Three Biggest Impact of Corona Virus On Ecommerce

by Czarina R. Content Manager and SEO

The impact of corona virus on ecommerce business confidence is varied, a trend that's likely to be seen worldwide. Some declines would come predominantly from a downturn in consumer confidence (especially after a string of poor days for the stock markets), but could also result from supply and inventory challenges.

I have gathered below what I think are the 3 biggest impact of corona virus on ecommerce:

#1. Decline of COD payments due to people staying away from physical contact

The World Health Organization (WHO) is advising people to not use paper tender and to use as many cashless options as possible to help contain the spread of the corona virus, according to reports.

A WHO official say that while cash is not more or less likely to spread the disease, it can carry the virus just like door handles and hand railings, and can spread it on contact.

“We know that money changes hands frequently and can pick up all sorts of bacteria and viruses,” a WHO spokesman said. “We would advise people to wash their hands after handling banknotes, and avoid touching their face. When possible, it would also be advisable to use contact-less payments to reduce the risk of transmission.”

Governments are taking steps

Some countries are taking this a step further: South Korea, for example, is quarantining all cash received at the central bank for two weeks before disinfecting it and putting it back into circulation, and China is undertaking similar efforts. Measures to restrict cash, combined with mounting concern that might push consumers to heed the WHO's advice, could boost noncash payments.

The US Center for Disease Control said that, the best way to avoid getting infected by the virus is to adopt the same behaviors as when trying to avoid the flu, by staying away from people who are sick and practicing good hygiene.

People are advised to wash their hands for at least 20 seconds, especially after eating or using the restroom. Also, the CDC advises using disinfectant wipes to clean things like shopping cart handles when out in public.

Cash-less payment is the biggest impact of corona virus on ecommerce, as people are staying away from contact following these recommendations by WHO.

2. Increase in delivery services business model

Delivery services across the board might see an onslaught of new customers, but they'll have to work to maintain consumer trust. If consumers continue avoiding public places, they're likely to look for digital services that fulfill everyday needs beyond retail, including delivery of food and on-demand goods, —which in turn could lead to an increase in business for delivery organizations, including Uber, Grubhub, Postmates and DoorDash, as well as for online grocers like Instacart and FreshDirect.

The spread of the coronavirus and sweeping policy measures to combat it have led to a spike in online food delivery. As consumers globally have been either mandated to stay home or voluntarily chosen to do so, many have been ordering in.

According to new UBS research, demand for online delivery has risen in most markets impacted by the coronavirus outbreak. Demand for Food Panda, Delivery Hero’s brand in Asia, has shot up 80% during the New Year holiday in Hong Kong. Yogiyo, which is Delivery Hero’s brand in South Korea, has seen a weekly 3% to 4% increase in deliveries since Jan. 20. Singapore’s food delivery business saw a similar upward trend. Grab orders rose 20% in early March.

corona virus on ecommerce

Uber (UBER) CEO Dara Khosrowshahi believes that Uber’s food delivery business will grow during the coronavirus outbreak.

“Certainly our rides business to the extent that people stop leaving their house will take a hit, while our business Eats will probably actually benefit”.

An uptick in demands for delivery platform

China is already seeing an uptick in demand for these offerings: Popular delivery platform Meituan has seen an increase in large orders and surging demand for online grocery, per Business Insider. Depending on how long the corona virus pandemic and social distancing measures last, grocery and other delivery providers might need to provide discounts, offer loans, or provide installment tools that can help consumers afford services.

The key is to maintain consumer trust. Couriers also have to be prepared to demonstrate good health and offer "contactless" delivery options to minimize risk—something a number of firms, including Instacart and Postmates, are already beginning to implement.

However, as delivery people are human too, their exposure to the virus is extremely high. Some were reported to have contracted the novel corona virus, and are suspended says Uber ceo:

Uber says, we may temporarily suspend the accounts of riders or drivers confirmed to have contracted or been exposed to COVID-19,” Uber says. “We’re also consulting with an epidemiologist to make sure our efforts as a company are grounded in medical advice.”

#3. Public gathering avoidance eschew physical store

Public avoidance is the third impact of corona virus on ecommerce. Ecommerce is likely to grow as consumers eschew physical stores and crowded gathering places—but this could create logistical challenges. This avoidance is trickling down into shopping: Three-quarters (74.6%) of US internet users said they'd be likely to avoid shopping centers and malls if the corona virus outbreak in the country worsens, and over half would avoid shops in general.

A shift to digital channels:

A decline in brick-and-mortar retail, could shift day-to-day shopping to digital channels, like Amazon or other e-tailers, and boost sales—effects already seen by providers like RedMart in Singapore, per CNBC. Further, it could bolster use of omni-channel commerce, like buy online, pick up in-store (BOPUS), for customers who want to shop in-store but avoid crowds. Such a surge in demand for e-tail could overwhelm logistics providers and workers, which might require ecommerce companies to revisit their strategies for order fulfillment and delivery, including potentially slowing down fast-shipping strategies, in order to keep up with surging demand and keep workers safe.

In conclusion

It's worth noting that the impact of corona virus changes online shopping habits affecting all people of all ages. With the older customers—the group most susceptible to the corona virus and most likely to avoid stores because of it, but they are the least likely to shop online. A shift toward online shopping among this population could provide a short-term boost for sellers, but in the longer term, it may also increase sales if these customers continue shopping online after the outbreak subsides.

If there is something you might want to include in these list of the biggest impact of corona virus on ecommerce, please let us know in the comment section. We would love to hear from you.