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GUEST COMMENT Coronavirus: growth lessons from the global seller community

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Learning from how China has bounced back will help growth
Learning from how China has bounced back will help growth
James Allum, VP and Head of Europe, Payoneer
James Allum, VP and Head of Europe, Payoneer

For the global seller community, coronavirus has been a wake-up call. While global lockdowns drew consumers from brick and mortar stores to eCommerce, supply chain disruptions, marketplace restrictions and a lack of resources forced many sellers to change tactics and adjust to the new reality brought on by the pandemic. James Allum, VP and Head of Europe, Payoneer explains.

 

Whether coming from logistics providers or small business owners, resilience and the desire to work together towards a common goal have been the prevailing themes in the eCommerce industry throughout the pandemic. As the global economy begins to reopen and sellers look for new ways to expand their businesses, now’s the time to look at how different industry players weathered the storm and adapted to the new eCommerce landscape.

 

Chinese logistics providers adapt to prevent supply chain disruptions

As the leading global manufacturers, suppliers and shippers, Chinese logistics providers have always been the backbone of the global eCommerce industry. When the coronavirus pandemic first hit China, effectively locking down the Hubei province, the effect was massive.

 

According to Global Wish Logistics, China: “The impact of COVID-19 can be broken down into three parts: first, the decline in orders due to insufficient supplies on the client side; second, work-resumption and office issues caused by the virus; and third, the rise in transportation costs [to ship cargo]. The overall business impact is estimated to be around 30%.”

To secure global supply chains, many logistics providers were forced to get creative, despite additional expenses. According to a rep from logistics provider Yunexpress, this included “using commercial charter flights to reduce the impact of insufficient transport capacity”.

 

Additionally, there was a desire among service providers to partner for the benefit of the eCommerce industry as a whole, with one rep from 4PX commenting that “during this period, the logistics industry needs to work together to turn competition into a win-win situation, fully integrate industry resources, improve product quality and services , and help sellers overcome these difficult times.”

 

Japanese sellers preparing their businesses for the day after

The coronavirus pandemic created several issues for Japanese cross-border sellers, notably the temporary FBA restrictions that Amazon implemented to ensure the availability of essential goods.

Takahiro Yamada, Representative Director/CEO, Global Brand Inc., Japan, says: “Because of Amazon’s FBA restrictions, sales are down around 90% as of March 30th. We expect to recover around 50% of our sales at first, once deliveries are resumed, depending on the quality of shipments.”

In addition, product type has become an issue for many Japanese sellers, as many global consumers are foregoing non-essential purchases. For Masayuki Machida, Representative Director and CEO at KAI Trading Inc., the decrease in demand for luxury products resulted in “US sales [dropping] 70% year-over-year from March 2019 to March 2020.”

 

To get around these issues, Japanese businesses are laying the groundwork for eCommerce businesses to begin promoting themselves when the global situation begins to stabilise. For Noboru Okada, Representative Director and CEO at Compass Point Inc., that means turning to “such industries as online seminars and support centers, [which] businesses will [use] to promote their online stores.”

 

Additionally, to make sure sellers don’t get bottlenecked by supply chain issues in future global events, the Japanese government unveiled a $2.2 billion plan to shore up the Japanese logistics industry and draw overseas manufacturers to Japan.

 

For some US and UK sellers, product categories are key to business continuity

Supply chain disruptions caused by the closing of Chinese factories in the first months of the coronavirus pandemic hit many US and UK sellers hard. This included Anthony Rodriguez at Square Imports, who was “extremely impacted by the fact that workers were not able to produce and supply the inventory that I [needed]. Fewer workers, fewer planes and fewer packages being delivered.”

 

At the same time, overall sales for UK and US sellers increased by 53% from Q1 2019, likely a result of sellers who had stockpiled inventory before the pandemic hit. Product categories were also a factor for many sellers. While the sales of products deemed essential spiked throughout the pandemic, those that catered to people being confined to their homes also surged. This was the case for Mike Smith at UK-based Well Stuffed Toys LLP, who commented that “sales are better than their peak season, with board games being the bestselling product. The trend is likely to continue, as people are at home and bored and looking for something to do.”

 

Lessons learned as the world emerges from the pandemic

For cross-border sellers, there are several main takeaways from the coronavirus pandemic that should impact how businesses are run going forward:

  • Supply chain management – The overreliance on a single logistics provider hampered many online businesses, at least during the opening months of the coronavirus pandemic. Diversifying supply chains to create redundancy should be a priority for cross-border sellers so they’re able to maintain inventories ahead of new disruptions.
  • Product diversification – The slowdown in sales of non-essential products during the pandemic highlights why sellers should diversify their product lines. While luxury goods are likely to make a comeback as the global economic outlook improves, online sales of necessary goods, including household goods and groceries are likely to stay strong.
  • Marketing strategies – coronavirus transformed how the world communicate. Amid country-wide lockdowns, companies are investing in digital marketing tools and tapping specialised freelancers to help with content creation and web design. With digital mediums likely to be prioritised for the foreseeable future, online businesses would be wise to adjust their promotion strategies to reach the widest possible audiences and focus on virtual communications with customers.

The growth in eCommerce transactions seen in the first part of the year are likely a sign of things to come. As the industry continues to grow, it’s important for cross-border sellers to take the necessary precautions to ensure their businesses survive the next global event.

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