The health of the world's citizens is threatened and so are their businesses as on Wednesday, the World Health Organization (WHO) declared the Coronavirus that causes the COVID-19 a global pandemic. This move will surely only boost the number of companies who are asking their workers to work from home as there is already an increased use of working from home apps. Social media giant Twitter Inc (NYSE: TWTR), for instance, made it mandatory for their workers to work from home during these unprecedented times.
But the impact on the global supply chain is still hard to measure as it will be profound considering the pandemic is expected yet to reach its peak in April. There are many big tech and top-tier luxury names which produce their goods in China and many are often not even willing to disclose it.
Ralph Lauren (NYSE: RL) alone makes a quarter of its goods in China, not to mention Apple Inc (NASDAQ: AAPL) who is literally paralysed without China as it depends on it for parts. But just because cities are on lockdown with restricted traveling does not mean users will stop consuming as they are home. They still need food and entertainment.And this is how some lucky ones are finding their way around this Black Swan event.
Alibaba Group Holding Ltd. (NYSE: BABA) stock had a great run last year as it rose 55% , making it deserving of the title of being among the best technology stocks out of China. The stock even managed to continue the momentum into 2020 as it rose about 9.0% just 13 days into the new year. But the coronavirus outbreak disrupted normal business operations around the world and rattled investors making them go to safe-haven investments with the stock facing tremendous pressure.
Due to the nature of its business, Alibaba has been caught in this mess along with the fact that it is in the epicenter of it all. Consequently, the company warned revenue from its core e-commerce business will fall in the current quarter. Obviously, packages aren't getting delivered on time and labor shortage is impacting the production of goods. But Alibaba isn't standing by and watching the coronavirus derail its business. Iis focusing its efforts to boost its retail sales during these unprecedented times by providing $144 million in subsidies to encourage people to shop on its online platforms.
Although Alibaba has diversified operations, the company derives most of its revenue from the commerce business that contributed 88% to its total revenue in the latest quarter due to a strong year-on-year growth of 38 percent. Despite its stock falling since then, rest assured Alibaba will find new revenue sources by observing the situation and all the rising trends from it: yoga mats and other accessories for ‘staying at home' are benefiting from increased sales on its platform. Even its financial affiliate Ant Financial, Alibaba, has continued to build its business even though the coronavirus outbreak disrupted economic activities around the world as purchased a stake in Swedish fintech startup Klarna. It even tried to acquire MoneyGram (NYSE: MGI)
IKEA And Alibaba- Believe It Or Not!
Ikea is selling through a third party, for the very first time in its 77-year-old history. It has launched a virtual store on Alibaba's platform Tmall in an effort to lure Chinese customers. IKEA has in recent years invested heavily in expanding online and in new sales channels so it becomes even more accessible to consumers. And we're about to see how this brave new venturel roll out as it aims to roll the Tmall store out to more parts of China.
Cloud Should Do Ok Too – Success Factors Of Salesforce
Cloud software giant salesforce.com, inc. (NYSE: CRM) has managed to beat earnings estimates for the 12th consecutive quarter on Feb. 25 as e-commerce traffic surged in Q4. According to Salesforce, the increased prevalence of mobile wallet solutions [such as Apple Pay and PayPal (NASDAQ: PYPL)] is contributing to changing shopper behaviour. But both of these providers also issued revenue warnings due to the COVID-19 impact so hopefully this will not destroy entirely the extraordinary increase in e-commerce during Q4 2019 that led to quite a few beneficial outcomes for digital retailers.
According to analysis from Salesforce, on a year-over-year basis, traffic to e-commerce sites grew 13% in Q4 2019 while digital commerce rose 14% with 1 percent increase in shopper spending. One of the factors that drove it is e-commerce growth.
Digital traffic derived from social channels also reached new heights as it broke double-digit barrier for the first time with mobile traffic from social channels topping 10% on peak days during the holiday season.Unfortunately, we can no longer count on the holiday season but still, social media has the power as thirty-four percent of Gen Z shoppers report they seek out shopping inspiration from it.
But this does not mean no impact is expected as Salesforce is San Francisco's largest private employer, with more than 7,000 employees in the city and has also asked employees in California to work remotely in March due to coronavirus so there will still be some impact. However, this is surely the company who can protect its system well from any hacking attempts.
The Outbreak- Every Problem Is An Opportunity In Disguise
Coronavirus is certainly a Black Swan event for the global economy. But this does not mean that there isn't a company whose top and bottom line will stay healthy. Although transport, tourism and the event industry surely aren't one of those as their hit is already severe, e-commerce has that virtual aspect to amortise the blow of supply chain disruptions by the lockdown. But although China has put the economy to sleep, there are companies who are doing their best to shake it awake, just with limited success for now.
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