Features Malaysia Commerce

Coronavirus outbreak a double-edged sword for e-commerce seeing demand as well as disruption

28, Feb. 2020

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By Charlotte Chong

KUALA LUMPUR, NNA - As the deadly Covid-19 virus sweeps across 48 countries in six continents with more than 2,800 deaths to date, many people have chosen to stay indoors as a precautionary measure.

So it is not surprising to see a big jump in orders for local e-commerce platforms. But there's a much bigger problem. How will they get products for consumers when there are widespread disruptions in production, supply and logistics?

While demand has shot up fast as the epidemic worsened, deliveries have crawled to a slow pace for shipments from China, said Ian Ho, regional managing director of Shopee, the leading e-commerce platform in Southeast Asia.

“Stronger demands across most retail categories are seen, especially for fast moving consumer goods such as household necessities and groceries,” he said in a recent statement.

These include instant noodles, canned food, detergent, diapers, baby milk formula, bath and body products, facial cleansers.

But Shopee users "can expect a delay in the shipments of orders from China,” he told NNA in an email.

The Singapore-based e-marketplace is working furiously with sellers to manage the overwhelming demand for masks, hand sanitizers and disinfectants to ensure that shoppers get hold of these products quickly but not at inflated prices.

Closely monitoring the Covid-19 situation, Ho is taking stringent measures to ensure that staff and warehouses in China are adequately protected from the virus.

“Our transit warehouse in China is being disinfected twice daily and the body temperature of all employees are checked before they can enter the warehouse,” Ho added.

According to a digital platform ASEAN UP, Shopee attracts 20.9 million users monthly. It will soon offer discounts as high as 50 percent on some products to entice more shoppers during its 3.3 Mega Sale.

“Many of our retailers in the service sectors have also expressed concerns as footfall has dipped between 15 and 30 percent. We understand the increased challenges faced by our retail partners, and aim to leverage our platform to connect them with shoppers,” Ho added.

Previously known as 11street Malaysia, local e-commerce player Presto said while there was a high demand for masks and sanitizers, "a lot of cross border deliveries have been slowed down."

Presto was launched by ACE-Market listed PUC Bhd. Its group managing director and CEO Cheong Chia Chou told NNA via Whatsapp messages that it has been facing mainly cross-border logistics issues.

“Both (hand sanitizers and masks) are sold out, some replenishment is slowly coming in,” he said, adding that there was an increase in grocery sales though not significant.

Presto, which attracts 1.35 million visits currently each month, is expecting higher traffic when its integration with multiple partners such as China e-commerce player JD.com and BonusLink is completed, said Cheong.

Shopback Malaysia, which allows online shoppers to receive cash back of their purchases, saw a plunge in the travel category last month, especially for international destinations.

But its country general manager Eddy Han told NNA that it was quite in line with the trend in January when sales are usually lower as compared to year-end travel months. Also, there were no mega campaigns planned for January by Malaysia's e-commerce industry.

While international travel has been impacted, there is an upward trend for other categories, particularly grocery and food deliveries, health and beauty products, bus tickets and digital reloads, he told NNA.

The dark cloud of Covid-19 has produced another silver lining - that is the rise of domestic travel for Shopback which receives a monthly traffic of 8 million visitors.

Han noted that domestic travel is still holding strong with a robust 6-10 percent growth in ratio compared with international destinations.

However, Lelong.com.my, which garners about 3.65 million visitors per month, did not see any significant changes in its overall online sales, its co-founder and managing director Richard Tan told NNA via a Whatsapp message.

As for the impact on food delivery in Malaysia, a spokesperson for Grabfood is not ready to report on sales as its priority now is health and food security.

“Right now, our focus is to ensure the safety and well-being of our partners and users,” she told NNA, adding that the company has put in place measures according to guidelines of health authorities to prevent viral transmission.