Second Covid-19 wave rocks ecommerce boat, hits consumer spends – The Economic Times

Clipped from: https://economictimes.indiatimes.com/tech/technology/second-covid-19-wave-rocks-ecommerce-boat-hits-consumer-spends/articleshow/82807434.cmsSynopsis

Fashion hit hardest; non-metro markets feel impact too, could be critical for recovery

Ecommerce hasn’t been able to escape the impact of the ongoing second wave of the pandemic, unlike last year. There had been an almost immediate spike in online orders once the national lockdown was lifted and delivery of all goods was allowed from the middle of May last year. This time around, there is uncertainty among industry executives over recovery in the sector with pandemic impact been visible over the past several weeks.

According to data from Unicommerce, an ecommerce solutions provider, online shopping volumes dipped 11% in April from the month ago. That’s in line with what executives told ET—the effects of the current wave of Covid-19 has hit consumer demand for non-essential segments, both in urban and rural markets. Expectations of a demand revival are driven by the belief that consumers will continue to avoid offline shops and malls. Unicommerce data further showed fashion and accessory sales were down 22% in the same period while eyewear and accessories were down 16%. Only fast-moving consumer goods (FMCG) and agri, and health and pharmaceuticals, saw growth — of 33% and 18%, respectively. Consulting firms and analysts are reviewing the annual growth outlook for ecommerce this year as they are largely concerned with non-metro markets being hit hard this year.

Liking this story?

Get one mail covering top tech news of the day in under 5 minutes!

Trusted by 2.5 lakh+ readersPlease wait…
In 2020, the virus outbreak was largely limited to the country’s bigger cities.

“The second wave has impacted the large population of the country and people are afraid of stepping out more than ever,” said Unicommerce CEO Kapil Makhija. “Discretionary spend categories such as fashion and accessories will have to bear the short-term impact.”

However, the appetite to shop online will continue to grow in the long run, he said.

Ecommerce executives said the effects are more visible this time though data is still flowing in for the month.

“There is impact within the broader network of the organisation and consumers are also impacted —healthwise and economically,” said one of them. “They are largely sticking to buying essentials and what they need immediately.”

ET had reported May 20 that consumer demand was still high for essentials online with people buying more of those with each order.

Another executive said demand right now is less for work-from-home and kitchen and home products.

“This is also due to various restrictions in different states and various other external factors are at play,” said TA Krishnan, cofounder and CEO, Ecom Express. “For example, Maharashtra seems to be recovering but in Karnataka and Kerala, people are still not able to deliver all goods due to restrictions. I still feel people will avoid going to malls (once things stabilise) and that will help online orders pick up.”

Ecommerce

Graphic: Rahul Awasthi
Other stakeholders feel the same — traditional retailers and shop owners are increasingly looking to go online amid the second wave.

Amitava Saha, founder of ecommerce-focused delivery firm Xpressbees, said it was difficult to predict the outlook for the rest of the year but acknowledged the impact being felt in both urban and rural markets.

“March was a little higher than February. Fashion and other segments were hit in April but there is a slight recovery now,” he said.

After the post-lockdown spike in online orders last year, average daily shipments through ecommerce were at 5-5.5 million. Krishnan said the number is 4-4.5 million now.

Kearney partner Arpit Mathur said the response of the rural or non-metro markets over the coming weeks will determine the rate of recovery.

“The impact has been far worse this time. The ground reality is that more people are infected this time. If rural demand stalls, that’s a more structural issue,” he said.

Ecommerce, which according to Kearney, grew by around 30% last year, could slow to 15-20% if the rural markets continue to be depressed. Both Flipkart and Amazon India are currently prioritising delivery of essentials and groceries while hoping that all goods will be allowed soon by state governments that have halted this.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s