COVID-19 and E-Commerce Operations: Evidence from Alibaba

Brian Rongqing Han (), Tianshu Sun (), Leon Yang Chu () and Lixia Wu ()
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Brian Rongqing Han: Gies College of Business, University of Illinois at Urbana-Champaign, Champaign, Illinois 61820
Tianshu Sun: Marshall School of Business, University of Southern California, Los Angeles, California 90089
Leon Yang Chu: Cheung Kong Graduate School of Business, Beijing 100006, China
Lixia Wu: Alibaba Group Inc., Hangzhou 311121, China

Manufacturing & Service Operations Management, 2022, vol. 24, issue 3, 1388-1405

Abstract: Problem definition : This paper investigates the impact of COVID-19 on e-commerce sales and the underlying operational driver. Academic/practical relevance : As COVID-19 continues to disrupt offline retail, anecdotal evidence suggests a rapid growth of e-commerce. However, the pandemic may also significantly decrease offline logistics capacity, which in turn decreases e-commerce sales. Then, how does e-commerce respond to COVID-19, and what are the corresponding opportunities and challenges? Methodology : We leverage e-commerce sales data from Alibaba and construct a city-day panel across three years, representing sales for all buyers and sellers on the platform across 339 cities in mainland China. We develop three identification strategies to estimate the overall impact of COVID-19 (based on a year-on-year comparison), the impact of COVID-19 intensity (based on the different number of cases across cities), and the impact of corresponding containment measures (leveraging policy changes of checkpoint, partial shutdown, and complete shutdown measures across cities). Results : We provide two key findings. First, across different identification strategies, we observe a common drop and recovery pattern, which illustrates the digital resilience of e-commerce during the pandemic. For example, we estimate an overall decrease of 22% in e-commerce sales during the period of the Wuhan shutdown (January 23–April 7, 2020). However, it recovers in most cities within five weeks. Second, we identify a key operational driver— logistics capacity —that significantly explains the decline and recovery of e-commerce sales during and after the outbreak. Managerial implications : We provide important evidence on how e-commerce responds to and recovers from COVID-19, contrary to the common perception. The evidence in the recovery phase can also inform platforms and policymakers to design digital strategies and invest in logistics infrastructure.

Keywords: e-commerce; COVID-19; containment measures; digital resilience; logistics (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormsom:v:24:y:2022:i:3:p:1388-1405

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