Azoya Express: China e-commerce industry & Coronavirus crisis

by Ker Zheng

For this special edition of Industry Express, we've summed up a series of articles that demonstrate just how deeply affected the China e-commerce industry is by the coronavirus crisis. 

Coronavirus Disrupting the Global Economy, Including Ecommerce 
(Practical Commerce, Feb 13)

Many cargo airlines have cancelled or reduced flights to and from mainland China. Cathay Pacific has reduced cargo flights by 50% through the end of March. UPS canceled 22 daily flights to China.
Overall air freight prices have increased; most goods coming in are medical products rather than consumer goods. Many ports are forcing ships that have called at Chinese ports to quarantine themselves in floating quarantine zones. 

Alibaba warns of drop in e-commerce revenues due to coronavirus 
(Reuters, Feb 13)

On an earnings call, company management noted that e-commerce revenues may decline as many retailers and restaurants have remained closed due to the coronavirus outbreak. There has also been a shortage of delivery workers as many migrant workers stayed in their hometowns after Chinese New Year. 

Chinese e-commerce giant creates 35,000 jobs for those displaced by coronavirus 
(ABC News, Feb 13)

JD.com and its delivery services partner Dada Group announced that it would create 35,000 new jobs as demand for delivery services increases. These new jobs can help workers that have been laid off from small businesses or have been forced to go on reduced wages. Some of the jobs also include customer service positions that allow workers to work from home.

China e-commerce giant Alibaba sets up website for coronavirus medical supplies 
(Times of Israel, Feb 6)

Alibaba’s B2B e-commerce platform is soliciting international suppliers for face masks, googles, gloves, thermometers, and disinfectants. It has set up a fund of US$140 million to directly buy medical equipment as well. Alibaba plans to use its technology to directly connect health care professionals and hospitals for suppliers to speed up the process.

Ecommerce and food delivery platforms subsidize coronavirus-hit merchants 
(SCMP, Feb 4)

Platforms for SMEs such as JD.com, Pinduoduo, Alibaba, and Meituan are offering subsidies and loans to keep their retail merchants afloat as business rapidly declines.

JD.com launched 11 subsidies to cover 250,000 businesses, while Pinduoduo plans to cover 2 RMB of logistics costs per order.

Meituan, a popular food delivery app, launched seven different programs, including a US$50 million fund to support restaurants and waive commission fees in Wuhan. Alibaba’s food delivery platforms Eleme and Koubei are also exempting merchants form commission fees.

Coronavirus outbreak drives demand for China’s online grocers as tens of millions of consumer hunker down at home 
(SCMP, Feb 11)

Fresh grocery chains Hema, Missfresh, and Super Species have seen a surge in demand as people stay at home and even shun traditional supermarkets. Such chains are backed by the likes of Alibaba, JD.com, and Tencent, and their smart, modern look conveys a sense of higher quality. 

However some chains are facing issues with meeting demand, as vegetable supplies are running out at a rate that is 3-4x as fast as normal. They are also raising wages to attract more delivery people.