What’s the impact of the war in Ukraine on global ecommerce? [Ecommerce checklist]
How does the war in Ukraine impact global ecommerce?
The war in Ukraine is one of the biggest crises in modern history. It affects practically all areas of our lives. This post focuses on its business impact in ecommerce.
Can ecommerce sellers stay relatively immune to the economic shocks of the war in Ukraine?
In this article you’ll find:
- A quick recap of the impact of the invasion in Ukraine on global supply chains, the production of goods, components and raw materials.
- The general impact affecting the world economy and the ecommerce industry.
- A checklist with useful questions to help you minimize the negative impact on your ecommerce business in these unstable times.
The impact of the war in Ukraine on business & ecommerce
It’s only the beginning. Nobody knows what to expect or what the final outcome will be.
Still, the effects of the crisis in Ukraine on the world economy are already visible. Huge losses are certain and many business areas will be affected, including global ecommerce. The Russian invasion can have a domino effect on global supply chains.
The (potential) impact of the war in Ukraine on ecommerce and business
- The impact on the world economy and the flow of goods and services due to economic sanctions and asset freezing on Russia as well as shutting airspace to Russian planes.
- Closing of factories by global companies (affecting the production and shipment of goods and components).
- The impact on gas prices and on other products, such as food, materials for chip and automotive production (Bloomberg).
- The impact on the production of specific products and raw materials, for example nickel for lithium-ion batteries (Russia is the third largest supplier), copper, platinum, palladium.
- Chip manufacturers can expect supply chain disruptions due to stockpiling and diversified procurement of components.
- The impact on the agricultural industry (both Ukraine and Russia play a key role in the agricultural industry on a global scale).
- The risk of long-term cyberattacks (for example on banks) and the impact on cybersecurity and IT infrastructure.
- Concerns about using software that originates from or has been produced in Russia.
- The impact on some digital products, for example games and apps originating from Russia.
- The impact of a halt on Russian oil and natural gas exports to Western Europe.
- Vendors with a prominent Russian developer headcount may have to move their labs to different territories.
- The risk of long-term unexpected currency fluctuations.
According to Fitch Solutions Country Risk & Industry Research:
Disruptions to the flow of (…) materials would have a costly effect around the world, particularly in Europe and North America.
The war in Ukraine: ecommerce checklist
The current situation is difficult and unprecedented, but you don’t have to sit idle. Take a proactive approach to protect your online sales business against any potential disruption, e.g. by ensuring you have enough stock or by relocating inventory if need be.
Ask yourself these questions to minimize the impact of the war in Ukraine on your ecommerce business. The list is not exhaustive, but it’s a good starting point.
- What’s the (potential) impact of the war on your business?
- What are the risks and how can you minimize them?
- What can you do now and what in the future? Are you prepared for several scenarios?
- What can you do if worst-case scenarios become reality? What are the consequences? What are the costs? How will you cover them?
- What/who will be impacted: your suppliers, customers, staff or any other aspect of your business?
- Are you dependent on a limited number of suppliers? Are they from Russia?
- Can you find alternative suppliers? How long will it take? What’s the price difference and what does it mean for your budget (planning)?
- Do you have backup sources of inventory? Does it make sense for you to order more in advance?
- What and how will you communicate with your customers?
- Are you expecting the buying behavior of your customers to change?
- Can you predict demand fluctuations in your product categories?
- Have you updated your sales, inventory and cash flow forecast?
- How can the changing circumstances affect your employees? What can you do to address their situation?
- Are most of your sales coming from one or two products? If so, can you expand your options?
- Are most of your sales coming from one or two countries? If so, can you expand your options?
The bottom line: stay proactive.
There are things that you can do to minimize the impact of the crisis in Ukraine on your online business.
A few examples of what you can do:
- Secure your inventory.
- Keep an eye on your supply chain and prepare for different scenarios, e.g. longer lead times.
- Consider diversifying your supply base.
- Secure your home and office network.
- Address customer concerns who are likely to expect an appropriate attitude from companies.
- Monitor the situation closely.
The war in Ukraine & ecommerce: conclusion
We don’t know the final outcome of the war in Ukraine. Above all, war is bringing a catastrophic loss of life, human suffering and widespread destruction.
However, unity and a proactive attitude will help us get through these difficult times and hopefully, come out of them wiser and stronger. This relates to both our personal and business circumstances on both individual and collective levels.
Webinterpret will do its best to support ecommerce sellers in the case of any unexpected events.
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