How COVID-19 Is Impacting E-commerce

Created: Mar 19, 2020

Updated: June 19, 2024

Black swan events, such as economic recessions and pandemics, change the trajectory of governments, economies, and businesses — altering the course of history. The Black Death in the 1300s broke the long-ingrained feudal system in Europe and replaced it with the more modern employment contract. A mere three centuries later, a deep economic recession — thanks to the 100-year war between England and France — kick-started a major innovation drive that radically improved agricultural productivity.

Fast forward to more recent times, the SARS pandemic of 2002-2004 catalyzed the meteoric growth of a then-small e-commerce company called Alibaba and helped establish it at the forefront of retail in Asia. SARS forced to start selling its products online in 2004, and now it is the largest online retailer in China. This growth was as a result of underlying anxiety around traveling and human contact, similar to what we see today with COVID-19.

Outbreak of COVID-19

The financial crises of 2008 also produced its own disruptive side effects. Airbnb and Uber shot up in popularity across the west as the subprime crises meant lower savings and income for the masses, forcing people to share assets in the form of spare rooms and car rides to cover for the deficit. Doubling down on this trend, videogame business models rapidly changed as well, with 2011 seeing the rise of the free-to-play business model, thanks to Nexon in Asia and King in the west.

The outbreak of COVID-19 will encourage the rapid movement from traditional store-based selling to digitalization and retail through omni-channel. The presence of COVID-19 will result in consumers moving their purchases online; however, the impact would be even more far-reaching as the COVID-19 spread is more global.

With COVID-19, we are already seeing early signs of a shift in how consumers and businesses behave. Remote working is being encouraged by tech and non-tech companies alike. Airline profitability is getting impacted by low seat occupancy, and supply chains are getting disrupted globally. Likewise, retail stores are running out of ibuprofen, dry goods and toilet paper en masse. Some of these changes are direct, short-term responses to the crises and will revert to regular levels once COVID-19 is under control. However, some of these shifts will continue, creating a long-term digital disruption that will shape businesses for decades to come.

New trend - Work from home

Across many countries where the newest strain of the COVID-19 has made an impact, isolation and social distancing measures are already in place. Workers in some infected countries have been asked to work from home, cities have been placed under lockdown and schools have been shut down. People in those countries have also begun avoiding public, crowded places. New research shows that the extent they have done so depends on the severity of outbreak in each country. According to a March 2020 YouGov survey, 85% of internet users in China and 83% of those in Hong Kong said they had avoided crowded public places in the past two weeks. Just more than a quarter (27%) of those in the US and 14% in the UK said the same.

COVID-19 Impacting E-Commerce

Closing offices and keeping people self-isolated would have been unthinkable in 2000, but today we have the technology to easily work from home. More importantly, it also allows us to shop from home. In contrast to the depressing situation which traditional retail is facing, e-commerce has benefited from this episode of the virus outbreak as people are now turning to online grocery platforms to purchase their daily necessities.

Some deliveries increased by 600%

E-commerce activity, particularly related to health and grocery, is booming in the USA. According to data from e-commerce ad tech provider Pacvue, there have been surges in Amazon searches for products like hand sanitizer and antibacterial soap. Digital shoppers are also willing to convert on products that they need with longer delivery windows to avoid going to stores, where inventory may be limited anyway.
Housebound consumers in China are turning to online groceries for their daily food supply. According to French retailer Carrefour, vegetable deliveries increased by 600% year over year during the Lunar New Year period. Chinese online retailer reported that its online grocery sales grew 215% year over year to 15,000 tons in the space of 10 days, between late January and early February.

In February 2020, online sales in Italy grew significantly compared to the same period in 2019. Particularly, during the last couple of weeks, the e-commerce sector was largely impacted by the outbreak of COVID-19. Online sales registered an increase by 101.5 percent compared to the same period of the previous year.

Generally, online sales have increased 52% compared with the same time frame a year ago, and the number of online shoppers has increased 8.8% since the COVID-19 began, according to SaaS platform provider Quantum Metric. The firm analyzed 5.5 billion anonymous and aggregated online and mobile visits to retailer websites from U.S. consumers. Jan. 1 and Feb. 29.

All in all, online retail, along with online communications, gaming, and other interactive services are all seeing a massive boost in the coming weeks as people forced out of circulation look to continue to buy food and entertain themselves. Much money is set aside for this purpose across online and mobile channels in the coming weeks and probably months as COVID-19 continues to play out across the globe.


How the coronavirus is affecting online retailers


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