The COVID-19 pandemic has disrupted the global economy in startling ways. In the U.S. alone, nearly 17 million new people filed for unemployment in a three week period, and first-time claims have gone up 3,000% since early March.
As a global leader in payments and fintech, Rapyd closely monitors how thriving industries such as digital goods, traditional ecommerce and platform businesses have prepared — and in some cases dramatically pivoted — their business models to take advantage of the current environment. There have been some very clear winners over the last few weeks across some distinct verticals that should serve as bellwethers for other ecommerce verticals and companies.
At a glance:
- Record number of office workers around the world immediately switched to remote work creating demand for remote tools
- Tools that solve the twin problems of remote work isolation and collaboration
- Digital infrastructure must be robust to handle the growing demand
Remote Work Tools
Tools that make remote work easier and more responsive are thriving as many companies become 100% remote for the first time. This has the potential to create a whole new paradigm for how companies and offices operate in the future as they are forced into large scale remote work programs.
Microsoft’s Teams platform has seen a 500% increase in usage during this time, and while Zoom’s CEO has gone on record as saying it has surpassed the 100 billion minute run rate it experienced at the end of January by a significant margin. While it has not been a glitch-free few weeks for any of these companies, it has not impacted their ability to capitalize on this moment.
Any application that is considered a daily use tool has the opportunity to thrive while others lose ground. Company-wide messaging software like Slack helps to keep teams on task and on track in-between video calls. Slack has begun to integrate Zoom and Microsoft into their messaging applications to further deepen their usefulness for remote workers and increase their value.
At a glance:
- Streaming services can capture even larger shares of the growing need for in-home entertainment
- Streaming services have the opportunity to expand into new markets
- Keeping streaming quality up with massive increases of viewers will test streaming service viability
Arguably, the biggest story in entertainment over the last few years has been the meteoric rise of streaming entertainment services like Netflix, Hulu, HBO Now, and Disney Plus. These services are among the best positioned to take advantage of improvements in online infrastructures and the billions of captive eyeballs looking for entertainment.
At a glance:
- Online gaming has an opportunity to monetize the large number of people around the world seeking home-based entertainment
- Older generations of players come online in order to connect with their younger family members
- Maintaining the digital infrastructure needed to meet the overwhelming demand will be a challenge
With people stuck in their homes for extended periods of time, there has been an explosion of global online gaming. Industry giant Steam announced that they broke their concurrent online users record on March 15th, with more than 20.3 million people using the service at the same time. With so many closed offices and schools, many people are looking for ways to occupy themselves and young children.
Improvements in payment infrastructures have opened up new avenues for smaller, and independent gaming companies to reach previously unreachable audiences. Companies that take advantage of the scalable payments infrastructure Rapyd operates globally can grow their user base exponentially and enter new markets faster. This provides an opportunity to create lasting relationships with customers that will extend beyond the scope of the current crisis by accepting local payment methods.
At a glance:
- Virtual classrooms fill curriculum gaps for millions of students
- Underemployed or unemployed workers will use online learning courses to improve their skill sets
- Newly homebound subject matter experts will use online platforms to monetize their expertise by creating online learning courses of their own
- Creating robust online learning programs will be difficult to do in a timely manner
- Standing out in a crowded field and competing with free or freemium options will be difficult for online learning platforms
It can be hard to understate the impact COVID-19 is having on education. Schools are closed across the world. Some have outright ended the school year early, while others look to the same online tools as the business world to create virtual classrooms.
Online learning gives people the ability to gain new skills and emerge from the pandemic in a better position than before. Some professionals are using this new remote-learning world as an opportunity to reassess their careers and increase their skill sets while they have the time to do so.
Online coding platforms like Codecademy, general education tools such as Coursera and MasterClass, and university programs with robust online offerings are the most likely winners in this scenario. Popular non-profit online learning platform EdX — which provides hundreds of online courses from top-level schools such as Harvard, MIT, and Princeton — have made their class audits free and incentivized low-cost paid upgrades, creating the potential for a long-term relationship with consumers that will extend well into the medium and long-term.
Platforms allowing individuals to create and monetize their own education programs have the potential to do for the education space what marketplaces are doing for eCommerce. Experts in their fields who find themselves out of work temporarily, or even permanently, can use their expertise to create online classes hosted on these platforms and educate others looking to improve their skill sets.
At a glance:
- Traditional ecommerce platforms have an opportunity to stand in and provide both high-demand necessities, as well as goods that offer a bit of normalcy
- Some consumers are breaking down biases toward online commerce
- Those who fail to make the switch to digital commerce risk significant drops in sales
As billions of people around the world sequester themselves in their homes, ecommerce companies have emerged as a vital lifeline. Online sellers of consumer products that are in high-demand during an emergency, like over-the-counter drugs and cleaning supplies will continue to see growth.
Similarly, companies that sell less essential products but have robust ecommerce mechanisms may not see as sharp a decrease in sales as others. With so many people currently experiencing unemployment, non-essential purchases are likely to go down across the board. However, there may still arise some demand for normalcy in the face of this pandemic, and it would not be unlikely for some ecommerce sites to see increases in sales as the initial circling of the wagons relaxes back into a relatively stable economic stasis. It could take some weeks or months to see this effect.
At a glance:
- Many gig economy companies are shifting emphasis to their delivery networks.
- Non-digital businesses will be forced to improve their digital offerings in order to stay afloat.
- Delivery opportunities have not yet proven themselves to be as lucrative as transportation had been.
Ride-hailing companies like Uber, Lyft, and the Singapore-based Grab have retooled their existing models and doubled down on their delivery services as more and more people require food and other goods to be delivered directly to their doors. This adaptation has allowed many of the otherwise out-of-work drivers to retain some of their income. Thanks to this capability, many brick-and-mortar retailers and restaurants have expanded local home delivery and online purchasing in a bid to keep the “doors” open while they are forced to be closed.
Delivery via ride-sharing company is nothing new, but thanks to the existing ordering, payment, and delivery infrastructure, it is positioned to break out and perhaps create a permanent shift in consumer behavior as companies see the need to diversify the ways in which they conduct their businesses in order to be more nimble during future emergencies.
At a glance:
- Remote freelance platforms will have an influx of skilled workers to their sites
- The economic situation will break down existing barriers to freelance platforms that many of those skilled workers
- The ratio of skilled workers to available projects on freelance platforms could balloon as the economic outlook becomes more dire and companies fold
Freelance Remote Work
We’ve discussed at length the reasons why remote work SaaS companies are expected to weather this economic downturn with millions of people working remotely for the first time. However, there’s another component to the remote work ecosystem that is also positioned to do quite well. Remote work gig-economy platforms such as Fiverr and UpWork offer a way to combat unemployment or underemployment by giving professionals the platform they need to operate their own small businesses.
For instance, companies or individuals in need of short-term contract design work can discover, vet, and hire professional designers on Fiverr who then work remotely to fulfill the contract. It’s a way to help surplus skilled labor increase their income during downtimes. These platforms have existed for many years, but have not broken into the mainstream. With the proliferation of many at-home skilled professionals looking for work while quarantined, these platforms are a vital lifeline providing needed services in a safe way.
At a glance:
- An influx of brick-and-mortar companies will bring new retailers and customers to the marketplace
- Unemployed skilled workers will create their own businesses and house them on marketplace platforms
- With more retailers using the site, there may not be enough demand to make them viable
- Expanding into new markets means building out local payment methods
Arguably the most diverse form of platforms, marketplaces span many industries, making it difficult to make generalizations about how they are faring overall. However, for marketplaces to be successful they require sellers, of which there are about to be a huge increase in the coming weeks.
It may seem counterintuitive but this is one of the best moments to start a business. With the sales infrastructure provided by marketplaces such as Etsy, eBay, etc. good providers can find customers across the world much more easily than they have ever been able to before. Combine these platforms with the kind of robust payment infrastructure Rapyd has created, and whole new markets open up for the small (or nano) business-owner.
Many marketplaces will benefit from an increase in skilled labor who are either unemployed or underemployed and willing to take the opportunity to go into business for themselves. Existing brick-and-mortar retailers needing to diversify their sales methods immediately in order to stay afloat are also turning to online marketplaces and the preexisting sales infrastructure they provide. Some are significantly expanding their online offerings. Others are making this essential leap for the first time. As the crisis continues and economic woes for small businesses deepen, the speedy switch to digitalization these marketplaces offer to “main street” retailers will be a big part of why some emerge in the coming weeks or months still in business and others, unfortunately, do not.
Thriving companies have created innovative products but more so, they’ve created innovative ways to consume their products that fit the current situation. There is a way ahead for those who haven’t done so yet, and a few tips to get started.
From the middle of the COVID-19 economic crisis, it could be easy to think that the situation is dire across the board. It is in some ways, but as we’ve pointed out, there are many ways that innovative companies aren’t just surviving the crisis, they are thriving in it and helping to create whole new economic paradigms that could shape the next few decades of commerce.
Forward-thinking companies will find that there are many opportunities to seek solutions outside of their traditional paths of success. Diversifying their sales mechanisms, embracing the gig-economy, and providing localized experiences are just a few of those ways.
For companies hoping to navigate a turbulent environment, we recommend they consider a few things.
- Look for new customers in unexpected places and utilize existing integrated fintech solutions at your disposal to reach them.
- Embrace the local experience and understand that reaching a customer and convincing them to buy is only half of the sale. Providing them with the local payment methods they need to complete the sale will allow a company to operate in markets they couldn’t enter before.
- Constantly be testing new approaches, even if the company is currently in the “winner” category. A strong expansion strategy means consistently iterating new ideas and diversifying sales and payment methods to avoid succumbing to the next economic crisis.
While the way ahead could be bumpy for many businesses, there are resources available to help companies better position themselves to survive the economic downturn. Rapyd is the world’s leading expert in local payment methods. We have released a helpful guide for companies looking to reach new customers, grow cross-border sales and expand into new markets.