THE EFFECT OF COVID-19 ON E-BUSINESS IN EGYPT.

• Author: ElKhouly, Sayed

The effect of the COVID-19 pandemic on e-commerce has been very significant. Over one hundred countries worldwide had instituted full or partial lockdowns by the end of March 2020, including Egypt, affecting billions of people, while many others recommended movement restrictions for some or all their citizens (BBC, 2020).

The widespread shift from office to home working and the closure of public shopping venues during the pandemic have also led to substantial increases in the use of online and E-shopping platforms (i.e., sites, apps, Facebook and Instagram shopping solutions). Reduced incomes and the risk of redundancy for many people have affected their ability and desire to buy goods and services, both offline and online (UNCTAD, 2019a).

The pandemic has had a substantial impact on retail, including a significant transfer of market share from offline to online businesses. Public anxiety about infection and mandatory closures of non-essential retail stores have had a marked impact on patterns of consumer behavior, encouraging online shopping at the expense of traditional retail across the world. Changes in shopping, entertainment, and workplace behavior, and associated adaptations in business practices, have accelerated ongoing transitions from physical to online markets that are likely to have a lasting impact, particularly if recovery from the pandemic is spasmodic or prolonged (RBC Wealth Management, 2020).

Google's data-monitoring of community mobility, for instance, found that visits to retail and entertainment establishments fell by 70 percent between February and April 2020 as the pandemic hit, while those to grocery and pharmacy establishments dropped by 45 percent - though by September, these figures had recovered significantly to around 30 and 10 per cent below previous levels (ECLAC, 2020b).

The COVID-19 outbreak triggered changes in consumer buying behaviors that had a significant effect on Egyptian domestic and "cross-border" E-commerce business. Hence, the researcher in this study focused on understanding the effect of the COVID-19 outbreak on E-business, specifically in the Egyptian business context.

This research is divided into six sections. In section one, the researcher provides a detailed review of the literature on E-Business before and after the COVID-19 pandemic in a broader context. Section two covers the methodology used in the research, which includes the research objective, questions, hypotheses, framework, and design. Section three addresses the results and data analysis. In section four, the results are discussed in compliance with the literature review. Section five covers the limitations, future research, and recommendations. The last section includes the research conclusion.

LITERATURE REVIEW

The objective of this section is to provide a review of previous literature related to the research questions. According to Saunders et al. (2009), a literature review helps researchers to understand the emerging trends of relevant previous research.

In conducting the literature review, the researcher used four databases to search for relevant research studies. Those databases included EBSCOhost, Emerald, ProQuest, and Google Scholar. The search was limited to scholarly, peer-reviewed journals and economic reports that were published in the past five years. In addition, older works that were frequently cited in articles published in the past five years were reviewed.

The following phrases were used in searching the databases: COVID-19, Coronavirus, E-Commerce and E-Business in Egypt. The search was limited to those phrases in the titles and abstracts of the articles in order to locate the most relevant studies.

The researcher organized the literature review chronologically rather than thematically (Creswell, 2009), specifically E-commerce before and during the pandemic utilizing available published literature. There are important limitations that should be noted, as most countries have still not published official statistics in this area, and those that have have sometimes not followed international guidelines (UNCTAD, 2018).

E-Commerce before the pandemic

The global value of E-commerce sales (including both B2B and B2C) reached almost US$ 26 trillion in 2018, accounting for 30 percent of GDP and representing a growth of eight percent over 2017. The value of global B2B e-commerce was estimated at US$ 21 trillion, representing 83 percent of all E-commerce, including transactions over online market platforms and electronic data interchange. The value of B2C E-commerce was estimated to be US$ 4.4 trillion in 2018, an increase of 16 percent over 2017. The three countries with the highest values of B2C E-commerce sales were China, the United States, and the United Kingdom (UNCTAD, 2018).

While the majority of online shoppers bought mostly from domestic suppliers, a little over 20 percent - some 330 million -made cross-border purchases in 2018. Interest in buying from foreign suppliers was expanding. The share of cross-border online shoppers to all online shoppers had risen from 17 percent in 2016 to 23 percent in 2018 (European Commission, 2020).

Domestic E-commerce has been developing over much of the present century. Although the initial growth of online shopping was slower than anticipated, it has accelerated in the past decade. Interestingly, in the present context, the experience of health crises has played some part in its development. The Chinese firm JD.com, now one of the world's largest online retailers, moved into online sales in 2004 in response to the SARS crisis of 2002/3 (JD.com).

Sustained but variable growth in domestic E-commerce was taking place before the pandemic, though with large variations between countries. These differences were broadly consistent with average income levels, but were also affected by other aspects of the digital and legal environment (UNCTAD, 2019a).

Data from six European countries with highly connected populations show that more than 80 percent of Internet users were making some purchases online before the crisis (European Commission, 2020). Similar differences could be found in the Arab region, where the largest e-commerce markets before the pandemic were in wealthier Gulf states: UAE, Saudi Arabia, and Qatar (UNCTAD, 2019b) and in the UNECE region where the percentage of the population engaged in online shopping ranged from 70 percent and more in Germany, France, and the Russian Federation, to 15 percent in Armenia, and less than 10 percent in some Central Asian countries (E-Commerce Foundation, 2019).

E-Commerce during the pandemic

One side impact of the COVID-19 outbreak has been an increase in employment in the online shopping and delivery sectors, though this has only partly compensated for the loss of jobs in the economy since the pandemic began. Overall, retail, including both online and offline sales, has been impacted negatively by financial uncertainty among consumers, as well as formal lockdowns and business closures (ESCAP, 2020).

Significant shifts have occurred in the scope and scale of E-commerce during the pandemic. Different trends are evident in international/cross-border and domestic contexts (WTO, 2020a). The majority of international E-commerce consists of transactions for goods that are ordered digitally and subsequently delivered over traditional transit routes through ports, airports, and border crossings.

A growing proportion of transactions for such goods - both B2B and B2C - takes place online. Disruption to supply chains disrupts E-commerce. The environment for the transit of goods is, therefore, fundamental to the effective functioning of international E-commerce and to consideration of the pandemic's impact on it (WTO, 2020b).

In Africa, for example, 38 countries have announced some form of land closures during the pandemic - with concurrent falls of 5, 16, and 23 percent in exports in February, March, and April of 2020 compared to the same months in 2019 (while imports declined by 7 percent in March 2020 and 25 percent in April 2020 over the previous year). A significant proportion of this trade consists of transactions that have been facilitated through E-commerce (UNECA, 2020a).

Border lockdowns--common in most countries during the pandemic, including Egypt--have restricted shipping and transportation, causing severe disruptions in supply chains for all trade, both traditional and E-commerce. Shortage of staff and enhanced requirements for additional safety precautions have also slowed trade processes where physical human interaction is required, such as border inspections. Uncertainties and poor information exchange, for instance, regarding new protective measures or rules about restrictions, have added to the confusion at ports, airports, and border crossings, leading to significant delays in transit and in some cases the exhaustion of storage capacity (UNECE, 2020b).

ECLAC believes that the most important factor disrupting international trade in its region has...