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Impact of COVID19 on OMNI Channel Businesses
By Zingerbee India
Date: 14-August-2020 | Blog No.008
The coronavirus pandemic has a different effect on people in the digital economy. The COVID-19 crisis is driving the expansion of e-commerce to new businesses, consumers, and types of products, likely to entail a long-term change in e-commerce from luxury goods and services to daily needs.
A few companies have demonstrated resilience during these COVID19 crisis, however the costs for many others
are increasing. Some of these shifts in the eCommerce environment are likely to be of a long-term nature,
considering the potential for new waves of epidemics, the ease of new shopping patterns, the cost of learning
and the opportunity for companies to capitalize on investment in new distribution channels.
COVID19 has forced consumer segments like senior citizens and categories like food and grocery to expand rapidly.
However not all consumer categories have fared well during these times. And most companies and brands who have
not been prepared for OMNI Channel Retail business have fared poorly during these times.
It is fair to state that the upsurge in eCommerce due the Coronavirus pandemic lockdown has accelerated the growth
of eCommerce. However, this surge has not been across product categories and consumer segments. Also needless to
state that a major portion of the eCommerce growth seen during this period has been at the cost of physical stores.
In this blog we shall discuss some of the key pitfalls and issues which have arisen due to the COVID19 pandemic.
And how it has affected brands who never took eCommerce seriously.
“IF YOU DO NOT CHANGE NOW
YOU WILL PERISH"
It is no longer possible for you to postpone your OMNI Channel eCommerce venture. The change is already here and
it has not been gradual. COVID19 has brought about significant changes in consumer behaviour. Those businesses who adopt
will thrive and those who postpone their transition to OMNI Channel will face difficulties.
Read on …
Impact #1 - Uneven Growth
Despite the hoopla of “eCommerce” doing very well during COVID19 times. The growth has not been even for all
categories and eCommerce sellers.
When we analyze the data we find that despite the shift to eCommerce by customers, a significantly large portion
of eCommerce sellers are facing the same economic repercussions as traditional brick-and-mortar retailers,
following reduced spending by customers on items considered non-essential.
We analyzed the data of inactive sellers on Flipkart.com and Amazon.in for the month of April-20 and found that 38%
of the sellers were inactive as compared to 23% in April-19.
The Big-2 of Indian eCommerce, Flipkart.com and Amazon.in have lost market share to OMNI Channel Verticals like
D-Mart, Star Bazaar, Big Basket, etc. This was logical as consumers focused on buying essentials online and OMNI
Channel Verticals like D-Mart and Star Bazaar were able to leverage their physical distribution to get essential
across to consumers quickly.
“GROWTH FOR SOME AND TROUBLE FOR MOST”
Lifestyle categories contracted by 38% during the initial period of lockdown. This was logical as consumers and
marketplaces were more keenly focused on essential goods during the initial period of the lockdown. As the lockdown
restrictions have been eased; the lifestyle category has still not been able to recover. In the latter phases of the
lockdown, the lifestyle category contracted by 22% as compared to last year.
This was not due to a lack of customer
demand, but due to a lack of OMNI Channel capabilities of these lifestyle brands. Companies were simply unable to
service customer demand as they did not have the technology nor the reach to service orders beyond urban centers.
Impact #2 – India V/s Bharat
The digital divide has never been starker than during the COVID19 pandemic. The spurt in OMNI Channel eCommerce
has been largely an urban and neo-urban feature.
Despite what we have been told by large marketplaces about their logistics penetration into India, during the
pandemic, due to the restrictions in travel, the service of online orders was largely restricted to urban and
semi-urban centers. OMNI Channel Verticals like D-Mart, Star Bazaar, etc. were largely restricted to servicing
the catchment footprint of their stores, which are primarily located in urban and semi-urban locations.
Building OMNI Channel supply chains has never been more important for retailers. A significant portion of India
was unserviceable as Retailers never expanded beyond their OMNI Channel footprint beyond their existing stores.
The opportunity is there, it is for these retailers to seriously look at their OMNI channel strategy.
This is an opportunity and a challenge. Brands need to seriously contemplate and build their own OMNI Channel
supply chains. Large marketplaces like Flipkart.com and Amazon.in have their limitations to service PIN CODES.
Brands need to seek out new supply chain innovations and move their dependance from traditional eCommerce supply
chains controlled by large marketplaces and build their own network.
“BUILD YOUR OMNI CHANNEL CAPABILITIES NOW”
Zingerbee© can help you build your OMNI Channel capabilities. CALL US NOW! we can help you.
Impact #3: Increased Frauds during COVID19
COVID19 and the subsequent lockdowns have provided a fertile ground for frauds. The combination of financial and
health threats makes people more vulnerable and creates opportunities for fraudsters.
The Fraud rates have significantly increased over the past few months. And experts predict that they will continue
to rise. Apart from the traditional exploits which fraudsters apply online, we have seen a significant increase in
the rise of frauds in the OMNI Channel eCommerce value chain.
Digital Fraudsters have exploited poorly secured eCommerce backends and have stolen consumer data and money. Data
pilferage and loss of money online has increased by 76% as compared to January 2020. This can easily be presented
if brands take steps to secure their data and online financial transactions. The pressure from fraudsters will only
keep increasing and it is for the brands to invest into security and building a proper OMNI Channel backend. Rather
than using patch work of applications masquerading as an OMNI Channel eCommerce engine.
The other common fraud which we are seeing on a significant rise is the pilferage loss in the supply chains. This is
expected as financial pressures gown on people, they will tend to commit more frauds. Brands are seen a rise in their
goods being stolen during transit to their customers. They are also reporting a spike in fake customers placing fake
orders and exploiting loopholes in their supply chain processes to steal high value products. This is easily tackled
if brands redesign their operating processes and implement tracking tools to prevent supply chain pilferages.
“SUPPLY CHAIN FRAUDS AND ONLINE FRAUDS HAVE INCREASED BY 76%”
Zingerbee© can help you minimize your exposure to supply chain pilferage and online frauds.
CALL US TODAY!
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