Everyday we’re hearing more about the novel coronavirus or COVID-19, which started in Wuhan in the Hubei province of China in January 2020 – and has slowly been spreading throughout the world. At the time of writing, South Africa has reported 13 official cases, mostly from travelers to Italy and Europe after travel to China has been suspended. The disease is highly contagious and it is presented as a classic ‘flu-like’ disease, involving coughing, headaches and fevers. Globally, there are over 120,000 reported cases of the disease, with around 4,400 deaths reported, and over 66,000 patients have now recovered.
Fear is considered one of the main reasons for economic disturbance and buyers might potentially scare themselves into limiting their purchasing, if conditions continue to worsen. As more infected people are revealed, the real question you’re probably wondering is how the coronavirus might impact your e-commerce business. We’ll discuss some of these potential effects in this article.
Firstly, it makes sense that many people around the world are now staying at home during both work-ordered and self-imposed quarantine periods of around 2-3 weeks. Many individuals have adopted a ‘stockpile’ mentality as they fear product shortages will occur. Such products include hand sanitiser, medical masks, toilet paper and other toiletries.
Depending on where your business operates, it might be a wise idea to market products such as these if you’re currently selling similar products on your e-commerce store or are looking for a gap to explore. This can be considered an opportunistic ‘niche’, and could be a good idea to boost your sales in the short-term.
Supply and Demand
One of the biggest problems right now is supply. China is facing the biggest outbreak of the coronavirus, but it is also the number one producer for many different industries, including tech, clothing, household goods and so many more. Many companies are forced to close their stores and factories due to health concerns. More than 45 days of manufacturing time have been lost, which has rippled across global supply chains, as companies cannot produce finished goods due to lack of necessary parts from the afflicted region. This means that many suppliers are facing limited capacity, meaning that there might be a chance that your store won’t have any stock coming in from China any time soon, as supply challenges might worsen in the second half of 2020. Globally, it is expected that revenue will be lower than expected this year due to the continued production delays that are not yet over.
However, it isn’t all bad news. If you’re in a position to order domestically, you would be wise to do so. Even if it costs slightly more initially, this is nothing compared to the cost of closing your business for an extended period.
Another idea would be to outsource to another country. India is gaining popularity at the moment, because it offers fairly cheap labour. However, India also has its own selection of infected areas, and it remains to be seen if India delivers their promised goods on time. Nonetheless, this may be an option if you’re dealing with specialised goods that cannot be produced locally.
If your e-commerce business is operational in areas that are heavily affected by the coronavirus, it’s important that your public message highlights that you’re aware of this. First and foremost, the coronavirus is a health issue, with consequences on real people. Brands should retain sensitivity and care in order to avoid reputational damage. This can be reflected in content campaigns and social media posts, with videos proving extremely popular for this purpose. Brands that offer to assist customers through the virus will highlight their affinity for customer sentiment, and will allow for better connections with their customers.
As an act of transparency, you might want to consider your content strategy and its message before resuming your regular marketing schedule. It’s never wise to act callously in front of your customers, and especially not during a time of global fear. Don’t lose sight of who your customer is – it might be worthwhile to compile an FAQ or resource that can address customer frustrations due to the knock-on effects of the coronavirus, in an attempt to encourage brand loyalty.
Your business strategy
It might be time to shift your marketing strategy. If you’ve got a strong regional focus, you may need to redirect this if you’re working in an area of outbreak. In addition, spending for online media should probably increase, as more and more people face quarantine or mandatory paid leave from work. This is majorly a short-term solution, due to uncertainty regarding the fate of the virus. You should consider any temporary opportunities that you might face, and it’s important that your long-term plan is somewhat conservative, as fears prior to the outbreak hinted at an economic slowdown – which is currently being realised.
Growing E-commerce Spending
In China and other countries, e-commerce has already seen exponential growth, as spending in this profitable sector continues to grow. This trend is likely to continue due to the coronavirus, meaning that we can expect more e-commerce sales. Chinese spending on e-commerce grew almost seven times as fast as the overall sector in 2019, which is truly incredible and highlights the immense growth and acceleration in the industry.
The coronavirus is likely to cause e-commerce to start up in new areas, as even apartments in China are being sold through entirely digital platforms. This initiative managed to sell 7000 units within 6 days, following a discount on selected apartments. It goes without saying that if you’re in the property business, you might consider adopting such an approach!
There’s no reason that this kind of behaviour has to be limited to China, or the property sector. It’s very likely that we’ll see more and more industries turning to fully online practice following extended incubation and quarantine periods. You might be able to originate an idea for a brand new e-commerce store that has not yet been seen.
At present, it seems as though the ‘cocooning’ that is happening is boosting economic growth rates in specific industries, and online marketplaces with a diverse range of suppliers are likely to be less affected. For example, in China, sales of fresh food on JD.com jumped 215% in a 10-day period from January to February.
In addition, specific industries are continuing to thrive. Many people cannot access grocery stores any longer. So, delivery, e-commerce and food delivery services are experiencing a massive boom as a result. Restaurants are affected, because they cannot allow walk-in customers any longer, but they can make the switch to delivering food online. Again, this is not limited to China. So, if your e-commerce business falls under a food production or food delivery category, you’re likely to expect a boom in sales in the short-term.
Global players such as Amazon, UPS and FedEx have been forced to announce delivery delays, which are caused by spikes in e-commerce orders due to fear surrounding the coronavirus. This has severely impacted their fulfillment and logistics departments, while sales have soared. This means that the capacity of e-commerce stores to deliver will be strained and tested during this trying time. This is particularly a problem where there are a large number of cases, although many people purchase out of panic as well, as delays are expected in multiple countries.
While sales are of course a top priority, global e-commerce businesses need to take precautions regarding the health and safety of staff members and customers. Many travel restrictions are in place around the world, meaning transit times are hiking up – which is unfortunately unavoidable due to government protocol. This can affect your business if you sell on multiple channels. You’re likely to experience shipping delays for your customers, so it’s a wise move to announce this publically to promote customer understanding and brand transparency.
Dropshipping e-commerce stores are likely to be heavily affected, as they retain little inventory. You might consider placing a bigger order than usual in order to combat increasing production and shipping times and hiked delivery costs, which will negatively impact your store. You’ll need a good grip on your omnichannel marketing and inventory levels across all platforms so as not to overpromise and underdeliver during this trying time.
Another issue for fulfillment is that deliveries in affected areas cannot be completed, and are sent back to distribution centers, which is costly. To avoid accruing extra charges for your shipping attempts, make sure your e-commerce distribution center or partner attempts to create alerts for certain areas, in order to hold off on orders for afflicted locations until global quarantines are finally over.
Depending on how large your e-commerce store is, customer service queries will probably rise in certain areas regarding deliveries and orders being delayed. To combat this, you should prepare for this increase in volume and train agents to best handle any queries with compassion, in order to highlight appropriate positive brand representation.
Although the coronavirus is causing global ripple effects for supply and fulfilment of e-commerce stores around the world, you could still expect an increased volume of e-commerce sales during this challenging period. You may need to reconsider your brand messaging to be sensitive to the illness, and promote awareness and transparency regarding issues to your loyal customer base.
Marketing spending should move to the online space, as people are becoming quarantined in their homes for longer periods. If possible, you might look to your own country or another to secure supplies of your ecommerce store’s inventory, as global travel barriers make shipment deliveries quite difficult. It might be wise to train yourself or other customer service agents on how to best deal with delays caused by the coronavirus.
At the same time, you might be able to provide new products to your customers and fill in a niche product market for hot-ticket home essentials. Remember to maintain composure and sensitivity when dealing with any of your customers who might be impacted by the coronavirus – and hopefully, this too shall pass.