COVID-19 poses short-term challenge to e-commerce but long-term benefit

The COVID-19 pandemic and lockdown are posing short-term challenges to the e-commerce sector in China, however, the sector will likely benefit in the long-term.

Bloomberg Intelligence (BI) senior industry analyst for Asia-Pacific Internet, Vey-Sern Ling said despite being online businesses, the pandemic and global lockdowns did disrupt the operations of e-commerce companies in China such as Alibaba, Pinduoduo and Vipshop.

“In the short-term, e-commerce platforms do suffer from disruptions to the way the merchants operate, produce their products, as well as logistics and delivery during the lockdown period there, even though they are supposedly online.

“These ‘offline’ aspect to the business will bring negative impact to these companies,” he said at the online BI Analyst Briefing: APAC Technology Outlook 2020 here today.

The pandemic in China had peaked in the first quarter of the year, with the situation improving in March.

Vey-Sern said while Alibaba, Pinduoduo and Vipshop have implied that their first quarter sales would either decline or at least be flat year-on-year, JD.com is expecting its sales to grow by at least 10 per cent because it owns and operates the bulk of their fulfilment and delivery network.

He highlighted that JD.com has a better outlook on their sales because the company has better control over delivery and fulfilment during the outbreak.

Over the long-term, Vey-Sern said there would be major upside for the e-commerce sector considering that the lockdown period has clearly accelerated user penetration and increased users’ reliance on e-commerce to purchase groceries, fresh produce, daily necessities and medical supplies.

“Over time, this will accelerate the structural shift from offline retail to online retail because more users have experienced this service and it is likely that they will be retained even after situation normalises.

“The convenience and price comparisons that e-commerce offer is a major appeal,” he added.

Source: Bernama