What are the future lessons from this COVID-recession?
- In Ukraine, we often say “Головне – здоров’я. Все інше наживне”, which is translated as “Health is the most important thing. Other things are attainable”. The phrase seems so easy and ordinary, like saying that 2+2 equals 4. Turned out, we were amateurs in health mathematics.
- We found out the other side of globalization.
- The unpopular jobs turned out to be the most necessary for society’s survival: medical workers, supermarket assistants and refuse collectors.
- Working from home is not as great as we imagined it would be, sitting in the office.
- Solving public goals is more important than increasing revenue while sacrificing them.
- The governments should not just give bailouts to the industries for the sake of giving. It should serve a purpose.
- The unbelievable cannot happen today. It already happened yesterday.
- The digital world is a “first aid kit”, keeping the society alive during such unprecedented times.
Is the digital business an anti-crisis sanitizer?
The previously unknown Zoom broke its records in the number of downloads because the education process, conference meetings, and friendly get-togethers turned online. General practitioners consult the patients via the apps, bringing healthcare to the web. People, whose work was on the Internet, now can work remotely without losing the salaries (still with losses in productivity). Messengers become a way of dating. People marry online. So, does it mean that the digital world will save your business? Well, yes and no.
It depends on the value you bring under COVID-crisis-conditions. People order more food online and fewer clothes because eating is a bigger necessity than fashion. If you lost your job, you are less likely to buy the subscription to Netflix and Apple Music. If people are less likely to spend in offline life, it means they are also less likely to pay on the Internet. Thus, today the most important aim of all businesses is not to stay remembered.
On the one side, people stay at home and cannot go to the shops often, so they will more likely to order online. On the other side, retail companies cannot provide fast delivery, especially when we talk about cross-border shipping. Also, there are certain types of products that frequently occur in the basket (medical supplies, baby-products, cleaning items, food), and those that occur there fewer times (clothes, jewelry, electronics, sports, and fitness supplies).
Bringing your store online always seemed to be a significant step for businesses because with globalization it broadened their target audience, hence profit. Now, local online shops play a bigger role because they don’t delay the delivery. So, today there’s more sense to target a local consumer more than a global one.
What can e-commerce brands do to stay afloat?
- Choose less pricey delivery options and count on the customers’ understanding;
- Target other manufacturing centers instead of China, Bangladesh, India, Taiwan, and Vietnam, and…
- Support local manufacturers;
- Choose the essential products’ distribution instead of luxury ones;
- The well-though acquisition is a must. Companies will provide only the items they are sure will be sold;
- Understand panic buying and prevent people from doing so to avoid supply chain overload.
How can IT industry help?
- Allow customers to track the delivery of the product and be sure that, although slow, it is being shipped;
- Target the user’s purchasing desires best with more advanced algorithms for “recommended items”, according to the previous experience and the customer’s budget;
- Provide accurate supply chain management, with a highlight on the timing, along with the quality;
- Model new cost structures;
- Implement anti-panic-buying features.
There are two types of SaaS business models: vertical and horizontal. Vertical SaaS focuses on a specific industry, like retail, healthcare of logistics, and produces software for it. For example, Salesforce targets CRM only. Horizontal SaaS provides software that would be of use to different sectors, like Slack. You can use it no matter what team you are in – a team of software developers, a team of photographers or general practitioners. It’s a one-fits-all product. Logically, the vertical SaaS suffered more than the horizontal because it had a too specific and small target audience.
What can the SaaS companies do to stay afloat?
- Make payment terms more flexible and prolong them;
- Offer annual contract with a reduced price;
- Negotiate discounts with the clients who want to stay but need to quit due to budget changes;
- Build a “stress-response” scenario in case the worst happens;
- Provide free trials and prolong them;
- Give paused account suspensions;
- Mitigate pricing-per-user structure and provide free seats;
- Provide contact pause.
People stay at home. Those whose work is not possible to be brought to a remote online world, have tons of free time (the free time they’d prefer not to have). This way, Netflix has seen a 30% growth in the number of international users. Over 1 million users were playing Counter Strike online in April. Before that, the biggest amount of people engaging in this game was only in January 2017 – almost 100 000 users. Being forced to stay at home, people resort to online entertainment, like watching movies, listening to music and playing games. This way, popular singers conduct live sessions on their Instagram pages instead of concerts. There is even an example of a new unfamiliar type of art delivery – Digital Theater.
What online entertainment companies do is encourage users to stay at home. Although it serves a public role, there’s no way to deny that they [the companies] will only profit from that. In the long run, however, the subscription-based products can suffer from the loss of users if the crisis escalates. No matter how much the people enjoy watching “The Irishman”, he won’t feed them. Still, it seems to be a worst-case scenario. Below are the statistics of how the users react to the brand’s engagement in the COVID-informing.