It’s safe to conclude that Covid-19 is now a global pandemic. The virus which initially began spreading in early January in parts of China, leading to a massive shutdown in one of the world’s strongest economic contributors, has eventually made its way to almost all countries, including players like the US and now, India.
Not only has the virus caused mass panic, it has had far-reaching consequences for world economy. Predictions are being made, about global recession, and naturally it will affect both online and retail platforms. But since, our focus here is online retail websites, let’s focus on that. A number of these companies are altering their profit expectations for the year, in context of altered consumer behaviour. However, let us take a look at the big picture.
Spike in online orders
The Indian government has placed restrictions on almost all services except those deemed essential, including those provided by online retail platforms. And given India’s significant population, there has been a lot of traffic flowing towards websites like Flipkart, Amazon, Big Basket, and others. Many of these retailers are reporting major spikes in orders of flu-related products, such as cleaning supplies and health products. According to Economic Times, “In e-commerce, average orders surged for staples, with edible oil growing by 106%, salty snacks by 84%, soft drink by 68% and biscuit by 31% on a weekly basis in last one month till last week. Sales of hand sanitiser reported 1425% growth, face mask grew over four times, hand wash by 86%, floor and toilet cleaner by 77%.”
But this also begs the question, how sustainable is this for them in the long run?
While retailers who supply these products are making significant sales and profits as the pandemic reaches its peak, they continue to be concerned that corona virus will negatively impact their revenue for the year 2020.
Breakdown and delays in the delivery system
The ecommerce industry is struggling to cater to the significant populous of India, who have all turned to online platforms in their time of need to procure necessities. They have now started issuing statements clarifying the services available on their portals.
All online retail platforms, including Amazon and Flipkart experienced a surge of orders, which led to them running out of products and hence a break down in the delivery chain, as a backlog of orders combined with staff and product shortage has led to long term delays in delivery. Flipkart has ceased all deliveries until the lockdown situation changes and Amazon has now begun only delivering their products on an essential and priority product basis to cope with the issues they are currently facing.
Platforms dedicated to groceries like Big Basket and Grofers have issued statements to explain the slowdown of their delivery system owing to issues with supply as well as transportation.
Condition of small scale e-commerce companies
While e-commerce companies that operate in the essentials sector, including medical and groceries are having a field day and no dearth in demand for their products, other small e-commerce players are having a hard time sustaining themselves. Despite the tepid business, these companies will still have to bear the usual costs such as employee salaries and office rentals.
But the companies are attempting to stay afloat. Fashion e-commerce sites like Fynd, Coutloot are adapting to the circumstances. The former has stopped all online deliveries and has started identifying non-commerce tech avenues that can be explored. In an interview with Quartz, the co-founder of Coutloot, a fashion e-commerce site, said that they have launched a feature where users can see shops or sellers of essential goods within a 500 metre to 1 kilometre range to minimise logistical nightmares.
Further, marketplaces can help sellers by mitigating negative feedback, subsidising handling fees and waiving penalty fees for refunds.
Consumer spending patterns
During times of crisis, it seems but natural if a little selfish for people to start stock-piling, fuelled by uncertainty and panic. This shift in consumer behaviour impacts both online and retail markets, facilitating a surge in the number of orders placed for both essential and non-essential products. E-paper Live Mint, addresses a recent Nielsen study, that upon observation of consumer behaviour patterns over the last few weeks, shows an increase in consumer interest in health and hygiene. Nielsen says that once people return to routine life, they may continue to be cautious about their health and wellness, and this could lead to a permanent shifts in supply chain and increased usage of e-commerce.
Paranoia associated with being in crowded places, has led to a shift in shopping patterns of mall rats and shopaholics with many consumers opting to shop online. This may of course, permanently alter consumer patterns and online retailers will be required to adapt accordingly and provide more personalised shopping experiences to consumers.
This brings us to the second part of the article, how are e-commerce platforms faring in this situation?
Online retail platforms like Myntra and Flipkart, which until recently were offering huge promotions and deals on their websites, have now stopped accepting new orders. They are citing the safety of their employees and their accordance with the lockdown imposed by the government as reasons for the same. While others like Amazon are providing limited deliveries. Myntra, adapting to the current scenario, has now introduced wellness videos and online tutorials to cater to their consumers who are stuck home.
Amazon is not delivering paperbacks but has been promoting the consumption of e-books through its reading platform kindle, to keep users entertained.
Changes that need to be made…
E-commerce companies are trying their very best to abide by the government’s guidelines while still trying to ensure the smooth functioning of the system. But there are clear glitches in the system that require addressing – ensuring continuous supply of products by sourcing them in time before the production systems in the country come to a standstill. The 21 day lockdown that was announced on midnight Tuesday (23rd March), has led to enforcing of strict curfews in terms of mobility by law enforcement officials, making it infinitely difficult for commerce companies to ensure on-time delivery of their goods. The delivery men are also subjected to intense questioning and scrutiny by police officials, and sometimes, even violence. To prevent such occurrences, companies must ensure that their employees not only take the necessary security measures such as masks but are also provided with necessary identification so that they may be able to perform their jobs with any hassle.
Now, while we wait and watch for new developments, all we can do is make sure we follow the lockdown procedure, stay home to ensure we don’t get infected or become carriers for the virus and infect others and lastly, stay safe and wash our hands at regular intervals.