The topic is on everyone's lips: Covid-19 has now arrived in Germany and many companies are worried about its economic impact. What does this mean for e-commerce? According to a survey by the German industry association bevh, almost 90% of e-commerce merchants are affected by the impacts of Covid-19.
But there is no need to panic: the industry will be little affected in comparison to others and with immediate action and a few simple measures you can avoid most problems. That's why we've put together five tips in this article that can help you react quickly to the new situation.
Protect employees & customers and keep the business running
In order to keep the business running, the first priority should of course be to protect your employees and customers from infection. This is necessary to maintain your business.
You have to do a differentiation between office and warehouse staff. For the office we recommend, if not already done, a quick conversion to the home office. With a structured set-up, this does not lead to any loss of productivity, as often feared.
- Use a standardized tool for video chats. There are a number of very good programs available, many of which are currently available for free due to the corona crisis.
- Organise daily all-hands standups in which each employee says in a few words what his tasks and goals of the day are.
- Open a "virtual office", a video chat room that is available all day and allows personal and informal exchange between employees during breaks.
- Establish a culture of "over-communication" and "over-documentation". The biggest problem of working from home is that information is getting lost more easily.
- Understand when employees have children at home and cannot cope with the situation immediately.
If you run a warehouse yourself, it is essential to make sure that your employees and customers are protected from infection.
- Introduce very strict hygiene rules. Schemas in the bathroom and on doors, as well as regular check on soap and towels, will ensure that the rules are followed. Also provide plastic gloves and disinfectant.
- Strictly separate employee groups and let them work in different, clearly defined shifts. This way it can be avoided that one case of illness paralyses the entire company for several weeks.
- Inform your employees that they should stay home even if they only have slight symptoms of illness.
- Try to minimise the risk of infection outside the immediate working environment. You can, for examples, organize carpools among employees so that public transport is avoided. Sensitize your employees not to leave the house apart from the way to work and advise to avoid social contacts as far as possible.
Finally, a point that is often forgotten: Many employees are probably worried or have fears. Especially loneliness can be very distressing for people. Offer your employees emotional support, show them that your company is there for them. Try to encourage as much exchange as possible, including on private issues, even during home office.
Communicate clearly to customers, suppliers and service providers
Especially now, clear communication is the be-all and end-all. Customers totally understand that under the current circumstances there may be delays in the supply chain. It is also understandable for your suppliers if, for example, the purchase figures are lower than expected. As long as you communicate the situation openly, you don't have to worry about negative evaluations, damaged business relations or the loss of customers.
In the communication with customers it is now possible to score points: Through openness and fast support you can stand out from the competition and show your customers that they are important to you.
Especially in the communication with customers it is now possible to score points: Through openness and fast support you can stand out from the competition and show that they are important to you.
- Communicate changed delivery times even before the purchase. You are not sure if you can deliver on time? Place a clear notice directly on the website.
- Extend the support team. Think about whether you have employees who have less to do due to the current situation and could help out the support team.
- Think about a short-term automation of the customer contact. Chatbots can be implemented quickly and easily, for example. This speeds up response time and makes the work of your support staff more efficient.
- Try not to talk down or silence the situation. Write in your newsletter how the situation affects you. Create understanding and a sense of community, especially among your existing customers.
However, it should not be forgotten that the potential impact on your business will not only affect you, but also many other companies you work with. In this crisis it is particularly important that everyone pulls together.
- Write a short e-mail to each key partner telling them how you see the situation and what impact you expect to have on the collaboration.
- Be honest, even if it hurts! If it is foreseeable that transports or services will be cancelled, for example due to delivery bottlenecks, communicate it as early as possible. This allows the respective partner to adjust his planning and react quickly.
- Exchange ideas. In many questions your partners face similar problems as you do. A regular exchange can help to find optimal solutions.
Identify risks and prepare alternatives
In order to lead your company through this time, an efficient risk management is important. To this end, a comprehensive Business Continuity Plan should be developed (or updated) in the near future. Scenario analysis helps for the short term. Doing this you are prepared for all eventualities and can estimate the consequences of different future developments.
- Create a comprehensive plan for the best case, the trend case and the worst case.
- Do not only look at purely financial aspects. Other areas are also important: How does the scenario affect the employees? What are the possible effects on customer reviews? How does the relationship with suppliers change? What would be the consequence for your brand image?
- Look closely at the cost side - how do variable costs change in the respective scenarios and how can fixed costs be adjusted? Which current contracts can be terminated quickly? To what extent can short-time work be as solution?
- Think about alternatives. Alternatives should be developed on a micro level (What happens if an employee in the warehouse gets infected?) and on a macro level (What happens if demand slumps for two years?).
Plan your supply chain and counteract failures
Many major producing countries are currently suffering from the economic consequences of coronavirus and disruptions in the supply chain are a common problem. In order to counteract this and allow for rapid adaptation, there are several points to consider.
- Keep an eye on your inventory on a daily basis so that you can react early if a possible out-of-stock situation arises.
- Consult your carriers regularly to check whether delivery times can be met.
- Everything is currently changing very quickly: check the situation in your production countries at least daily. Furthermore you should inform yourself about alternatives.
- Even though logistics are not directly affected by governmental containment measures, traffic jams at the borders can cause delays and failures in the supply chain.
Even if the situation continues to deteriorate and you suffer financially, this does not mean that insolvency will necessarily occur. However, it is important to consider measures to create liquidity as early as possible. House bank and tax consultant can be valuable aids here.
- Consult your bank advisor now. Additional leeway can be created by postponing the repayment of a loan or factoring, for example. Whereas financial restructuring and unnecessary additional loans should be avoided.
- Check which planned investments can be postponed.
- Apply for state aid and loans at an early stage. There will be a variety of programmes for SMEs that will increase liquidity in the short term. For young companies, for example, the ERP Start-up Loan will be offered with risk coverage of up to 80%. In addition, the obligation to apply for insolvency is suspended for those companies which have only got into difficulties because of the pandemic.
- Apply for short-time working allowance. Through short-time work, wage costs can be reduced quickly without losing your employees permanently. Temporary workers are included and the regulations already take effect if 10% of the employees are affected.
To come back to the beginning: Don't panic! With the above tips you should be on the good side. Also, don't forget that the e-commerce industry will probably emerge from this crisis even stronger - thanks to digitalisation, this branch has a clear advantage over traditional companies. Nielsen experts even expect a shift in consumption towards online shopping for the next phase of the Coronavirus. Therefore, as Einstein once said: In the midst of every crisis lies great opportunity. In the midst of every crisis lies great opportunity.
Our staff can gather impressions from a wide range of customers and partners and will thus be happy to help you with any questions you may have about the impact of Covid-19 on your business and logistics.
Kima, along with our operations team, our customers and our partners, has gained extensive insight into best practices for businesses during the Covid-19 crisis. She will be happy to answer the questions you may have about any impact that Covid-19 has on your business, including topics outside of warehouse logistics.
Axel is responsible for our Covid-19 task force, which provides solutions within hours for companies needing short-term alternatives due to Covid-19 failures. Thanks to our flexible network, we can usually implement a new solution within 24 hours. Of course we also take care of the return of the goods to your service provider, for example when a failure has been overcome.