Analyzing the Impact of COVID-19 on eCommerce Business

COVID-19: Impact on eCommerce Business

Whether forced or chosen, isolation has become the new normal these days with the raging virus. Some of the largest countries on the planet today have completely halted economic activities and made their citizens stay at home. As stores are being shut down, parks closed, and people asked to refrain from leaving their premises, many are turning to the internet to make the best use of time. Everyone is looking for ways to lead a normal life through the digital world. This has led to the eCommerce industry observing sudden traction.

A study by Verizon points out how gaming is up by 75% in the US while video streaming has increased by 12% and overall online traffic has increased by 20%.

The Size of Coronavirus Lockdown


Impact of COVID-19 on eCommerce Business

The eCommerce industry is seeing a rise in demand during the lockdown. However, while people are spending time online and wanting to buy products, there are several factors that are turning out to be major roadblocks and preventing smooth transactions.

Changes in Demand and Revenue

While demand is at an all-time high, changes in the buying behavior have caused a shift in the market. A study by Quantum Mechanics shows that eCommerce has seen a 52% average weekly growth rate in revenue. 74.6% of the US shoppers are keen on sticking to online commerce as opposed to brick-and-mortar shopping, throughout the pandemic. But, this is majorly focused on essential goods like groceries and hygiene items. Retailers that sold non-essential goods for instance, have seen a 40-60% drop in sales on Amazon.

Shortages in Inventory

Before quarantine was set in motion, a big explosion in shopping was observed because of panic buying that led to bulk purchasing by people to sustain their livelihoods during the lockdown. But, that has led to a shortage in the inventory of essential items, and retailers are wary of purchasing non-essential products with low shelf-life in the fear that they may lose millions in revenue. The production of items has also been affected because of supply chain issues resulting in the scarcity of even the essential items. A survey conducted on retailers showed that 44% of retailers expect product delays due to the coronavirus, and 40% expect inventory shortages.

Supply Chain Issues

The lockdown has made it impossible to maintain a steady flow within the supply chain. Somewhere along the line, the chain is being hampered, leading to a bottleneck. Some of the reasons are a scarcity of labor, unavailability of raw materials, or sometimes even an issue in transportation. According to the global editor-in-chief of the QuickBooks Resource Center, these problems may come and go in waves and last well over a year. Amazon, for instance, is so strained for resources that they are prioritizing the shipment of certain items over others.

More insights into the impact of COVID-19 on businesses

Steps to Streamline your eCommerce Business Amid COVID-19 Crisis

Even during the pandemic, your business must continue to run. As a digital commerce company, you may have faced various setbacks amid the pandemic, but by taking a few small measures, you can align your business to be productive during the lockdown.

Diversify Your Supply Chain

Since the disruption of a supply chain can completely freeze your business, it is necessary to have backup options ready. Diversification of supply chains is a prevalent method. A complication in a single production chain business can shut down the company altogether. Having various fail-safe options can, therefore, defeat the single point of obstruction. Although this may have several minor problems, such as an increase in transaction cost and investment in managing various chains, in time, the ROI is much greater than the alternative. Due to the pandemic, a diverse supply chain is no more a luxury, but a necessity.

Build Consumer Trust Through Social Media

A Nielsen’s research showed that social media usage consisted of 20% of mobile app usage for US adults before the quarantine was issued, but shot up immediately to 25% in mid-March after social distancing was implemented. With the growing use of digital media, it is high time to establish a strong social presence for your company. Promoting through popular social media platforms like Facebook and Twitter can help you speak to a wider audience to get your eCommerce business booming. Social media users are very vocal, so not only does this help you reach shoppers but it also gives you a good idea of what your target demographic may be looking for.

Change in Mobile App Usage


Digitization of Business

Social distancing has exponentially boosted the already booming digital industry. Now is the age of digital transformation. Companies are diversifying to virtualize their products and businesses. Minimizing human contact without compromising on the customer relationship is the right approach at this moment and can be realized by As remote forms of enjoyment are the new trend, supplementary products like gaming, video streaming, and music are in the reckoning. Spotify has clocked 30 million more paid users than this time last year.

Plan for Contactless Delivery

Today conventional methods of delivery are becoming increasingly difficult. A new concept, ‘contactless delivery’ has emerged. This system includes the delivery of products without coming into contact with your delivery executive. It involves 3 steps: prepayment, selection of drop-off location, and collecting your package. This mode is a safer option in the time of crisis and ensures that the products safely reach the consumers.

Open for Delivery

Be Transparent

In the time of crisis, due to the lack of products, demand for certain items can see an increase. These opportunities must be grasped but sometimes, magnifying your abilities and making promises you can’t keep can backfire. Avoiding this and being completely transparent with your customers is essential in continuing your business. Taking advantage of a disastrous situation can reduce consumer trust in your brand, leading to a decline in revenue. A report by Edelman shows that customer trust ranked 5th in the buying considerations.

Brand Trust Ranks ad Top Ranking Factor


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Final Thoughts

While the demand for the eCommerce industry is on a steady rise, the supply and production of the same have made it challenging to keep up. This has caused many retailers to close doors and give up. But with just a few small changes in your business model as suggested in this article, you can keep up with the demands, and ensure that your business continues, even amidst the pandemic.

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Arshpreet Kaur

About the Author

Designation: Lead Business Analyst
Forte: Resource Management and In-depth, data-driven competition analysis
Likes: Agile workplaces
Dislikes: Slackers and Slow workers
Claim to Fame: Increased team Productivity with Agile methods
Biggest Tech Blunder: I am a perfectionist, so nothing
Wannabe: Neuralink user so I can be more productive

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