Events

E-Commerce – The Bittersweet Opportunity During the Pandemic

Our CEO Arne Jeroschewski appeared on a joint webinar with Singapore Exchange (SGX) and the Infocomm Media Development Authority (IMDA) Singapore to share insights on the outlook for the e-commerce industry in the current coronavirus crisis, how e-commerce industry players are performing and a possible road ahead. 

View the slides and a transcript of the presentation below:

Transcript

Billy:

We will start our official round of our panellists to do the presentations before Q&A. Our first panellist comes from Parcel Perform; they are the leading carrier independent SaaS parcel tracking platform with over 600 carriers globally. Arne Jeroschewski is the Co-Founder and CEO at Parcel Perform. What’s interesting is they won a global award for World Post & Parcel Award 2019 – Start-up Category for their e-commerce logistics software. Arne, I hope you don’t mind, I need to tell the world that you were on TV on Channel News Asia’s Season 4 Series called Start Up as the finalist! It was a very tough show and I believe you were famous because of it.

So, ladies and gentlemen, Arne will now speak to us about e-commerce – the bittersweet opportunity during the COVID-19 Pandemic. Take it away, Mr. Arne Jeroschewski!

Arne:

Slide 2: Thanks a lot for the kind introduction, hello everyone. I really appreciate the opportunity to share with you thoughts on ourselves as a company and as well as our views on the pandemic. 

Quick introduction, I’m a consultant turned e-commerce professional over the last few years. I looked after the e-commerce logistics space here in Singapore and the region. About four years ago, we founded Parcel Perform as a global SaaS platform supporting e-commerce merchants and any kind of supply chain operators with a tool that helps them with visibility and value-added services. 

We are now accredited by IMDA and we’re serving customers worldwide, among them – Nespresso, Decathlon, Zalando, BMW to a wide range of customers. This gives us a marvellous opportunity to see what’s happening in the e-commerce space and, also very interestingly, what happened over the last few months in this industry. 

Impact of lockdown and social distancing measures on consumer behaviour

Slide 3: I think everyone would probably believe that with the virus, the first thing happening is social distancing measures, lockdowns, work from home. Everyone has a fear of going out and contracting the virus. There’s a lot of change of behaviour for many people. So, people spend more time online. They get comfortable ordering online and they buy a lot of their things online instead of offline these days. 

You would imagine that e-commerce is having a great time at the moment having a huge leap in adoption and the e-commerce industry is a huge benefactor of this crisis. But if you look under the hood and that’s the next slide, there are a lot of factors why e-commerce is also having a tough time.

Slide 4: The first one, e-commerce companies usually also have an offline business. So, with that an offline business facing all these challenges when they are locked down, I think most companies are still in a terrible situation where the online business cannot fully compensate for the losses they are making offline. 

The second element is there’s an inventory mismatch. Not everyone is buying the same things that they were buying before. So, many in demand categories are out of stock. And it wasn’t entirely working to restock these items fast because it disrupted a lot of logistics flows. Ideally, they could sell a lot, but they couldn’t because the inventory wasn’t there. 

There’s another big element, which is logistics productivity. There were initially infections of warehouses, so they had to shut down operations. Staff members were put in quarantine or were under suspicion or had a slight cold/were coughing and therefore had to stay at home. So, there were a lot of impacts on productivity in warehouses and facilities, and not all processes also support social distancing. From that perspective, it wasn’t easy for them to fulfil the demand they had. 

Lastly, scalability. If you grow 50 percent, you can’t just extend your warehouse 50 percent because you may not have the space or trucks, and this is a terrible time to scale your infrastructure. Even growth opportunities that are there may not be as easy to seize by the industry. 

So, as you see, there are a lot of reasons why e-commerce is kind of an industry that should benefit from this crisis, and may not 100 percent be able to act on this.

Slide 5: On the next slide is, how is the volume developing over the first three months compared to last year where we saw that in February and March, the volume was a little bit behind last year. And these were the first days of the crisis where all the players were unsure what to do, how to react to the virus, and therefore were cautious and didn’t have the ability to fulfil demand. 

But what we have seen is towards the end of March and April, we have seen an unprecedented kind of surge in volumes across the industry – the e-commerce sector. So, we are seeing that April volumes compared to January volumes – 40 percent higher than what you would normally expect at this time of the year. This is a huge news for the industry.

Not everyone is benefiting from this pandemic. 


Slide 6:
But I think if we look under the hood in the next slide, you’ll see that not every industry is benefiting the same way. We have what we call the winners – what you would normally expect anything that’s related to health, medical supplies, mask and so on is seeing a lot of growth. The second industry is sport and leisure – A lot of people are buying sports equipment because they cannot go to the gym and have to do it at home. So that’s one of the sectors that is doing tremendously well at the moment.

And, of course, food and groceries, because you want to avoid going to the supermarket. So, there are some clearly cut winners out of this pandemic, even among the e-commerce players. Another one to mention are marketplaces without their own inventory. You don’t have to run warehouses; you just have merchants listing – it’s a great time to grow your business. 

On the other hand, there are the categories doing not so great during this pandemic. So, anything that’s related to luxury or fashion, discretionary spending is postponed because you’re sitting at home anyway and you may not be able to benefit from it. There are some categories as you see they’re not shrinking, but they’re still a plus minus with last year. But not everyone is benefiting from this pandemic. 

We predict consumers will adjust to the new normal and shift more online

Slide 7: A lot of the players kind of figured out their way of operating over the last two years. Every e-merchant can now manage online growth better and really focusing on getting that right. The second thing is the supply chains have also found a way of operating and getting the new commodities in stock. They figured out a way to do social distancing in their warehouses, introducing additional shifts, making sure that they can leverage assets better. 

And last, consumers are getting the hang of the new normal and start buying more online. So, what we will likely see is that e-commerce will do incredibly well over the year. 

Slide 8: To summarize: most of the players will probably see probably not so fantastic results in the first quarter because the volume was still lagging, and everyone was trying to understand how to deal with the new normal. 

But for Q2, however, we will see a lot of movement in the numbers and the adoption of e-commerce. But one thing to note, not every e-commerce player will benefit the same way. So, all the investors will probably have to look into the details behind each of the players and see which categories will benefit the most.

I think one thing to note in this last point, anyone servicing e-commerce players will probably enjoy this growth trend and that’s where we see a huge opportunity as a service provider to the e-commerce industry. We are seeing this growth trend and we are hoping as a business to have enormous opportunities coming out of it. 

That’s my perspective on COVID-19. Handing things back to Billy and happy to take questions later on. Thank you.

Billy:

Thank you very much, Arne. It was a great presentation on the current status of the e-commerce industry. It’s interesting to see that certain sectors are doing well and certain sectors aren’t doing so well. I mean the assumption was that everybody is booming from e-commerce, so it’s quite a sobering analysis. Thank you, Arne.


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