Impact of Coronavirus on the eCommerce Industry

Coronavirus is perhaps the biggest news of 2020.

10:31 09 June 2020

The global pandemic has severely disrupted all manner of businesses from offices, healthcare, travel and tourism, entertainment and shopping.

Various advisories have been published limiting travel and minimizing contact with the outside world. What does this mean for the e-commerce sector?

The most common assumption is that online shopping will benefit hugely. Owing to social distancing and staying-at-home advisory, more people will opt to shop online. However, the bigger picture suggests something else. A sudden surge in online shopping and unpredictable demand trends coupled with supply chain issues suggest that e-commerce businesses have to be better prepared.

 

Coronavirus: Impact on e-commerce in China

 

China, one of the most severely affected countries and also the one to experience it early experienced a massive shutdown and retail shops remained closed for a long waiting period. During this time, many retailers shifted their focus to e-commerce. In particular, the sale of essentials like masks and sanitizers shot through the roof.

 

JD.com which is China’s biggest online retailer saw sales of household essentials like rice and flour quadruple since the same period in the previous year. Companies like Apple have also benefited as there have been more than 222 million downloads from Apple’s online store in China since February.

 

Early signs of increased online sales

 

Data from Quantum Metric shows that e-commerce sales associated with selected brick and mortar retailers saw an average weekly revenue spike of 52% and an 8.8% increase in conversion rates, compared to 2019. The company studied 5 billion US retailer web and mobile site visits between January 1 and February.

 

It is predicted that e-commerce sales will reach 12% or higher compared to the 11.4% of Q4 2019, depending on the impact of the virus on the economy.

 

Supply and distribution chain need to be robust

 

A bullish prediction debates that more consumers will shift their purchases online due to the fear of public places. In the US, Amazon and the online divisions of major retailers like Target and Walmart will be the biggest winners. It is evident that foot traffic in shopping malls is slowing down across the world.

 

However, to sustain the sudden demand in online shopping, the supply chain needs to be robust.

 

On the logistics side, Amazon, UPS and FedEx have already been announcing delivery delays caused by the online shopping surge. Both Prime Now and Amazon fresh deliveries were impacted. Whereas UPS and FedEx have announced shipment disruption and delays in countries that are most affected by the outbreak as reported by Reuters.

 

Mixed outlook and uncertainty

 

Recently, Digital Commerce 360 surveyed 304 retailers and found a very mixed outlook amid confusion and uncertainty. A significant minority expect that e-commerce sales will continue to rise because of the virus. Whereas, a majority anticipate the sales to be flat or to decline.

 

One of the major concerns in the survey is about supply chain and consumer demand.

 

On the supply front, businesses are battling with their manufacturing woes since a large part of them depend on the epicenter of COVID-19 - China.

 

Factories are slow to catch up with the demand and still not operating at full capacity. Several brands are now worried about their ability to supply goods to customers without significant delays.

 

Sellers on Amazon in particular need to ensure that products don’t run out of stock repeatedly as Amazon’s organic search and algorithms are quite unforgiving to such vendors. For instance, if a product is out of stock for over a month, then it is treated as a new product with no sale history when it is back in stock. This impacts the product’s ranking for the most important keywords and search ability.

 

Online shopping will still win

 

The economic impact of coronavirus will be mitigated, thanks to the strong e-commerce network and market share. Compare it to the last major virus outbreak SARS(2002) and one can see how far e-commerce has come today.

 

There is an opportunity in every crisis and it is important that e-commerce sellers don’t lose sight of their customer. Brands that will go the extra mile to address customer concerns and requirements will create a positive reinforcement on customers resulting in brand loyalty.

 

In fact, executives from Procter & Gamble informed shareholders recently that the coronavirus had put immense pressure on their e-commerce sales. The demand has moved online as sales from retail stores slipped.

 

This is also the time to introduce innovative measures like contactless delivery. In fact, food delivery companies like Postmates and DoorDash have already tested and rolled it out.

 

Many e-commerce platforms, financial institutions and governmental organizations are now helping businesses to adjust with the new normal. From marketing solutions to logistics and payments, there are many offers and partnerships available to ease out this phase.

 

The good news is that there are many cash loan options if you are trying to enter e-commerce or scale up your current offering.

 

What should e-commerce companies do?

 

If you are in the e-commerce business, watch the market and forecasts closely. Make sure your website performance is optimal at all times and be prepared to face the sudden spikes in the sale. Superior inventory management, supply chain management and informed decision making is what will help e-commerce companies to deliver their best, despite the COVID situation.