Premier University, Chattogram.

Term paper on

Impact of COVID-19 in Online Business

Submited to
Ms. Sumana Podder
Submitted By
Nymol Hoque Asif
ID: 1603310108776
Major:-Accounting
Batch: 33rd
Date of Submission:-
 Letter of Transmittal

…. December 2020

Ms. Sumana Podder

Lecturer
Accounting Discipline
Faculty of Business Studies
Premier University
Chattogram

Subject: Impact of COVID-19 on Online Business

Dear Madam,
I have completed my term paper on “Impact of COVID-19 on Online Business” according to
your specification and regulation and I would like to submit my report.
I also like to draw your kind attention to the fact that, I tried my best to gather and organize all
kind of information needed for the particular assessment, and I have to make this report standard,
holistic and informative enough. Besides this, there may me shortcomings. I would be grateful if
you consider from those excusable points.
May I therefore wish and hope that, you would be cordial enough to my effort and work and
oblige thereby.

Sincerely

_______________
Nymol Hoque Asif
ID: 1603310108776
Batch: 33rd
 Acknowledgement

First of all praise to Allah, the most magnificent and the most merciful for keeping me in such a
favorable condition for completing the term paper. Then I would like to take opportunity to
express my deepest gratitude to my supervisor Ms. Sumana Podder, (Lecturer, Accounting
Discipline, Premier University, Chattogram.) for her kind support and ceaseless guidance
throughout the research work. Her intellectual suggestions shaped my raw idea from the very
beginning that helped me a lot to explore more in the research work. And for offering important
suggestions and comments during the whole journey of my research work. I am very much
thankful to the respondents for their sincere response in the questionnaire survey. I am grateful to
my family members especially to my respected parents for their support always.
 Table of Contents

Chapter Title Page

Number
1 Introduction
1.1 Introduction
1.2 Objectives of the study
1.3 Methodology of the study
1.4 Scope of the study
1.5 Limitations of the study
2 Literature review
3 COVID-19 and online business
4 Data Analysis
5 Findings and Conclusion
 Executive Summary

Impact of COVID-19 in Online Business……………..

 Chapter-1: Introduction

1.1 Introduction
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing pandemic of
coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus
2 (SARS-CoV-2). It was first identified in December 2019 in Wuhan, China. The World Health
Organization declared the outbreak a Public Health Emergency of International Concern in
January 2020 and a pandemic in March 2020. As of 12 December 2020, more than 71.2 million
cases have been confirmed, with more than 1.59 million deaths attributed to COVID-19.

Symptoms of COVID-19 are highly variable, ranging from none to severe illness. The virus
spreads mainly through the air when people are near each other. It leaves an infected person as
they breathe, cough, sneeze, or speak and enters another person via their mouth, nose, or eyes. It
might also spread via contaminated surfaces. People remain infectious for up to two weeks, and
can spread the virus even if they do not have symptoms

The pandemic of COVID-19, the social dimension and staying at home, has pushed consumers to
head to online shopping. This affects the demand and uncertain supply chain issues for the e-
commerce industry. COVID-19 can also affect older merchants like Walmart, who are
experiencing a drop in informal shopping, supply chain disruptions, an increase in the purchase
of basic toiletries, groceries, and other products. The term e-commerce referring to any sort of
business transaction, which involves the transfer of information through the internet E commerce
means using the transaction or commercial transaction, which involve exchange of value in
return of product or services The World Trade Organization indicated that it is the right time
for e-commerce to save the world economy and that it is to intervene with vigor and vitality and
prove e-commerce of its importance and effectiveness in the field of trade and online shopping
(WTO,2020). Shares of traditional trade have become volatile and in marked decline due to the
spread of COVID-19, and this will be a strong reason for the willingness of each of these traders
of these traditional markets to move towards trade via the Internet in order to preserve the rest of
its shares and maintain its commercial field and its success in the market.
The global e-commerce industry report indicated that the impact of COVID-19 on these
sectors has been pervasive due to uncertainty in the supply chain and consumer demand
worldwide. E-commerce supply chains are mainly stressful. In addition to closing factories in
China, the United States and other countries. The most affected part of the industry due to the
outbreak of COVID-19 is electronics products as China accounts for most of the cases of
COVID-19 and according to the International Federation, the country is the largest producer of
electronics and its parts globally. A large amount of China's imports of electronic parts that are
assembled into finished products, such as consumer electronic products and computers, are then
included. However, due to the factory shutdown, the electronics product supply chain is now
close to affecting the e-commerce electronics industry.
1.2 Objectives of the study

Online based Business has grown in the developed part of the world and has also in upward
growing trend in Bangladesh recently. The impact of this rising influencing our societies and
businesses arena. The new generation people are more interested to use e-commerce channel for
their needs. Govt. is also formulating new policies to keep cope with this new trend.
In this paper I aim to study the status of Online Business. The Impact of COVID-19 in online
business. And how Online based Business operates during this situation?

The main objectives are:-

 How online businesses conduct their business during COVID-19.
 To find out how online based Business growing during this situation.
 To find how online business tackling COVID-19
 To identify the problems faced by Online Business during COVID-19.

1.2 Methodology of the study

The research work is based on both quantitative and qualitative research. Quantitative data are
collected by a survey questionnaire from100 participants and Qualitative data has been collected
from the reports and publications. Secondary sources have been used to collect necessary data to
conduct the study. Secondary sources of data were both from published and unpublished
documents and literatures. Here, reviews of many literature, both national and international were
imperative to find out the trend and to understand the national as well as international context
and perspective. In case of primary data used to collect data regarding present situation or status
of COVID-19 and on its enabling factors, identifying strengths and weaknesses, etc. Secondary
data is necessary to find out the levels of awareness, perception, understanding of COVID-19.
1.4 Scope of the study
1. Current situation of online business in COVID-19.
2. Illustrate the impact of COVID-19 in online business.
3. Recommendation for further development in online business.
4. How an online business operates during COVID-19

1.5 Limitations of the study

This research paper further can be used as a useful secondary source of data but it also holds
some limitations due to confidentiality. Those limitations are-
1. Unwillingness of providing real thoughts on google form survey.

2. Web portals, articles, journals do not have sufficient data.

3. Lack of information regarding impact of COVID-19 on online business.

 Chapter-2: Theoretical Aspects

2.1 Literature Review

COVID-19 (Corona virus) has affected day to day life and is slowing down the global economy.
This pandemic has affected thousands of peoples, who are either sick or are being killed due to
the spread of this disease. The most common symptoms of this viral infection are fever, cold,
cough, bone pain and breathing problems, and ultimately leading to pneumonia. This, being a
new viral disease affecting humans for the first time, vaccines are not yet available. Thus, the
emphasis is on taking extensive precautions such as extensive hygiene protocol (e.g., regularly
washing of hands, avoidance of face to face interaction etc.), social distancing, and wearing of
masks, and so on. This virus is spreading exponentially region wise. Countries are banning
gatherings of people to the spread and break the exponential curve. Many countries are locking
their population and enforcing strict quarantine to control the spread of the havoc of this highly
communicable disease.

Is it Safe to Order Online During COVID-19?

As it becomes even more clear just how infectious COVID-19 is, some shoppers have raised
questions about the safety of receiving their online orders. Experts are finding that the virus
can live on surfaces from three hours to up to three days, depending on the material. (Note that
conclusive findings are difficult to come by in these early days of the virus, and as experts
continue their study of it, these numbers may change.)

That said, it’s unlikely that COVID-19 would survive on your purchased items from the time
they were packed to the time you received your package (especially with the slowdown in the
delivery system). And shipping conditions make a tough environment for COVID-19 as well, so
it’s not likely you’ll be exposed via the package itself, either. 

According to the CDC, “here is likely very low risk of spread from products or packaging that
are shipped over a period of days or weeks at ambient temperatures.” The CDC’s statement
refers to packages that have been in shipment for at least several days and did not come into
contact with any sources of contamination after packaging.

The World Health Organization addresses the concern as well, by saying that it is safe to receive
packages from locations with reported COVID-19 cases. From their website: “The likelihood of
an infected person contaminating commercial goods is low and the risk of catching the virus that
causes COVID-19 from a package that has been moved, travelled, and exposed to different
conditions and temperature is also low.” 
COVID-19: Men’s and Women’s Shopping Behaviors Vary 

While data shows that shopping behaviors are changing based on generational differences, we’re
also seeing variations based on gender. 

While survey data shows that women are more likely to be concerned about the effects of
COVID-19, it also shows that men are more likely to have it impact their shopping behaviors.
One-third of men, compared to 25% of women, reported the pandemic affecting how much they
spend on products. Additionally, 36% of men, compared to 28% of women, reported it affecting
how much they are spending on experiences (travel, restaurants, entertainment, etc.). 

Men were also found to be shopping online and avoiding in-store experiences more than women.
This includes taking advantage of options that limit in-store interactions like BOPIS (buy online,
pick-up in store), curbside pickup, and subscription services. 

Product Categories Shifting During COVID-19

As people are making buying choices based on new and ever-changing global and local
circumstances, the product categories that are being purchased are also changing. 

Market research company Nielsen has identified six key consumer behavior thresholds tied to the
COVID-19 pandemic and their results on markets. 

These are: 

 Proactive health-minded buying (purchasing preventative health and wellness products).

 Reactive health management (purchasing protective gear like masks and hand sanitizers).
 Pantry preparation (stockpiling groceries and household essentials).
 Quarantine prep (experiencing shortages in stores, making fewer store visits).
 Restricted living (making much fewer shopping trips, limited online fulfillment).
 A new normal (return to daily routines, permanently altered supply chain).

As we progress through these stages, the items people choose to buy and the product categories
that thrive continue to change. Here are some of the product categories most affected. 
Not all online sellers and product categories benefitted from the rise in Online
Business.

The effect of the COVID-19 crisis on e-commerce is not uniform across product categories or
sellers. In the Unites States, for example, a surge in demand was observed for items related to
personal protection (e.g. disposable gloves), home activities, groceries or ICT equipment, while
demand dropped for items related to travel, sports or formal clothing (e.g. suitcases, bridal
clothing, gym bags, etc.) (OECD, 2020).3 Shifts towards e-commerce have been observed in
several countries, in particular along the food supply chain, including farmers who started using
digital technologies to sell their produce directly to consumers or restaurants that switched to
providing food or grocery delivery services (OECD, 2020). In Germany, online sales grew
significantly for medicines and groceries, historically laggard sectors in terms of e-commerce,
while overall online sales contracted by around 18 percent in March 2020 in comparison to the
previous year (OECD, 2019). In Korea, where official statistics are available, the e-commerce
transaction value rose by 15.8% between July 2019 and July 2020. Significant increases were
observed for food services (66.3%), household goods (48%) and food and beverages (46.7%),
whereas online transactions involving culture and leisure services or travel arrangement and
transportation services declined significantly, by 67.8% and 51.6% respectively. In China, food
products were the single biggest winner in e-commerce, with an increase in accumulated sales
from January to April 2020 of 36%, relative to the previous year. In contrast, total online sales
over January to April 2020 remained almost constant compared to the same period in 2019
(+1.7%), after having grown significantly over 2018-19 (17.8%). Accumulated sales of clothing
products contracted by 16% compared to 2019, after significant growth from 2018-19 (23.7%).

While dynamics likely vary across countries, these data suggest that despite the shift to e-
commerce, a significant share of e-commerce sellers are facing the same economic repercussions
as traditional brick-and-mortar retailers, following reduced spending by individuals on items
considered non-essential. A sample of 200 000 third-party Amazon vendors in the Unites States
suggests that by April 2020 around 36% of merchants were inactive, an increase from around
28% in February.Particularly affected were sellers with less than 1 500 product listings (ASINs),
while sellers with over 3 000 listings saw positive upswings. This highlights how the COVID-19
crisis might have involved a shift in demand from small and specialised sellers to larger and
diversified sellers. The COVID-19 crisis also highlights the complementarity between online and
offline sales channels. Thus, while Amazon’s own sales in the first quarter of 2020 were 26%
higher than in the previous year, its share in total e-commerce in the United States fell from
42.1% in January 2020 to 38.5% in June 2020. In particular, Amazon lost market share to
Walmart (from 4.2% to 5%) and Target (from 2.2% to 3.5%). It can be inferred that these and
similar companies benefitted from large networks of bricks-and-mortar stores, facilitating fast
delivery and pick-up by the consumer (kerbside fulfilment).
Certain shifts brought by COVID-19 likely involve long-term changes in e-
commerce

While some demand shifts may be temporary, others are likely to have long-lasting effects.
Anecdotal evidence from the outbreak of SARS in 2002 and 2003 suggests that the epidemic has
been a core catalyst for the digital transformation of Chinese retail. For example, the move
of JD.com, now one of the largest online retailers in the world, from brick-and-mortar to online
sales in 2004 was a direct response to the SARS crisis. The same crises also provided the
consumer base for Alibaba’s business-to-consumer (B2C) branch Taobab, which was launched
in 2003.

In the current crisis, for example, elderly consumers who started to engage with e-commerce as a
means to enhance physical distancing might in part stick to their newly acquired routines.
The credit card usage of around 10 million credit card holders in Japan suggests that the increase
in the share of online purchases in credit card transactions was highest for users in their 60s
(from 15.4% in January to 21.9% in March 2020) and those in their 70s (from 10.9% to 16.4%).
A global consumer survey measuring the adoption of digital and low-touch activities during the
COVID-19 crisis by McKinsey further suggests that new users (i.e. users that had never engaged
in these activities before) drove over 50% of the increase in online grocery shopping (Brazil and
South Africa), kerbside pickup from restaurants (France, Germany, Italy, South Africa, United
Kingdom and United States) or other stores (Italy, South Africa, United Kingdom, United
States). In the United States, 21% of adults report having ordered groceries online or through an
app from a local store as a direct response to COVID-19. The percentage remains almost as high
(19%) among only the elderly (age 65+). In Brazil, around 54% of Internet users had bought
food or food products over the Internet in 2020, substantially up from only 22% in 2018.
Significant increases were also observed for cosmetics, toiletries and medicines. As convenience
has always been one of the key drivers of e-commerce participation, it is likely that many of the
new users will keep ordering at least some goods online in the future (OECD, 2019[4]). Others
might continue ordering online out of fear of a pandemic blowback or because merchants
manage to retain them through loyalty programmes or subscription models introduced.

On the supply side, many operators of brick-and-mortar stores, who often were forced to
completely shut down their physical business, are now considering e-commerce a potentially
crucial complimentary or alternative sales channel. Because the move to online sales requires an
investment, many of the firms that have enhanced their participation in e-commerce during the
COVID-19 crisis have an incentive to capitalise on their acquired infrastructure or skills over the
long run. This is particularly the case for larger merchants that have invested in their own sales
and distribution infrastructure.
 Chapter-3: COVID-19 & Online Business

Bangladesh E-Commerce Trends During COVID-19

Based on secondary data and discussions with a few players, MSC has observed some interesting
market trends in Bangladesh’s growing e-commerce and f-commerce sectors.

 E-commerce shoppers are mainly urban. About 80% of e-commerce buyers live in
metropolitan centers like Dhaka, Gazipur and Chattogram. The other two major cities for e-
commerce are Narayanganj and Sylhet. Among e-commerce users, 85% are between the ages
of 18-34. Clearly the e-commerce industry attracts young consumers living in urban areas,
while leaving a large market outside of major cities untapped. Logistics chains and the cost of
serving far-flung areas in a nascent industry are some of the reasons.

 Recognizing the needs of customers and the market potential, some players have changed
their business models. These changes have included adding essential services such as
medicines and groceries to their product offering, providing door delivery services, and
integrating with other suppliers. For instance, online players such as AjkerDeal.com and
PriyoShop.com, which had never sold any groceries or essentials, have joined this new
segment of essential goods. And Advanced Chemical Industries Limited’s Shwapno, a market
leader, has collaborated with the food delivery platform FoodPanda to launch a delivery
service online and through phone calls, in addition to its mobile app. This collaboration is
part of FoodPanda’s on-demand groceries and medicine delivery service PandaMart.

 Lockdowns and panic buying have led to a surge in online sales of medicines, safety
products and sanitizing kits. Pharmacy.com, one of the few e-commerce businesses to offer
pharmacy products via a digital storefront, has seen a substantial rise in sales. Many other
pharmacies are expanding into online-based sales during this pandemic period.

 Most of the f-commerce businesses in Bangladesh sell non-essential items such as

clothing, lifestyle products, baked goods, arts and crafts, and jewelry. As consumers became
more conscious of their expenses and prioritized spending on essential items in the early days
of the pandemic, non-essential businesses took a massive hit in terms of sales. But after the
first few weeks of lockdown (from March to April of this year), these f-commerce platforms
started regaining traction, and their recovery during the country’s Eid festivities helped to
minimize their losses.
The challenges of Online Business
As illustrated in the figure below, the e-commerce market in Bangladesh provides an enormous
opportunity for gig workers. But despite the millions of transactions taking place daily through e-
commerce and f-commerce platforms, there exist two critical challenges.

First, most e-commerce and f-commerce platforms accept both digital payment and cash on
delivery (COD). Not surprisingly, COD, estimated at around 80%, dominates the
paymentsystem. However, COD has its own challenges. They include customers’ last-minute
payment decline (in which customers change their minds about their purchase after the product is
delivered to their doorstep, leaving the vendor or platform to accept the cost of transport as a
loss), additional time taken to complete the transaction as customers gather cash to pay, and the
risk of carrying cash from customers’ homes to the business hub. COVID-19 adds another risk in
terms of cash acting as a potential vector of infection. These challenges impact delivery
efficiency, and ultimately the overall operation. If mobile and digital financial services providers
can collaborate with online commerce players to incentivize and nudge customers to pay
digitally, these businesses can grow faster. Based on the typical users’ profile in the e-commerce
sector, digital payment methods should be easier to adopt than cash payments, and able to
replace COD.

Second, there are regulatory gaps. With challenges in the existing National Digital Commerce
Policy of 2018, customers and entrepreneurs face challenges such as fraudulent activities, fake
products, uncompetitive pricing, customer harassment and quality issues in the existing industry.
These challenges make both the customer and the entrepreneur vulnerable. Authorities such as e-
CAB, the Metropolitan Chamber of Commerce and Industry, and the Ministry of Commerce
should formulate and enforce regulatory actions. These regulatory measures should include
product quality, customer satisfaction, monitoring transactions, pricing, competition and
taxation. The Bangladesh Competition Commission, under the Ministry of Commerce, can play a
significant role in monitoring the market for quality control and consumer rights protection.
The Way Forward
COVID-19 has been a catastrophe for most businesses and segments of the global economy,
especially in developing countries. Bangladesh is no exception to that. However, some sectors
took this crisis as a “nudge” to go digital. The unprecedented growth of e-commerce and f-
commerce in Bangladesh, despite the pandemic, illustrates the likelihood that various segments
of users will continue to seek opportunities to use online marketplaces. This growth creates an
excellent opportunity for the fintech industry to move even faster to enable cashless transactions,
provided the ecosystem players can work together and build a value proposition for all
stakeholders.

Moreover, financial institutions can also leverage the rise of e-commerce and f-commerce. Banks
and other financial service providers have the opportunity to build digital credit products in this
space, leveraging the data generated by both suppliers and customers. Bangladesh stands at the
cusp of more widespread innovation in online commerce, and it can learn from relevant
examples from many countries, in both developed and developing economies. This opportunity
could enable it to accelerate the sector’s growth, both during the pandemic and as the world
transitions to the new normal.

The pandemic has accelerated the shift towards a more digital world and
triggered changes in online shopping behaviours that are likely to have lasting
effects

The COVID-19 pandemic has forever changed online shopping behaviours, according to a survey of
about 3,700 consumers in nine emerging and developed economies.

The survey, entitled “COVID-19 and E-commerce”, examined how the pandemic has changed the
way consumers use e-commerce and digital solutions. It covered Brazil, China, Germany, Italy, the
Republic of Korea, Russian Federation, South Africa, Switzerland and Turkey.

Following the pandemic, more than half of the survey’s respondents now shop online more frequently
and rely on the internet more for news, health-related information and digital entertainment.

Consumers in emerging economies have made the greatest shift to online shopping, the survey shows.

“The COVID-19 pandemic has accelerated the shift towards a more digital world. The changes we
make now will have lasting effects as the world economy begins to recover,” said UNCTAD
Secretary-General Mukhisa Kituyi.
He said the acceleration of online shopping globally underscores the urgency of ensuring all countries
can seize the opportunities offered by digitalization as the world moves from pandemic response to
recovery.

Online purchases rise but consumer spending falls

The survey conducted by UNCTAD and Netcomm Suisse eCommerce Association, in collaboration
with the Brazilian Network Information Center (NIC.br) and Inveon, shows that online purchases
have increased by 6 to 10 percentage points across most product categories.
The biggest gainers are ICT/electronics, gardening/do-it-yourself, pharmaceuticals, education,
furniture/household products and cosmetics/personal care categories (Figure 1).

Figure 1: Percentage of online shoppers making at least one online purchase

every two months

Source: UNCTAD and NetComm Suisse eCommerce Association

 
However, average online monthly spending per shopper has dropped markedly (Figure 2). Consumers
in both emerging and developed economies have postponed larger expenditures, with those in
emerging economies focusing more on essential products.
Tourism and travel sectors have suffered the strongest decline, with average spending per online
shopper dropping by 75%.
 
Figure 2: Fall of average online spending per month since COVID-19, per
product category

Source: UNCTAD and NetComm Suisse eCommerce Association

“During the pandemic, online consumption habits in the world have changed significantly, with a
greater proportion of internet users buying essential products, such as food and beverages, cosmetics
and medicines,” said Alexandre Barbosa, manager of the Regional Center of Studies on the
Development of Information Society