Article Type: Research Article Article Citation: Sahana Dinesh,
and Dr. Y. MuniRaju. (2021). SCALABILITY OF
E-COMMERCE IN THE COVID-19 ERA. International Journal of Research
-GRANTHAALAYAH, 9(1), 123-128. https://doi.org/10.29121/granthaalayah.v9.i1.2021.3032 Received Date: 28 December 2020
Accepted Date: 30 January 2021 Keywords: COVID-19 E-Commerce Customer
Engagement Co-Opetition The COVID-19 pandemic has had major influence on the people all over the world. This has also influenced the consumers to shop online owing to their apprehensions regarding the safety. Therefore, this has opened up huge opportunities to online retailers and platforms to increase their sales and revenue and at the same time posed several challenges. E-commerce business is becoming scalable as more and more people are forced to buy online due to their apprehension to go to physical stores in the time of pandemic. This study is aimed at understanding the factors that are causing an increase in the e-commerce transactions and also attempts to know the consumer behaviour during the COVID- 19 pandemic. Through a survey of 195 respondents, the study found that frequency of online shopping has increased during the pandemic period. The study suggests that both online and offline retailers have to invest in smarter technologies and improve customer engagement.
1. INTRODUCTIONThe COVID-19 pandemic has changed the life of
people world over. Lockdowns and social distancing norms have had a major
influence over the way people shop. Consumers are looking for a convenient and
safer place to do their shopping. The footfalls at the shopping malls have also
reduced post-lockdown and this can be due to the hesitancy among the consumers
to shop in these locations. Hence, online shopping is gaining further
significance in the time of pandemic. The Indian e-commerce companies have also
seemed to have taken this as an opportunity to serve the existing customers who
already shop online as well as to attract new customers who otherwise would
shop from offline retail stores. In 2016-17, online retail market in India was
just 1.5 percent of the overall retail market (IBEF, May 2018). With the
pandemic haunting the people in the years to come, e-commerce market can be
expected to witness a drastic change. The
pandemic has caused an increase in the number of customers shopping online and also the number of first-time users of e-commerce has
also raised (Halan, 2020). A survey by UNCTAD (2020)
also found that the pandemic has resulted in a sales growth of e-commerce
websites. The survey found that around 64 per cent of third-party marketplaces
have witnessed an increase in their sales during the period March and July
2020. Bain & Co Report (2020) indicated that due to customers look for
safety and convenience, significance of e-commerce would enhance in the
post-pandemic period and could reach 300 to 350 million shoppers by the
Financial year 2025. The
present study aims at understanding the factors that would help e-commerce
companies to scale-up their business during and after the pandemic. Further, as
the reports suggest that the customers are increasingly shifting their
purchases to online sites during the pandemic, this study also aims at knowing
the customer behaviour during the pandemic. 1.1. OBJECTIVES
The study
was conducted with the purpose of understanding the factors that assist
e-commerce companies to enhance their business during the pandemic. Therefore,
the study was undertaken with the following objectives: 1)
To
know the scalability factors in e-commerce business during COVID-19. 2)
To
understand the online customer behaviour during
COVID-19. 3)
To
suggest the suitable e-commerce strategies to enhance customer experience. 2.
MATERIALS
AND METHODS
This
study is exploratory in nature and is aimed at knowing the changes that are
being witnessed in the e-commerce segment of the country during the COVID- 19
pandemic. For this purpose, we have sourced the data from industry reports,
news articles and various websites. The study highlights the opportunities and
challenges for online retailers during the pandemic. Further, data was also
collected from the customers. For this purpose, questionnaires were administered and data was collected from a sample of 195
respondents residing in Mysore division of Karnataka State using the
convenience sampling method. The collected data was analysed
using the descriptive statistical tools. For the purpose of
data analysis IBM SPSS 20.0 version was used. 3.
SCALABILITY
FACTORS FOR ONLINE RETAILERS DURING COVID-19
The
following are the factors that have enabled e-commerce companies to enhance
their business during the pandemic. 1)
Emergence of demand for new
category: Mobile
phones were the biggest contributor to online sales in the year 2019 (IBEF,
June 2020). Also, the share of consumer electronics and apparels was highest in
e-commerce retail. However, COVID-19 crisis has led to a situation where
customers are now looking to buy necessities and groceries online. Online shopping
service for grocery is not available to all pincodes
in the country. Hence, the online retailers can find this opportunity to cater
to the emerging needs of customers. 2)
Increasing sales: The Bain & Company report
2020 has noted that the online market in the country would expand from 300 to
350 million shoppers in the next 5 years and also the
Gross Merchandise Value would be pushed to $100 to $120 billion by 2025. This
shows that an amazing opportunity lies for online retailers to expand their
sales in the coming years. As more customers will gradually start favouring online stores for purchasing food, groceries,
personal care and health care products apart from
consumer electronics and fashion, e-commerce retailers will have to cater to
the rising customer demand. 3)
Local partnerships and
co-existence: It are
very unlikely that offline retailers could completely replace their offline
counterparts in countries like India. However, online retailers can take the
present situation as an opportunity to partner with offline retailers located
in tier-2 cities and beyond to increase their customer touch-points.
Partnering with small and local retailers to act as pick-up stores can help
online retailers to expand their market. Also, the offline retailers can
increase their footfalls due to this. In this new era, co-existence of online
and offline stores is vital. One of the
leading e-commerce platforms in the country, Amazon India, has launched a
program called ‘Local Shops on Amazon’ where local sellers can register on
Amazon and serve more customers from local areas (Amazon Services, n.d). Many shopkeepers across the country have registered
for this program and have added a wide range of products to the already large
product assortment of Amazon. The products range from consumer electronics to
durables, kitchen items to grocery and consumables, gifts, fresh flowers and cakes. This enables them to boost their sales.
Another e-commerce player Flipkart has also partnered with many kirana stores with similar objectives. 4)
Customer loyalty: Increasing online sales during a
pandemic is not an absolute measure of success for online retailers. Instead,
online platforms have to focus on increasing customer
engagement with the online stores. Retaining the new customers can contribute
to online retailers’ profits in the long run. In this direction, online
retailers along with their core activities can provide sticky customer services
such as video streaming, gaming, booking and payments in a single platform. (Poojary
& Krishna, 2020) 4.
CHALLENGES
FOR ONLINE RETAILERS DUE TO COVID-19
Though
the opportunities are many to improve scalability during extreme conditions,
the online retailers also have to address equally
challenging issues to meet the increasing customer orders. The following are
some of the challenges posed to online retailers due to COVID-19. 1)
Development of infrastructure: With the increase in demand
online retailers have to improve their infrastructure
as well. Supply chain has to be improved to a great
extent to ensure customer satisfaction. Online retailers will also have to
strengthen their relationships with local retailers to provide services beyond
the tier-2 cities. 2)
Concerns over quality: As more customers are being
attracted towards online stores, compromise over quality is something which is
not affordable to online stores. Online stores will have to undertake more
stringent quality checks to ensure quality products reach the customers. This
can go a long way in ensuring success to online retailers 3)
Co-opetition: In no way online retailing can
dominate offline retailing or vice-versa. Co-existence is the only way to
remain relevant in the ever-changing business world. Online retailers should
partner with local retailers to enlarge their reach. There is growing annoyance
between online and offline retailers in India. In such a scenario, competition
between the two has to be replaced by co-operation
which would ultimately benefit the customers. 4)
Social influence: The community is going to be a
great influencer for customers to shop online. Hence, online retailers have to work towards engaging the community through social
commerce. The marketing strategies of online retailers have
to involve the customers to promote the online retailer. 5)
Increase customer mindshare: It is vital for the online
retailers to retain the customers for a long run. They have
to invest more in sticky customer services. Providing services like
video streaming, gaming, booking and payments in a single platform along with
providing their core services can increase customer engagement with the
platform. Addressing
these challenges effectively would ensure long run success to online retailers
and assist them in scaling their operations. 5.
RESULTS AND DISCUSSION
This
section gives the demographic profile of the respondents and their online
shopping behaviour during COVID-19. Table 1: Profile of the respondents
Source:
Survey Data Table 1
show that the majority of respondents are female and
are in the age group of 26-35. All the respondents are well educated and are
employed with more than a half being employed in private jobs. Majority of the
respondents have a better income level and are married. The analysis of the respondent’s
profile reveals that they are well educated and have an independent source of
income. They are able to make purchase decisions
independently. Table 2: Online
Buying Behaviour
Source: Survey Results Table 2
indicate that out of the total number of respondent’s majority (78.5%) have
online shopping experience before the pandemic hit the world. This percentage
increased during the pandemic to 92.3%. This supports the findings of the
previous studies that customers are shifting their purchases to the online marketplaces
during the pandemic. The respondents have reported spending more online during
this period. Further, the data revealed that all the respondents who shopped
online during the pandemic have shown interest to continue shopping online.
Therefore, the study found that there is a change in the customer behaviour during the pandemic. Table 3: Product Categories bought online during the COVID-19 era
Source: Survey Results Note:
N=180; Multiple Response Rate (MRR)=377/180=2.09 Table 3
highlights the products bought by the respondents online during the COVID-19
period. The table 2 revealed that 180 of 195 respondents have purchased online
during the pandemic. The respondents were asked to check out the various
products bought by them. Accordingly, 180 respondents have checked a total of
377 boxes, which is almost 2 boxes per respondent (MRR=2.09). The most bought
product category during the pandemic is found to be Home and Kitchen Essentials
followed by Personal and Health Care Products. The restrictions imposed on the
movement of people during the lockdown and need to maintain hygiene has caused
a surge in the demand for home essentials and personal and health care
products. Table 4: Customer
attitude towards online shopping during the COVID-19 era
Source:
Survey Results Table 4 revealed a positive attitude of
customers towards online shopping during the pandemic period. The data revealed
that the frequency of online shopping has increased during the pandemic with a
mean value of 3.58 (SD±0.740). The respondents also were positive in
recommending online shopping to their friends and family with a mean of 3.70
(SD±0.827). To measure the satisfaction of customers who shopped online,
respondents were asked to rate a 5-point Likert’s scale where 5 being highly
satisfied and 1 being highly dissatisfied. The data revealed that the
satisfaction of the respondents was also high with a mean value of 3.96
(SD±0.675). The satisfaction of the respondents is also revealed by a high
recommendation rate and increased shopping frequency. 6.
CONCLUSION
AND SUGGESTIONS
Online
retailing has grown immensely over the years and there is enough headroom for
further growth. COVID-19 has caused the e-commerce market to penetrate further,
owing to customer hesitation to shop from offline stores. Apprehensions
regarding shopping from physical stores and restrictions on movement have
forced customers to buy online during the pandemic. For consumers online retail
gives access to a large assortment of goods and for sellers it gives an
opportunity to reach a large geographical area with limited resources. The
sales of e-commerce platforms have significantly grown comparatively to the
pre-lockdown order volumes. The results show that more customers are buying
kitchen essentials, personal care products and groceries online. The demand for
essentials and hygiene products is increasing and the online platforms have to ensure that the customer demand is met effectively
so that satisfied customers are retained. The finding that customers are
gradually shifting their purchases online emphasises
that online platforms have to focus on improving
customer experience. This is because increasing sales is not enough to ensure
growth in the long run. The online retailers in India will have to invest more
in infrastructure and also look for profitable tie-ups
with local retail stores. The major players in the e-commerce market in the
country could possibly achieve this more easily. However, smaller ones would
have to concentrate their energy and efforts in meeting the increasing consumer
demand. Offline retail stores too would have to reinvent themselves to drive
customers in the ‘new normal’ scenario. In countries like India, it is unlikely
that online stores could completely replace offline stores. Therefore, the
offline retailers will have to become smarter with the adoption of smart
technologies. Online retailers too would require constant innovations and
coming up with programs to increase customer engagement. In addition to this,
the platforms have to ensure the safety and security
of personal and financial details of customers shopping on their websites by
adopting suitable monitoring measures. This would boost the confidence of both
existing customers as well as first time users to make purchases online and in
turn would enhance customer trust. SOURCES OF FUNDING
The
research was funded by the University Grants Commission (UGC) under the JRF
scheme. CONFLICT OF INTEREST
The
author have declared that no competing interests exist. ACKNOWLEDGMENT
This
study was funded by University Grants Commission under the JRF scheme. REFERENCES
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