How e-commerce safeguards Ramadan grocery spending amid COVID-19 pandemic
Traditionally, Ramadan is a season of feasting and festivities that drive grocery spending. However, Ramadan this year is transpiring under stark circumstances due to COVID-19.
The pandemic has forced the public to practice physical distancing and home quarantines, to avoid catching the virus. The government’s decree on large-scale social restriction (PSBB) has further limited the mobility of the public.
The combination of government measures and the public’s avoidance of public spaces has had a grim impact on grocery retailers, notably fast-moving consumer goods (FMCGs), small and medium enterprises (SMEs) and fresh food producers. The three have had to readjust their expectations of elevated sales this Ramadan because consumers are no longer thronging offline stores to purchase seasonal needs, prompting these stores to cut operational hours, thus further diminishing the chances for grocery retailers to record sales.
However, decreasing offline store purchases have not equated to declining demand for groceries. Consumers still need groceries, even more so during Ramadan as they yearn to carry on revered traditions such as breaking-the-fast with delicious meals.
Consumers had already begun visiting e-commerce platforms to purchase groceries in the early stages of the COVID-19 outbreak and with the pandemic extending to Ramadan, consumers are set to shop online even more intensively.
At the outset of the COVID-19 outbreak, consumers mainly shopped for health and wellness products, like hand sanitizer and masks. With Ramadan here, consumers now frequently fill their online carts with fresh foodstuff such as meat, fruits and vegetables for their meals.
To cater to consumers better, e-commerce platforms have worked closely with brands to secure stocks -- especially essential foodstuff and popular Ramadan staples like syrup, cookies and crackers, sugar and dates -- to ensure that consumers can consistently find their needs. E-commerce platforms have also leveraged their comprehensive ecosystems, of which digital financial services are part of, to facilitate purchases.
E-commerce platforms provide a wide range of payment solutions, from internet banking to online credit facilities, to accommodate transactions. Recently, e-commerce platforms introduced the “pay later” feature, whereby consumers can purchase products now and pay for them toward the month’s end, to help those whose incomes have suffered due to COVID-19.
The expansion of consumers’ online shopping carts is a positive sign for grocery retailers in the market’s shift toward a stay-at-home economy. Witnessing how e-commerce platforms retain their access to the market despite COVID-19 has convinced grocery retailers to escalate their Ramadan sales and marketing efforts in the online space. Bottled water and children’s milk brands, for example, have started offering special sales promotions, from free delivery to discounts, in partnership with e-commerce platforms. Most importantly, fresh food producers, encompassing fruit and vegetable farmers, as well as meat and poultry processors, have joined the e-commerce bandwagon to sell their produce.
E-commerce platforms help retailers keep the lights on beyond providing them a channel through which they can always access the market. E-commerce platforms address another key concern among grocery retailers and that is logistics, which have become an even greater challenge under large-scale social restrictions (PSBB). E-commerce platforms now provide end-to-end fulfillment processing, from inventory warehousing to last-mile delivery, to ensure purchased products reach the hands of consumers. This is a boon for grocery retailers, especially for fresh food producers who must guard their narrow margins during challenging times for business.
The utilization of e-commerce by fresh food producers have caught the eyes of the government. Realizing the potency of e-commerce in connecting farmers with consumers, the government has begun engaging with e-commerce platforms to collaborate in programs aimed at helping the poor who have been greatly affected by COVID-19 this Ramadan.
The Agriculture Ministry is among government bodies that has formed partnerships with e-commerce platforms for the distribution of subsidized rice. The ministry will leverage e-commerce platforms’ wide logistics network, which stretches across Indonesia, to distribute subsidized rice. Moreover, with their capability to store and process a person’s data, e-commerce platforms can play a role in assuring that aid is received by those who deserve it.
Looking at the market shift toward online groceries and weighing on the heightened role of e-commerce in grocery retail further exposes the key role e-commerce platforms play in this COVID-19-impacted Ramadan. It is e-commerce platforms that will buttress household consumption during Ramadan, a critical season given its sizable contributor to Indonesia's annual economy, despite challenges imposed by COVID-19. After all, household spending contributed over 56 percent to gross domestic product (GDP) in 2019.
The major role that e-commerce plays in grocery retail is set to continue beyond Ramadan and COVID-19. COVID-19 has triggered permanent behavioral changes on the level of consumers, retailers and the government who have converted to, and now trust, e-commerce for grocery retail and distribution.
These behavioral changes are accelerating digital transformation, whereby the public turns to online services to sustain their lives. And with the acceleration of digital transformation, e-commerce will move closer to becoming the primary retail channel for the country.
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