In the Face of Lockdown, China’s E-Commerce Giants DeliverApril 1, 2020
China’s e-commerce giants played a major role in keeping supplies flowing and supporting people in quarantine during the two-month lockdown that started in January 2020. This involved rapid, on the fly innovation and experimentation along four fronts: technology, talent, processes, and offerings. They will be well placed to compete in the post-Covid digital marketplaces as a result.
On Jan. 23, 2020, the Chinese government imposed a full lockdown on the City of Wuhan. Eleven million citizens were placed in quarantine and all major highways were blocked. The lockdown would last for 60 days – a duration no one expected at the time of the announcement.
The lockdown posed serious challenges. In a city like Wuhan, the retail sector is like the body’s circulatory system: pumping groceries and everyday supplies through an extensive network into every neighborhood. The lockdown put an instant, hard barrier in the system’s major arteries, cutting off communities from their regular supplies. After a burst of initial panic-buying stripped the shelves bare in local stores, people hunkered down in their apartments, unwilling to risk contamination by going outside, effectively cutting themselves off from access to future supplies.
Let’s look at how two of China’s retail giants rose to the challenge of keeping Wuhan’s quarantined residents supplied during their two-month isolation. Their response is characterized with a high degree of innovation and flexibility in terms of technologies deployed, skills leveraged, processes applied, and the range of products and services provided.
Alibaba was the first to move, leveraging its digital logistics platform. In less than 48 hours, it had identified and contacted all qualified manufacturing partners, which reopened plants in over 58 cities during the Chinese New Year vacation in order to produce N95 masks and other medical supplies. Alibaba was also able to fast-track shipping of warehouse stock to Wuhan, setting a rolling release schedule for critical supplies, such as facial masks and hand sanitizers, at guaranteed prices through its B2C and C2C marketplaces, Taobao and Tmall. At the same time, it leveraged its integrated digital payment system, AliPay, to collect online donations from the entire country, collecting $1 million in the first eight hours alone.
In terms of physical delivery, Alibaba’s Cainiao Network and its competitor JD.com had already been experimenting with new automated technologies in a bid to gain an advantage on Western rivals Amazon and Alphabet. In 2018, for example, JD.com had tested drone delivery in remote areas near Xi’an and driverless smart…