Author’s note: How did everything happen so quickly? How will the outbreak affect our daily lives and the future of my business? These and many more questions drove us to investigate the topic. Our team at everstox dug deep into the archives of WHO, including other authenticated primary sources, evaluated stock markets and impacts on operational supply chains, and consulted with major industry players to find four best practices for navigating through this dilemma. This article will help your eCommerce shop, business operations, and supply chain to harness what’s coming next.
The global impact of COVID-19
31 December 2019: The WHO (World Health Organization) receives notification that cases of pneumonia from an unknown disease have been detected in the Wuhan City, Hubei region of China. Three weeks later, WHO announces 282 confirmed cases of COVID-19 have been reported from four countries including China (278 cases), Thailand (2 cases), Japan (1 case) and the Republic of Korea (1 case). Four weeks later, 50,580 laboratory-confirmed cases of COVID-19 have been reported by WHO, over 98,96% of cases originating from China. And now we’re here: 179,111 WHO confirmed cases, 45,29% originating from China, 54,71% outside of China – especially in Europe. Country borders are shutting down in order to condemn further outbreaks. But yet, industry supply chains and shipments for goods are required to still be intact – how?
Businesses are already facing the first impacts with stock market prices and indices nose-diving drastically (e.g. NASDAQ, FTSE 100, DAX), with cross-border trade and public travel being hindered. Companies like Apple have warned about the shortage of the iPhone and possible impact on revenues for the first quarter of 2020 (Apple) due to Coronavirus affecting the supply chain and possible shipment to international markets. Amazon and other major retailers have also warned Prime members and those using services like Amazon fresh that possible delays are to be foreseen on products originating from highly affected areas (Bloomberg). Another eCommerce giant Aliexpress has also given notice on global delays of orders and cancellation of product ranges due to fear of constraints on the supply chain and longer processing of orders (Reuters).
Before continuing this article, it is essential during this outbreak to follow the recommended guidelines by health officials and local authorities to ensure the safety and health of people in your organization, e.g. follow German Federal Ministery of Health. Nevertheless, your business cannot remain still, as entire economies and the public depend on it. Now more than ever, one needs to maintain an operational and functional team.
How is eCommerce affected?
Stronger demand for eCommerce is to be expected as more and more people are willing to purchase online and rather have goods delivered to them at home, than go outside, and shop in public places such as malls and retail outlets. In fact, over 49% of surveyed UK customers are more willing to shop online during the Coronavirus epidemic (The Guardian). This will also impact levels of service in terms of availability and speed for catering this drastic peak in shipments and deliveries. What’s more, one could also foresee a long-term boost in e-commerce shopping (e.g. for FMCG) as consumers will be used to a new standard of convenience level of home-deliveries in a post-corona scenario.
However, there is not only a shift in the way that goods are shopped, but also a change in the type of goods and quantities correlating with COVID-19 press announcements from public health and government officials (Nielsen Report). The increased spending and varying consumption patterns depend on the announced contamination stage in which an area, region or country is considered to be in. In other words, depending on which cycle a country is currently in, or is expected to be heading next, this will provide your business an estimation of which type of goods will be shopped.
Even though local administrations are stepping in to ensure that quality and health standards of imports are met during this outbreak, like the U.S. FDA – the public seems more wary of foreign brands and more fond of home-country goods. But regardless of governmental incentives to keep cross-border trade alive by leaving closed borders open for truck, rail or naval shipments of industrial and consumer goods, imports already face constraints in the supply chain to fulfill and deliver products on time (e.g. U.S. CNN, UK Telegraph, German Traffic Review). In fact, Amazon sellers are most likely to not meet single-day and two-day delivery promises due to constraints on the supply chain and goods imported outside Amazon selling markets such as Europe and North America (CNBC).
As these findings give an overall good understanding of what is happening in eCommerce now, there is still a lot of uncertainty involved. However, with all of that uncertainty, the following fact remains unchanged: the logistics and supply industry is the backbone & driver of local economies, the distribution of goods and global trade. Now more than ever, merchants, retailers and eCommerce businesses of all sectors need a reliable logistics partner and supply chain to deliver their goods.
Impact on Global vs Local Supply chain
Evidently, as first quantitative studies show (NRF), global supply is already and will be further affected as imports from China and other major supply hotbeds outside of closed country borders experience delays. Mainland China is already shutting down ports and factories which supply a majority of brands and global retailers (CNN) and small manufacturers are closing production shops that had already begun since the Chinese New year at the beginning of the year. Some of these effects are expected to be felt sometime down the road as stocks start to run out and the effects of these delays start to show up.
Local supply will play a crucial role in meeting local demand. Brands that source locally can still maintain operation levels and fulfill customer’s demands as global supply will be hamstrung. What’s more, governmental subsidies and tariffs may be imposed to control the supply of domestically produced goods with possible restriction on the export of some goods. Thus, proper stock management will remain one of the key challenges to keep operations going in the coming months (Logistics Management).
4 Best Practices for eCommerce: Flexible Warehousing & More
So what are the key lessons from our findings? How can you prepare your eCommerce business to avoid order fulfilment delays, stock shortages and maintain a fully operational production? We dug even deeper and consulted with our own logistics network of warehousing & fulfilment partners, and merchants from various eCommerce businesses to learn from experiences and to evaluate four best practices that will harness your business in the best way possible. The following recommendations do not solely refer to long-term strategies. As a matter of fact, deriving from our own business cases, implementation cycles rotate between 5 to 15 days. Here are the takeaways:
1: Diversify & Use Flexible Warehousing
By mitigating the risk of single distribution points, our eCommerce business partners benefit the most from a bigger portfolio of diversified warehousing & fulfilment partners distributed across various regional areas. A higher amount of local distribution points for each national market will simply help your supply chain reduce the risk of being exposed to quarantine zones and decrease dependencies from only one provider. But there’s much more to learn about flexible warehousing.
2: Automate & Adopt Tech-Driven Solutions
In times of uncertainty, data transparency is key to keep a higher degree of control and to react promptly to changing demands. As a merchant, you need to use automated ways to optimize your supply chain through real-time reporting and stock management. For instance, receive direct alerts and notifications when stock levels reach minimum levels and directly re-stock supply with one click. Our everstox platform uses API-driven technology to automate data flows to create visibility and control over stock, orders and warehousing capacities.
3: Embrace the Power of Network Synergies
Fighting for survival only by yourself will be impossible to master in the long run. Clearly, your business is dependent on a long supply chain of sub-suppliers and other business partners. Our warehousing and fulfilment network combines the expertise from logistics partners and merchants. We see great synergies evolving through the collaboration between our partners with the result of creating better user experiences.
4: Consolidate now, but don’t forget tomorrow
With business hours being reduced through governmental acts, staff working remotely at home, and the fear of not knowing what could happen next, lot’s of businesses are now trying to consolidate their current operations. It seems that most businesses are blindfolded to cope with their current stressors, but we recommend that one needs to take a step back and review the long haul. We know from various partners in the logistics industry, including our own experiences and learnings, that supply chain planning and improving fulfilment cycles cannot only take weeks or months into consideration, but rather years. Using this best practice in times of crisis might appear challenging, but it’s crucial to ensure that your business still has the strategic advantage to prevail in the years to come. Think also of tomorrow: which strategic markets could become more relevant for your business in the next years; what other distribution channels are now also relevant to further expand revenues and sales; and lastly, how do you aim to provide a reliable and sustainable supply chain?