March 18, 2020

Will Ecommerce Emerge from COVID-19 for Better or for Worse?

Since the World Health Organization officially declared COVID-19, or Coronavirus, a pandemic on Wednesday, March 11, things in the U.S. have moved rather quickly. March Madness is officially canceled. Just before the announcement, the entire country of Italy had been quarantined.

Doomsday-ers have been preparing all last week for quarantine, as seen by photos shared online of completely empty toilet paper aisles, such as this one shared by Oil City News.

As more cities and even entire states (most recently Utah) begin implementing safety procedures to protect vulnerable populations, it seems like more people will turn to ecommerce to fulfill their shopping needs so as to avoid large crowds, which would be good news for sellers—but is it really?

Well, yes—but also, it depends.

China’s example

Take China, for example. As the country of origin for the outbreak, China has been fighting to combat COVID-19 since December of last year through measures like closing businesses and limiting transportation, which affects sellers such as those on Amazon because it has disrupted supply chains. 

Interestingly, it was the SARS epidemic of 2004 that first caused retail giant JD.com to move to ecommerce in the first place. Now that China is facing yet another pandemic, JD seems well-positioned to answer. 

According to Adweek, JD reported increasing numbers of consumers buying daily grocery products and have responded by ensuring warehouses are stocked. JD has also been working with brands to make sure in-demand items, such as masks, are experiencing accelerated production rates; and the company launched a channel specifically for farmers to be able to sell their produce. 

Other Chinese companies such as Alibaba and Freshippo have responded similarly to ensure citizens have access to fresh food and produce, and florists and booksellers have taken advantage of livestreams and online platforms to sell their goods. Drones, robots, and vending machines have all become part of the retail effort in China to minimize human contact as well.

What people are buying

Coronavirus is, in large part, bad for business unless you sell disinfecting wipes—or if you sell products online and offer delivery. Vox reports that Amazon is likely poised to actually benefit from the pandemic, at least in the United States, since nearly 40% of ecommerce takes place on Amazon. According to Marketplace Pulse, Amazon has seen a huge increase over the past two weeks in sales of sanitizing items, face masks, and other coronavirus-related items.

Forbes suggests the pandemic may actually cause ecommerce revenue predictions to surpass 2020 projections, not only for the short-term, but for the long-term as well, as consumers who make purchases online are more likely to make future purchases the same way. And it makes sense to think, once you get used to having your groceries delivered to you, it would be hard to switch back. 

However, it may still hinge on how good of an experience consumers have with ecommerce over the next few months as companies work to keep up with increasing demand; Amazon warned of delays on items being shipped as early as March 2, according to Bloomberg. Amazon Fresh in particular has taken a hit. 

UPS and FedEx have issued similar warnings, adding that the health and safety of employees and team members, as well as customers, takes top priority. Already online grocery sales have spiked but for grocery chains just testing out online platforms, this may point out some major kinks that need to be fixed.

Will companies buckle under pressure?

The main concern with ecommerce is the pressure to meet demand, and it remains to be seen, early into the COVID-19 pandemic, how ecommerce companies like Amazon will rise to the challenge, although some experts suggest recent years and events have prepared ecommerce companies for a crisis such as this and that supply chains are resilient.

So long as ecommerce companies can keep up with stock and demand, the other problem ecommerce faces is dealing with sellers who will take this opportunity to price gouge. Amazon told CNBC it has already removed thousands of products and seller accounts that violated its fair pricing policy. 

Where retail could really suffer

The retail sectors that could really suffer at this time are restaurants and other social gathering places, such as entertainment centers. It remains to be seen if delivery services like GrubHub and DoorDash will see similar upticks in usage, or how restaurants and movie theaters will adapt at this time.

In summary, things look good for ecommerce, so long as companies like Amazon are prepared to deal with demand for goods. Other businesses that rely on people coming to their stores more, such as restaurants and retail, will have to learn to adapt. To learn more about the changing ecommerce landscape and how you can prepare for it, contact Pattern at hello@pattern.com or 888-881-7576.

More Resources
Top Challenges & Trends for Navigating Amazon & Other Marketplaces
20 No-Brainer Tactics For Growing Amazon Sales in 2020
Optimising Your Amazon Presence To Drive Sales Growth in the Middle East
Middle East Report 2019