How the Coronavirus is affecting eCommerce

The Novel coronavirus – you’ve probably all heard of the outbreak in China that is slowly becoming a global pandemic. At the time of writing this article, there were 31.500 reported cases worldwide which caused a lot of concern and has greatly affected eCommerce.

The new coronavirus has more than likely started in a wet maker in the Chinese city of Wuhan. Wet markets put people and live animals closely together – pigs, snakes, bats, chickens, dogs and more – in constant close contact. This makes it very easy for a virus to jump from an animal to a human.

What do we know about coronaviruses?

Coronaviruses are zoonotic diseases, meaning that they can easily spread from animals to people. In the case of SARS and this new strain of coronavirus bats were the original hosts. The bats then infected other animals which in term transmitted the virus to humans. These viruses can be fatal to humans because these viruses have not been circulating in humans before and the specific immunity is absent in humans.

The Chinese government has quarantined over 15 cities, meaning that more than 50 million people are forced to stay in their homes to prevent the spread of this new virus. The government has also proceeded to temporarily shut down airports, train stations, theme parks, and factories. What does this mean to eCommerce?

Let’s have a look at how this new coronavirus affects eCommerce:

It is no secret that China is the manufacturing powerhouse of the world – they produce almost everything –planes, cars, clothing, pharmaceuticals, tech, and even food. The Chinese economy has taken a great hit as most of the manufacturing plants were near these cities that are now under quarantine.

Those cities include Guangzhou, where a huge amount of production and manufacturing takes place, making an even bigger impact on global eCommerce. Given that restrictions are currently in place, logistics companies are experiencing disruptions to their operations, meaning that there will be delays in transporting any orders from China.  If you are running a dropshipping business and selling items from an AliExpress supplier, this means your products might have lengthy delays reaching your customer.

What should you do if the majority of your stock relies on Chinese suppliers?

With this temporary shutdown of manufacturing and logistics facilities, we recommend you to prepare for delays and take into account before continuing to run paid ads and take orders. You can check with your supplier, but it is healthy to assume that your items will not be shipped promptly.

IF you have any current orders that you are concerned about not being fulfilled, we highly recommend you contact the buyers and inform them of the situation and tell them that their orders might be suffering some delays. Get ready, because not all of your customers will like the news and they will be wanting a refund.

So when will these factories be reopened?

At this stage, we don’t really have an estimate on when the Chinese government will deem it safe for workers to return to the factories. As the pandemic spread, it might take months and logistics companies will not be able to start moving items until the transport routes are reopened.

With the Chinese government taking quick action on stopping the spread of the disease transport routes might be reopened by the end of February.

Can the coronavirus be transmitted through the packages?

coronavirus affects ecommerce

According to the CDC, there is no evidence that suggests that the coronavirus has been transmitted through imported goods and packages.

While the coronavirus is transmitted from person to person through respiratory droplets from coughing or sneezing, they generally have poor chances of surviving on surfaces. This means that there is a very low risk of the current virus spreading from products or packaging that have been shipped over days or weeks at ambient temperatures.

 

What can businesses to do manage this current situation?

Many businesses were caught off guard by the global public health emergency and are not struggling with the short-term actions to limit the impact.

Although these situations are unpredictable and unavoidable, you as a business owner should take steps to prepare for these events – you can start by stepping up your risk management now.

So what can you do?

Diversify your supplier base

The current pandemic is a good example of the risks of relying on a sole supplier. This is a clear of a signal as it gets for you to start looking for additional suppliers to limit your exposure to one supplier.

Regularly asses the risks

Assessing the risks on a regular basis can be a very useful habit – when looking for risks, you should cover both internal risks as well as external risks. Examples beside the Corona outbreak could be your supplier going bankrupt, Amazon suspending your listings, a ransomware attack or a fraudulent employee.

Bottom line

This new pandemic is seriously taking a toll on many businesses, as the Chinese factories and supply routes shut down, more and more online stores are becoming unable to deliver the orders.  Use the momentum of this crisis to make your business more resilient in the long run. Remember, this is not a “bad news” situation only, your competitors are taking the same hit as you are – so this turbulent market may also provide some unexpected opportunities – as Churchill said, never let a good crisis go to waste!

 

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