Life Online During The Lockdown

The Covid-19 outbreak has moved our lives totally online, e-tailers providing essential supplies are being bombarded with demand, which they are finding hard to meet due to regulatory issues and other support services being shut because of the outbreak. In addition, the three-week lockdown to contain the spread of the virus has caused supply chains disruptions and labour shortages. 

The coronavirus epidemic has impacted people and businesses world over, global economy has been hit hard and the effects are likely to be felt for some time to come. The April 2020 Asian Development Bank report estimates global losses from the Covid-19 outbreak ranging from $2.0 trillion to $4.1 trillion, equal to 2.3%–4.8% of global GDP. The report further suggests regional growth declining from 5.2% last year to 2.2% in 2020 and states that if the pandemic ends this year and activity normalizes, the growth will rebound to 6.2% in 2021. Latest developments indicate that the recently opened Hubei province, more specifically Wuhan, the epicentre of the outbreak is being asked by authorities to be cautious to avoid a fresh slew of Covid-19 cases. The rest of the world is waiting to get to the point where they can open up borders, lift restrictions and resume daily operations.

Moving Online 

Most sectors are suffering as a result of the disruption caused by the epidemic. The national lockdown has caused companies / organizations to issue ‘work-from-home’ orders and look into cost cutting methods. Online essential product providers such as BigBasket however, are getting increasing demand for essential goods. Yes, it is as if the world has moved online almost overnight. Our lives were already being lived online in a major way but this event has caused a rapid shift. However, it is not easy for these brands to meet the demand - in addition to supply chain disruptions due to lack of staff, factories being temporarily shut and other such issues, they are also having to deal with matters such as delayed and more expensive shipping. 

In a statement issued to the press, BigBasket stated that they are experiencing high demand, which they expect to continue over the next few weeks considering they provide essential goods. They further added that their supply side is working fine, but meeting this increased demand is a bit of a challenge. They have partnered with the ride-hailing company Uber for delivery to meet this demand. 

“We will not charge any commissions for our efforts and are pleased to partner with BigBasket to support the nation in its hour of need. We stand ready to support all other private and public sector efforts in keeping vital supply chains open and to ensure last mile delivery of everyday supplies, during this current nationwide lockdown.” said Prabhjeet Singh, Director-Operations and Head of Cities, Uber India & South Asia, Uber India.

Talking about the partnership, Lalita Aggarwal, National Process Head-Last Mile, BigBasket, said, "The ongoing pan-India lockdown has led to a disruption in the supply of essential goods, primarily led by a shortage of personnel and delivery vehicles. We are very happy to partner with Uber India for this initiative and we will be utilizing a portion of their huge fleet of cars, bikes as well as personnel to help with our deliveries to fulfil customer orders. We are thankful to Uber India for helping us deliver essential goods to thousands of customers across the country and the opportunity to provide financial sustenance to many drivers and riders during this time."

Re-Inventing

Since essential services are witnessing a surge in demand, it is interesting to note that a number of companies that were originally not into supplying essential supplies are moving into this space. Domino’s Pizza, the pizza restaurant chain for instance recently collaborated with ITC Foods to launch ‘Domino’s Essentials’, a service that would enable the  delivery of groceries and essentials. Even local neighbourhood shops that were not into delivery of essential supplies have taken to doing so in order to keep the cash registers ringing. 

The April 2020 KPMG report on the impact of Covid-19 on the Indian economy stated that as a fallout of this crisis, in the near future more companies will explore newer distribution channels focused on a direct to consumer (DTC) route. They will focus on being able to predict and manage demand. Maintaining customer relationship while focusing on the bottom line will be an important. In regard to policy recommendations, the report stressed on ramping up digital payments, interest waivers, payment deferments , rebates and extending credit limits. 

Sector Impact                                

The Indian e-commerce industry was on an up and up these last few years on the back of internet penetration and policy support, in fact as per reports 175 million people were expected to shop online by 2020 and if healthy growth trends were to continue, the e-commerce sector in India was expected to reach $84 billion by the end of 2021. However, with the current setback the projected figures will take a hit. While essential goods suppliers will keep going, those who do not fall into this category are definitely feeling the pinch and will continue to do so till the lockdown ends and the global economy starts up back to normal.

According to Anil Talreja, Partner, Deloitte Haskins & Sells, in the months and years to come it will be imperative for offline players to have online platforms. A strong e-commerce platform as per him, requires smooth co-ordination between three aspects - understanding the need of the consumer, educating the consumer and the actual supply, and in India, this is currently not at the level it is meant to be. Given the disruption caused by Covid-19, what is needed is to put strategy and infrastructure in place so that this sector can continue to work on auto-pilot regardless of whether they sell essential or non-essential supplies. When asked about post Covid state, he added that a V-shaped recovery for the e-commerce sector is likely and it will bounce back. 

While the world waits to get back on its feet, moving online and having a robust infrastructure for e-commerce is the new reality for businesses. 

Indian e-commerce industry Quick Facts (IBEF- Indian Brand Equity Foundation)

• The e-commerce market in India is expected to grow to US$ 150 billion by 2022 
• Projections showed that in 2019, one in every three Indians shops via a smartphone
• By 2021, Internet penetration in rural India is expected to grow as high as 45 per cent 
• In 2018, e-Commerce and consumer internet companies in India received more than US$ 7 billion in private equity and venture capital 
• By 2022, smartphone users are expected to reach 859 million 
• By 2026, the e-commerce sector is expected to grow 1,200 percent