Impact of the Ukraine Conflict on Global eCommerce
The impact of the Russian invasion on Ukrainian territory is having far-reaching consequences on global eCommerce. The eCommerce industry continues to battle a global pandemic, supply-chain issues, and inflation- now the next hurdle is the invasion and war with Ukraine. How has this geopolitical nightmare impacted the Russian, Ukrainian, and global eCommerce industry so far?
Here’s What’s Happening In Russia
In an effort to show disapproval and catalyze a possible cessation of the war with Ukraine, sanctions have been imposed on Russia by many EU and Western countries. Shipping companies including FedEx, UPS, have halted deliveries in Russian territory. The following shipping suspensions have been implemented:
– UPS suspended all international shipping services to and from Ukraine, Russia, and Belarus.
– FedEx temporarily suspended inbound and outbound services to Ukraine and inbound services to Russia.
– DHL stopped accepting new shipments to Ukraine, Russia, and Belarus.
In addition, Reuters reports that the world’s three largest container shipping lines which include MSC, Maersk, and CMA CGM — have suspended all shipments to and from Russia. Retail companies such as Apple, Nike, and Victoria’s Secret have also have introduced merchandise shipping and sales bans. Large eCommerce clothing retailer Asos announced last week it would stop shipments to Russia.
Social media giant TikTok banned posting any new content from Russia, and even Netflix has banned its services. Finally, Russian financial institutions have been banned from using SWIFT, a financial messaging system for sending and receiving secure financial information.
According to one source, Russian eCommerce began declining on Feb 24th, and the day following the invasion of Ukraine dropped 43% and continues to drop. eCommerce sales made by Russian consumers dropped 53% compared to the 1st of the month, to the end of February following the invasion. The war signals a huge economic downturn for Russia’s eCommerce, but what about the rest of the world?
How Is the Conflict Impacting eCommerce In Ukraine?
There have been Increased sales for Ukrainian products and increased eCommerce support. Western and European citizens have expressed sympathy and solidarity through their eCommerce actions.
The following U.S. companies have pledged to offer aid to Ukraine, including Starbucks, Intel, KPMG, Amazon, JPMorgan, and more. See the full list here. Sales of Ukrainian-themed items on eCommerce websites have increased while online purchases of vodka, whether made in Russia or not, are dropping.
The online marketplace Etsy canceled the current balances equivalent to $4M by all sellers based in Ukraine on February 28. eCommerce powerhouse Amazon announced its pledge of $5M to NGOs and Ukrainian-based employees, as well as cyber support provided by AWS.
In an amazing show of solidarity, thousands of people from countries all over the world purchased AirBnB rentals in Ukraine with no intention of going, but as a way to offer aid directly to the Ukrainian people. According to Forbes, AirBnB’s CEO tweeted
“In 48 hours, 61,402 nights have been booked in Ukraine. That’s $1.9M going to hosts in need,” he wrote. “Such a cool idea from our community. Thank you.”
Lastly, eBay offered to protect Ukrainian seller performance ratings as well as pause sales to buyers located in Russia or Ukraine. But despite the positive sentiment and efforts, the economic situation in Ukraine is dire.
This digital source reports that Ukrainian eCommerce sales dropped 96% after Russia invaded Ukrainian territory. But across all platforms, from eBay to Etsy sellers increased their sales of Ukrainian-related goods by 338%.
The Impact on Ukrainian Exports
Finally, many Ukrainian companies responsible for massive amounts of exported goods are now not operational. Denmark’s Carlsberg beer, Japan Tobacco, auto-maker Sumitomo Electric Industries, who employs over 6,000 Ukrainian employees, will also shut their doors.
Global shipping giant Maersk closed its port in Ukraine, and lastly, Ukraine supplies more than 90% of the semiconductor-grade neon, for the United States. This neon is used for lasers used in chipmaking. Those exports will also cease.
The war has destabilized economies and eCommerce industries in both Ukraine and Russia. The Russian ruble faces collapse in the wake of sanctions and loss of eCommerce sales, while Russia continues attacks on Ukraine’s digital infrastructure furthering damaging Ukrainian eCommerce.
The war on Ukraine is expected to worsen global supply chain problems. As products typically made or supplied by Ukraine and Russia are no longer available, demand will increase, as will price. International trade and eCommerce supply and delivery are significantly impacted and will affect any eCommerce businesses and sellers working with goods that come from Ukraine or Russia.
The war will continue to increase gas prices in the US, as the US is especially dependent on Russia. Wheat, chips, and automotive production are likely to experience significant supply disruptions. In general, Bloomberg outlines while rising eCommerce costs and product prices in the future, with continued supply chain disruptions.