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The Impact Of Coronavirus On Ecommerce

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The Impact Of Coronavirus On Ecommerce
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The Impact Of Coronavirus On Ecommerce

COVID-19 (coronavirus) continues to spread around the world. The coronavirus first appeared in Wuhan, China in December. Since then, the virus has spread into Italy, Spain, France, Germany, South Korea, Iran, the USA and more. World Health Organization declared a global emergency and countries shut their borders to slow down the spread of the virus.

Store shelves are empty, schools and universities are closed, events and conferences are canceled, employees are working remotely, brick and mortar stores are shut down. 

Empty shelves at supermarkets
Empty shelves at supermarkets. Image credit: CNN.

Here are some statistics:

  • According to eMarketer, the economic loss from canceled events will exceed $500 million.
  • According to SimilarWeb, in February retail sales dropped by nearly 40% in Italy, by 20% in Germany, and by 10 % in the USA.
  • According to the NFIB Research Center, SMBs claim the coronavirus pandemic is negatively influencing their brands in the form of slower sales 42%, supply chain issues 39% and sick employees 4%
  • According to SimilarWeb, key ecommerce platforms fell by 5% in the UK, by 10% in Germany ND BY 12% in Italy in February.
  • According to the  National Bureau of Statistics, retail sales dropped by 20% during January and February, industrial output fell by 13%, and fixed asset investment went down by 25%.

On top of health issues, companies all over the world are concerned about the impact of COVID-19 on the ecommerce market. At a time like this, ecommerce brands should go to the great lengths to keep their business going through it.

In this article, we talk about the effects of coronavirus on the online business and ecommerce industry. We’ve also compiled a list of recommendations that you can apply to lessen the blow. 

Delivery and supply chain concerns 

Worries around the COVID-19 affect delivery and supply chains. The majority of ecommerce businesses rely to some extent on Chinese suppliers. 

According to a Berkeley Research Group, due to mass quarantines, Chinese factories have been working partially or even were shut down, reducing both production and shipping of products. This has negatively influenced such popular ecommerce sectors as fashion, sanitary products, electronics, and furniture.

Sourcing from China

Travel restrictions in China also affected supply chain and order fulfillment causing the Chinese manufacturing index to dip below the recession level. According to a Bloomberg report, shares of Wayfair ( furniture retailer) plunged as much as 26% toward the end of February. The reason is that the company relies on China for half of its products.

Because many European countries are also in quarantine, including Italy, Germany, France, and Spain, many warehouses have been shut down. If you’re dropshipping the goods from warehouses in Europe, we recommend contacting suppliers to see if product orders can still be fulfilled.

A boost for ecommerce?

As has been mentioned before the customers avoid brick and mortar stores, so many digital marketing experts predict a shift to online shopping. According to data analysis from Quantum Metric, ecommerce retailers saw a 52% increase in online spending and a 9% growth in conversion rates during the fifth to eighth weeks of 2020 compared to the same weeks of 2019

During the quarantine, merchants can acquire sales from new customers who wouldn’t in ordinary circumstances shop online. For ecommerce companies, it’s crucial to put the worries of customers first and monitor how customer behavior changes in reaction to the coronavirus outbreak. 

Customers buying online during quarantine
Customers buying online. Image credit: PYMNTS

However, it’s not as easy as it seems, the reality will be somewhat more complicated. Supply and delivery chain issues, panic buying, product shortages, and a decrease in customer demand due to financial problems could also numb ecommerce growth especially if the global economy goes into recession.

What ecommerce niches will remain immune to coronavirus?

Definitely, some ecommerce categories will remain immune to coronavirus and even experience a growth in sales. The virus could give a sales boost to such categories as health, food, and grocery. 

Health products

Due to the spread of Covid-19 globally, people tend to spend much more money on health-related products. Many medical institutions introduced free online consultation services with doctors and online tools to help sick people maintain their medicine supply, without leaving the house. For example, Alibaba announced that it would deliver any items from its marketplace to every hospital in China.

Health products have been a crucial factor in ecommerce growth. According to digitalcommerce360, there was a significant increase in sales from Feb 22 to 29 compared to the previous week for the following health-related products:

  • Masks sales went up by 590% from the week earlier
  • Hand sanitizer sales grew  by 420% from the week earlier
  • Disinfectants sales increased by 178% from the week earlier 
  • Gloves sales increased by 151% from the week earlier
  • Vitamins sales increased by 78% from the week earlier
Passengers wearing protective face masks
Passengers wearing protective face masks. Image credit: Business insider

Grocery 

The food industry is preparing for big changes as worries over the spread of the COVID-19 grow. With customers staying at their houses in the outbreak of the virus, the online grocery market has seen significant growth. People who are in high-risk to be infected with coronavirus prefer contactless delivery.

Many companies started providing drop-off delivery for customers who want to avoid social contact. In China and South Korea, which have both experienced many confirmed cases of coronavirus, people have come to rely on ecommerce. According to SimilarWeb, food delivery spending in February grew by 55% in Australia, by 100% in The USA, by 250% in Italy.

Grocery delivery statistics in February 2020

Companies in the food industry should redirect budgets to meet the high demand. The majority of restaurants and cafes can also offer food delivery for people who do not have time to cook and prefer ready meals. Food delivery networks have seen a boom in China during the pandemic. 

Markets under threat 

There are specific markets that can experience tough days during the quarantine.

The fashion market is reacting much like the rest of the world by closing stores in China and around Europe. A number of designers dropped out of Paris Fashion Week and Seoul Fashion Week. 

Clothes and apparel are not something that people will buy during quarantine. So the fashion industry should rethink the way that they operate and reconsider their marketing strategies in order to encourage people to buy their products.

The electronics industry isn’t making an exception. The coronavirus pandemic is causing electronics manufacturers delays, as suppliers in China have struggled to keep factories running at full speed.

What can you do to minimize money loss

Now it is high time to reconsider how your ecommerce business can change to ensure it gets through this economic crisis. There are a series of measures you can apply to restrict the impact of the COVID-19 on your business. What are the measures that your ecommerce company needs to implement?

Monitor the situation and create an action plan

Monitor the situation with your local personnel and suppliers. Ensure you gain an overview of what is happening through credible news channels and directly from your chain suppliers.

If your supplier remains shut for more than 1 months you should develop an action plan of what you can do in such a situation. Can you find alternative suppliers, and when? What is the price difference? Where can you make extra money? How will you communicate delays to your customers? 

Depending on how much your ecommerce business will be affected by the pandemic, you would also need to make changes to your 2020 budget and adjust your forecast and goals. 

Provide customer support page

Make sure your product information and content is trustworthy, relevant, and evidence-based. You are concerned about the COVID-19 outbreak, but so are your customers. Provide a customer support page where you can share content or relevant links to medical info even if you do not sell health-related products.

You also need to prepare your customer support team for the questions your customers may ask. They need to be ready to give the recent info about shipment delays and the detailed info about the safety of opening the packaging.

Increase your social media presence

The majority of your customers are staying home and checking social media to receive the latest news on coronavirus. We recommend posting regularly on Facebook, Twitter, and Instagram to remind your customers about your brand. 

You can post the latest updates on COVID-19 or offer positive content to help your customers cope with the panic and fear of tomorrow. Being active on social media can help you stay relevant to your customers.

Ensure product stock availability

Customers on the lockdown are ordering items online. Can your brand deal with this high demand? 

These days ecommerce companies should monitor their product stock availability. Ensure product availability to fulfill all your customer orders by communicating effectively with your selling partners. If you run out of products there is a high probability that your customers will not wait and buy from your competitors.

Help fight with coronavirus 

At a time like this, you should think about how your company can help fight with COVID-19. Don’t be indifferent. You can provide technology, expertise, or donations to healthcare and other social services in your country. 

You could also donate money from specific products that you sell. Let your customers know about all the actions that you’re taking to prevent the spread of COVID-19.

Elogic wants to help the ecommerce community to fight with the COVID-19 pandemic. As a certified Magento development company, we offer a flexible pricing model for our ecommerce development services

Want to set up a custom online store?

We can help you build your ecommerce website in 3 weeks.

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