21/03/2020 0 Comment

How Delivery Technology is keeping economies afloat through COVID-19.

 

Digital Platforms have turned out to be boon for cities that had to face extreme lockdown at first due to the initial outbreak of CoronaVirus.

Ever since the outbreak of CoronaVirus aka COVID-19 in Wuhan, many people globally have found themself in the Chernobyl-esque scenario. All the countries ranging from moderately populated to densely packed are fighting to minimize the contamination among their population.

For the last month, China’s cities, with its empty streets and deserted shopping malls, have looked like the set of a post-apocalypse TV show.  It may be a glimpse of the future for Europe, India and North America, where lockdowns are becoming aggressive.

Public Service Announcements in Europe and the U.S. is predictably focused on how difficult things could get and the practicalities of living under lockdown: How will people get ration supplies? Can the medical services cope with the mounting pressure? Will people get paid? Or Are the enough resources to tackle and curb the false hysteria?

But even at this stage in the lifecycle of the Covid-19 pandemic, some lessons are already emerging from countries like China and India about how we can cope with the social and commercial disruption of this kind. A key differentiator, it turns out, is digital technology.

Let’s start by looking at China, where the recent signs suggest that the pandemic has now been subdued. In Wuhan — a city of 11 million people — the lockdown posed a serious problem. Because it was the first city affected, its citizens had no clue what’s about to unfold. Initially, the lockdown imposed by the Chinese authorities triggered panic buying of food and other essential items, emptying supermarket shelves.

Yet in a matter of days, supplies started pouring into Wuhan. Although fears and concerns about the disease were rampant, residents fairly quickly came to terms with the lockdown and have leveraged digital technology to organize, synergize and collaborate with suppliers, thereby ensuring that supplies reach the people who need them the most. Two factors were key differentiators in this exceptional show of resilience:

  • Digitally Enabled Delivery Platforms: In major Chinese cities, ration purchased online can be delivered to the home within a short span of time following a purchase. This is largely dependent on the deployment of digital technology.  Alibaba’s Cainiao network, for example, enables the supply chains of the merchants it serves via an AI-powered digital inventory management system that connects both online and offline shopping worlds, in which merchants’ physical stores serve an extension to the distribution network. The result being Alibaba shipping medical and food supplies into the province as soon as the lockdown was declared in Wuhan.
  • Consumer Satisfaction in online purchasing: In the last five years, Alibaba Group, JD.com, MTDP (Meituan Dianping) and many other tech giants have highly influenced the Chinese consumer’s purchasing behavior by moving them away from bricks-and-mortar shopping into online spaces, aided by a so-called “super app.” As of 2019, China’s e-commerce penetration had, by one estimate, reached 36.6% of retail sales, with 71% of consumers in China transacting online at some point, mostly via smartphone apps (80% of e-commerce transactions).

The combination of consumer digital maturity and digitally-enabled supply chains has empowered locals to organize home delivery of necessary supplies to people in self-quarantine.  In the gated communities and neighborhoods, residents have created small groups of volunteers via group chat apps to receive supplies at the gate for the whole community, box them for each household, and deliver them at the doorsteps.

In the U.S. and Europe, however, the digital landscape seems rather less favorable for this kind of response than in China and India.

Although U.S. consumers are more than ready to shop on Amazon and other e-commerce platforms, only 16% of total sales in 2019 were on e-commerce platforms — a number lesser to a developing country like India’s 28% .

Also Read: Imminent trends in the e-Commerce marketplace

Moreover, groceries and ready-to-eat food are still tough categories in the digital world, despite efforts to experiment with home delivery of foodstuffs on the part of Walmart.com and Amazon, which recently purchased Whole Foods. U.S. consumers have been slower to shift to the digital marketplace in these categories than the Chinese and Indians, while last-mile logistics for the grocery category have yet to reach the standards seen in China’s major cities. Even in the restaurant business, the likes of Uber Eats and others lag far behind China’s MTDP, Ele.me, and many other similar services in China.

Europe, regrettably, is even further behind. Although big retail players like Ooshop.com of Carrefour and start-ups like Deliveroo are building last-mile logistical abilities, consumer demand and readiness are at lowest, while old city infrastructures and labor regulations make the rapid construction of an efficient delivery system an extremely challenging proposition.

Just last fall, when Alibaba and Amazon celebrated their achievements during the Singles’ Day and Thanksgiving sales respectively, large merchants in Europe were facing serious difficulties in managing their logistics for “Black Friday” sales. This is forgivable if all that is on stake is a new mobile device, but when feeding their children is the issue, consumers will be less patient.

Of course, the pandemic will subside – and Americans and Europeans will definitely find ways to overcome the effects; But as the U.S. and Europe emerge from the coronavirus pandemic, their governments, cities, and businesses should look at how China and India’s digital advantages have helped it respond to the logistic challenges presented by the crisis. COVID-19 is a wake-up call for European and the U.S., which both need to accelerate their digital economic infrastructure transformation not to just fight the pandemic, but to be an equal player in Technological race that Asia-Pacific seems on getting a lead on.

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