How the Corona Crisis Will Affect E-commerce, Particularly Amazon - Remazing
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How the Corona Crisis Will Affect E-commerce, Particularly Amazon

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• 3min. read
However, in this article we want to understand the potential consequences and possible scenarios for e-commerce, especially Amazon. Hannes Detjen, managing director of the Amazon agency Remazing, analyzes the current developments.

If we look at current developments, we can clearly see a strong overall increase in online trade. Amazon plans to hire 100,000 additional logistics employees in the USA and warns logistics service providers of rising demand. While city centers and shopping streets look as if they were deserted, online business is booming. People are less likely to step outside of their homes, and prefer to run their errands from the safety of their couches. But in the short term, traders are splitting up into winners and losers. FMCG companies benefit from the increased demand for everyday products, such as toilet paper or cleaning products. But categories such as books, games and, in some cases, electronics that are complementary with domestic isolation are also likely to see gains. However, other categories are losing, such as outdoor products or furniture. In times of crisis, many consumers forego expensive purchases.

We are convinced that the current situation will have long term ramifications. Many people are just beginning to appreciate the advantages of online trading and are, for example, registering with Amazon Prime. The comprehensive range of video streaming services on offer is also likely to be a decisive factor here. These new customers will probably not say goodbye to e-commerce even after the crisis. Even currently neglected products will then be winners; for example, we expect a run on sportswear when gyms and fitness studios are finally able to reopen. However, should the crisis lead to a severe economic recession, the consumer climate could be permanently disrupted and demand could be significantly reduced across all channels, whether e-commerce or stationary retail.

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On the supply side, we are observing that the movement of goods and work in the logistics centers will be maintained. However, there have been massive traffic jams at national borders, and increased activity in fulfillment centers. Some warehouse employees in Spain and Italy have been infected with COVID-19 and others are no longer coming to work over fears of infection. The biggest cut so far is that Amazon, as of Tuesday, is no longer accepting the delivery of products of numerous categories to fulfillment centers; this regulation is valid until April 5th. This is a clever move: on the one hand, to meet the increased demand in critical categories, and on the other hand to show the authorities that Amazon is “essential” for the current crisis and that closures must be prevented. Amazon remains essential as a large proportion of high-demand health and household products are still being sold, while stationary shops with similar goods are no longer allowed to open their doors. In the medium term, however, warehouses will be able to restock all products and deal with the increased demand.

For the time being, we can assume that the crisis will have positive consequences for online trading. Amazon could then be the big winner. Agile brands should prepare for this now by creating appropriate internal (e-commerce) structures and developing strategies for different scenarios.

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Hannes Detjen
Hannes founded Remazing in 2016 and leads our company today as Managing Director. On the blog, Hannes deals with strategic questions concerning Amazon and gives insights into the development of Remazing.

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