As every significant historical moment has its own powerplays, a 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 the question is: Is everyone in the tech space really
winning?
Video Conferencing
Platforms
Digitalization 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 centered 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 organizations scrambling
to create temporary patches to tackle malware and improve security before they
are subjected to headlines again (in a different light this time around).
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 UBER Eats and Deliveroo, among others, have
launched contactless “leave at your door service” to help drivers 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 maybe
fleeting as restaurants and consumers alike shun these services as dine-in
businesses re-open.
Verdict: Undecided
Ecommerce
Market research company Nielsen has identified six
key consumer behavior thresholds tied to the
COVID-19 pandemic. With people adjusting their purchasing habits, eCommerce
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, a 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 behavioral change as a result of COVID-19 on offline
to online shopping cannot be ignored as consumers begin to experience the
convenience that eCommerce brings into their lives. Ecommerce 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 organization to support
their alleviated status.
Verdict: Winners
Med-Tech Start-ups
Real
innovation always comes about as a result of the urgent need to solve a crisis
this is especially so for the health care industry. Public healthcare systems
around the world are leaning on providers of digital health technologies,
particularly telehealth solutions to tackle the coronavirus pandemic. Ping An Good Doctor, one of the largest telehealth
companies in China reported a 10x 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 favoring entrepreneurs whose solutions either have a direct impact on a
pandemic response or have a place of relevance in a changed world”. Medtech
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 a unique value
proposition that can withstand periods of uncertainty.
Verdict: Winners
Travel Industry
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 workweek. 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, the total contribution of travel and tourism to the global economy in
2019 was a whopping $9.25
trillion USD, 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.
Verdict: Losers
So, do we know who the
true champions are?
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 centered 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 a 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.
Ranise Teo 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.
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