E-commerce leaders including Amazon and Flipkart have been able to recover only one-fifth of their pre-Covid-19 demand even after they opened up sales of non-essentials across smaller towns and cities which fall under the Green and Orange zones, as per analysts and industry insiders.
These companies said initial orders have come in for electronics, phones, kitchen appliances, even as they await the opening up of business in high-demand areas which fall under the Red zone.
As per estimates by Forrester Research, regions in Green and Orange zones accounted for 30-35% sales of ecommerce firms prior to the lockdown.
This is also because offline stores have opened and they had faced several headwinds during the lockdown, including forced cashless payments, longer delivery timelines and limited selection.
In some cases, etailers said they have not been able to open up fulfillment and sorting centres that fall in the Red zones, where infections continue to rise. “Ministry of Home Affairs (MHA) guidelines didn’t clarify the operations side of ecommerce… And, hence, confusion among local authorities for non-essential warehouses in Red zones is still there,” said a top executive at an e-commerce firm on condition of anonymity.
A report by RedSeer Consulting also points to customers in smaller cities and lower-income groups curbing discretionary spending, which means spending on e-commerce will remain lower than normal as they largely service non-essential and discretionary categories. “The outlook for the industry looks bleak,” said Satish Meena of Forrester Research. “We have already reduced our growth forecast for 2020 to around 6%…as of now, there is limited demand plus credit is also going to be difficult,” he said.
Without disclosing order volumes, ecommerce companies confirmed that people have only bought items that they deem essential in the last 48 hours, including electronics, laptops and home appliances, partly due to pent-up demand from the last 40 days.
Apparel has been hit the worst, they said. “We are seeing an increase in searches for products in categories such as laptops, consumer electronics, mobiles, air conditioners, coolers, t-shirts, and other essentials,” said Anil Goteti, senior vice-president at Flipkart.
“We urge the government to allow an expanded list of priority products in the Red zone which will not only serve urgent needs and spruce up economic activity but will also ensure citizen’s safety in a high-risk area,” an Amazon spokesperson said.