How COVID-19 Pandemic Elevated Global e-Commerce

save cost through e-commerce

By Emmanuel Nwachukwu

When the coronavirus disease (COVID-19) broke out in the Wuhan province in China on the eve of the New Year, the government of the country quickly shut down the province and restricted the people from travelling in or out of the province until it became clear they had fully contained the spread of the virus.

This restriction became part of the initial items on the protocol that most countries had to adapt as the disease became a pandemic, affecting many countries of the world.

With the lockdown restrictions, most economic and social activities almost came to a halt, except those organisations that delivered essential services to the people as well as businesses that dealt on food items, medicals/medicines and other goods and services needed for people’s daily upkeep.

The fallout of these restrictions, in Nigeria like most other countries, included scarcity and its attendant increase in prices of consumer goods and services and the inconvenience of living with a shortage of some basic domestic needs.

People, in a bid to access their basic needs, turned to e-commerce and began ordering for their necessities on the few online shopping platforms available in Nigeria, led by Jumia Nigeria.

The e-commerce businesses ensured that shoppers could do their purchases – from food/groceries, medications, water and other essential needs to even personal electronics and gadgets – pay and have them delivered to their doorsteps even without physically going to the stores.

Jumia even went a notch higher than its peers in delivering these supplies in the most social distancing-compliant manner by introducing the contactless delivery system, where the delivery men drop customers’ orders at their doorsteps, move three metres back and call the customers to come and pick up their orders.

Producers, too, in their bid to reach their consumers turned to these e-commerce platforms who gave them, not just visibility but also access to their consumers.

Some global brands including Coca-Cola, Procter & Gamble, Mastercard etc moved their products and services to the Jumia platform, either showcasing their products on the Jumia Mall or advertising their products on the Jumia Marketplace and benefiting from the Jumia’s wide reach and logistics operations.

The harsh economic consequences of the lockdown became so unbearable for citizens that, after about two months, the government had to ease the restrictions to allow some form of economic activities.

Mr Boss Mustapha, the Secretary to the Federal Government (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 interventions, in announcing the beginning of the third and final phase relaxation of the lockdown restrictions, warned that the government’s new measures were not because the pandemic has gone away but to ameliorate the economic hardship that the citizens went through during the lockdown. He then charged the citizens to take personal responsibility in ensuring that they stay safe from the disease as they went about their productive ventures.

The fear of the huge presence of the disease, nay the increasing number of infected persons as well as the mounting number of deaths from the disease, coupled with the many incentives that online shopping offers consumers, are the reasons many Nigerians are yet to fully embrace their lifestyles of old, thus sticking with the e-commerce platforms as their preferred stores instead of the physical markets, supermarkets and malls.

The mass conversion to online shopping during and post the lockdown period, gave the e-commerce platforms a major commercial boost.

Jumia, Africa’s leading e-commerce platform recorded a significant month-on-month increase in the number of orders on its platform, a bold indication of the heavy recourse that customers place on them.

In its first-quarter financial statements recently released, Jumia gross profit was €18.4 million, a year-over-year increase of 21 per cent. The number of annual active consumers on its platform was 6.4 million, a 51 per cent increase over the last year’s figure. Customers’ orders grew to 6.4 million, a 28 per cent increase over what it was as at March 31, 2019.

Third-party verification (TPV) value reached €35.5 million, a year-over-year increase of 71 per cent, taking on-platform TPV penetration from 10 per cent in the first quarter of 2019 to 19 per cent in the first quarter of 2020. JumiaPay transactions reached 2.3 million, a year-over-year increase of 77 per cent, representing 35 per cent on-platform penetration in terms of orders. The company’s operating loss was €43.7 million, a four per cent decrease year-over-year.

Jumia is not alone in reaping from the upsurge in the e-commerce activities as a result of the COVID-10 pandemic. Amazon’s e-commerce platform sells approximately $11,000-worth of goods every second, thanks to the movement restriction occasioned by the coronavirus pandemic.

Also, the Amazon Web Services (AWS), its cloud-computing division, during the lockdown, records more than 100m people who make Zoom calls during the day and a similar number who watch Netflix at night during the same period.

Also, Walmart Inc, the world’s largest retailer saw its U.S. e-commerce sales surge as much as 74 per cent in the first quarter, mainly on strength in grocery pickup and delivery.

That positive outcome made the company focus more attention on the online shopping business during the stay-at-home period, and certainly, the company’s long-drawn and concerted efforts to step up its online game paid off well.

With the gradual return to the normal way of life after a period of enforced lockdown restrictions worldwide, albeit the huge presence of the disease, many people, especially those who have experienced the benefits of the online shopping during the period of the lockdown, would not likely go back to physical shopping, at least, not for now. This means more fortunes for e-commerce platforms.

Emmanuel Nwachukwu, a Business and Communications Strategist, writes from Lagos

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