Blog 1b - E-commerce in the age of COVID-19

1b. Discuss the opportunities and challenges for e-commerce businesses in the age of COVID-19.

In order to understand the opportunities and challenges faced by e-commerce businesses during COVID-19, it is important to understand what e-commerce is. Essentially, it is the electronic purchasing or selling of products via an online medium (Ecommerceguide.com, 2020). COVID-19 has significantly impacted e-commerce businesses, in both positive and negative ways and has presented many opportunities and challenges.

Opportunities

Increasing Customer Numbers

One of the biggest opportunities provided to e-commerce businesses due to the COVID-19 pandemic, is the significant increase in their customer numbers. An increasing number of shoppers have switched to online, due to the tight restrictions and concern over being in crowded places. In fact, in the eight weeks following the announcement of the pandemic, Australian e-commerce observed an 80% year-on-year growth (Birmingham, 2020). In addition to this, research conducted by CouriersPlease (2020), found that approximately two thirds of Australians shopped online more frequently than before the pandemic (Busby, 2020). As well as this, over 50% of those surveyed stated that they would continue to online shop after the pandemic was over (Busby, 2020). With these figures like these, e-commerce businesses have the opportunity to expand their market and increase their sales significantly, both in the short and long term.

Expanding Businesses

Restaurants and cafes around the world have been severely impacted by COVID-19. The tough restrictions placed on the hospitality industry has forced businesses to adapt to a new way to serve customers. While this initially may have been seen as a challenge for most businesses, it can create a massive opportunity. One restaurant that has taken advantage of the current restrictions to expand their business is the Gungahlin Lakes Golf Club. I have personally visited this restaurant many times throughout my life, and every time I have visited it has always been packed full with customers. That was until COVID-19 hit. Now, with limited seating available, the Gungahlin Lakes Golf Club has decided to expand their business to online, offering an “order online, pick up in store” option. Prior to COVID-19, this was never considered as an option, due to the fact they were occupied with dine in customers. However, due to COVID-19, the Gungahlin Lakes Golf Club has been able to expand their business into the online world.

Challenges

While there are a number of opportunities presented for e-commerce businesses, there are always some challenges which accompany them. These include supply chain issues, a change in customer spending habits and health and wellbeing of staff members.

Supply Chain

While the significant increase in demand for online shopping is a benefit for e-commerce businesses, a potential issue arises within the supply chain and how businesses can keep up with the increased supply. Gym equipment is a great example of how COVID-19 has affected the supply chain in terms of product supply. Once restrictions were in full swing around April/May 2020, online sales for gym equipment saw a 60% increase (Plastow, 2020). This had a significant impact on gym equipment retailer, Gym and Fitness, causing them to remove their website temporarily due to the excessive demand for their equipment (Plastow, 2020). This is just one of many examples in which COVID-19 can cause some challenges for e-commerce businesses.

Customer Spending Habits

In Australia alone, over one million people have lost their jobs due to the COVID-19 pandemic (Janda, 2020). This means that there are a large number of Australians who are unemployed, with no regular income. This may have increased effects on e-commerce businesses, due to consumers tightening their budgets and only spending on essential goods or services (Mageplaza, 2020). This means e-commerce businesses which are non-essential, such as the beauty and fashion industry, may take a huge hit and lead to a decrease in overall revenue due to COVID-19. Their major challenge is how to ensure their business can continue to operate in these challenging times.

Interestingly however, businesses are able to turn this challenge into an opportunity. Many businesses which are non-essential or have been shut down during the pandemic, have taken to the internet to sell essential products through their business. A prime example of this can be seen in the fashion industry. In order to ensure they are able to keep their business afloat, fashion retailers have begun stocking essential items such as face masks and hand sanitiser. Some of these stores include Crossroads, Rivers, Rockmans and Noni B (Burke, 2020). This has allowed them to have some revenue, despite their stores being shut down.

Health and Wellbeing

While many customers are choosing e-commerce businesses as their preferred method of purchasing during the COVID-19 pandemic, often little thought is given to the employees making this possible. While a vast majority of jobs are able to be completed at home, warehouse workers are not able to work from home (Mageplaza, 2020). This provides a potential threat to these employees, and with an increasing number of online deliveries required, more employees may have to work. This leads to an even bigger threat of these employees potentially becoming ill. The challenge for e-commerce businesses here is how to manage the increased number of orders, all while ensuring their employees are safe.

References

Birmingham, A., 2020. Huge Spike In Ecommerce Once COVID-19 Hit - Which-50. [online] Which-50. Available at: <https://which-50.com/huge-spike-in-ecommerce-once-covid-19-hit/> [Accessed 14 August 2020].

Burke, K., 2020. ‘Disgraceful’: Leading Retailers Slammed For Using ‘Panic Marketing’. [online] 7NEWS.com.au. Available at: <https://7news.com.au/lifestyle/health-wellbeing/choice-slams-leading-retailers-for-encouraging-coronavirus-panic-buying-c-754188> [Accessed 14 August 2020].

Busby, C., 2020. 10 Online Shopping Habits That Have Changed Since COVID-19. [online] Kochie's Business Builders. Available at: <https://www.kochiesbusinessbuilders.com.au/10-online-shopping-habits-that-have-changed-since-covid-19/> [Accessed 14 August 2020].

Craigieburn Central, 2020. Crossroads Craigieburn Central. [image] Available at: <https://www.craigieburncentral.com.au/store-directory/crossroads/> [Accessed 14 August 2020].

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Janda, M., 2020. RBA Expects 1 Million Australians To Stay Unemployed Until End Of Next Year. [online] Abc.net.au. Available at: <https://www.abc.net.au/news/2020-05-05/almost-one-million-australians-lose-jobs-due-to-coronavirus/12215494> [Accessed 14 August 2020].

Kloppenburg, E., 2020. Brits Are Buying Weights For At-Home Workouts Instead Of Going To The Gym.. [image] Available at: <https://news.yahoo.com/coronavirus-exercise-equipment-sales-spike-5800-as-brits-cancel-gym-memberships-145959385.html> [Accessed 14 August 2020].

Mageplaza, 2020. RBA Expects 1 Million Australians To Stay Unemployed Until End Of Next Year. [online] Abc.net.au. Available at: <https://www.abc.net.au/news/2020-05-05/almost-one-million-australians-lose-jobs-due-to-coronavirus/12215494> [Accessed 14 August 2020].

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Plastow, K., 2020. Sports Retailers On Track For Personal Best Following Spike In Demand. [online] The New Daily. Available at: <https://thenewdaily.com.au/finance/consumer/2020/05/05/sports-sales-anz-coronavirus/> [Accessed 14 August 2020].

Siossian, E., 2020. 'Food Brings People Together': The Web 'Lifelines' Rallying Eateries Restricted By COVID-19. [online] Abc.net.au. Available at: <https://www.abc.net.au/news/2020-03-28/coronavirus-prompts-new-food-directories-for-cafes-restaurants/12096718> [Accessed 14 August 2020].