Corona Virus Crisis: A Risk For Online Commerce?

One topic currently dominates public perception like no other: the COVID - 19. In India, with the total cases being reported hitting 200 on March 20, 2020, social separation is the norm. A large number of offices and schools are closed, as are malls, movies and any other places where people could gather. In the light of this, how can e-commerce businesses cope? 

The fear of a possible pandemic also leads to uncertainty in the global economy and already clearly noticeable consequences. In this article you will learn what consequences the corona virus has for online trading. We also examine why dropshipping companies are particularly affected by the consequences of the virus and what measures you should take as a retailer.

The production chain and the goods routes are threatened

All companies, small or large will face the impact of factories being shut. While large companies would have cash reserves to quickly look for newer supplies and sources of supply, a medium-sized company, on the other hand, is powerless if the summer collection fails to appear because a Chinese zipper factory no longer works.

Particular risk: dropshipping

The risk of being affected by delivery problems and missing orders is much higher if your business is primarily based on drop shipping.

  1. As a dropshipper, you do not have a warehouse that you can fall back on in the event of production bottlenecks. If your producer fails in China, which is very likely, the sale of your goods immediately comes to a standstill. Furthermore, without the associated logistics, it is not possible for you to quickly hamster goods before the crisis affects you.

  2. You rely on a much longer logistics chain than just your producers. It is not enough for just the factory to continue working. The local freight forwarder may also have stopped working due to the Corona crisis. The same applies to the shipping companies. Of course, dealers with their own warehouse also have to struggle with this problem, but it affects you as a dropshipper  more directly.

If you already run a dropshipping business, you should take particular care of our tips in the next section. The same applies if you are thinking about getting into this business.

Facing the storm - what you should do now

Difficulties in e-commerce are inevitable. These are the set screws you can turn:

1. Contact your manufacturers

Communication is crucial, especially in times of crisis. Therefore, contact your most important suppliers immediately and get a good understanding of their location and how things stand there. We recommend that you look for a personal conversation if possible. Take the trouble to reach the right contact person on your supplier side, and have a conversation with them.

2. Ration your sales

While it may sound contradictory, if the situation escalates further, you will soon be dealing with a sellers market. This means that there is a greater demand than can be covered by the range of goods. Consequently, you could cut back on your advertising measures and raise your prices/cut back on discounts. It is better to sell fewer items at a higher price than to lose customers because you cannot service their order.

3. Search for alternative providers

Although China is an important source for supply, there are a number of  other countries that you could consider sourcing from. Perhaps an Indians supplier maybe me expensive, but there are other advantages: The delivery routes are shorter, your contacts are in the same country and India is not yet as badly affected by the corona virus as China. So look around for new delivery channels in good time, even if it comes with a hit on margins.  

A forklift with packagesThe goods have to come from wherever

4. Concentrate on the core business

When the going gets tough and your suppliers stop producing, start by focussing on what is most important : the items that make you the most money. When in doubt, take care of your top selling products - because crises are always known as opportunities where you can grow.

5. Communicate directly with your customers

It is important to communicate honestly in these difficult times. If it is foreseeable that delivery problems may arise in the future, inform your customers in good time.  Use all the channels available to you, i.e. your website, emails and your social media presence. 

If there are delivery problems with an order, we recommend that you be generous: apologize to your customer for the difficulties and maybe even offer them compensations like a voucher in-lieu of having to wait weeks for their goods, giving you a great chance of a purchase again in the future.

6. Order goods in stock

Unfortunately, this tip does not apply to dropshippers. It is all the more important for all dealers with their own warehouse: order enough new goods now. After all, we don't know if and when this might impact your suppliers. Therefore, it makes sense to be prepared for any bottlenecks and to be the owner of a well-stocked warehouse. Use alternative channels such as marketplaces for residual items. The smart trader is gearing up for the storm before it starts.

The risk is real, but manageable

Since its emergence, The COVID-19 has impacted business across the world, irrespective of their sizes. In a time when supply chains extend across continents, online commerce businesses are feeling the consequences of the epidemic, even if the epidemic isn't in the country the said business is based out of. 

Since the going is going to get harder, it is important to focus on what has distinguished good businesses for generations: ingenuity, flexibility and the ability to adapt to change. 

 

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