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What Would Stage 4 Lockdown Look Like for E-Commerce?

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By Published On: April 2, 20200 Comments

Last week, New Zealand entered Stage 4 of lockdown to help prevent the spread of COVID-19. As a result, non-essential e-commerce stock will not be distributed to the country, as they're restricted to only essential goods. So, what would it mean for e-commerce if this were to happen in Australia?

Australia is in the midst of enabling Stage 3 restrictions in states and territories, which limits the reasons for going outside and how many people can legally be inside a household. In New Zealand, from March 25th, all New Zealand residents must stay inside, with the exception of essential services.

As of April 2nd, there have been no further restrictions for online retailers and delivery processes. According to the Power Retail Town Hall information session, the rate of at-home deliveries has jumped from 68 percent to 81 percent throughout March. In contrast, click and collect deliveries have dipped significantly since the announcement of strict isolation regulations.

“Click and collect dropped considerably and is sure to drop further, while post offices are also out of favour as collection centres due to stay at home warning,” said Grant Arnott, the Managing Director of Power Retail.

As Australia adjusts to the rapidly changing environment, retailers are working tooth and nail with logistics companies to ensure safe and reliable ways of delivering goods while adhering to the strict rules.

Recommended practises from CouriersPlease include contactless delivery, virtual signatures and increased PPE (personal protection equipment) for couriers. “To maintain social distancing, all courier companies should have by now trained their drivers to make contactless deliveries,” said Jessica Ip, a spokesperson for CouriersPlease. “Some parcel delivery providers will take a photo of the delivered package, others will sign on the customer’s behalf, and others will take the name of the recipient who accepts the parcel.”

Online retail has boomed in popularity over the last few weeks as brick-and-mortar stores close. While it’s almost impossible to predict the long-term outcomes of this event, it’s safe to say that online retail is experiencing significant growth.

With the current landscape, retailers are working to reduce the impact of these closures. As a result,  72 percent of online retailers are reducing operating costs, and 39 percent are planning to delay capital expenditure, which will stifle growth. As only 23 percent of retailers increase their advertising spend, 39 percent are fine-tuning product offers, and 38 percent are holding sales or promotions to entice value-conscious buyers.

What Would Stage 4 Look Like?

So, what might happen if Australia upped its strict restriction regulations and took the country to Stage 4? While it’s something that many logistics companies are not anticipating, it could spell disaster for the retail landscape.

For New Zealand, the Stage 4 restrictions will take place from March 15th, and predictions suggest it won’t be lifted until April 23rd. While this is the scheduled Tim frame, all concrete plans are up for debate. “We just don’t know at this stage when the lockdown will be lifted or what that might look like. The Government is talking about a four-week lockdown but the signs are there that if it doesn’t go well, it could well be longer,” said Greg Harford, a Retail New Zealand spokesperson. For online retailers, only essential products will be distributed across the country, leaving many retailers in the dark about their future.

“There’s a real issue about the lack of a level playing field that currently exists where overseas businesses are allowed to be servicing Kiwi customers, while Kiwi businesses are essentially banned from doing so. It’s not clear what the rationale for that is. It really is something we’d love to see government have a close look at,” said Harford.

“The view coming out of government to date has been that the transport network needs to be preserved for carrying essential items. But if we’ve got non-essential items coming across the border, then that’s something government needs to look at,” he said. “There’s two ways of doing this. One is to perhaps clamp down on those items coming in, or potentially creating a level playing field and freeing things up a little bit more domestically as well.”

Power Retail’s Town Hall information session indicated that if the same outcome were to enter Australia, it could have catastrophic consequences. “A New Zealand scenario could wipe out $25 billion a year minimum (annualised) of e-commerce revenue,” Arnott said.

Even if Australia were to introduce Stage 4 for a month (from April to May), there would still be a dire outcome for retailers, resulting in a $4 billion minimum hit.

Despite the immediate fears that this would ensue, Australia Post has not suggested that Stage 4 would happen in Australia at this stage. A comment from an Australia Post spokesperson told Power Retail that it was ‘working with various state governments and do not believe it will be the same arrangements as NZ’.

Power Retail is dedicated to providing critical and live e-commerce retailer benchmarking data and shopper insights for the online retail industry. Click here to find out more about Power Retail E-Commerce Intelligence or here to sign-up for the free weekly Pulse Newsletter for more essential online retail content.

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