STATUS OF E — BUSINESS DURING PANDEMIC
Tags: Ecommerce, Bussiness, Pandemic, Covid 19, Economics

Introduction

The concept of e-commerce first formally came forth in 1991, a time when internet practically did not even exist in India. Even worldwide, very few could fathom that the act of buying and selling goods and services over the internet, would be as widely accepted a practice, as it is today.

Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions. Ecommerce is often used to refer to the sale of physical products online, but it can also describe any kind of commercial transaction that is facilitated through the internet.

Whereas e-business refers to all aspects of operating an online business, ecommerce refers specifically to the transaction of goods and services.

The history of e-commerce begins with the first ever online sale: on the August 11, 1994 a man sold a CD by the band Sting to his friend through his website Net Market, an American retail platform. This is the first example of a consumer purchasing a product from a business through the World Wide Web — or “ecommerce” as we commonly know it today.

Since then, ecommerce has evolved to make products easier to discover and purchase through online retailers and marketplaces. Independent freelancers, small businesses, and large corporations have all benefited from ecommerce, which enables them to sell their goods and services at a scale that was not possible with traditional offline retail.

Global retail ecommerce sales are projected to reach $27 trillion by 2020.The biggest reason for such growth in 2020 is COVID-19 pandemic has disrupted how people buy products and services and how they perceive e-commerce. The standardized lockdown rules across India and the growing hesitation among consumers to go outside and shop for essential goods have tilted the nation towards e-commerce.

Consumers have switched from shops, supermarkets, and shopping malls to online portals for the purchase of products, ranging from basic commodities to branded goods. Which leads to massive loss for local retailers or salesmen of offline markets, which further leads to the reason of e-commerce boom in India.

The fear of getting sick is the ground reason behind the switching of people towards online shopping and this is in fact the reason why the E-commerce sector is making progress by leaps and bounds.

The pandemic has rendered a kind to great favour and service to E. Commerce business community by offering them great business opportunities.

All the sectors like food, health care, garments, jewellery even entertainment have developed online websites and facilitating applications to help the consumers in buying the required products and availing the desired services in a quicker and easier manner.

The influx of daily consumers of grocery and food is highly noticeable because these are the fundamental essentialities that are linked to every human being so going out and risking one’s own health is not a better option to consider and nobody is ready to do that happily that is why everyone is preferring to go digital and avail the useful services being offered by E-Commerce business.

Developing ecommerce mobile apps and websites turned out to be one of the very high demand service requirements during this pandemic, as many small business owners were really searching for a good mobile app development company to develop an ecommerce app that suits their business model.

As the people are observing time in self-isolation, they have an ample amount of time to spend in their own way so that are naturally attracted towards the skin care and similar products, that is why these products are on rise which is directly helping the E-commerce to flourish as compared to other businesses.

The increased number of food apps that are being introduced widely are the best example of people using the E-commerce industry to get their favourite food items

Advantages of E — Commerce

E commerce has a lot of advantages to organisations and to the customers –

Advantages to organisations

· Using e-commerce an organization can easily locate more customers, best suppliers, and suitable business partners across the globe.

· E-commerce improves the brand image of the company.

· E-commerce helps organization to provide better customer services.

· E-commerce reduces the paper work.

Advantages to customers

· It provides 24x7 support. Customers can enquire about a product or service and place orders anytime, anywhere from any location.

· E-commerce application provides users with more options to compare and select the cheaper and better options.

· E-Commerce increases the competition among organizations and as a result, organizations provides substantial discounts to customers.

· Customers need not travel to shop a product, thus less traffic on road and low air pollution.

· A coin always has two sides. So, E commerce apart from being highly advantageous has some setbacks.

Disadvantages of E — Commerce

· Customers have concerns about Privacy and Security, and this worry is sometimes right. In this lockdown we have heard about many cases related to E Fraud.

· There is a total absence of in store engagement in E Commerce. This has led to many sales men losing their jobs, especially in this quarantine period.

· E Commerce giants like amazon and Flipkart took over most of the business of small retailers and the shopkeepers were forced to suffer some huge losses.

· Apart from these E — Commerce has many other disadvantages like late delivery, site crash, tax issues, huge technical costs and sever competition.

Impact of the pandemic on E-Businesses

The coronavirus pandemic had a profound impact on the economy and businesses in general. E-businesses too were affected by the pandemic, some profiting from the pandemic while others facing loses.

Losers

The e-commerce sector in India is estimated to have lost $400 million worth of sales during the last week starting with the ‘junta curfew’ on March 22, as operations were heavily disrupted forcing several platforms such as Flipkart and Big Basket to temporarily suspend services. What’s scarier is that the losses are set to grow to $1 billion during the entire period of the nationwide lockdown, as per new data from market research and advisory firm Forrester.

Starting with the junta curfew, e-commerce companies said transport of goods to warehouses was halted, authorities forced their warehouses to be shut and the police did not allow delivery personnel to make deliveries. The nation went into a complete lockdown starting March 25.

E-commerce operations began gradually picking up after central and state authorities intervened, but e-commerce giants Flipkart and Amazon are now only taking orders for essential services, and even e-grocers such as Big Basket and Gofers were working at only 30–40 percent capacity due to a thin staff.

E-commerce sector grew 28 percent in 2019 to touch $32 billion in Gross Merchandise Value (GMV), and including movie tickets and online media subscriptions, it touched $33.3 billion.

Loser: Clothes

This one doesn’t take a huge leap of reasoning, there’s only so much effort you’re going to make for a Zoom call.

For the time being though, with panamas proving to be the most popular work uniform of 2020, your efforts are best directed elsewhere.

Some websites:- AJio,Bewakoof.com, Myntra, Amazon

Loser: Hotel and travel

No doubt because of pandemic the worst hit sector is this sector only

Some websites makemytrip.com, TripAdvisor.com, Airbnb.com

Loser: Luxury goods

Vogue Business projects a potential loss as great as $10 billion for this industry in 2020 due to COVID-19.

“Smartphones and fashion contribute over 50 percent of sales on e-commerce. But both categories have now been hit due to low demand, and they are also facing supply issues. We don’t see demand for these products picking up at least for six months,” said Meena.

“However, we will take another look at trends in June to see if there has been any change in customer behaviour, “he added

Groceries are in high demand on online platforms and are expected to grow faster. But the sector contributes 6 percent to overall GMV. Online grocery sales stood at $2 BN in 2019 as per Forrester.The personal care and hygiene segment are also growing, but again contributes 4.5 percent of total GMV for e-commerce platforms

Winners

Although the pandemic led to financial losses for most people and businesses, for some businesses it proved to be a blessing in disguise.

Online retailers

During the coronavirus pandemic, online retailers faced unprecedented demand because of panic buying, customers stocking up on essential items, local shops being out of stock, the relative safety of online shopping, etc.

Because of the pandemic online retailers experienced a surge in new customers looking to make their purchases online instead of offline like they normally would.

In the below graph you can see the increase in purchase of medical supplies shopping which is the category that experienced the most growth.

Leader: — Amazon

Amazon’s North American retail unit reported operating income of $2.14 billion on sales of $55.44 billion. International delivered an operating profit of $345 million on revenue of $22.67 billion.

Others: — Shopify, JD.com, Alibaba

You are going to see a theme that I would like to address. Amazon seems to be in every one of them. This is because, Amazon is the company that has profited the most during the pandemic adding a whopping 401.1 billion dollars to its market cap while also doubling its net profit year over year to 5.2 billion compared to 2.6 billion in 2019 and that’s despite spending more than 4 billion dollars in COVID-19 related costs. It seems if there was one person on earth who can be grateful for the pandemic it would be Jeff Bezos.

Video Streaming Platforms

Millions of people stuck inside their homes during the lockdown with nothing to do meant a huge increase in online content consumption.The graph below shows that the average streaming video consumption in the U.S. doubled during the pandemic.

Leader: — Netflix

Netflix was the leader among the video streaming platforms adding 10% to its global audience which equals 16 million new subscribers.

Others: — Amazon Prime Video, Hulu, Disney+

Cloud computing service providers

The COVID-19 pandemic has forced many companies to move to a remote work model and video conferencing are accelerating moves to the cloud. As work was forced to go remote due to stay-at-home orders tasks were largely done on cloud infrastructure.Enterprises increasingly are seeing the cloud as a tool that improves business continuity.Collaboration tools such as Microsoft Teams and Google Meet have become essential in the companies’ broader cloud ecosystem.

Spending on cloud environments, including public and private, increased 34.4% from a year ago.

Leader: — Amazon Web Services

AWS delivered second quarter sales of $10.81 billion, up 29% from a year ago.

Others: — Microsoft Azure, Google Cloud, Alibaba

Honourable mentions: -

Zoom, Facebook, PayPal, Tencent, Sea Group, NetEase

The future of E-Commerce

Propelled by rising smartphone penetration, launch of 4G network and increasing consumer wealth, the Indian E-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017. Online retail sales in India is expected to grow 31% to touch US$ 32.70 billion in 2018, led by Flipkart, Amazon India and Paytm Mall.

Smartphone shipments in India increased eight% y-o-y to reach 152.5 million units in 2019, thereby making it the fastest among the top 20 smartphone markets in the world.Internet penetration in India grew from just 4% in 2007 to 52.08% in 2019, registering a CAGR of 24% between 2007 and 2019. The number of internet users in India is expected to increase from 687.62 million as of September 2019 to 829 million by 2021.

In August 2020, Reliance Industries (RIL) acquired 60% stake in Netmeds, an online pharmacy, for Rs 620 crore (US$ 84.61 million). This acquisition gives RIL’s retail unit, Reliance Retail, entry into a vertical e-commerce space.

In January 2020, Divine Solitaires launched its E-commerce platform.

In February 2020, Flipkart set up a ‘Furniture Experience Center’ in Kolkata, its first offline presence in eastern India.

In April 2020, Reliance Industries (RIL) started home delivery of essentials in partnership with local kirana stores in Navi Mumbai, Thane and Kalyan.

In April 2020, Swiggy received an additional US$ 43 million funding as part of its ongoing Series I round.

In May 2020, PepsiCo India partnered with Dunzo for its snack food brands that include Lay’s, Kurkure, Doritos and Quaker.

In May 2020, chocolate maker Hershey India partnered with Swiggy and Dunzo to launch their flagship online store in order to increase reach.

In Union Budget 2020–21, Government has allocated Rs 8,000 crore (US$ 1.24 billion) to BharatNet Project to provide broadband services to 150,000-gram panchayats.

In the festive sale (September 29–October 4, 2019), E-tailers in India achieved US$ 3 billion of Gross Merchandise Value (GMV).

Unified Payments Interface (UPI) recorded 1.25 billion transactions in March 2020, valued at Rs 2.06 lakh crore (US$ 29.22 billion).

Internet Saathi project benefitted over 26 million women in India which reached 2.6 lakh villages and 20 states.

Under Digital India movement, Government launched various initiatives like Udaan, Umang, Start-up India Portal etc.

Udaan, a B2B online trade platform that connects small and medium size manufacturers and wholesalers with online retailers and provide them logistics, payments and technology support, has sellers in over 80 Indian cities and delivers to over 500 cities.

The E-commerce industry has been directly impacting micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training and has a favourable cascading effect on other industries as well. Indian E-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest E-commerce market in the world by 2034. Technology enabled innovations like digital payments, hyper-local logistics, analytics driven customer engagement and digital advertisements will likely support the growth in the sector. The growth in E-commerce sector will also boost employment, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term. Rise in smartphone usage is expected to rise 84% to reach 859 million by 2022.

According to a report, titled, ‘E-commerce: A boon for the current economic downturn’ compiled by First Data Corporation, if the market trends are to believed, the domestic e-commerce market has the potential to grow between $125 billion and $260 billion by 2024–2025. The report even talks about the fact that urban dwellers are now confident enough to make online purchases of up to Rs 25,000 up from the Rs 2,000–5,000 purchases in the recent past.

With this, it yet again seems only natural that the industry should flourish. India is a young country with more than half the country’s population under the age of 25. The country is also getting richer and just in case the ‘black money’ stashed abroad, if at all, comes back, the surge in cash flow would consequentially push the economy to further thrive. Our income per capita has only grown and as per the International Monetary Fund estimates it will increase substantially over the next few years. This means, with more money to spend, the upwardly mobile crowd will lap up content in online stores. This doesn’t mean that the rural or semi-urban markets are not fertile for business. In fact, around one-third of all products sold online are purchased from cities with a population of less than 3 million.

Conclusion

This infographic is sum up off the data