Will The Coronavirus Kill Your Business?

Hey, how's it going?

It's Ollie here.

Welcome to the Ecommerce Freedom Podcast. Before we dive in with today's episode, I've got two cool resources for you. The first one is my new E Commerce Q and A group on Facebook. So in this group, the point is, you ask questions in the Facebook group and I answer them with daily videos, okay? So you can get your questions answered.

Really, really, really quick.

It's a great resource. If you go to ecommercefreedom.com and look at the top of the page, you'll see a button for the Q and A group. Click on that, it will take you.

To the Facebook group.

Second resource I got for you is an Amazon accelerator call.

So what I'd love to do with you is talk about your goals, talk.

About where you are now and talk about the stuff that could prevent you from hitting your goals right together on a strategy session, we will come up with a plan for you to replace your income with an Amazon business.

If you'd like to book a call.

Where we can do this, go to ecommercefreedom.com, look at the top of the page and click Amazon Accelerator Call. You'll be taken to a very short application page. You can fill that in on the next page. You should be able to book your call. Alright, hope you really enjoy the episode.

Hey, how's it going? It's Ollie here. So how will the coronavirus affect your business? This is a question I've had multiple times over the past couple weeks and I thought I'd make a video just to get clear on the facts and give you some pointers as to what's happening right now in the world of the virus, how it's affecting industry, what I think is going to happen over the next few months and when I think it will be contained. And also what actions you can do if you have a business that involves China and how you can prevent your business being too disrupted because of this outbreak. So first of all, if we have a look at the map of China, you can see that the coronavirus is mainly affecting the eastern side of China. Unfortunately, most of the areas where there are the densest amount of factories in China, where most of the stuff is produced, all fall on the eastern side of China as well. So as you can see from this map here, I found this on the economist.com you can see that Beijing, Shanghai, Shenzhen, Hong Kong. All those areas are where probably your suppliers are or where they will be. And that's where most of the infected people are. So what this means is, yes, the virus is slowing down production and shipping in China dramatically. So just a couple points on exactly what's happening right now. So, as you know, a lot of factories go on holiday for Chinese New Year. Chinese New Year was quite early this year. It was like the end of January. And the government have said to a lot of these factories to stay closed until we see progress with containing the outbreak. So what this means is a lot of the factories are going to be closed until March. In fact, there's been a lot less shipments leaving China in the past couple of weeks. One article from the New York Times said something like 350 million per week effect on the economy because of the coronavirus spreading. And some people at the docs said that they were dealing with a quarter of the volume that they usually deal with this time of year. A lot of people in China aren't going to work, right, they're working from home or they're just not working at the moment. Everyone's wearing masks and walking around, you know, panicked. They're going to get this virus and. And it is causing a big issue. One of the biggest impacts has been to flights going in and out of China from affected areas. Now, what happens a lot is when you get air freight, then your products actually go on the cabin of passenger planes, right? So your products go in those normal planes. So a lot of airlines have stopped these flights to China and therefore these trade routes have been completely disrupted. So this could be something that's going to affect your business. But I'll be talking a little bit later about what you can do instead in the meantime. Now, there has been some talk of ships being stopped at customs and being quarantined, so the goods aren't able to go into the country. So US and UK been some reports of this happening. From what I can see, this hasn't been too much of a problem just yet. And the reason why is because the coronavirus can't be transmitted outside of humans. So what has happened a few times is the staff on board cargo ships have been tested before they can enter the country. But remember, you can't get the coronavirus onto an object like a phone or something, have it last for four weeks on a ship and then be transferred to someone because it dies within 24 hours of not being on a human or on an animal. So as of now, it doesn't look like customs are stopping products coming in and out of the country. Now, if we look back at the map, as you can see, most of the manufacturing happens on the east coast of China. But interestingly, because Hong Kong is separated from mainland China, it's is part of China, but it's also its own separate country. What that means is it's got its own borders, right? So Hong Kong is say down here, China's up here, there's borders in between. And what's happened is they've closed off a lot of these borders. So because of that, the virus hasn't spread as much to Hong Kong. So a lot of the factories in Hong Kong are still fully operational, and a lot of the shipments are still leaving as scheduled. So one thing you can do, we'll talk more about this later, is find suppliers who are based in Hong Kong. And also if your manufacturer has, like, a partner warehouse based in Hong Kong, it's very likely that they are still going to be fully operational over the next few months. So that's what's happening at the moment with the outbreak. But how long is this going to last? And when will this be resolved so things can just go back to normal? Well, one of the things is always good to do when you're trying to predict what's going to happen with something like this is look at history, right? If we look at SARS and have a look at how that affected the economy back in 2003, we can get a rough idea of what's going to happen with this coronavirus. So there's an article from CNBC who talked a little bit about how SARS affected the economy back in 2003. And they said the economic growth slowed from 11.1% year over year, okay, in the first quarter, to 9.1%. Right. So that means that there was basically a 2% decrease in growth. Now, I've read in some other articles that they expect that the coronavirus could reduce economic growth to 5%, which is a little bit worse. It's considerably worse than sars. But also they say the growth in retail sales and industrial production in China with SARS was also slower around May, but the expansion in exports remained steady throughout the year. So I'm assuming that the coronavirus is going to be a relatively similar case to sars. Now, it seems to be more aggressive, it has infected more people, but it doesn't seem to be quite as deadly because with SARS, you had 8,000 people infected throughout the whole period and 1,000 died or 800 died. So it was like a 10% mortality rate, whereas coronavirus is something like 60,000 and we've had 1400 deaths. So it seems like it Infects a lot more people, but not as many people die, unfortunately. So I would assume that it's going to be a similar case. Now, if we look at this article on Wikipedia, gives you a rough timeline of the SARS outbreak, what happened and how long it took for it to be contained. Now, it is a Wikipedia article. I would assume that it's relatively reliable. But to make an educated guess about what's going to happen, this is probably our best bet. Right? So if you see, the first case was reported in November 2002, right? And that's when the world started to realize that SARS was going to be a problem, right? So it happened in the 16th of November 2002. And with the coronavirus today, the first reported case was December 31, 2019. Now starts the way it always starts, right? You have one person who I think they call it a super carrier, who goes out and infects loads of people. And then obviously each one of those people goes and infects four or five people and it just starts to spread like that. And when there's loads of people traveling around in hotels and airports, you know, it's not very long before we've got tens of thousands of people affected. And yet in 2003, the whole thing seemed to be wrapped up by July. In fact, during July, the World Health Organization declared SARS was contained around that time, July 2003. So it took them about six or seven months to completely contain the virus. So they're saying that the coronavirus is a little bit more aggressive than sars. So I would assume that it would be wrapped up by July, hopefully by September. So in other words, with any luck, by quarter four, hopefully this stuff won't affect manufacturing in China anymore. And hopefully things can progress normally from then on. So those are some of my predictions as to what I think is going to happen with this virus. Now let's talk about what you can do with your business to avoid all the disruption. So the first thing you can do is just contact suppliers anyway. Whether you're looking for new products or whether you're reordering stock that's already selling, contact your factory anyway. Now, they might not be at work right now. They might get back to work soon, they might be answering emails from home. But if you message them, they can let you know what's going on with their particular factory in their part of China. Not every factory is going to be exactly the same. There are going to be differences depending on where your factory is based. As I mentioned earlier, it might be that your factory has a partner factory in another part of China, such as Hong Kong or maybe Shenzhen, or just a place where there isn't too much disruption and they can manufacture the same thing for you and ship it to you without too much of an issue. So definitely contact your supplier and see what they can do because the likelihood is they have a solution for you. One thing you could do is see if any other factories can make the product while your factory is being closed or has major disruption. Because the likelihood is, especially if you're sourcing private label products, you know, if your factory has the template and the mold they use to build your product, another factory could probably do the same thing. So it's worth contacting around. If there's an absolute no go from your factory, see if another supplier can help you just for, you know, one shipment while we're waiting for the outbreak to be contained. Another thing you can do while we're waiting for things to settle down is instead of sourcing from China, especially if you're doing test batches, you could try sourcing locally or maybe sourcing from another country. So if you live in the UK and you're selling on Amazon UK or another E commerce provider or your own website, then go and contact wholesalers, manufacturers, people who might be able to provide you with, you know, 50 or 100 units or a pallet of stock that you can test without going to China, because that might be quicker and easier and cheaper anyway. And if there's any time that you know to do this source localing stuff, now is probably the best. Now if you can't get any more stock, sometimes that's going to happen. Then one thing you can do is just slow down your sales for now. I think this whole thing is going to be wrapped up within a few months. At least it's going to be under control, hopefully. So what you can do is let's say you have 300 units left in the warehouse, they're selling 10 units a day, you could just put the price up and then what will happen is you'll get more profit per sale, the sales volume will decrease, maybe it'll sell half as quick. And then hopefully by the time the sock sells out, you'll have another shipment in ready to go. And finally, if it's okay to manufacture the stuff, but it's the shipping that is being problematic because there's been some air freight that has been cut out completely because of this outbreak, then instead of shipping by air freight or air cargo, you could ship express. So it might be. Once you've done all the figures, it might be more sensible to express ship a load of products from China and pay a little bit more than just completely miss out on a reorder that you need to place just because you want to save money on shipping. You know, losing all those rankings with your product or upsetting customers who are expecting the product, you know, might not be worth it. It might be better just to take a hit on the cost of express shipping and maybe order a smaller amount for now, just while we're waiting for the flights to all take place normally again. So those are my tips for what to do with the coronavirus, a few estimations and predictions for when it's going to be fixed. Hopefully you found this video helpful. If you did leave a like, leave a comment as well. Let me know what your plan is to do with your business over the next few months and we'll speak very soon.