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Impact of Coronavirus on the eCommerce Industry – Positive or Negative?

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Harshal Shah
March 16, 2020
Coronavirus Affects the eCommerce

COVID-19. We all know this has been affecting the health of a number of people. It has already stirred the travel and tourism industry, sports industry, and many more. Is it bothering the eCommerce Industry too? Let’s see the highlights on the situation of the eCommerce industry.

The outbreak of COVID-19 Coronavirus has stagnated global business growth. There have been significant shifts in the stock market. The Organisation for Economic Co-operation and Development (OECD) has declared that the coronavirus outbreak poses the biggest threat to the global industry since the 2008 financial crisis.

The Worldometers reports that the number of coronavirus cases has risen to 170,192 as of 16th March 2020 (08:51 GMT) with a death toll of 6,526. After the first case in Wuhan, China, the situation is getting worse and worse. Day by day, almost every country is getting hit by the nCOV.

We read in the second paragraph of this article that global business growth has deteriorated due to this. And this directly or indirectly affects eCommerce. How? An eCommerce platform runs on the base of physical businesses through the supply chain. It is a medium that brings the consumer closer to the products and services that they can’t find or get nearby.

So shut down of factories, supermarkets, etc. will definitely affect the eCommerce industry. For years China has remained the largest e-commerce market in the world, with the online sales of USD 307.4 billion in the year 2018, which has increased by 35.4 percent over the years.

With China’s factory shutdowns, businesses around the world continue to suffer. The global supply chain has been disrupted, which has resulted in a big change for the eCommerce industry. The outbreak is negatively impacting the retail industry as more people continue to choose online shopping for daily needs.

People are avoiding public places as advised by the government. A Coresight Research survey of February 2020 reads that the U.S. consumers are already shrinking from the shopping mall, shops, restaurants, and theaters. These are the hardest hit points. 

Nowadays, people are relying on online marketing for their daily needs, from tea leaves or coffee beans to clothes and gadgets. A slight disturbance in the supply chain and boom! everything gets on the verge of loss. Thus, the eCommerce market is under the pressure of fulfilling customer requirements. 

Let’s see what the impact of coronavirus on the eCommerce industry is! 

Image Source: marketingland.com

What are the basic necessities in this nCOV outbreak? Sanitizers, masks, disinfectants, medical supplies, and temperature-stable consumable items, right? Obviously, every second person you see is sanitizing himself. So it is natural that there will be an increase in demand for these products. Be it online or offline!

People are avoiding public places and the government has ordered to shut down pubs, shopping malls, movie theatres and all the other places where there are chances of public gathering to avoid the spreading of the virus.

A few weeks ago, shopping malls and supermarkets were experiencing a high demand for these products. But now there are very low footprints in those places and people are opting for online purchasing. So good news! There is an increase in demand for products on various eCommerce platforms

In Q4 of 2019, the total online retail spending was around 11.4%, which is expected to increase by 12% or more after the coronavirus outbreak. There is an increase in health product demand on online platforms like Amazon. There has been a 52% increase in sales from the same time period last year and the number of online shoppers has grown by 8.8% after the COVID-19. There has been a constant increase in sales of health products.

Hold on! Don’t get too excited. Why? Because this is where you need to start worrying! We already said, eCommerce relies on the physical supply chain. And the biggest online supplier chain is China. 

Now can you connect the points? There is a high demand but low supply. You will find the ‘out of stock’ tag on most of the online platforms. Why is it so? Let’s get you the answer to that too!

According to the New York Times, the hundred million SKUs (stock-keeping units) of Amazon can’t maintain the supply of goods. With the indistinct production timeline, delayed deliveries and the supply chain being held at bay, businesses that depend on the Chinese manufacturers are facing dire consequences. 

So what is the solution? Will eCommerce be able to fight the crisis? Are there any alternatives that can solve the problem? Or will we have to wait for the end of the nCOV? There are many questions and no particular answer.

Always remember, every problem has a solution. You can’t just leave the problem unaddressed.

For instance, Debrief Me, an online retail platform, said they had grown 10 times after the coronavirus threat. The company got the front hand of the situation. They were able to relocate the products from their China warehouse to Georgia’s fulfillment center before the shutdown. However, now they are also running out of the stock. 

And now they have planned to start their own mask production in Brooklyn. And slowly they will be able to locate their production units in other parts of the country too. The main motive is to secure the supply chain in the U.S. only. They are also getting flexible on the supply from any other foreign country. 

And the retailer has gained the uphold of the situation. It has fielded the customer service messages of more than 200 people with limited staff and has sold its mask in China and Japan. Debrief Me, planned out a first-come, first-serve waiting list on March 10th to get notified for the stock update. And within a day, there were more than 800 people who signed up for the waiting list.     

After reading how the online retailer Debrief Me, is handling the situation. There is a number of solutions that you can go for, like:

-> Shift your SKUs (if it’s still not too late).

-> Opt for your own production unit in a safer place or country and secure your own supply line.

-> Shift your dependency on the supply in other foreign countries instead of China.

There will be temporary expenditures, but then you will have permanent gains. Once you become the supply chain, you won’t have to worry about the ‘low stock’ or ‘out of stock’ issue as you will have everything in your hand. And most importantly, don’t lose hope. 

You would have heard Winston Churchill’s quote, “Success is not final; failure is not fatal: It is the courage to continue that counts.” Make that your motto.