If you haven’t been paying attention to the coronavirus outbreak in China, you might not have a choice soon. With the death of Li Wenliang, the doctor who first raised concerns about the novel coronavirus outbreak, this aggressive infectious disease has reached a new level of concern on the international stage. Over 28,000 people have fallen sick and over 560 people have died, and the effects on travel in China and beyond are far-reaching.
The coronavirus (known as 2019-nCOV) is affecting world travel massively. In the United States, hundreds of people are quarantined. Hong Kong is enforcing quarantines on all mainland China travelers. Almost every major airline has suspended flights to and from China for a significant amount of time, many till March, some till April.
But it’s not just travel that’s affected. E-commerce and just about every business involved in manufacturing or selling anything that even touches China are going to get hit hard.
Sourcing and the Coronavirus
We’ve already talked a little bit about the problems that the novel coronavirus is going to cause with China’s supply chain. The timing and location are particularly bad for industry because Wuhan is a transportation hub and the Chinese factory workers have all traveled home for the Lunar New Year—and many companies are not bringing their workers back immediately after the New Year break.
Those problems aren’t just limited to Chinese factories, though. With the travel freeze anyone who’s doing significant business in China is unable to travel overseas and visit their factories or contacts.
Some companies are also postponing product launches, pushing back their plans for future production and generally battening down the hatches. Nike is only one of the companies that’s recently scaled back earning targets and pushed back launch dates in the wake of the coronavirus problem.
The problem isn’t just with workers staying in their home cities, either. Many of the Chinese workers who’ve managed to make their way back to their home cities are now running into issues with not being able to return to their actual home. They’re being shut out of their apartment buildings or even cities.
Product sourcing from China is slowing down whether or not your full product is being made there. That’s because many of the source parts for other products are made in China, too. Companies from Shanghai to London are running into issues with product sourcing. Some companies are expecting weeks or even months of delays.
E-Commerce Problems
Dropshippers and e-commerce businesses can expect a few major problems due to the coronavirus. First, as we’ve already covered, sourcing of products is going to be much harder than usual with the disease ravaging China.
You’ll have problems traveling in and talking to your contacts, and even if you’re reaching out to them remotely you may have problems getting in contact. Some may still be in their home province and might not have access to their work emails or the ability to answer questions.
Even if you try to change your sourcing outside of China, there isn’t much possibility of it helping. Other manufacturers and sources especially in southeast Asia are slammed, and many of them don’t have the bandwidth to push through any more jobs or provide more product.
You’re also going to run into problems with drop shipping, so you might want to let customers know that they’re likely to run into delays. If you can’t get hold of your contacts in China or know already that you’ll have problems with sourcing, you need to get on top of it now — not later. Talk to your customers and get out ahead of it, and make clear it’s due to factors not within your control and hitting many businesses.
Avenues of transport are drying up as borders close and transport is shut off. It’s a problem for just about everyone who does e-commerce and drop shipping. Reach out to your contacts, find out what’s happening and take care of it as soon as possible.
Don’t err on the safe side and think you’re fine; this is going to hit the entire industry.
Dealing With the Aftereffects
Coronavirus is here to stay, and it’ll be some weeks before the virus is under control. The ramifications may be longer-lasting than that. Supply chain disruption will exacerbate the trend of suppliers looking outside of China, and though this has been a slow movement you’ll likely see it continue. China’s still the big dog, but many e-commerce companies are coming to the realization that they might need to establish alternate sources and backups for their supply chain.
China will be reeling from the impact for a while, and even in the United States, Europe, the Middle East and other areas this is going to hit GDP significantly. We don’t know yet what all the long-term ramifications are, but what we do know is that it’s going to be bad in the short term.
Batten down the hatches. Talk to your customers and explain any delays. Chase down your overseas contacts. And start making plans for supply chain backups. This is going to be a rough ride for the next few months, even though it should eventually even out.
