Coronavirus lockdown hangover lingers in e-tail selection

Three weeks after restrictions on shipping non-essential goods were reversed, sellers on leading ecommerce marketplaces Flipkart and Amazon continue to curb their product selection compared to the period before the Covid-19 pandemic. The key reasons for this have been acute working capital, labour and raw material shortages as well as unpredictable demand.

“Our sellers are struggling to manufacture since there is no labour and their factories are running much below capacity…,” a senior executive of a leading e-commerce marketplace said.

The reduction in product selection, or stock-keeping units (SKUs), on online marketplaces is as high as 30-50%, said another executive who did not want to be named as the estimate has not been shared publicly.

Brands mirrored the trend.

“Till a few days back, we were at 50% capacity due to government regulations. Now, it’s closer to 80%, but we are focusing on our more important products,” said Bala Sarda, CEO of Vahdam Teas, adding the supply shortage was also due to labour shortage.

Walmart-owned Flipkart said while 90% of its sellers were active on its platform, the selection is back by 85%. “Our analytics team is also supporting them (sellers) with market intelligence and consumer insights,” a company spokesperson told ET. This is the scenario despite online marketplaces seeing a sharp recovery in the number of sellers active on their platforms and a spike in the number of new sellers signing up, multiple industry executives and analysts told ET.

“Sellers are back because, for many of them, online is the only channel and for others footfalls offline are still low, but the products are not,” said Satish Meena, senior forecast analyst at Forrester Research.

“Factories are not running at full capacity and there is no labour, which is especially affecting categories such as FMCG,” Meena said.

ET reported on May 28 that although 85% of sellers on Amazon India had become active one week after restrictions on e-commerce were relaxed, only 30% of SKUs were available. Snapdeal said sellers in Delhi-NCR, Hyderabad and Mumbai were facing some operational issues due to disruptions related to the pandemic. “We expect them to resume full operations over the next few weeks in a staggered manner,” a company spokesperson said.

Amazon, too, said most sellers on its marketplace had been affected by the restrictions. While selection remains low, sales seem to be stable for now, multiple people said.

Fast selling products are largely back, but it is also a function of consumers shopping only to fulfill their needs, because of which a smaller selection is not deterring them from buying. Online brands such as Pee Buddy and Wow Skin Sciences said their focus remains on core products, as demand predictability and consumer resonance towards these items were higher.


Jun 10, 2020

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