The connected, digital economy — and the many players who enable business within and across the ecosystems that support it — is helping enterprises, workers and consumers continue to interact and do business, even as the virus continues to spread. Even if the way we all do business may be different in the short term — and, quite possibly, the long term. It’s not a perfect solution, but absent the digital economy, things could quite possibly be much worse.
Why We Need A Connected, Digital Economy — Now More Than Ever
We see it everywhere. In the areas most impacted by the virus, connected ecosystems make it possible for the show to go on, so to speak. The House of Armani live-streamed a “dark” fashion show in Milan two weeks ago to present his fall 2020 lineup. People everywhere could still see models walk the runway wearing his creations, without risking possible exposure to the virus. The Italian government has asked for soccer matches in affected areas to be played without fans and instead live-streamed, enabling citizens to still watch, support and cheer on their favorite teams while avoiding the danger of infection.
All of that is made possible by the technology, apps and networks that power use cases like these.
In China, digital content and the platforms that serve and create it are thriving, as people take to one of their many screens at home to ingest it. Gaming apps have surged in popularity in the country as people download video content. Museums are putting their exhibitions online for people who want to visit but are unable to currently. Educators are putting coursework online so that children quarantined at home don’t have to miss out on key aspects of their education while school is closed or students can’t get there.
Online sales have seen an uptick in China, and Alibaba reportedly added 10 new servers to accommodate the demand. Observers recall similarities to the SARS outbreak in 2003, which they say ignited China’s online retail sales, and expect a similar spike and continued upward surge.
In China, apps that enable transacting in what was once considered a more physical ecosystem, like car buying, are surging — as apps that provide virtual test drive experiences help car dealers stay in business while people stay in their homes. There has been a surge in health and wellness app downloads, as consumers in all affected areas take extra precautions to monitor their vital signs and learn how to reduce their risk of infection.
Everywhere – not just in those areas most impacted by the virus — social networks make it possible for people to stay in touch with their loved ones. Smart speakers with screens enable video phone calls so people can talk and see each other. Family members can visually check on moms and dads and brothers and sisters and grandmas and granddads without physically visiting them, providing a level of comfort that would be impossible over the phone.
Seniors, for whom the virus can be most debilitating, don’t have to leave the house to get food or have their medicine filled or refilled. Apps, virtual assistants, delivery aggregators and online grocery options make it possible for them to order what they need and get it delivered instead of going without or relying on others to do it for them. Telehealth apps and patient portals increasingly give people more access to doctors without having to take an unnecessary trip to their offices.
Global peer-to-peer (P2P) platforms expedite the delivery of money in minutes to anyone anywhere in the world, especially those living in affected areas, in an effort to blunt the impact of lost work and wages.
Businesses that don’t want their workforces to travel or whose employees are uncomfortable taking trips can stay connected with team members, clients and prospective clients around the world using software platforms like Slack, Zoom and Microsoft Teams — making those interactions real-time, dynamic and almost as good as being there in person.
Digital content platforms like PYMNTS are seeing surging demand for high-quality, consumable content, as executives take to their offices instead of airports to stay up-to-date on who is doing what and how best to reach them. And consumers are increasingly taking to their screens at home to watch a variety of content, including some of the live events they might otherwise watch in person.
The Darwin Effect
The last Black Swan event to hit the U.S. and impact the global economy was the financial crisis of 2008, which plunged the U.S. into a severe recession. It would take our economy five or six years to work our way out of that hole. Over that period, businesses failed, banks faced liquidity crises and the Fed used a variety of monetary policies to avoid an even more dire outcome.
Yet out of the financial crisis came a wave of innovation that has reshaped how businesses and people have engaged over the last decade, seeding the path for the innovations that are at our doorsteps this decade in the connected economy. Deal volume surged in 2010 as 3,277 deals were made, with a 19 percent increase in dollars raised and a 12 percent increase in deals done over the prior period. Investments in software scooped up the lion’s share of those dollars.
Startups stepped in to fill the gap that traditional players couldn’t or wouldn’t fill in banking, lending, payments and retail services. With reCommerce platforms popping up out of nowhere, it become possible for consumers to monetize the clothes they didn’t want anymore by giving others the chance to buy them. Gig platforms made it possible for workers to find and do work remotely to fill in for the jobs they may have lost and the skills that employers needed but couldn’t invest in full time workers to support. Innovators examined opportunities to reduce B2B payments efficiencies by using digital methods to reduce the cost of making and receiving payments. Many leveraged the smartphone and app and data opportunity to rethink how businesses and people interact across all segments and disrupt conventional norms.
In fact, some of those startups and innovations make it easier for the world today to blunt the impact of the coronavirus somewhat and continue to do business in the face of what is likely to be a global pandemic.
I trust that we will see many of the same impacts from the COVID-19 black swan.
Thinly capitalized businesses that rely mainly on physical channels will struggle, and many could die. Unicorns could shrink in size and become attractive acquisition targets for big companies — or shrivel and die, too. Businesses that were built around serving people and SMBs with cheap capital may find themselves and their business models tested. Restaurant business models will be tested even more than they have been, as customers potentially pull back and ghost kitchen models use this opportunity to double down and take share.
At the same time, people will embrace the power of a connected world and the ability of connected ecosystems to sustain consumers and businesses. Firms that have optimized logistics and direct-to-consumer (DTC) models could have an advantage over those who were late to that party. Companies with a digital-first and/or a digital-only legacy will prosper, since their models weren’t built to boost physical environments but to complement or replace them. As we have seen quite clearly in retail, the shift from physical to digital is much more of an uphill climb than the other way around.
And new businesses will emerge, capitalizing on the opportunity in crisis and investors willing to support new product and service delivery paradigms.
Of course, there is no bright side to COVID-19. Businesses will probably fail, workers will lose their jobs and it is expected that many people will die. The effects of the virus will last far longer than the contagion itself. But the crisis will accelerate the move to the ever more connected digital world, force businesses to rely more on digital solutions and likely spawn a new wave of innovation.
When we come out on the other side, the world may well be a different, better place. Some of the methods and ways of doing business as the global crisis plays out may very well become standard operating procedure in the decade that awaits. And it will be the connected economy innovators who will lead the way.