As e-commerce sales surge, COVID-19 likely to drive growth further

Experts predict e-commerce demand will outpace pre-COVID levels


As per media reports, there has been a surge in e-commerce sales in India over the last couple of weeks especially after the gradual unlocking of the economy began. Supply chain disruptions have been on the decline and ever since e-commerce firms started delivering non-essential items across cities, sales volumes have been on the rise.

The impact of the increase in sales volume was seen when Amazon India announced plans to create nearly 50,000 seasonal opportunities across its fulfilment and delivery network to meet customer requirements.

It was widely predicted that e-commerce firms would see business volumes grow as people become reluctant to visit brick and mortar stores for fear of contracting COVID-19, choosing to make purchases online instead.

“Consumers across cities are still concerned about the safety protocols followed in retail outlets and hence are relying on e-commerce. Recruitment for jobs in the supply chain, from warehousing to delivery executive [roles], are on the rise. Because many people moved out of cities back to their hometowns, there has been a short supply of these executives in many e-commerce companies. Moreover, suppliers have been at a low to meet the market demands in terms of products and meeting the schedule. This has hampered the ability of companies across product categories to service their customers. However, over the last four weeks of gradual unlocking, demand has been slowly picking up. Companies are getting ready for [steady demand] higher than the pre-COVID-19 days,” Aditya Narayan Mishra, director and CEO of CIEL HR Services, told THE WEEK.

The pandemic has also led to an increase in the number of new customers for online shopping, reducing people’s dependence on cash.

“It is believed that anything you do for more than 21 days becomes a habit and hence I expect some good online purchasing behaviour to get established supporting expansion, growth and profitability for e-commerce platforms,” points out Ankur Mittal, co-founder of Inflection Point Ventures.

“The shift in consumer habits...may stay for a long time given the convenience and surging [number of new] COVID-19 cases after unlocking. As per our analysis during the lockdown, the e-commerce sector [saw] a medium impact on the severity and longevity metrics,” says Meghna Suryakumar, Founder and CEO, Crediwatch.

“However, with the markets opening up since June 1, despite the COVID-19 impact—and in so many ways because of the COVID-19 impact—the medium and big players in the e-commerce segment in India are currently poised for growth in the short term. The secured borrowings data on MCA shows that there have been no charges availed by the companies in the last six months. However, the sentiment scores of the articles featured across media outlets indicate that despite the setback in Q1 in FY 2021, the sector is bouncing back.”

Another important aspect has been that the demand has reconciled back owing to household replenishment of stock inventory. At the same time, the continued anxiety owing to COVID-19 is unlikely to have large droves of consumers move into stores. “This demand is getting channelised towards the doorsteps of e-commerce firms as compared to traditional and big-box retailers. As consumers get acquainted with the convenience of online shopping, the propensity of Indian consumers is likely to permanently shift towards buying online,” said Alok Shende of Ascentius Consulting.

Some experts are bullish on e-commerce, feeling that the new normal of social distancing will always discourage people from frequenting physical stores.

“All digital transactions, therefore, will gain much be it e-commerce or e-learning or e meetings. Given the consumer base India has, e-commerce companies will not just surpass their pre-COVID-19 levels but possibly beat it twice over,” said Subramanyam Sreenivasaiah, CEO at Ascent HR.