How does the coronavirus affect online commerce?
parcelLab
Published on: Mar 20, 2020Updated: Aug 19, 2022
The coronavirus is creating new headlines and uncertainty for people around the world every day. According to official data from John Hopkins University, 533,416 illnesses have already been recorded, as well as 24,082 deaths (as of March 27, 2020). However, the virus does not only affect private life, the economy is also significantly affected and will continue to feel effects in the future. Online retailers should prepare for all eventualities - because they will not be spared from the consequences either. Why is that? China is Germany's most important trading partner. For this reason, some problems have already occurred in this country as well.
Parcel shipments to China are halted
.The Deutsche Post announced a few weeks ago on its website that parcel shipments to China, Macau and Hong Kong have been stopped. Furthermore, pickup, delivery and warehouse management operations in Hubei province have been suspended. Taiwan, on the other hand, is said to be unaffected by the shipping halt. Letter mail to China is also still being accepted. However, considerable delays in delivery must be expected here.
Parcel shipments to China including Hong Kong and Macau can no longer be accepted until further notice due to problems with transport, customs clearance and/or delivery in the destination area. Shipments to the destination Taiwan can still be transported.Deutsche Post DHL Group
Online retailers anticipate (even more) delivery bottlenecks
.Because the area around Wuhan (population over 50 million) where the virus originally broke out has been quarantined, people cannot go to work at the moment. Warehouses are shut down and thus no production of new goods is possible. Wuhan is the largest producer of iron products in the world.
Amazon and Alibaba are also affected by the coronavirus
.Amazon expects shortages, Alibaba expects lower growth. For Alibaba, the virus will bring a negative effect on sales figures. The main reason is that the company is affected by staff shortages. Amazon, on the other hand, is struggling with out-of-stock problems. Many items that the company sources from China cannot be delivered at all or only late. It is not yet clear how big the effects will ultimately be, but they will certainly be noticeable for both companies.
Addendum: Amazon already delivers only essential products in some countries.
What can online retailers do now?
Online retailers must now take special measures to avoid both supply shortages and out-of-stock situations as much as possible. The following 4 measures should be taken by online retailers now. You can also find even more measures in our latest blog post!
1. Keeping an eye on inventory
.What's especially important now is that retailers should keep a close eye on their inventory levels. New orders should be placed well in advance of the scheduled date, because delivery delays will make it take longer for the goods to arrive. Online retailers should calculate exactly at what point an out-of-stock situation could occur.
2. Increase the selling prices
.Another option retailers should take is to increase prices to dampen the out-of-stock rate. However, this option does not protect merchants from the fact that certain items will still sell out. Online retailers need to be prepared for this. Additionally, major marketing campaigns and promotions should be postponed.
3. Stand by the suppliers
What is especially important with regard to the human aspect: suppliers must be shown understanding for their situation - because they can do the least for the situation. Both retailers and suppliers are in the same boat. Assigning blame in this situation gets no one anywhere, and the good supplier relationships should not be put under additional strain in this situation.
4. Optimize the Customer Experience
Customers are now more uncertain than ever: will their package arrive on time or at all. Retailers should now do everything they can to proactively keep their customers informed of potential delivery delays or failures at all times. An additional message integrated into the shipping message should inform customers in advance that there may be problems with the delivery. This can reduce unnecessary calls to customer service.
Conclusion
It is not fully foreseeable what restrictions and consequences the corona virus will bring to online retail in the long term, but some retailers are already noticing the effects. Different measures should be taken to the best of their ability. After that, it's just a case of "wait and see".
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