COVID-19 and E-commerce Operations: Evidence From Alibaba

Manufacturing & Service Operations Management 2022

Posted: 20 Jul 2020 Last revised: 12 Sep 2022

See all articles by Brian Rongqing Han

Brian Rongqing Han

Gies College of Business, UIUC

Tianshu Sun

Cheung Kong Graduate School of Business; University of Southern California - Marshall School of Business

Leon Yang Chu

Cheung Kong Graduate School of Business

Lixia Wu

Alibaba Group

Date Written: July 18, 2020

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), respectively.

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 Wuhan shutdown (January 23 to April 7, 2020). However, it is recovered for 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

Suggested Citation

Han, Brian Rongqing and Sun, Tianshu and Chu, Leon Yang and Wu, Lixia, COVID-19 and E-commerce Operations: Evidence From Alibaba (July 18, 2020). Manufacturing & Service Operations Management 2022, Available at SSRN: https://ssrn.com/abstract=3654859

Brian Rongqing Han (Contact Author)

Gies College of Business, UIUC ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Tianshu Sun

Cheung Kong Graduate School of Business ( email )

1017, Oriental Plaza 1
No.1 Dong Chang'an Street
Beijing
China

University of Southern California - Marshall School of Business ( email )

3670 Trousdale Parkway
Bridge Hall 310B
Los Angeles, CA 90089
United States

Leon Yang Chu

Cheung Kong Graduate School of Business ( email )

Building No.5, 1&2/F
Hongqiao Wanke Center
Shanghai, 201107
China

Lixia Wu

Alibaba Group ( email )

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