Will Coronvirus boost e-commerce?

Many people believe that Coronavirus resulting in social distancing and staying home will boost e-commerce as consumers will shift more and more purchases online. While consumers avoid public places, Amazon and the online divisions of major retailers (e.g., Target, Walmart) seem to become the biggest beneficiaries. 

However, early findings suggest that the reality will be somewhat more complicated. Supply chain issues, product shortages and potentially declining consumer demand could also blunt e-commerce growth – if the economy falters or goes into recession.

It is said that JD.com had increased sales during this difficult time. Let's also see how it operated in China through Coronavirus. As per the financial times, Chinese online retailer JD.com expects its self-operated logistics network to power it through the coronavirus outbreak, as it forecast double-digit sales growth for the first quarter of the year. Unlike competitors such as Alibaba and Pinduoduo, which have struggled during the outbreak with a shortage of available couriers at their delivery partners, JD.com’s in-house network, which has roughly 150,000 employees and is unique among major ecommerce platforms in China, has allowed it to quickly resume operations after the extended holiday period.

Regardless of the mix outlook, early findings and the uncertainty of the economy in the future, I do believe that as consumers turn to digital options as a means to circumvent physical shopping environments, the change in behavior may have a long-term impact. As one of the Forbe’s article mentioned consumer behavior is influenced by technological advancements, but also by environmental, economic and sociological factors, all three of which are evident with the current COVID-19. Changes in shopping behavior based on circumstances or events have been seen with holiday shopping. The longer-term impact is that consumers who purchase using e-commerce and mobile devices during the holiday season continue to use these behaviors going forward and an increase in the percentage of digital sales is seen post-holiday.

As per the article, the percent of digital sales varies by category of business; electronics is at 42.7% whereas apparel is 28.9% and food and beverage at 3.2%. Consumers being home more than normal could drive e-commerce sales in more specific categories like consumer product goods, grocery and staple items. 

Amazon Prime may have a significant increase in membership as many products fall into these categories. Grocery pick-up and delivery will have a short-term boost and once the consumer has purchased groceries online, they will be more likely to make future purchases in the same manner. Personally, I started using Amazon whole foods this week and I really enjoyed the services so far. Hence, I may continue using Amazon whole foods in the future, especially during the times when I do not feel like going to the grocery stores. 

With coronavirus cases increasing in the U.S., some product shortages have already become evident. For example, many pharmacies across the world, including those in the U.S., are sold out of hand sanitizers. This will prompt shoppers to search online for the products, again changing the shopping behavior of some customers who have never bought these types of products online. 

In 2020, e-commerce is expected to represent 12% of total retail sales, however, a change in consumer behavior in the first quarter of this year due to the coronavirus can impact the future quarters for 2020 and have a profound impact on holiday sales. As the consumer’s comfort with online shopping becomes higher and technology is more intuitive and ubiquitous, the digital side of the retail business may be stepped up at a faster rate than previous projections.