Pouria Parhizkar

Software Engineer

E-commerce Expert

Pouria Parhizkar

Software Engineer

E-commerce Expert

Blog Post

The Impact of COVID-19 on Online Businesses: A Global Perspective

20 March 2023 E-commerce
The Impact of COVID-19 on Online Businesses: A Global Perspective

The novel coronavirus (COVID-19) pandemic has caused widespread economic disruption around the world. As governments have enforced social distancing measures and encouraged people to stay home, many traditional brick-and-mortar businesses have had to shut down or scale back operations. However, the pandemic has accelerated growth in one business sector: ecommerce.

Online businesses that enable people to shop from home have seen a surge in demand. For example, Amazon has hired over 175,000 temporary workers to help fulfill online orders. Online clothing company ASOS reported a 24% increase in sales in the first half of 2020. Food delivery platforms like Uber Eats, DoorDash and Deliveroo have also seen business boom as restaurants have had to shift to takeout and delivery only.

The impact has been global. In China, Alibaba’s ecommerce platform saw a spike in new online stores created by traditional retailers moving businesses online. A survey found 60-70% of small businesses in India have started selling online for the first time during the pandemic. The shift to ecommerce is also taking place in the Middle East, as malls and stores have closed. Dubai-based noon, the region’s largest online shopping platform, has doubled its warehouse space and hiring to keep up with higher demand.

While the COVID-19 pandemic has been disastrous for many physical businesses, social distancing measures have accelerated the trend toward ecommerce globally.

For online retailers, delivery platforms and other ecommerce-related companies around the world, the surge in demand has presented an opportunity for growth despite the economic downturn. The global healthcare crisis has triggered a permanent step-change in how people shop and interact with businesses. Ecommerce is set to emerge from this crisis in a stronger position.

Some of the major challenges online businesses have faced during the COVID-19 pandemic

•Supply chain disruptions: As the virus spread around the world, many manufacturing facilities and warehouses had to shut down or operate at limited capacity. This disrupted the supply of products and made it difficult for online businesses to fulfill orders and meet demand.

•Logistics constraints: Travel restrictions and border closures made it harder for online businesses to ship and deliver products. There were also not enough delivery workers to handle the surge in online orders. This led to delayed shipments and strained logistics networks.

•Safety concerns: There were concerns that handling and delivering online orders could contribute to the spread of the virus. Many businesses had to implement additional safety and sanitation procedures to protect workers and customers. This added to costs and operational challenges.

•Price gouging: Some online sellers engaged in price gouging by charging excessively high prices for in-demand products like masks, sanitizers and toilet paper. This unethical behavior led to reputational damage and legal issues for some businesses.

•Cyber threats: There was a spike in cybercriminal activity targeting online businesses during the pandemic. Phishing emails, malware and scams aimed at stealing money or account information from customers surged. This required businesses to enhance cybersecurity measures.

•Economic uncertainty: The overall economic downturn caused by the pandemic led to reduced consumer spending in many countries. While spending on essential goods remained steady, discretionary purchases declined. This uncertainty made it difficult for online businesses to forecast demand and plan stock levels.

Those were some of the most significant challenges faced by online retailers and ecommerce platforms during the COVID-19 pandemic according to business reports and analyses. Overall, it was an immensely difficult time, but digital commerce proved resilient in the face of such obstacles.

Online businesses adapted in several ways to overcome the challenges posed by the COVID-19 pandemic

•Diversifying supply chains: Businesses sought out alternative suppliers and looked to more localized sourcing of products and materials to mitigate supply chain disruptions. Some also increased their product buffer stocks to ensure availability.

•Investing in delivery capabilities: Companies hired more delivery drivers, expanded their warehouse spaces, and adopted new routing software and algorithms to improve delivery efficiency and speed. Some partnered with third-party logistics companies to augment capacity.

•Prioritizing safety: Companies implemented contactless delivery, enhanced sanitation and cleaning procedures, and provided personal protective equipment for workers. This helped reassure customers that their orders would be handled safely.

•Cracking down on price gouging: Online platforms banned sellers that engaged in excessive price hikes and took action against those that violated their policies. This addressed unethical behavior that could damage customer trust and loyalty.

•Improving cybersecurity: IT teams worked diligently to detect and shut down COVID-19 phishing scams and malware. Security systems and employee training were strengthened to reduce cyber threats.

•Diversifying revenue streams: Some companies looked for new ways to generate revenue, including virtual classes, online experiences, gift cards and other digital offerings. This helped offset losses from a decline in sales of certain goods.

•Forecasting changes: Businesses analyzed trends emerging from the crisis to identify shifts in consumer demand and preferences. They then adjusted their product ranges and stock levels accordingly to match changing needs. Comprehensive data analysis was key to gaining insights.

•Providing payment flexibility: Companies offered discounts, payment deferrals and interest-free installment payments to support customers facing financial difficulties. This helped generate goodwill and ensured people could still make essential purchases.

By adapting rapidly to the challenging environment, online businesses were able to continue operating, serve their customers effectively and build longer-term resilience. The innovations developed during this time are reshaping business models for a post-COVID-19 future.

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