Recessions, by their nature, may be the quintessential disruptor. They often reveal weaknesses in the long-term health of an industry, shining a spotlight on outdated business models that were overlooked during boom times. However, recessions also create opportunities, as consumers and businesses adapt to changing circumstances.
The COVID-19 pandemic and resulting recession qualifies in both cases.
Sheltering in place has brought dramatic changes to how we live and work, particularly in the Internet space. Consumers shifted more grocery and home goods purchases online; businesses embraced innovative ways of working remotely; and society explored untapped avenues of communication and entertainment. But these areas may be just the beginning.
As nations address both the coronavirus and the related economic downturn, here are five areas of potential disruption online:
Will a Small-Businesses Recovery Fuel Search and Social Platforms?
U.S. small and midsized businesses (SMBs), hit hard by state lockdowns, will be looking for ways to get consumers shopping again. This may mean a greater role for search and social media giants through the end of next year and a more powerful avenue for SMBs to market their services. Consider that social media players have tens of millions of SMBs on their platforms and just a fraction of those are advertisers. Moving forward, this may grow, as SMBs look to start/restart their businesses.
Likewise, search engines could see increased usage by SMBs by focusing on local reach, easier SMB on-boarding, and smaller minimum dollar commitment for ads. Another avenue could be greater monetization of navigation apps with local, national and branded advertising dollars. Broadening this would allow large retailers, brands, and local businesses to reach potential shoppers within their geographic area who express intent (“search for donut shops near me”).
For social apps, look to see a more sustained focus on building digital town squares, local groups and e-commerce offerings. Key barriers to overcome in the e-commerce space include robust, real-time inventory, frictionless payment, and logistics.
How Will Ridesharing Brands Evolve in the Time of Coronavirus?
Ridesharing companies have seen revenues plummet, as lockdowns dramatically reduced passengers. To stay afloat, these companies have been experimenting in the shipping and logistics space, helping retailers deliver products and better compete with e-commerce giants.
If successful, these efforts could mean new revenue streams, increased driver employment and higher potential earnings power for its drivers. This is particularly notable heading into 2021, when the elevated unemployment rate in the U.S. could result in a larger pool of available drivers. Ridesharing companies may look to expand into ancillary services and/or to offer lower prices for riders/consumers in their core business. What could change the outcome? Substantial growth could mean incremental regulation (benefits, vacation allowance) and increased labor costs.