As every significant historical moment has its own power plays, shift in business models and societal adaptation to a new norm, the same applies to the COVID-19 new world order.
Much has been said that technology companies are the true winners, but is everyone in the tech space really winning?
Digitalisation begins to fit itself into the new rhythm of daily life as governments implore their citizens to work from home and reduce physical contact.
Video-conferencing platforms have instinctively become the all-encompassing go-to-service, no longer centred on webinars or chats only. It does appear that platforms like Skype, Google Hangouts and Zoom may emerge as the true winners, given the “new normal” that almost all governments’ and CXOs’ are purporting now, especially in regards to how businesses will be conducted in the long term.
The Flip Side: These platforms are not built for highly confidential or sensitive environments. Amidst its newfound fame, Zoom has come under heavy scrutiny over how it handles breaches in privacy due to the prevalence of “Zoombombing”. We then see the very same video conferencing organisations scrambling to create temporary patches to tackle malware and improve security before they are subjected to headlines again (in a different light this time round).
Verdict: Short-term winners
Food Delivery Platforms
The popularity of food delivery is not fading anytime soon, notably with more people being self-quarantined. Aware of consumer sentiments, increasing F&B outlets have begun to offer delivery services online.
In response to a surge in unprecedented demand and supply, as well as health risks, food delivery companies like GrabFood and Deliveroo, among others, have launched contactless “leave at your door service” to help riders and customers adhere to social distancing guidelines.
The Flip Side: The platform-to-consumer delivery business model involves operating risks with high costs for delivery and supply logistics. Moreover, such platforms are easily abused. In the West, GrubHub, DoorDash, Postmates and Uber Eats were sued for allegedly violating the U.S. antitrust law by imposing “exorbitant” fees to process delivery orders. Eating out is also beyond consummation, but a way humans socially interact with each other. So unless these companies change their business models, the business boom they are enjoying may be fleeting as restaurants and consumers alike shun these services as dine-in businesses reopen.
Market research company Nielsen has identified six key consumer behaviour thresholds tied to the COVID-19 pandemic. With people adjusting their purchasing habits, e-commerce order volume has increased nearly to 50% since the end of April, according to logistics vendor Narvar Inc.
Compared to March 2019, transaction volumes have increased by 97% for home products and furnishings, 97% increase in online gaming, 136% for DIY products, 163% for garden essentials, 26.6% for electronics and 18.6% for telco.
The Flip Side: Online retailers who once pride themselves on efficiency are now buckling under pressure to keep up with the crush of coronavirus-related orders. Amazon is stuck between hiring additional workers, and granting workers paid time off if they feel unwell. The inability to strike an ideal balance between demands for physical goods and employees’ emotional wellbeing is not a problem to be ignored as it can affect a company’s growth. The behavioural change as a result of COVID-19 on offline to online shopping cannot be ignored as consumers begin to experience the convenience that e-commerce brings into their lives. E-commerce players must start to acknowledge that they are no longer the alternative but the main player in consumer shopping and this goes to making sure they build an enduring business and organisation to support their alleviated status.
Real innovation always comes about as a result of the urgent need to solve a crisis this is especially so for the healthcare industry. Public healthcare systems around the world are leaning on providers of digital health technologies, particular telehealth solutions to tackle the coronavirus pandemic.
Ping An Good Doctor, one of the largest telehealth companies in China reported a 10 times increase in newly registered users after the emergence of COVID-19. In Seattle, TransformativeMed – a company focusing on Electronic Health Record (HER) usability – offered its COVID-19/Core Work Manager (CORES) app to Seattle-area hospitals and medical centers free of charge. In light of the current situation, Raj Prabhu, CEO of Mercom Capital Group highlights that we should anticipate funding trends to shift among digital health technologies.
The Flip Side: Analysts have pushed forth that not every digital health company will thrive in the post-pandemic world. StartUp Health suggests that “health innovation investments are favouring entrepreneurs whose solutions either have a direct impact on a pandemic response or have a place of relevance in a changed world”. Med-tech startups such as InnAccel who developed an automated and closed system for clearance of highly infectious oral secretions might be the true winners as they have an added advantage with their flexibility to adapt their business models quickly against black swan events, offering an unique value proposition that can withstand periods of uncertainty.
It is indisputable that no other industries have fallen as far and as fast as the travel industry. The World Travel and Tourism Council reveals that recovery could take up to 10 months. As a ripple effect of the three-month loss in global travel, the lodging sector is severely affected too. Jumbo hotels in Nevada and Las Vegas have lost their vibrancy.
Travel booking start-ups like Klook will be laying off staff, placing employees on temporary leave and implementing a company-wide reduced work week. Airbnb, the once heralded disrupter scheduled to go public in 2020, is laying off 25% of its workforce and witnessing a collapse in bookings with hosts pulling out to find cheaper long-term tenants. The tourism industry’s financial strategy built on the foundation of a trouble-free future of open borders and high tourism demand has thus failed them.
The Flip Side: Before the pandemic, total contribution of travel and tourism to the global economy in 2019 was a whopping US$9.25 trillion, registering a CAGR of 5.6% from 2019-2026. The need for business travel and social travel will not diminish even as technologies for virtual interactions increase in popularity or attainability. In a business sense, face-to-face interaction builds relationships and enhances credibility and trust. From the perspective of any consumer, nothing can take away the novelty of experiencing a new city by themselves. The travel sector may see challenging times this period, but it would not be long before they reignite in the most explosive fashion post pandemic.
So, Who Are The True Champions?
There is no straightforward answer or crystal ball to predict who the ultimate winners and losers are.
Rather, the pandemic has taught us three important lessons in order to achieve self-enablement and self-sufficiency in a dynamically changing world.
Flexibility to reinvent business models centred around network effects: Given the unpredictable environment that affects the industries or market we once look at, we must be able to determine the next business model to rely on or replace with in order to stay relevant amongst new realities.
Having sufficient capital and comprehensive back-up strategies: It is crucial to keep a steady runway which allows us to take advantage of any opportunity for recovery and upturn the soonest it happens. We should never rest on our laurels.
Innovation and adaptation: The rubric for measuring or defining a new norm in the post-pandemic world is still being fine-tuned. Yet, it is safe to say that we are still living in a competitive landscape driven by disruptive business models. Circumstances that benefit us at a particular moment can also bring about our untimely end. We should adopt the growth mindset and constantly innovate. In doing so, we develop the adaptability and resilience to face challenges as opportunities, valuing the processes and learnings that emerge from it.
This article is a contribution piece by Ranise Teo. She is part of the Business Development and Marketing Team at Arcadier, a SaaS company that powers next generation marketplace ideas. You can follow Arcadier on LinkedIn, Facebook, and Twitter for more news and updates.
Featured Image Credit: GrabFood / Askifa.ng