The opportunities and challenges facing e-commerce in the current climate
VOO shares what they believe the opportunities and challenges facing the e-commerce world are and how they will have to adapt to the current COVID-19 situation.
Since the COVID-19 outbreak, the whole world has been sharing a sense of worry, confusion and fear about the situation and its impact on us. Despite its negative effects on many day laborers and industries, the quarantine restrictions have also created a rise in opportunities for industries playing a critical role.
We are an intermediary between e-commerce businesses and courier companies in Egypt, and with a mission to handle the last mile delivery to create a hassle-free experience for e-commerce businesses. Due to this, we at VOO are able to notice, study and understand some insightful buying behaviors including how small-medium e-commerce businesses can handle the challenges effectively.
The number of online orders and transactions across Egypt is higher than ever. This is the optimum time to target consumers across all governorates, not just in Cairo. In the last month alone, there was a 25% increase in the purchase power of consumers in Egypt (including Cairo, Upper Egypt and the Delta), so look out for potential customers outside the capital who could contribute to a large percentage of your sales.
Which industries have found opportunities during the pandemic?
People have been staying at homes for the past few weeks and for the weeks to come. This has led to a change in buying behavior and the formation of new habits. In order to avoid going out to stores where there is a risk and potential lack of inventory, people have switched to online retail with longer delivery windows.
“People are gradually moving from offline shopping to online, and the habit won’t disappear when the epidemic is over. This will have a very positive impact on the whole e-commerce industry.” - Zhong Zhenshan, Vice President of Emerging Technology Research, at IDC.
What type of products/services are in-demand and create an opportunity?
Family products and activities
People have been trying to make the best out of the time they are spending with their families. This is a great opportunity for businesses to offer innovative group activities like board games, family activities, and group cooking recipes that people can enjoy together, whether with the people that they are quarantined with or online with their friends.
With schools and nurseries currently not operating and children staying at home, it is the parents’ responsibility to keep them busy with activities, games and learning opportunities. However, what businesses can supply, are stories, e-learning kits, books, in-house brain activation tools, coloring books and more. The spectrum of products is very wide.
Sanitizers and cleaning kits
According to Bloomreach, in recent weeks:
- Masks sales increased by 590%
- Hand sanitizer sales increased by 420%
- Clorox/Lysol wipes sales increased by 184%
- Disinfectants sales increased by 178%
- Gloves sales increased by 151%
- Bottled/packaged water sales increased by 78%
- Tissues sales increased by 43%
- Hand soap sales increased by 33%
- Toilet paper and paper towels sales increased 26%.
This is the time to utilize your resources to provide these types of products extensively to the market, as they’re in need and in demand. If your business offers similar products or services, it would be wise to pivot and adjust slightly to fit these products in your business model. Once the pandemic is over, people's mindsets and cleanliness behaviors will have shifted towards a heavy and continuous use of these sanitary products, making them a great long-term investment opportunity.
Sports and diet
The closing of gyms has had a fascinating effect on workout apps. Apps that offer home exercises, body weight exercises and stress relief activities such as meditation and yoga have witnessed a boost in the number of new users and users who have upgraded to premium accounts. Companies that provide home exercise tools, healthy products and diet recipes also have an opportunity to grow their business. It would be a good idea to revisit your promotional campaign to incentivise people to resort to sports and healthy lifestyle to minimize their fear and stress about the ongoing situation.
Female products and services
Businesses that have women as their target segment have a strong business opportunity if they successfully study their purchasing psychology and the promotional messages that grab their attention. With the spread of COVID-19, markets have shown an increase in the sales of products such as cosmetics, health care, lingerie and clothes. Women in Egypt have a powerful purchase decision. Even though they are more likely to develop stress during these times, they have taken it upon themselves to find ways to home school and entertain their children, and take care of their family. A woman is the key to any home, so this is a target segment that businesses should keep a wide eye on.
What are the challenges facing small-medium businesses?
Despite the opportunities that have risen, we cannot disregard the fact that there are yet many challenges that threaten different industries. Now is the time to activate a crisis plan. Some companies may have to pivot their business model, or shift the way they sell and market their products and services. By constantly following the new market updates, you should be taking the necessary steps to adjust and adapt your business accordingly.
Is this the optimum time for luxury products?
With people focusing on the essentials and getting through the upcoming period, there has been a decrease in luxury products that don’t fit into the survival kit (this should be the peak of the buying season). Weddings, birthdays and other events have all been cancelled - people are not spending their money on extravaganza and expensive items.
What’s happening to the supply chain?
To ensure that your operations are running smoothly, contact your suppliers to confirm that they can provide you with the materials and products that you need (given that the inventory in store will run out with time and will need to be restocked). If you are in the import/export business, rest assured that international shipment procedures are still operating despite the slow pace, but make sure all of your suppliers are well aligned with your timeline and will still deliver. As for your customers, the current conditions mean they are more understanding of late deliveries, so you may not need to worry there.
Are customers afraid of deliveries?
It’s justifiable that people are thinking twice before making an online order in worry of catching an infection. In these times of panic, your responsibility is to give assurance. If possible, contact your customers to reassure them that your products are sanitized, and you have put protection policies in place. Incorporate these safety procedures in your promotional messages, and make sure that you have delivered training programs to your staff so that they can deal with customer communication and delivery transactions. Most courier companies have already taken the necessary measures to minimize health and safety risks in their facilities and throughout operations.
Pressure on courier companies
As everyone is going digital, most purchases in this current climate will be online. This will add an extra load on courier companies to adapt to the higher demand than what they are used to. Between taking all of the necessary health and safety procedures, and managing a higher number of orders, courier companies may be forced to increase their delivery fees and delivery time. This may not be the ideal situation, but we have to understand and accept the challenges that courier companies are facing and cooperate together until these uncertain times pass.
Adapt and react
The businesses that will get through this are those who adapt to the everyday updates and react accordingly. Whether it’s the changing curfew hours, bank limits, or the implementation of new regulations, businesses have to be flexible enough to adjust fast by adding new, temporary products, changing the working hours, or managing on low revenue. Some of these measures could be temporary, but you have got to stay on top by adapting.
Last but not least: stay safe and stay positive!
Despite the COVID-19 crisis, MENA's startups saw an increase in funding in Q1 2020. Find out more in our Q1 2020 MENA Venture Investment Report, which is hot off the digital press.