What Impact Covid-19 Puts on India’s Retail and E-Commerce Sectors?

Today, the entire world is facing a very difficult phase as the outbreak of Covid-19 hit people’s lives and put businesses at stake. In India, the impact of the outbreak is relatively low than other countries, but business across the nation has affected largely due to the 21-day government-mandated lockdown. However, the e-commerce sector is assisting people by bringing solutions both virtually as well as services to their doorstep. Conversely, for the retail sector in the country, it said that it may take at least 9-12 months to recover from the consequences of the Covid-19 pandemic.

According to the Retail Association of India (RAI), 20-25 percent of retail companies may need fresh fund infusion to stay afloat and nearly 25 percent of jobs in the sector is likely to get impacted. The pandemic is bringing a stimulated adoption of online services and potentially building a long-term behavioural change in the way people purchase things, consume health, get educated, and more.

Let’s have a look at impacts on both sectors one by one.

Impact of Coronavirus Outbreak on Indian Retail Industry

The Covid-19 pandemic has put an adverse impact on the retail sector across the country, with consumer retail witnessing a big drop in sales by 46-55 percent due to the fall in the number of customers per store from March 17 to 25, according to the report from Capillary Technologies.

India’s retail sector, consisting of 70 million small, medium and big traders with 450 million people, generates a monthly business of around US$70 billion. However, due to the pandemic, the retail trade has reportedly lost a whopping US$30 billion in the last fortnight alone, said Confederation of All India Traders (CAIT).

After the announcement of the lockdown, only around 7-8 percent of the modern retail trade is functioning, with the sale of essential items alone is permitted, as per the CEO of RAI, Kumar Rajagopalan. While the retail industry also comprises fashion, accessories, electronics, etc, he said, only 8 percent of the industry’s modern trade sells essential items. However, it is significant to consider that if just 8 percent of the industry is functioning, it will take a long time to bounce back from the losses.

Furthermore, the Covid-19 outbreak has caused sharp sell-off in the markets that have taken a heavy toll on direct equity investments of retail investors. They have now seen the value of their investments grind down by almost Rs 3 trillion in the current calendar year so far.

Impact on E-Commerce

The Indian e-commerce sector has also grasped under the crisis, halting the supply of essential commodities due to lockdowns to prevent the spread of the contagious virus. E-grocers including BigBasket and Grofers, and e-commerce firms Amazon and Flipkart, along with B2B platforms Jumbotail and Udaan stopped deliveries as they are facing operational turmoil caused by the limitation on manufacturing and movement of goods, and people.

Considering industry reports, it is anticipated that the e-commerce sector in India lost US$400 million in a week due to Covid-19. Furthermore, the number of losses is expected to grow to US$1 billion amid the nationwide lockdown.