The impact of coronavirus on e-commerce with China

By Matt Rivera, marketing and business expansion advisor for Asian markets in China

The spread of coronavirus has undoubtedly shifted the entire global economy. Businesses of almost every sector needed to rapidly react and navigate the challenges presented by the virus to quickly overcome them and move forward.

The Covid-19 pandemic continues to surge in Italy, Germany, Spain and nearly all over the world. Businesses in major global cities such as Rome and New York have been gravely affected by this unfortunate turn of events.

Companies are scrambling to mobilize responses, but the unpredictable nature of the virus, coupled with the obvious under-preparedness by business executives and government leaders, these responses have brought little to no success.

No one seems to have a workable plan on how to handle the virus and its repercussions.

Surprisingly, as the virus continues to take a toll on the world’s leading economies, China appears to be recovering pretty well from the initial outbreak.

The epicenter and origin of coronavirus has relentlessly invested in plug-and-play strategies of lowering the virus’ impact on their economy. If you were planning a China company registration soon, don’t give up just yet because the economy is already showing early signs of recovery.

Of course, there is no denying that the coronavirus pandemic has been a major disruption to China’s supply chains, but the Asian nation has not been hit as hard as anyone would have predicted 2 months ago.

More people are contracting the virus outside China than within China, and there are more people forced into quarantine in European countries than there are in China, save for Wuhan.

The Chinese government is doing a great job of containing the spread of Covid-19 and reassuring their trade partners that everything will be back to normal soon.

But even with that reassurance, the partial and full shutdowns of plants and factories in the country have left the e-commerce sector nearly paralyzed.

Some of the prominent multinational technology companies that had set base in China or that were relying on Chinese raw materials and manufacturers are already considering their options.

Digital advertising and online retail in China have also been hit hard by the Covid-19 pandemic. The e-commerce industry in the country has been struggling with unprecedented product shortages and other logistical bottlenecks.

The commercial impact of this could be dire in the long run because as the profits dwindle, we can expect major employee layoffs to happen sooner than later, stores will close, and credit defaults among Chinese companies will shoot through the roof.

This will still be the case in countries that rely heavily on China’s vast market for export earnings.

But it is not all doom for the e-commerce sector. There still are companies who have benefited bigly from the shifts on consumer behavior that coronavirus has precipitated.

Many quarantined shoppers are relying on e-commerce for the types of products listed below.

1. eGroceries

The demand for raw food products such as vegetables, meat, and seafood has grown by up to 300 percent since the Covid-19 outbreak was reported. Some companies such as JD Daojia have seen their sales and profits grow by more than 500 percent.

The eGroceries trend is becoming popular in the US since the beginning of March. The online grocer, Farmstead, saw its delivery volume shoot by more than 30 percent within the first week of March.

2. Health Products

The online demand for health-related items has quadrupled in China and the US in the last month compared to January 2020 and December 2019.

Masks sales have grown by 600 percent, hand sanitizer sales by 450 percent, Clorox/Lysol wipes by 200 percent same as disinfectants, and gloves sales by 150 percent. Toilet paper, hand soaps, and paper towel sales have also increased by more than 30 percent.

3. Food Delivery

Most restaurants have closed temporarily and those still in operations are reluctant to admit many customers at a go. People all over China and other Corona epicenters are also skeptical about eating out.

Food delivery services are in high demand right now, although most companies operating within quarantined cities have been forced to rethink their strategies.

Their operation costs have also hiked because they are forced to disinfect their delivery units and bikes more regularly than normal. They have also done away with impossible deliveries, only focusing on delivering basic food supplies.

4. Fashion And Apparel

Many Chinese fashion companies are selling their products on WeChat. Augmented reality has also helped the online fashion industry to remain active in China during the Covid-19 pandemic.

Not easy, but doable

Covid-19 is changing consumer behavior world over and affecting service delivery on a massive scale.

As medical experts strive to find ways of curbing the spread of the Covid-19 infections, financial and economic experts need to look for ways of cushioning China and the world from the foreseeable economic consequences of this virus. It won’t be easy, but it is doable.