock. Think canned foods, boxed goods, and frozen vegetables. Any type of food product that is cost-effective and has a long shelf is ideal during a recession, especially during COVID-19, where people are encouraged to visit the grocery store less often.
The stress and tough times associated with a recession cause many people to seek temporary escapes. If the product isn’t a necessity but provides a small amount of cheap escapism, such as a bar of chocolate, a puzzle, or a movie on Netflix, it becomes worth it for people going through the recession looking to distract themselves from any more bad news. Video games can also be included (depending on their prices), but even board games have made a comeback, especially for families looking to spend less.
Business ideas for the future, even during a recession
There’s no telling how much of an economic downturn we’ll experience. If unemployment claims are any indicator, we should expect fewer consumers to be pulling out their credit cards.
Since the beginning of April, there has been an uptick in ecommerce sales across all markets, from fitness to beauty products. It’s not surprising that this timing correlates with the stay-at-home orders enforced in the United States.
Now more than ever, ecommerce brands are coming together to help navigate what’s next and whether we will see a rise in new businesses that match the current economic times. There is no rule book on how to keep “business as usual” during the pandemic, but through shared experiences and advice, the ecommerce industry will stay strong despite what results from the recession.
For the last eight weeks, ShipBob has been hosting a weekly webinar series, Moving Your Business Forward, bringing together ecommerce leaders and operators to help each other navigate these challenging times. You can find a comprehensive recap of past episodes here.
Seeing a surge in sales? ShipBob can help
The effects of a recession will always impact business and consumer behaviour across all industries to some degree. The COVID-19 pandemic marks a defining moment for the ecommerce industry. Although it’s forced many consumers to turn to online channels, many of them will continue to shop online knowing how easy it is to get the products they need delivered safely to their door.
If you’re seeing an increase in online order demand, ShipBob can help. We help thousands of recession-proof businesses and operate a growing fulfilment centre network across the US, as well as Canada and Europe. Our fulfilment centres are powered by our proprietary technology, allowing you to streamline your entire fulfilment strategy from one dashboard.
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