Jeff Bezos got the whole world to sit up straight in utter surprise with his business venture in 1994. He launched Amazon as an online bookstore. A ground-breaking concept back then.
A lot has changed since then. E-commerce now is a roaring business. The global value of retail e-commerce sales increased from almost US$1.34 trillion in 2014 to US$3.53 trillion in 2019.
Simply put, e-commerce is trade done online using the internet. The prediction is that 95% of commercial transactions will happen online by 2040.
The current situation may even cause that to happen earlier. Even those who had not considered it before are realizing the importance of e-commerce now. Almost all physical stores have been forced to down their shutters. No one is sure for how long.
E-Commerce During Lockdown
As the world got into a hugely dysfunctional mode because of the Covid-19 lockdown, only e-commerce sales showed some remarkable ups in some European countries during the last two weeks of March 2020.
In Italy, e-commerce sales shot up by 101% between March 8 and March 22. Then it climbed down in the last week to settle at a 55% hike in comparison to March 8. In Germany and the UK, e-commerce sales increased by 55% March 15 onwards.
As it happens, the world seems to be gradually adjusting to functioning in the new normal. E-commerce is a clear gainer. Amazon’s global sales gained 26% in the first quarter of 2020 in comparison to the first quarter of 2019.
It is not just about essentials, Fashion e-commerce globally witnessed a tremendous drop in March 2020. In April, however, it has bounced back to be 21% higher than in April 2019. A recent global survey indicates that people have been spending more time to shop online during the lockdown.
Food and grocery items have dominated e-commerce sales during the lockdown, but other items have also been bought. Once the April statistics are available, it may become clearer how human beings across the world are adapting their responses to the lockdown.
One thing, however, remains clear that e-commerce as a way of shopping has gained by leaps and bounds.
The E-Commerce Scenario in India
E-commerce value in India rose from US$14 billion in 2014 to US$ 39 billion in 2017. Its estimated value in 2020 is US$64 billion.
In India, the government has marked e-commerce as exempted from the lockdown. Large retailers and fashion brands are upping their e-commerce options, informs a recent report. Indians, too, are adapting to the new normal and people want access to non-essentials also.
A social media survey involving 12,343 individual consumers from 210 districts across the country want e-commerce firms to start selling both essential and non-essential items.
Increased Sales ≠ More Profit
This is also a feature typical of the lockdown phenomenon. Under normal circumstances, more sales would automatically imply higher profits. Not so during the lockdown. While e-commerce is thriving, it is not translating into higher profits immediately for companies.
That is because of the extra safety measures that e-businesses need to take to keep their workers protected. It may be a large supermarket chain serving a large number of consumers. It could also be a small locality shop that has organized digital access for its niche customers only during the lockdown to keep its business running. Extra investments to keep its workers safe and to sanitize delivery items have evolved to be a non-negotiable need.
Where Would E-Commerce Stand Post Covid-19
Does it mean the sales surge in e-commerce is specific to the Covid-19 lockdown only? Will e-commerce slump once the world crawls back to normal?
We really don’t think so. Firstly, e-commerce was growing since before Covid-19 struck the world in December 2019. Its growth has been accelerated during the lockdown. We believe that e-commerce growth will continue beyond the lockdown, probably at a rate higher than projected before.
We Don’t Know How and When the Lockdown Will End
It is far from clear when the world is going back to be the way it was before the Covid-19 pandemic. “We have to change our behaviours for the foreseeable future.” That’s what Dr Mike Ryan, executive director, emergencies program, WHO (World Health Organization) said during a recent briefing.
WHO has directed countries to meet six guidelines before even considering any possibility of lifting the lockdown. The second one of those conditions states that the health system of the country must be able to identify, test, isolate and treat every single person with Covid-19. The health system must also be able to trace each person the infected person might have come in contact with.
This is an impossible condition to meet in a country like India. With the number of daily infections still rising, the lifting of lockdown will at best be staggered. It remains to be seen when that process starts.
How It Affects E-Commerce
A staggered lifting of the lockdown means e-commerce will continue to thrive. Even after easing the lockdown, WHO has strongly advised that the physical distancing norm be maintained till the end of 2020 at least.
That means, people should maintain a minimum of one-meter distance with each other when outside. There should not be any gathering of more than 10 people. Washing hands frequently and avoiding touching one’s face constitute the minimum hygiene consciousness even after lockdown gets ease.
People under the circumstances will try to avoid coming in contact with others to the extent possible, even when the government starts lifting the lockdown by stages. That implies a continuation of shopping online rather than from physical stores.
The fear element needs to be counted in this context. People are afraid and they will continue to use e-commerce for both essentials and non-essentials even after lockdown ends. At least for some time to come.
Recent online opinion poll surveys have revealed that people do not want to go back to physical shopping at brick and mortar stores anytime soon. That means the increased level of sales achieved will continue beyond lockdown.
Post lockdown, e-commerce retailers will continue to thrive. The sphere of growth will be enlarged as non-essential items get the government nod to operate.
If you have an e-commerce business, the time to spruce it up is now. If you have been thinking about starting an e-commerce business, don’t lose any more time. If you want to extend the digital arm of your existing business, act upon it.
But please – stay safe and organize to protect your workers.