Online retail to lose $1 Bn in sales during Covid-19 lockdown

The ongoing 21-days nationwide lockdown is going to hurt the e-commerce companies, pulling down their robust growth rate to a single-digit and losing big money according to the latest data released by market research firm Forrester.

What's more worrying is the hit on sales for these companies as the loss filters down to the sellers on their platforms too.

"We are expecting a loss of around a billion-dollar for e-commerce players during this lockdown due to supply chain disruptions, limited consumer spending and non-availability of items," said Satish Meena, senior forecast analyst at Forrester.

Online retail sale in India, which is dominated by non-essential goods at about 70%, stood at $32 bn in 2019 and was expected to grow by 26% in 2020. But with the spread of Covid-19 and the resultant lockdown to counter the pandemic along with the long term impact on spending, the growth rate is now expected to slow in 2020 to around 5%.

And given the circumstances, sales are expected to revive only by next year.

"Due to the ongoing lockdown, non-essential goods including smartphones, consumer electronics, fashion and appliances will face supply chain disruption from manufacturers this year. At the same time, consumer spending will take a hit due to the uncertainty in the market," added Meena.

Several businesses, including online retail came to a grinding halt after PM Narendra Modi last week announced a total lockdown to contain the spread of Covid-19.

"The lockdown has been disrupting the operations of e-commerce companies including Amazon and Flipkart, despite government ensuring the supply of essential goods," said sources aware to the development. Both the e-comm giants had also complained of facing challenges with last-mile delivery of goods.

Flipkart and Amazon are yet to respond to our queries.

Many e-tailers across segments, including Myntra and Firstcry, are not taking any new orders. Meanwhile, after multiple complaints of disruptions in operation by e-tailers and e-grocers, the government had allowed transportation of goods without the essential and non-essential distinction during the 21-day coronavirus lockdown.

However, online grocery, which contributes 5-6% to overall online retail, is expected to grow and drive online retail during this period.

"Online grocery is expected to grow at around 20-25 % even though the margin is also going to be a challenge for e-grocers," added Meena. Last year, online grocery contributed $2 billion in overall online retail sales.

So far, India has reported over 1050 cases of coronavirus infection and 29 deaths.