Looking at a Post Covid-19 E-Commerce World Through the Lens of Taiwan

With the vaccine around the corner and global immunization right by the horizon, traditional brick-and-mortar stores are celebrating the return of normalcy. After a full year of customer draught; store owners are ready to restock their inventory and conduct business. As the outlook becomes brighter for brick and mortar stores, a looming question hovers over the e-commerce industry like a dark cloud.

“Will E-commerce’s growth stagnate/decline once the pandemic is over?”

In order to get a better understanding of the virus and its potential impact on e-commerce, we should shift our focus to a small island country called Taiwan. Thanks to popular news sites and media most of you are probably already familiar with this tiny island nation and its extraordinary Covid-19 prevention measures. With a population of over 23 million, Taiwan reported less than 1000 COVID-19 cases since the viruses’ inception in December 2019. Because of the Taiwanese government's extraordinary measures, life in Taiwan resumed normalcy by mid-2020.

Like many other countries out there, Taiwan’s e-commerce purchases skyrocketed during the peak of its COVID-19 scare. The pandemic has benefited several e-commerce companies with online shopping sites PChome Online and Momo.com registering revenue increase of 12.5% and 26.7%, respectively, in July 2020, compared to the same month last year.

But what happened to those increases once the panic died down mid-2020?

The answer: They continued to go up

Why?

1. Consistent growth trends in the e-commerce industry prior to Covid-19

Taiwan is home to a robust e-commerce market, with high Internet and smartphone penetration (93% and 98%), and tech-savvy millennials; E-commerce sales have been on a consistent growth trajectory for the last few years. The ongoing COVID-19 pandemic and the subsequent social distancing measures undertaken by the government have further accelerated e-commerce growth in the country.

2. Government intervention

Taiwan launched several initiatives to promote e-commerce adoption in the country. One such initiative is the launch of a subsidy program in April 2020 under which retailers are offered subsidies to cover costs including setup, marketing, logistics, and order processing. The government allocated TWD100m (US$3.3m), with about 1,000 retailers are expected to benefit from the program receiving TWD100,000 (US$ 3,339.58) each.

Is it necessary to have both for sustained E-commerce growth? Not necessarily, factor one alone is powerful enough to be the sole driving force of e-commerce growth in any country. Government intervention, subsidiaries or regulations, is the added bonus that further facilitates and safeguards the transaction between consumer and supplier.

So to answer our original question “Will E-commerce’s growth stagnates/decline once the pandemic is over?”

Short term: Minor drops in e-commerce growth is expected as people return to the streets and engage in retail shopping. However, the novelty of retail shopping will slowly fade and eventually, the growth of retail will start to stagnate and give way to the growth of e-commerce shopping. Despite the decline, retail growth still serves as an important asset for e-commerce growth as more and more companies embrace omnichannel retailing.

Long term: No, Covid-19 forced many businesses and industries to adopt a stronger online presence and this presence will only continue to grow as the world becomes more digitally advanced. The post-Covid-19 return to retail will only briefly slow down the growth of e-commerce. In Taiwan, where retail shopping remains unhindered, e-commerce is expected to grow at a compound annual growth rate (CAGR) of 9.0% from TWD1.1 trillion (US$35.4bn) in 2020 to TWD1.5 trillion (US$49.9bn) in 2024.