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Today while the world fights against the greatest enemy of modern humankind, COVID 19, commonly known as the novel Corona Virus, the impact is perceptible not only on human lives but also on various other aspects, including economy and businesses of different countries. One such remarkable change can be observed in the businesses of the e-commerce industry.

From the business perspective, most of the Indian e-commerce giants, like Amazon and Flipkart, are generally focused on sustainable, high margin businesses that allow them to acquire more profit out of their most vendible product categories, like Lifestyle and Electronics Appliances. On a regular business day, these e-commerce giants make a business of more than INR 1.5 billion (150 Crore)! 

But due to the current situation of the COVID-19 outbreak, their regular business has been impacted heavily, so much so that the amount has dropped to 0.67% of the regular business which sums up to a business of around 1 crore rupees per day. Still, the e-commerce giants have decided to pursue their business in this highly critical condition! But why? What is the new business model that is helping them sustain this pandemic outbreak and maintain their existence in the customer’s brain?

In this digital era, more or less everyone on this planet is aware of online shopping and at least 25% of the world population uses e-commerce sites regularly for their shopping needs. Predictably, at least 2.15 billion people will be using e-commerce websites by the year 2021. Hence the competition among the e-commerce giants is also very tight as they want to acquire more markets and captivate consumers.

Now during the COVID-19 pandemic outbreak, when all businesses are at a standstill, the e-commerce industry giants have remodeled their business strategies for the time being by shifting their sales to lower margin FMCG products, like Groceries and Essentials. The reason for this major shift can be attributed to various marketing strategies, such as staying relevant in the current turbulent market space, capturing new customers, captivating repeat customers, as well as contributing towards public welfare to a certain extent.

The current marketplace is a typical one, one of the major strategies for the e-commerce industry to follow is staying relevant, even if that means shifting to low margin business for a while so that when the situation normalizes, they still come at the top of the customer’s mind and do not get lost into the sea of available options to a customer.

The current need of the hour is the low margin category items, the e-commerce platforms are targeting to capture new customers since new customers are creating accounts on these platforms to get their essential supplies delivered during the quarantine period.

Also, at the same time, to keep the previously registered customers engaged, the frequently used essential items are put on attractive deals so that the old customers keep coming back to them. At this point in time, even if the customers are buying low margin category items, eventually they will give more monetary business in the future once they have their faith established on the online shopping portals; so in the long run, this will ensure more customer lifetime value. Furthermore, grocery shoppers are repeat customers who make monthly purchases. Hence, they are expected to come back to the platform every month, increasing chances that they will buy other, more profitable category items too.  

During these uncertain times, though it is risky to continue an online e-commerce business, the companies are trying to serve their customers, keeping public welfare and customer needs in mind. Even the Prime Minister is trying to iron out issues for the industry so that their services can keep running smoothly.

In order to capture a larger market, e-commerce websites have started hyper-local operations already. Not only the e-commerce giants, like Amazon and Flipkart, but also the newer companies, like Dunzo, Swiggy, and Zomato have started selling grocery and essential items to increase their reach and stay relevant. Even Dominos has started selling essential groceries on their pizza delivery app!

As a customer engagement strategy, companies have invested in video streaming and gaming business also. Flipkart is releasing content at a brisk pace on their in-app Videos and Games platforms. Amazon is focusing on Prime Video.