27 March 2020
With people all over the world being urged to stay at home, digital is quickly becoming the new normal, resulting in a sudden increase in the urgency of digitization and a further acceleration of digital businesses, both in direct-to-consumer and in business-to-business markets.
In this blog, we’ll share some first observations we’ve seen globally and at our clients in these first few weeks of the Corona crisis:
- Many digital businesses are struggling to keep up with the explosive demand growth
- In some digital businesses, barriers to adoption are inevitably broken
- Several offline businesses are quickly digitizing by e.g. setting up their own digital channel, leveraging a third-party channel or platform, or adapting their proposition
Many digital businesses are struggling to keep up with the explosive demand growth
As the high rise in demand for e.g., groceries, hygiene product and meal delivery came overnight, many suppliers are struggling to cope. Two weeks ago, Dutch supermarkets reported their highest turnover ever at €998 MM. Online supermarket Picnic is looking for hundreds of employees to relieve the pressure on their distribution centers and delivery services. German recruiters report high demand for new workers from supermarket chains like REWE and EDEKA, and US giant Walmart is seeking to hire 150,000 new employees in response to exploding demand.
For some pure-players, hiring additional staff is not enough: besides hiring 100,000 people, Amazon closed their fulfillment service for non-essential products. Similarly, Bol.com reported to prioritize delivery of essential products.
In some digital businesses, barriers to adoption are inevitably broken
Several digital initiatives have been available long before Corona, but were struggling to get traction. In certain areas like office work, education, health services and exercise, most people value personal interactions above digital solutions, so adoption rates remained low. Now that the Corona virus forms an insurmountable barrier to the in-person experience, the tables have turned: old habits are shaken up and new habits are established at higher adoption levels of digital alternatives. For example, with businesses and schools all around the world being forced to close down, virtual meetings and online teaching have become a part of our daily lives, resulting in vast increases in usage of video conferencing software like Microsoft Teams. By the end of this crisis, many companies will probably have established a successful digital-first way-of-working and are reaping the benefits. Then both employers and employees might not feel the need to return to the old “9 to 5 (or whatever hour) physically in the office” working days once they can.
Similarly, from the moment the lock-down started, we’ve all been bombarded with more “home workouts” than we could ever have time to do, and many people who have always been skeptical of this concept surely tried it by now. Once we have personally experienced we can remain fit from the comfort of our own home, some might not even want to return to their gyms, and be surrounded by sweating and grunting men in the weight room.
Also, digital healthcare is becoming much more widely-accepted, now that the physical healthcare system needs to pull out all the stops to care for Corona patients. For example, telemedicine is getting a boost. US president Trump has recently passed new legislation allowing Medicare to expand the use of telemedicine. In Germany, platform provider Jameda reports that video consults, for example for GPs, are booming.
Several offline businesses are quickly digitizing by e.g. setting up their own digital channel, leveraging a third-party channel or platform, or adapting their proposition
Many offline businesses are facing huge income losses due to mandatory closure and are painfully confronted with the necessity of digital propositions. While some may be paralyzed by this realization, leaders are distinguishing themselves by quickly taking steps towards digitization of their businesses.
For example, after restaurants were forced to close down, they’ve been shifting towards home-delivery. Some have started their own delivery service, like Dunkin’ Donuts, while others chose to join well-known platforms like takeaway.com or Deliveroo. Not only restaurants are joining forces with these home-delivery platforms. Also, Marks & Spencer teamed up with Deliveroo and is offering 60 of their basic food products like milk and orange juice for 30-minute home-delivery from 120 of their stores across the UK.
Additionally, new platforms are emerging. For example, Amstel Heroes delivers boxes filled with fresh products from local suppliers to people’s doorsteps and Cooklikeachef.nl, offering luxurious Michelin-star dining-in menus to be prepared at home, is gaining momentum against the “same-old” takeout from cardboard boxes.
In other sectors, the switch to digital is not as straight-forward as home-delivery. For example, real estate agents currently can’t host in-person house viewings anymore and are shifting towards virtual viewings through live video calls with interested clients. For notaries, the law is prohibiting digitization, as it requires clients to be physically present to sign e.g., their testaments. In light of the Corona virus, the governor of New York, Andrew Cuomo, is (temporarily) permitting documents to be virtually notarized.
With only the first few weeks of the pandemic behind us, we’re already seeing how the Corona virus is acting as a catalyst for digitization. There’s an uptick in the notion “digital is the new normal”: digital channels and initiatives are shooting up like mushrooms, and barriers to adoption are inevitably broken. Undoubtedly, we will be extremely relieved to finally mingle again once the Corona crisis is finally behind us. But as we’re getting a taste of the advantages of our new digital-first routines, we might grow to like them and possibly not simply revert back to our old “offline ways” once social distancing is not the norm anymore. For some sectors, this means that the massive shift to digital brought about by this pandemic might not be reversed.