COVID-19 shines light on e-commerce– WTO Report

The World Trade Organisation (WTO) in recent report noted that e-commerce is flourishing in the wake of the COVID-19 and the accompanying measures to forestall its spread which include lockdowns.

The report noted that one of the most significant segments of online purchasing by value, tourism and travel has plummeted as a result of the COVID-19 pandemic for obvious reasons.

In March, for example, 30 per cent of US consumers reported delaying vacations and 25 per cent delaying flights.

In this environment, e-commerce by tourism-related purchasing platforms has likewise fallen. For example,the holiday accommodation rental platform AirBNB has experienced a dramatic reduction in customer traffic.

However, spurred by social distancing and stay-at-home requirements, e-commerce in services that can be delivered electronically has flourished, with demand rising sharply. While it may be a short-term phenomenon that might not last beyond the current crisis, as with online shopping, longer-term shifts in customer habits could potentially make businesses and consumers more accustomed to consuming online services in both work and personal settings.

One example is media services. Facebook reports that its online messaging, voice and video call services are up by more than 50 per cent, with Italy showing a 70 per cent surge overall, and a 1,000 per cent increase in group calls. Spain’s Telefonica has seen an increase in IP (i.e. internet protocol) and mobile data traffic of 40 per cent and 50 per cent, respectively. Thailand reported an 828 per cent rise in data traffic from Zoom Video Communications and a 215 per cent spike on Skype video conferencing.

Both companies and governments are moving to address capacity constraints and facilitate consumer access. Some publishers have, for example, made COVID-19-related content freely available online. In addition, social distancing measures have dramatically boosted the demand for audiovisual content; and, as consumers cannot attend cultural events physically, content is being brought online. For example, a number of opera and concert houses have chosen to offer free online streaming of their repertoire.

The considerable increase in demand for these digital services, as illustrated above, has led to an equivalent increase in data volumes which, in some cases, has strained the telecommunications infrastructure. In order to ensure continuity of service, Netflix and YouTube have reduced video quality to alleviate network congestion. In India, this move by Netflix has reduced its network traffic by 25 per cent.

In the financial sector, some mobile phone companies have moved independently to reduce their fees on mobile payments, and these moves have been complemented by governments in an effect to discourage the use of cash.

Many central banks have lifted some of the restrictions and requirements applied to e-payment systems, particularly in Africa, where mobile payments are common. Ghana, for example, agreed to alter policies for mobile money transactions for a period of three months; smaller withdrawals will not carry a charge, and transaction limits and balance levels have been increased. Rwanda has removed fees on all mobile money transactions, with increased daily and monthly limits depending on the type of user.

Following discussions with Uganda’s central bank, mobile providers of payment services announced temporary measures that included removing fees for lower-value transactions, and certain providers will make mobile wallet-to-bank transactions cost-free. Kenya introduced similar temporary measures, such as increasing daily transaction limits and suspending fees for transferring funds between mobile services and banks. Egypt has raised contactless payment limits and reduced costs of mobile cash transfers.

Once the crisis necessitated the closure of businesses and schools, demand for online collaboration tools and learning platforms grew dramatically. Platforms such as Amazon have chipped in, offering the public sector free access to its remote education, remote working and research tools, and Cisco has made its Webex video conferencing tool free of charge.15 Looking forward, the current crisis is likely to have a significant and lasting impact on the demand for e-working facilities and online education traded across borders.