In an effort to control global coronavirus cases this year, many countries went into lockdown forcing numerous brick & mortar shops to close. These restrictions during the Coronavirus pandemic may not be the first and won't be the last. For example, Germany and other European countries are expected to enter new restrictions over December and January.
Along with these past and future global restrictions, the Coronavirus has forced many consumers to shop online in order to comply with social distancing regulations.
As a result of these stay at home orders, online shopping has soared, pushing more than 60% of consumers to move their shopping habits online, and with some e-commerce giants reporting record sales.
Amazon’s (AMZN) share price hit a high of $3,546 on September 2nd 2020 and closed yesterday’s trading 1.3% higher than its opening price. Alibaba (BABA) and JD.com (JD) both hit a record this November with approximately US$115 billion in sales. These Chinese e-commerce giants saw an additional boost in online shopping during Singles Day.
With online shopping habits now being the norm, e-commerce giants, which rely on online advertisements, could potentially benefit from more network traffic. Some e-commerce companies predict this consumer shift towards increased online shopping is here to stay.
E-commerce Faces New Regulations
Even though there was a huge increase in sales during the COVID-19 period, there were also stock declines of both Alibaba and JD.com, which came following the release of new antitrust rules by Chinese regulators.
Since announcing these anti-trust regulations on December 9th, Alibaba, which is dually listed on the NASDAQ (NDAQ) and Hong Kong’s (HKEX) saw their New York listing fall 3.6%, while Tencent (0700.HK) dropped 4.0%.
Whether online shopping will remain the social norm after the global pandemic or not is yet to be seen. With US and Chinese governments on a mission to break up monopolies, it remains unclear how markets will react.