Ecommerce Players, Including Amazon And Flipkart, To Lose $1 Billion Due To Covid-19?

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With India now experiencing a country-wide lockdown for 21 straight days along with the talks of plunging into recession in the near future, businesses of all kinds and sizes are being affected badly.

Apart from the industries such as hospitality, travel and food which are witnessing the very worst of the whole Covid-19 outbreak, it now being reported that e-commerce players in India, including Amazon India and Walmart owned Flipkart, are now stand to lose a whopping $1 billion in gross sales, all thanks to the nationwide lockdown.

By now you must be aware that all leading e-commerce giants have immediately halted the sale of all non-essential items during this lockdown and have redirected their efforts towards delivering only essential items. Based on the orders given by the government currently, this will continue at least until the middle of this month.

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Current Scenario for E-commerce Players

Presently as people are trying to collectively flatten the curve of the Covid-19 outbreak in India, e-commerce giants are observing a huge spike in online grocery orders. However, it isn’t enough to save their sales revenue from going through a huge slump as it only contributes to a meagre 10% of the total sales. The sales of Electronics, the most popular category which accounts for the biggest chunk of the revenue share for both Amaon and Flipkart, has been completely suspended.

It should also be noted that if the government of India decides to further curb the onslaught of this deadly pandemic, the present figures may change for the better or worse.

Satish Meena who is a Senior Forecast Analyst at Forrester has reportedly mentioned that online retailers should consider themselves lucky to be able to grow even by as less as 5% this year. He believes that consumer spending will take a huge hit majorly post the lockdown. People are more likely to push their planned purchases to the next year even if presented with the option of EMI waivers.

He also further added that in China it has been observed that e-commerce sales rose by 3% as opposed to retail sales which declined by 21%. The growth, however, was led by grocery sales, which accounts for a sizeable share of online sales in China, unlike India.

If this pandemic wouldn’t have existed, it is around this time of the year when major eCommerce players witnessed anywhere close to $50-$60 million in day-to-day sales as opposed to the present scenario wherein it is down to zero for most of the key players.

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Hindered Growth Of Online Retailers Amid The Outbreak

After Covid-19 forced the whole country to undertake social distancing and nationwide lockdown, sales numbers for many of the giant e-commerce marketplaces dipped to a huge extent. Therefore, many analysts are now predicting that even in the most optimistic of scenarios, the whole e-commerce industry will likely only grow a meagre 5% this year which is way less compared to the 26 per cent growth rate that the industry achieved in 2019. In gross sales, the e-commerce industry reached a whopping $23-$24 billion in the previous year.

Source: TOI

According to the market research firm Forrester, the total eCommerce sales in India, inclusive of movie tickets and other platforms, reached $32 billion in 2019.

“During a meeting for 2020 projections at the end of 2019, Amazon India leadership team was told about economic and policy challenges in India, which might be a hindrance to growth. The mandate was to grow despite those issues. But now, with Covid-19, it looks virtually impossible,” an Amazon executive recently told the daily when confirmed cases started to rise in India.

It should be kept in mind that due to broader economic challenges, the growth of total consumer spending was not exactly sprinting before the Covid-19 started spreading. The deadly outbreak just happened to give this situation a severe boost to make the situation even worse for the entire online retail industry.

In 2019, the total number of online shoppers in India, who bought a product at least once, reached 140 million. Now in 2020, even though new customers have joined in to buy groceries and medicines online, it would be interesting to see if the figure of online shoppers outshines the previous one.

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