How Does the Russia - Ukraine War Affect eCommerce Businesses?

How Does the Russia – Ukraine War Affect eCommerce Businesses?

Posted March 25, 2022

In eCommerce, Fulfillment, Inventory Management, Shipping

The world is in a kind of a limbo ever since the Russian-Ukrainian war began. Even as the world is still recovering from the Covid-19 pandemic, the war clouds are beginning to impact the world economy. eCommerce businesses are not immune to the affects of war. Now how does war affect economy and business?

Here are 5 Impacts of War on eCommerce.

1. Disruption in supply chain

The global supply chain could be at the receiving end during a war. The Russian-Ukrainian war has resulted in numerous economic sanctions, which threatens to adversely affect the global supply chain. A majority of businesses are likely to suffer from the global sanctions with Russia being a leading exporter of many commodities world over. These businesses that are dependent on Russian import might have to look for business elsewhere, resulting in long lead times.

As a result, it’s high time, eCommerce companies started evaluating their supply chain risk. The need of the hour is to make inventory decisions to deal with the emergency imposed by the war.

2. Borrowing Costs

The Russian-Ukrainian war could spur inflation worldwide. War cries have already had an adverse effect on the U.S. Federal Reserve, which has increased interest rates. There may still not be an end to the hike as long as the ghost of war continues to spread fear and apprehension. It should come as no surprise if the borrowing cost rises for companies and consumers.

There is a dire need for eCommerce stores to review their lines of credit. This should give them an idea about the impact of rate hikes.

3. Shipping Surcharges

The war has had a significant impact on gasoline prices. The sudden spike in gasoline prices has an effect on transportation and related cost of transporting small packages. Carriers are likely to impose fuel surcharges or increase rates. The looming fuel crisis is already warning of a price hike.

4. Product Stockpiling

The memories of shortages induced by the panic are still green. Shoppers have not forgotten the crisis yet. Unfortunately, the Russian-Ukrainian war might fuel the panic further.

Now is the time for eCommerce businesses to consider the impact of war on their products. It’s also time to consider if consumers are likely to hoard their products due to the impending war crisis. If so, they should determine the impact of stockpiling on their business.

5.Consumer Demand

eCommerce businesses need to be prepared about any decrease in consumer demand of non-essential items when consumers tart to focus on saving more in such financial crunch situations when the fear of a global crisis is looming large.

Unfortunately, the world is yet not prepared to tackle with the repercussions of another global crisis since the economic crisis induced by the pandemic is still not over. Even as the global crude fuel prices register major spikes, eCommerce businesses must keep a close eye on the developments in Ukraine. The prevailing crisis might have some serious adverse effects on global businesses, which must be prepared to deal with any impending challenges hereon.

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