Shift in consumer behaviour silver lining for e-commerce firms

E-commerce businesses are anticipating a silver lining from the Covid-19 shutdown as a significant number of customers are now more inclined towards ordering online than ever before, which might boost the industry in the post-pandemic period.

Industry leaders and businesses said although the overall e-commerce industry is witnessing a major drop in business, the shift of consumer attitudes about online shopping for daily necessities is promising.

They further said a segment of consumers who have never thought of using online services for their daily needs, are now enjoying such services and expressing their satisfaction in the convenience of the platform.

According to industry sources, around 90 percent of the e-commerce firms have had almost zero business during the Covid-19 crisis period that began on March 26 with a nationwide shutdown. 

The sales of products through call centres declined about one third in the last two weeks, while orders via digital platforms – such as apps and Facebook pages – increased manifold, they said.

Health-related items – such as hand sanitiser or masks – witnessed about 200% increase in sales in the last few weeks, and the demand is greater outside Dhaka, industry insiders added. 

According to the E-Commerce Association of Bangladesh (E-CAB), about 100 e-commerce businesses – mostly with product lines of essential commodities, groceries and medicine – are witnessing a jump in business as people are bound to order online due to the shutdown.

Muhammad Abdul Wahed Tomal, general secretary of E-CAB told The Business Standard on Tuesday, "There is no doubt this is a tough time for everyone and also for the e-commerce industry. 

"However, a trend we have observed is that a segment of consumers that did not previously think of using e-commerce services to meet its daily needs has now shifted its position."

Tomal pointed out that although currently the change is apparent from a handful of companies, in post-pandemic times, this trend could bring in a huge surge for the e-commerce businesses. 

The E-CAB leader continued, "The majority of our e-commerce businesses are related to fashion goods or electronic gadgets, which are now almost out of business. However, firms concentrated on commodities and grocery items are witnessing a boom.

Earlier, firms used to get 300-500 orders a day, now they are getting around 2,000 orders daily. 

"To assist consumers during, and after, the pandemic, the association is taking a number of steps. We have started online registration for our association membership. We are talking with the government, seeking support to facilitate small e-commerce companies in opening bank accounts via online methods and also availing loans in the same process."

Tomal added, "When this pandemic ends, we will be going for the full automation of our backward and forward linkages in the industry."

Good sign in the long run

Echoing Tomal, Chief Executive Officer of AjkerDeal.com, Fahim Mashroor said, "In the long run, such a shift of consumer behavior will help the industry grow rapidly.

"This is surely a good sign for the industry in the long run. However, if the pandemic continues for a longer period, then a large number of smaller e-commerce firms will drop out of the race and that might create a major problem," he said.

As his firm partly deals with commodity products, Fahim said the response is good but shortage of delivery people has already become an issue that they are dealing with.

"A large number of delivery men went to their native homes in the first phase of the shutdown and could not return to Dhaka. Some of them are losing their jobs from the firms who are going out of business. At the same time, we are having a hard time finding delivery people. So there is a mixed trend here," Fahim added.

Zeeshan Kingshuk, co-founder of Sindabad.com, said the pandemic has helped to improve the relationship between e-commerce businesses and their consumers.

"The consumers have become more understanding now. Despite late deliveries, our delivery people are being treated better than before. This indicates a change in consumer behavior, which is very positive. In the long run and during the post pandemic period this will help the industry to grow faster," he said.

Zeeshan pointed out that currently the ordering trend is more via digital platforms than previous call-center-based practice.

"At Sindabad, our call center orders have declined by a third in the last few weeks, and we are getting more orders via digital platforms. So people are now practicing the true form of e-commerce shopping," Zeeshan said.  

He further said, "A large number of new consumers have entered the market due to the crisis situation and more will join during Ramadan. We need to cater to this additional demand, so that we can retain these people for a considerable amount of time." 

"Already industry people are taking initiatives in this regard," he added.

According to a recent survey by the E-CAB, the e-commerce industry could face around Tk3,480 crore operational and inventory losses amid the novel coronavirus shutdown.

The study, titled "Impact of Covid-19 on E-commerce Industry of Bangladesh," showed that, financially, 82 percent of the e-commerce firms have been severely impacted, 1.5 percent of firms are not impacted, and about 16.5 percent have been moderately impacted by the shutdown.