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Amazon and Flipkart hit as coronavirus forces Chinese factories to remain closed

Both e-commerce sites are going through a supply crunch.

Picture credit Matt from Pixabay

India’s two largest online retailers, Amazon India and Walmart-owned Flipkart, might see a spiral-down effect on its sales as major factories in China have halted operations due to the coronavirus outbreak.

According to local media Economic Times (ET) citing industry insiders, both e-commerce sites are going through a supply crunch, specifically in their high selling product categories such as smartphones, televisions, large appliances, and consumer electronics.

Jusda India, a Gurugram-based cross-border logistics company that works with the importers of Flipkart, Amazon, social-commerce platform Meesho, and multinational electronics manufacturer Foxconn, said the business has dropped drastically since the first week of January.

The coronavirus has severely impacted Jusda’s operations, as business for our e-commerce operations has been nil for 1.5 months,” a person who handles cross-border e-commerce supply chain at the firm, told KrASIA. Previously, Jusda used to import 100 tons of products from China to India every month, the person added.

Talking to ET, Neil Shah, vice president of research at Counterpoint Research, said that “estimates suggest that stocks of smartphone manufacturers will last until the end of February.” With 41% sales of smartphones taking place online, the impact for online retailers could be significant, he added.

Online retailers have largely depended on electronic goods, as they contribute around half of their yearly gross merchandise value (GMV) Research platform Counterpoint told ET. The shortage of electronic products will last for at least another month, affecting sales in March, according to Counterpoint.

“The smartphone segment is facing a massive supply shortage. While companies sourcing from China are expected to be hit the most, we expect players like Samsung to ease a bit of the pressure, taking advantage of the supply shortage of rivals,” according to a senior Amazon executive, as reported by ET.