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Regular-article-logo Saturday, 20 April 2024

Online retail faces slump in demand

Lack of delivery staff; product mix limited as new stock has not come

TT Bureau Calcutta Published 15.04.20, 07:38 PM
E-commerce firms have been only supplying essential items to households in certain locations. The relaxation this time is that they can now deliver non-essential items as well.

E-commerce firms have been only supplying essential items to households in certain locations. The relaxation this time is that they can now deliver non-essential items as well. (Shutterstock)

The relaxations announced by the government are a step in the right direction, but with multiple challenges still confronting e-tailers, experts feel the path to normalcy will be a long drawn one.

The Centre has eased lockdown restrictions on certain economic activities which includes e-commerce with effect from April 20.

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A notification issued by the ministry of home affairs included e-commerce firms within the commercial and private establishments that will be allowed to operate.

The notification added that vehicles used by e-commerce operators will be allowed to ply with necessary conditions.

E-commerce firms have been only supplying essential items to households in certain locations. The relaxation this time is that they can now deliver non-essential items as well.

Speaking to The Telegraph, Ankur Pahwa, partner at EY India, said: “Normalcy will take longer. The fulfilment capabilities of these platforms is limited as not enough labour or logistics is available. This apart, the assortment of products will be less as new manufacturing activities is nil. Then there is consumer sentiment.

“It remains to be seen what non-essentials he is looking to buy now. Given the overall scenario, the unit economics becomes challenging for e-commerce companies who have to operate at a certain distribution and procurement scale,’’ he said.

An e-commerce industry analyst also agrees with these views. “First, there is a shortage of manpower. So, even if goods are available people need to transport and deliver. Second, consumers are limiting their purchase of discretionary items and focus is more on essential supplies.

“So even if the scope of sale is broadened, non-essential items are unlikely to garner much demand. Third, intercity transportation is still restricted. The warehouses locally have to cater to the local demand. I don’t think e-commerce will see any major benefit in the short run, but it is a good way to keep the light burning,” the analyst said.

According to Arvind Singhal, chairman of Technopak, a management and retail consultancy, “This is an effective solution to practicing social distancing especially while retail stores are closed... Consumption growth needn't be stopped and can be supported, backed by the capability of e-commerce companies to deliver. This will ensure that there is no inventory pile-up,’’ he added.

Reacting to the announcement, a spokesperson from Flipkart said that the group is continuously working to ensure that customers have access to products.

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