An Overview of Impact of COVID-19 on E-commerce Industry

Blog: MattsenKumar Blog

COVID-19 has made the world stand still; the governments are urging people to stay inside, enterprises are facilitating work from home and people are binge-watching their favorite series online. The global economy has taken a hit and it will take a good number of months to recover when all of this ends.

Every industry be it hospitality, or BFSI is hit badly and plunging of the global stock market is a concise attestation of it. E-commerce is one industry that was expected to gain during this pandemic. As an early mover, Amazon announced hiring over a million people to strengthen its delivery fleet across the globe.

In a series of bizarre events, people started stocking essential elements only to sell it online when the pandemic grows but it backfired and now people are stuck with unsellable blocks of essentials.

How bad is this COVID Pandemic for E-commerce Industry?

E-commerce industry was growing at a neck-breaking rate of 23% annually. The US, India, and China were the biggest contributors to e-commerce growth and these three are among the top countries hit with COVID-19. Over 10,000 people have died alone in the United States, while India is still combating the impact of COVID-19 with lockdown, the cases are expected to grow in the coming weeks.

In other news, China seems to have gained control over the pandemic but the government is continuing with the lockdown to stopping COVID from recurring. Ali Baba the biggest e-commerce player from China has contributed heavily to combatting COVID-19. Ali Baba has pledged over $2 billion of medical supplies and support to multiple countries include the US, Sri Lanka, and Italy.

Impact on E-commerce in Asia Pacific Region

E-commerce Stores Completely Shut-in India

Ever since the Indian Government announced 21 days of lockdown, e-commerce players like Amazon and Flipkart had to shut their processes entirely. In India, Amazon and Flipkart drive sales whose value runs into billion dollars together and on special occasions like festivals, they generate over $7 billion every week.

3 weeks of lockdown has got executives running towards the government for help. Commerce Minister Piyush Goel held meeting with leaders from Amazon, DHL, Flipkart, Zomato and Swiggy where the executives urged the government to let them sell essential items. Players like Zomato and Swiggy are already managing a fleet that delivers essential items but Amazon and Flipkart who are full-fledged e-commerce players with millions of sellers, want the government to rethink their decision.

Executives from top e-commerce organizations tried to take the government into confidence, one of the representatives said: “we should trust people and open our markets, with limited cash supply, people will only shop for essentials”.

Revenue of E-commerce Players Dip in China

Retail and tourism are perhaps the worst industries in China, while air travel was halved, retailers like Apple failed to meet their first-quarter revenue. Being the manufacturing and supply hub for most of the B2C players in Asia, China’s e-commerce players are stuck because of decreasing demand.

With India, Sri Lanka, Australia and the United Kingdom under full lockdown, China is left with only small markets to sell. The production has stopped, freight ships are not moving and there’s no dollar pouring in.

A report by Rehub suggests that the current situation will take four more months for the companies to come out of lockdown. The return of normalcy in China’s e-commerce industry looks like a distant dream.

Australian E-commerce Players are in Defensive Mode

2020 started on a good note for the Australian e-commerce industry but with February closing in and cases of COVID-19 rapidly increasing, things go haywire. Taking a cue from varied other countries, e-commerce organizations in Australia have acquired a defensive mode; they are now working in close proximity with government and local municipalities to deliver essentials.

2020 was expected to be the year Australia’s e-commerce boomed and gave markets like India, Europe, and China a run for their money but COVID-19 has coaxed Australia is taking a different route. The government has an indefinite lockdown in Australia, which is expected to last at least three months.

What’s up with E-commerce Players in the United States?

Well, a report from mid-February suggests that digital commerce is on the rise. With COVID-19 becoming a real threat and claiming over 10,000 lives alone in the States, people are scared to go out and stand close to people at stores.

Since the US government is yet to announce a lockdown, e-commerce stores are working at their full capacity and delivering all kinds of products to people. Players like Instacart, Walmart Grocery and Amazon have witnessed a surge in online orders ever since COVID stepped in the US.

A report suggests that grocery orders jumped by 210% in the first few weeks of March, the same report suggests that these behaviors are expected to remain the same post-pandemic.

Let’s move on to the United Kingdom, another major e-commerce market.

Essentials are the most shopped item in the United Kingdom

Before the UK government announced complete lockdown, people started panic buying, which led to a surge in the sale of items like:

Medicines
Toilet paper
Groceries
Gardening Tools
Home Appliances
Yoga mats
Board games
Crafts equipment

One close look at the most bought items and one can predict that people were preparing for the upcoming doom. People are skeptical that lockdown just might last a little longer than the government has announced hence they have collected items that will keep them entertained.

Europe puts on hold new norms for E-commerce

In the first week of March, the European Union urged the e-commerce players to focus on designing, manufacturing and selling products that are recyclable and repairable. In the coming weeks, the number of infected by COVID increased rapidly and the countries had to take measures to cascade it.

In one of the first orders, E-commerce players were asked to continue providing essential services and any request related to repairable and recyclable products was kept on hold. The growing demand had e-commerce organizations under great pressure catering to the growing needs of people.

To sabotage the attempts of hoarding and black marketing, multiple e-commerce websites put a restriction on several items one person can buy. Such attempts helped e-commerce organizations ensure that every customer was provided with access to essential products.

Amid COVID-19 Singapore is Combating Fake Listings

In a shocking revelation, Singapore’s Health Science Authority (HSA) has removed over 3000 products from an online platform. All products removed had fake information, some of the details were added or numerical were spiked to drive sales during the COVID pandemic.

To make quick money, sellers relied on malpractices but their attempt was sabotaged by the vigil eyes of the local authority. Government and e-commerce players are working in close-relation to delivery essentials and ensure that no one is over-charging.

Sellers who tried to garner benefits during these tough times are expected to get their accounts suspended. Health Science Authority is also creating a system that identifies and restrict such sellers from selling online.

Amazon shuts Fulfilled by Amazon Option for Most Sellers

With global government and philanthropists willing to redirect their entire funds to help people fight this pandemic, it was required to make delivering essential services first. In a swift action, Amazon decided to put other services on hold and promote essential services in European countries and the United States.

Amazon has restricted features like “Fulfilled by Amazon” only for sellers who deal with essential products like grocery, healthcare, medicines and home activities.

To help these sellers deliver essential products to common people without any hassle, Amazon has also offered incentives on opting for FBA because sellers might not be able to get through the lockdown and deliver the product to common people. With FBA, sellers can store their products at Amazon’s warehouse and then the company will deliver it to the people with great ease. Amazon is working with governments around the world whereas they have acquired requisite registration and permission to ensure hassle-free delivery of essential products.

Final Thoughts

One-click order, one-day delivery, free returns, and instant refunds are the features of e-commerce stores that got almost 2 billion people shopping online. The e-commerce industry was expected to do business worth $6 trillion in 2020 but owing to the lockdown and delivery of only essential products, it looks like the industry may fail to achieve the milestone.

While B2C e-commerce organizations can deliver essential services to common people, B2B players are under complete lockdown. With factories shut, workers at home and raw materials not reaching factories, there’s no product, no management, and no transactions.

The other challenge faced by e-commerce organizations is to keep their delivery agents and warehouse workers safe from infection. By taking measures like regular sanitization of the workplace, access to gloves, masks and immediate medical attention to agents who shows symptoms, e-commerce players can serve customers efficiently.

The coming months will be tough for e-commerce leaders as a growing number of deaths due to COVID-19 is urging governments to announce curfew in many parts of the world. E-commerce leaders will have to work in close collaboration with the government and provide everyone in need with a helping hand.

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