Well, they warned us that this was a possibility, now it’s become one. The coronavirus (Covid-19) threat has increased considerably now that it’s been defined as a global pandemic, and the shockwaves of it are being felt all around the world in a big way. It’s even been suggested that the economic slowdown resulting from it may even trigger a worldwide economic recession. For the average person whether or not that becomes a reality is something that’s beyond their control, but if you’re operating a small business online you may find that you have to change your ways.
Here at 4GoodHosting, we’re like any Canadian web hosting provider in that it seems we may be fortunate in that the nature of the work that we do allows us to be fairly isolated and working from home if need be. Doing so may be the most responsible choice to make, as there are many others who have professions that don’t allow them to do that and by staying in we lessen the chance of transmission rates increasing to very problematic levels.
As we’ve all been told, even if you are in good health with a strong functioning immune system you may be contributing to the problem just by going about your everyday lives and being out and about as usual. Without going on at length, we agree with those insisting that it’s best for as many of us as possible to stay home and help in the fight against the pandemic.
Concerns for Those Operating E-Commerce Websites
We imagine that everyone will agree that public health has to be the number one priority during the Coronavirus pandemic. eCommerce companies are advised to make plans to maintain their business in the face of this current economic volatility. You should already know that large scale disruption is likely, and problems with supply and demand that can seriously impact cash flow are already being seen. Here are the major issues and what you can do to minimize the effect they have on your online storefront to keep it open.
Product Availability Concerns
An eCommerce company does not operate if it does not have products to sell. The origin of many products and components is China – the epicentre of the pandemic – and that’s resulted in the supply of many retail goods dwindling.
As the pandemic spreads and other countries see reductions in manufacturing capacity, supply is only going to get worse. We should probably expect that employee illness, factory closures and travel restrictions will mean that the products eCommerce companies are selling will now be manufactured at a lower rate, and delivered to retailers MUCH later than they’d like them / need them.
So what can an eCommerce company do to continue their operations? One possible fix is to start sourcing these products from areas that haven’t been widely affected by the virus – if that’s possible. Having multiple sources can also make it so that you’re not entirely cut off from supply if one manufacturer or wholesaler goes out of action. Sourcing products domestically can also be helpful as they will not face the same shipping disruption as imported goods.
Product Cost Concerns
It’s now inevitable that fewer manufacturers or wholesalers will be working at capacity, and we can also expect that many of them will take advantage of the product scarcity by raising wholesale prices. Customers who place large orders and pay inflated prices will very likely be prioritized. Smaller eCommerce companies that don’t have the means of doing that may be moved to the back of the supply queue.
To keep supply going, a smaller eCommerce company may have to consider a wider range of suppliers and accept paying higher prices. Whether this can be done realistically will of course depend on your operating budget and a whole host of other dynamics that are exclusively related to your online business.
Supply disruptions, higher prices and far fewer incoming orders means cash flow is going to be a primary concern for many eCommerce companies during this time. Coping with this effectively will mean businesses must reduce spending and determine ways to generate income. Product scarcity is probably going to continue for some time, and so there will be less choice for customers. One possible solution that arises from this is to hold on to items that would previously have been put in the sales and to continue selling them at full price to maintain margins.
You may need to consider re evaluating your advertising budget too. You may have items in your inventory that are not going to sell given the nature of the Coronavirus crisis – travel-related items, for example, and any that meet the same type of criteria are ones you should stop advertising for. Focusing on SEO and content marketing to improve organic traffic and shifting towards email marketing which doesn’t have a high acquisition cost may be good ideas to protect your cash flow.
You can count on the general public being fully aware that Coronavirus will affect the availability of products, so they likely won’t be too surprised if something is not available to them temporarily. However, they will be displeased if a company continues to advertise products as being available but then fails to fill orders for them. Be very proactive in letting customers know about the challenges you are / will be facing as a result of the Covid-19 pandemic before they order, and this will go a long way in retaining these customers once this big mess is over.
Getting through Coronavirus will require online businesses to be more agile and creative. Some will consider new ways of selling products. Another option for some will be to look at sourcing products that are more likely to go up in demand during the pandemic. Home improvement, hobby and cooking items are some examples.
eCommerce companies also need to be prepared to adapt to the impact of the virus on their staff and day to day operations. Utilizing web-based applications so that staff can work from home may be the best – and most socially responsible – thing to do. Also, look for alternative fulfilment and shipping options and undertake video meetings rather than meeting in person.
How long this Coronavirus pandemic is going to last is anyone’s guess. You may not have felt the pinch yet, but you should at least somewhat prepare in case you do. And planning in full may be the better choice. You want to ensure that your online business can withstand current disruption and is in a strong position to move forward when the pandemic finally comes to an end.
Wishing you and your family – and online business interests – all the best during this difficult time.