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Retail Business Review | Monday, April 11, 2022
Amid Russian aggression in Ukraine, e-commerce companies are beginning to feel the sting of economic barriers implemented by the U.S. and other nations, and they’re pulling out of the region.
FREMONT, CA: Russians are migrating in droves as a result of Western sanctions. With the world's attention on Eastern Europe due to Russian aggression in Ukraine, e-commerce companies are feeling the pinch of economic obstacles erected by the US and other countries, and they're getting out. Several CPG businesses, Nestle (OCTUS: NSRGY) and Coca-Cola (NYSE: KO), stopped shipping to Russia last week, and e-commerce shippers and logistics companies are following suit. UPS (NYSE: UPS) and FedEx (NYSE: FDX) are two of the largest corporations in the region to suspend operations, with both announcing that deliveries to Russia and inbound and outbound cargo in Ukraine would be halted. DHL (OCTUS: DPSGY), a global logistics business, issued its statement, stopping all new shipments to any country.
Furthermore, A.P. Moeller – Maersk (OCTUS: AMKBY) and MSC (NYSE: MSM), two large international shippers that have been expanding their landside e-commerce operations, have suspended container shipping lines to and from Russia, effectively cutting the country off from a global shipping network that has steadily evolved to fulfill e-commerce orders as well. The departure doesn't end there; e-commerce marketplaces are also included. For instance, eBay (NASDAQ: EBAY) has opted to temporarily halt sales to Russian and Ukrainian buyers. There are also e-commerce fulfillment providers, such as Sendle, that all international deliveries to Russia and Belarus will be suspended.
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Furthermore, credit card providers such as Visa and Mastercard are removing Russian financial institutions from their networks, making e-commerce purchases difficult for customers of banks such as VTB, Russia's second-largest lender. The decision comes after a similar step by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which blocked Russian banks from using its network, making cross-border payments more difficult. Even drone delivery companies are speaking out, with DroneDek abandoning plans to extend the patent for its tech-enabled mailboxes to Russia. The suspensions aren't going away anytime soon.
Amazon and Walmart, two of the world's top e-commerce merchants, will have no impact on e-commerce volumes in the region, as the former has yet to issue comments and the latter has no business in Russia. However, the effect of the Russian-Ukraine crisis on e-commerce may not be restricted to that region. The conflict is rising inflation, which may reduce the flow of e-commerce shipments via supply chains due to their high cost.
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