As a worldwide epidemic unfolds, e-commerce giants have adapted their operation at an unforeseen speed.
Big players like Amazon and Walmart online are struggling to keep up and prevent potential health risks.
With significantly reduced foot traffic in malls and shopping centers, the population has placed their hopes and dreams upon online solutions.
1. The strain on global supply chains
COVID-19 will be the reason that many shareholders and industries will need to rethink and redefine their whole supply chains.
With the downfall of the world's factory, China, some Fortune 500 companies have suffered from a severe disruption in their operations. Especially the ones with ties to facilities around the Wuhan epicenter.
Apple has announced, in their quarterly investor update, that their iPhone supply is "temporarily restrained" due to the closing and reduced hours of some suppliers' facilities in China's Hubei Province.
America's favorite Lingerie brand, Victoria's Secret, posted on their webpage a statement saying that their online shop will continue to be open as all of their brick & mortar shops are temporarily closed.
Amazons' CEO, Jeff Bezos, has announced that they are still on board for Prime day, which is set to be two months from now. However, they have addressed the situation of delays on their current deliveries amongst the pandemic.
On the bright side, emerging technologies are improving supply chain visibility.
Shifting from a linear supply chain into a digital supply network (DSN's) will enable companies to be more connected and make way for flexibility and optimization.
Harvard Business Review highlights the fact that "The procurement function is measured by cost savings, not revenue-assurance.
2. Health & Safety measures taken by online retailers.
The Washington Post reported that as Amazon's warehouse workers test positive for COVID-19, the company has shut down some of its fulfillment centers to clean and disinfect their facilities.
Reuters has reported that at Lazada, part of Alibaba Group Holding BABA.N, their staff are displeased over the health requirements they are expected to comply with to prevent the spread of the virus. The workers feel like it’s a little too much and express their clash with Chinese-style management.
3.Consumer behavioral changes
Consumers nationwide are hoarding emergency supplies and other things.
We Americans tend to be particular about our toilet paper. But as fears amidst the coronavirus arise, the stockpiling has only just begun.
According to Nielsen's "Pandemic Pantries" report, citizens are gathering items beyond hand sanitizers, masks, and cleaning products. Non-perishable items such as canned goods, bottled water, sugar, and flour.
Up next, Nielsen's Pandemic Pantry table containing relevant information about the increase of CPGs sales over the course of one week in the U.S.
|Sales of shelf-stable CPG items are on the rise amid COVID-19 concerns|
|Category||Dollar Growth (%)||Unit Growth (%)|
|Bath & Shower Wipes||9.5%||12.5%|
|First Aid Kits||6.2%||0.2%|
|Source: Nielsen Retail Measurement Services, Total U.S. All Outlets Combined (xAOC),
the one week period ended Feb. 22, 2020
4. Price gouging
Price gouging occurs when a seller intends to take advantage of customers by increasing the prices of goods and services exponentially despite the unfortunate circumstances.
For example, the NYTimes reported that in Minnesota, a smoke shop was charging $79.99 for 36 rolls of toilet paper.
The NYC Department of Consumer and Worker Protection (DCWP) declared an emergency rule that makes it illegal for businesses and individuals to participate in price gouging for goods and services that limit prevent or even treat coronavirus.
It is illegal to increase prices by 10% or more, this applies to:
The only exception is accepted If the price was raced because it costed more to supply them. If this is the case, you must provide proof to DCWP.
Walmart shared on its web page the following statement:
"Online, we are taking a firm stance related to the potential for price gouging by third-party sellers. Violations of our seller pricing policy and seller prohibited items policy will not be tolerated and will be resolved quickly."
eBay has shared on its website that they are continuously monitoring the listing and new products being posted. They are actively removing listings that contain the following words on the product title or description COVID-19, coronavirus, 2019nCoV , excepting books,
This week, they started restricted items such as toilet paper, baby formula, baby wipes, tampons, and diapers. The products will only be permitted for sale by business sellers in a fixed-price format.
E-commerce players must innovate in the way they operate their businesses. This epidemic might not be the last one to put a strain on global supply chains.
Just in time models work under optimal circumstances. However, when events like this occur, the importance of mapping effective backup plans is indispensable.
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Last Edited on May 25, 2018