Red Zone

E-Commerce Platforms can Deliver Non-Essentials but Not in Red Zone

Red Zone districts of India still remain outside the delivery sphere of the so-called non-essentials  such as  IT Hardware products and electronics such as TV and  refrigerator.  The government has categorised all Indian districts into  Red Zone, Green Zone and Orange Zone The Red Zone are the areas where Corona Virus cases have been found. Orange Zone areas are the places where Corona cases were found  21 days earlier and no fresh cases have been found. Green Zones are the areas free of Corona cases. The places where more than 3 cases have been found in last 21 days are the containment areas and have been sealed with no activities permitted except the most basic needs-based activities. The government has allowed the E-commerce platforms such as Flipkart and Amazon to deliver non-essentials from May 4th onwards in Orange and Green Zones, but Red Zones are still off the limit for such E-commerce delivery. In fact, people in Red Zones are facing delivery problems of  even  essential items as there is strict surveillance.

“As India is classified into red, orange and green zones with certain relaxations, retailers and FMCG companies need to quickly figure out their manufacturing and supply strategies and prepare for the “Next” phase. Companies should identify and fix the gaps during this crucial period, and be ready for the time when the restrictions will be fully lifted and business resumes as usual. Some key actions that retailers should take include, re-evaluating buy plans and communicating changes to suppliers, increasing collaboration with the ecosystem, considering asset repurposing and reinventing some stores as micro-fulfilment centres for online or click and collect centres. Companies should also implement a comprehensive COVID checklist in their factories, offices and stores to ensure employee safety, establish trust in the organization especially with families of staff members and with local authorities. Regular health checks of staff , mandating use of sanitizers and masks, and ensuring a strict governance and regular & transparent communication will be key to a successful rebound for companies. The current relaxations will give an opportunity to open businesses in green and orange zones as applicable and also help slowly get the sales and supply chain systems in place,”   said    Pinakiranjan Mishra, Partner & National Leader, Consumer Products & Retail, EY India.

 

Entering the 3rd phase of the lockdown, with relaxed measures across major parts of the country, expect a majority of the start-ups to kickstart activity especially in the non-essentials space to quickly ramp up. With ecommerce companies being allowed to deliver non-essential items provides an airpocket, the uptake of which will be a key indicator of consumer sentiment. Start-ups in the mobility space will especially hope to quickly get back to normal although with more stringent hygiene measures in place and some of the guidelines provide tail wind to them, while B2C companies will have to wait for the demand to pick up under the discretionary spends. Demand for work-from-home category spends will pick-up considering this new normal is here to stay. The demand generated by tier II and III cities will be key indicator of the consumer sentiment as many of the tier I cities continue to be under mixed zone. Supply chain will continue to be a challenge albeit with reduced pressures considering relaxation, with start-ups keeping a keen eye on maintaining balance between supply and demand,” said   Ankur Pahwa, Partner & National Leader, E-Commerce & Consumer Internet, EY India.

 

Earlier, the government had allowed the E-commerce platforms to  fully function. However, facing opposition from the offline retailers, the government reversed its order and banned non-essential goods delivery online. Since then, the online sellers have been asking the government to allow delivery online. The government seems to have partially acceded to their requests. However, this still doesn’t solve the problem, as Delhi and other metropolitan cities are in Red Zone and hence, people living in these cities will still face problems and the IT and electronic products retailers as well as online sellers can’t benefit from this order. It is to be noted that both categories of products are mostly sold in the areas demarcated as Red Zone.  Ideally, the government should ask the offline retailers to open parallel outlets online and allow the E-commerce platforms to fully function.

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