While COVID disrupted the cash flow of businesses worldwide, it hasn’t completely halted sales for everybody. Brands who had already adopted a digital age business model were well suited for lockdown, but those who refused to jump feet first into the age of e-commerce struggled to stay afloat. In this article, we look at how digitally savvy companies had the upper hand at the start of lockdown and how old-fashioned companies have transformed their business models to stay afloat.
The Effects of Lockdown on E-Commerce
Overnight, lockdown changed the way brands interacted with customers. Not only that, but customers’ shopping habits changed rapidly, and any predicted buying behavior was thrown out of the window. Instead, customers began ranking their everyday purchases in order of necessity. If something was no longer deemed necessary or helpful to the situation, it was crossed off the list. Loss of income around the globe caused pockets to tighten, and brands were left trying to remarket to a confused and concerned audience.
E-commerce isn’t a new concept; in fact, online shopping took the world by a storm in 1991 when the internet became accessible to the public. So in 2020, why aren’t all companies digitally savvy? For some, selling goods and services online takes away from the enjoyment of purchasing in store. For others, the time, effort, and cost to transfer a business from high street to online are too daunting. Some companies enjoy the best of both worlds, and their income comes from both online and offline activity.
But has E-commerce really skyrocketed during lockdown? For industries selling cleaning products, groceries, medication, games, and sporting equipment, e-commerce has seen a sharp upturn. However, industries selling travel, property, and high-ticket luxury items have struggled and will continue to do so for months to come.
How to Become a Digital Business
Digital or not, brands must be willing to listen to their customers and adapt to new behaviors. Whether that’s by forming creative partnerships, testing new products on the market, or encouraging a trial-and-error model of business, change must happen. Research has proven that companies that act fast and decisively in a crisis tend to come out on top during the recovery period. For most, accelerating their digital transformation is the only way to act.
To digitalize a business, you must move away from active experimentation and push towards active scale-up. These changes should happen both at the core of the company and through the development of new businesses. According to <ahref=”https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/how-digital-reinventors-are-pulling-away-from-the-pack” target=”_blank” rel=”noopener ugc nofollow”>McKinsey, simply making small changes to a business model isn’t sufficient to develop new digital business.
Another way to aid a move towards a digital future is to experiment with new technologies. Successful companies are always on the lookout for new technology to help their business, and this ongoing research should never stop. Similarly, when making investments, a company should invest boldly and not be afraid to change the business model to do so. If you pause to worry for too long, you’ll no longer be fast-acting, and you could quickly be left behind.
Finally, brands should be considering collaborations. If the thought of going digital is too overwhelming, consider teaming up with a company that already has the infrastructure in place. For example, let’s look at JustEat, a British online food delivery service. Pre-COVID, customers could order takeout food from Just Eat and have it delivered to their door. During the lockdown, the company joined forces with supermarket giants and service stations, including BP, to provide everyday goods in desperate households. People could order an Indian takeout with a deodorant side, toilet roll, and a loaf of bread. While this collaboration is a little on a large scale, the initiative is both simple and attainable.
COVID has pushed businesses to prioritize digitalization. Brands are being forced to step out of their comfort zones. They’re having to rethink how to provide value for their customers. While the days of face-to-face selling might have disappeared for a few months, we wouldn’t say they’ve gone completely. In a post-COVID world, we’d imagine most businesses will adopt the 50/50 approach to online and offline commerce in order to enjoy the best of both business models. But the companies that are prepared to adopt a fully-digital future will most certainly have a brighter future.