China’s e-commerce sector is beginning to emerge from a months-long logistics ordeal brought on by the coronavirus outbreak, judging by the latest data on delivery volumes. But a longer-term rebound hinges on a recovery in demand for goods beyond the essentials.
Industry leaders Alibaba Group Holding Ltd., JD.com Inc. and Pinduoduo Inc. struggled to meet a surge in demand for household staples and gear such as surgical masks, after the epidemic forced authorities to shut highways and rail nationwide and couriers stayed home. But an analysis of publicly available information by Barclays showed shipping activity in many areas had approached pre-outbreak levels as people resumed work and roadblocks came down.
Based on official data showing 3% year-on-year growth of online physical product sales during January and February, e-commerce growth will approach normality in the second quarter, Barclays analysts Gregory Zhao, Ross Sandler and Jane Han wrote. By March 11, full-truck load delivery capacity nationally was 72% of its November 2019 peak, they said, pointing to data from logistics websites G7.com.cn and Chemanman.com. This month, Alibaba’s logistics arm Cainiao -- which ships upwards of a billion packages daily at its peak -- said it was already operating at full capacity.
Beijing released data on Monday that suggests the world’s No 2 economy may contract for the first time since 1989, denting consumer spending. Brick-and-mortar merchants have been particularly hard hit and almost half of China’s listed consumer companies don’t have enough liquidity to survive past September, according to a Bloomberg analysis. The situation is less dire online but a full e-commerce recovery will come only when consumers resume buying the big-ticket items that dropped off priority lists at the height of the outbreak, when people rushed to stock up on essentials like groceries, protective gear and household staples.
Most middle-class consumers are cautiously tightening spending, said Ashley Galina Dudarenok, founder of China insights and training company Chozan. “That’s the gravest long-term impact of the virus,” she said.
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