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E-commerce companies struggle to continue business in green, orange zones despite relaxations

These companies are also facing issues as several retailers have not been able to open up their fulfilment and sorting centres that fall in red zones, where the number of cases is on the rise.

May 07, 2020 / 10:12 AM IST
Representative image

Representative image


The Centre relaxed some lockdown rules after May 3 and allowed e-commerce companies to deliver non-essential products in orange and green zones. Despite the relaxations, e-commerce companies have reportedly been able to recover only one-fifth of the pre-COVID-19 demand across green and orange zones.

E-commerce companies have noticed a high demand for electronics, phones, kitchen appliances as they wait for businesses to open up in red zones that see the highest demand.

These companies are also facing issues as several retailers have not been able to open up their fulfilment and sorting centres that fall in Red zones, where the number of cases is on the rise.

“Ministry of Home Affairs (MHA) guidelines didn’t clarify the operations side of e-commerce… And, hence, confusion among local authorities for non-essential warehouses in Red zones is still there,” a top executive at an e-commerce firm told The Economic Times (ET).

Prior to the lockdown, green and orange zones accounted for 30-35 percent sales of e-commerce companies. Another RedSeer Consulting report suggested that customers in smaller cities and lower-income groups had curbed discretionary spending. It hints lower than normal spending on non-essential and discretionary categories that the e-commerce industry largely services.

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Due to these challenges, companies have reduced their growth forecast.

“The outlook for the industry looks bleak. We have already reduced our growth forecast for 2020 to around 6 percent...as of now, there is limited demand plus credit is also going to be difficult,” said Satish Meena of Forrester Research to the publication.

The report further highlights that customers only purchased essential items like laptops, electronics and home appliances after the e-commerce services restarted after May 3.

“We are seeing an increase in searches for products in categories such as laptops, consumer electronics, mobiles, air conditioners, coolers, t-shirts, and other essentials,” said Anil Goteti, Senior Vice President - Flipkart, told ET.

“We urge the government to allow an expanded list of priority products in the Red zone which will not only serve urgent needs and spruce up economic activity but will also ensure citizen’s safety in a high-risk area,” an Amazon spokesperson told the publication.
Moneycontrol News
first published: May 7, 2020 10:12 am

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