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The Impact of COVID-19 on E-Commerce Startups

The Impact of COVID-19 on E-Commerce Startups

COVID-19 is a pandemic that has affected the whole world economically. Author, entrepreneur, and co-founder of Darkroom, Lucas DiPietrantonio, explains how it has personally affected his company, other companies he has worked with, as well as his colleagues. Darkroom is a marketing agency that guides e-commerce companies in brand building and increasing revenue with the help of online platforms.

When the first case of COVID-19 was first found in Wuhan, Lucas DiPietrantonio was among the first alarmist amongst his co-workers and friends. Back in 2002, he avoided the SARS outbreak and was counting himself lucky.

As much as COVID-19 had started escalating the number of patients in China, Darkroom did not lay back and relaxed. Lucas and his team traveled to Ukraine and Italy in February as the COVID-19 situation was only in china then, or so they thought.

They shot an ad campaign in Italy for their new shoe company and finished up the production run. It was after they had departed Italy they had the news that the virus was in Italy four days after and was escalating. Cases of COVID-19 increased at an alarming rate in the U.S. in a very short period and especially at his home state of New York.

Some of the successful businesses that Lucas had worked with were failing and had started thinking otherwise about their operations while others are doing great.

So how is it that some E-commerce startups are doing so well during this pandemic while others failed terribly?

The Impact of COVID-19 on E-Commerce Startups

The ‘’New Normal’’ for E-Commerce Startups

It turns out, with the COVID-19 pandemic, consumer’s choices have changed all of a sudden. Clients that buy luxury goods now are on a budget; they are purchasing the necessities. Workers are being laid off. A lot of people are curious about how bad the situation will be.

As an expert in E-commerce, Lucas DiPietrantonio shares the essentials that one should keep in mind to help their E-commerce succeed amid a crisis;

Needs come first before luxury

When the economy shrinks, so does the demand for luxury products. Buyers go for the essential products and services to care about their health, wellness, and safety. Maslow’s Hierarchy of needs states the products that consumers need that are basic, and these products are the ones that consumers will prioritize.

Coronavirus might also need a shift in strategy for venture-backed and bootstrapped startups in their initial stages or during the prelaunch. One of the brands that are taking precautions in this coronavirus situation is the Stands Hair Care Company that deals with shampoo and conditioners.

According to Eric Delapenha, the company’s founder and CEO, positioning of strands in his company was paramount as shutting everything would have been disastrous.

Hence, due to the pandemic, the company has to highlight the brand’s specific features that are relevant to the consumer’s new norm. Eric says that the message of the brand is not that different because the consumer still wants the luxury, but they have to highlight different needs that suit the consumer in this pandemic situation.

Delayed Supplies

The pandemic has caused delays and difficulties in supplies for most businesses. Therefore, it is essential to consider diversifying your productions to be ready when things get back to normal. According to WHO, the COVID-19 is now in almost every country in the world.

So for business people and companies who source or ship their products in the areas that have most been affected, they should expect delays as well as timeline changes in their supplies.

For instance, when the factories in China were closed, some of the businesses that mainly relied on their supplies from China turned to South Korea.

Other factories have remained open but still have problems. Sources may be taking orders from them, but they will not be paying for the orders prior, as they will depend on the current cash flows to pay for them.

Additionally, a factory that deals with production must have raw materials. If they do not have the supply or there are delays, they may be unable to do their normal operations. These will affect small businesses, and owners of these businesses need to make an informed decision.

The best way to deal with this is to map all aspects of your supply chain and identify any potential vulnerabilities. Map out first and second-tier suppliers and learn everything you can about them, including their availability and potential constrains they have that may affect your orders. Above all, look for alternative supply chains, so you don’t have to rely on just one supplier.

New Opportunities in The Market

The COVID-19 pandemic has favored certain brands by acquiring new customers. A good example is with the cannabis companies. The sales of cannabis have significantly increased, and California has declared the companies as essential businesses due to their health benefits. Optimistic Customers who are quarantined tend to try out new indispensable products for their health.

According to Michael Kamins, a partner at OpenNest, founder of Humakina, they have been adapting their launch strategy for the pandemic, which has provided great results for them. Due to the rising developments which might negatively impact supply chains, they are cautious of the situation assessing the impacts and preparing actions to respond to those impacts.

Humakina established a diversified production and supply chain to continue its operations. They have a supply chain in China, and the U.S. When Chinas suppliers shut down, they continued with those in the U.S. and are still interacting with other suppliers to prepare for additional shutdowns. Other businesses should also emulate these strategies during this pandemic crisis.

Final Thoughts

The most important thing is to stay positive.  The infection rates will eventually decrease, and life will be back to normal for people as well as businesses. Employees who were laid off will resume their duties. But the time when normal operations will be back is still unknown.

Brands that do not fit in customers’ essential needs may have to alter their brands’ advertisements to their customers and highlight aspects that suit the consumers’ needs. Brands should also take opportunities that fit the consumer’s preferences.

Small businesses are still unaware of their fates, but there are available opportunities. Therefore, as an entrepreneur, ensure you stay afloat and take advantage of this time to look for opportunities to improve your future operations.

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