Health experts worldwide provided news that no one wanted to hear. Business leaders were optimistic that the tremendous disruption of the Covid-19 coronavirus would be resolved quickly. That a vaccine would be created or immunity to the virus would develop rapidly, making it safe to return to ‘business as usual’.
We now know that it may be another year or possibly two years before many of the lockdown and health and safety protocols for Covid-19 can be lifted. The pivot that businesses had to make in order to quickly downsize, economize, and restructure staff into remote working accommodations were meant to be temporary. As we understand the long-term nature of the global pandemic, businesses need to develop a strategy that prioritizes productivity, profitability, and safety.
Coping With the Disruption of Manufacturing and the Global Supply Chain
When China succumbed to the Covid-19 virus, the impact was catastrophic for the APAC region. Factories that produced wholesale goods were forced to close. Inventory on hand from pre-production activities quickly dissipated to fulfill export purchases from developed countries. And then the great shortages began to be felt.
Grocery and retail store shelves were barren within weeks. The G7 nations realized quickly how dependent certain industries were on imports from China. Retail products, food items and processing, mechanical parts, electronics and technology goods, and a broad spectrum of e-commerce goods supplied through drop-shipping directly from China or FBA (fulfilled by Amazon) were reduced to almost zero.
The incapacity of China to continue manufacturing goods, created a sweeping worldwide shortage and crisis for manufacturers in developed countries, who rely on China for components. As China was immobilized, other APAC nations began to position themselves to fill the production gap in China’s absence.
Vietnam was one of the first countries to step forward and aggressively pursue export buyers. Prior to the viral outbreak, Vietnam was already poised for rapid growth, due to the USA vs. China trade war. However, while exports have continued to grow from Vietnam to developed nations, analysts point out that the country lacks the infrastructure to fully replace China as the world’s leading manufacturing supplier.
There is some speculation that during the trade war between China and America, it is possible that China found a way to circumvent the stifling tariffs that were imposed on goods for export. Some have suggested that China began shipping volume products, parts, and goods to Vietnam for repackaging and export, bypassing the trade restriction and additional tariffs imposed. And that if the trade war continues, China will make a silent but substantial investment in Vietnamese manufacturing infrastructure.
Dealing with Unmanageable Demand: Why Some Businesses Are Growing During the Pandemic
While retail products and direct consumer service businesses have taken a significant hit to demand because of social distancing and safety protocols, other businesses are positioned to grow steadily (and unexpectedly) through the duration of the Covid-19 health emergency.
With many recreational activities closed for the summer due to the viral pandemic, consumers have increased purchasing in some key areas that improve their home environment. For example, for the first time in decades, manufacturers of affordable above-ground pools have seen a tremendous increase in demand. Many distributors are currently sold out of prefabricated pools due to the unprecedented consumer purchasing trend.
Marketing agencies and digital marketers include website designers, app developers, advertising sales and creative marketing companies have seen a large uptick in demand for services. As businesses in all sectors adjust to social distancing protocols that can prohibit customers from visiting the location, SMEs and corporations are ‘doubling down’ with new digital marketing strategies to reach customers at home.
Service-related businesses are growing, as they are essential to consumers who want to isolate themselves for safety at home. Some of the small and medium-sized businesses that has seen tremendous sales growth include meal kits (home delivery), housekeeping service providers, video and board games, delivery services, grocery e-commerce (pick-up and delivery), and foods with extended shelf-life such as canned goods.
Pharmaceutical medications and supplies have understandably increased significantly this year, as both government health authorities and private corporations and businesses purchase increased amounts of protection equipment (PPE), monitoring devices (fever scanning tools), ventilators and nebulizer equipment (for home and hospital use) and steroid medications for the treatment of the pneumonia symptoms of Covid-19.
On the technology side of consumer and professional goods and services, teleconferencing hardware and software has grown significantly. Popular video conferencing SaaS provider Zoom posted Q1 sales of $328.2 million dollars, an increase of 169% over 2018 Q1 figures. The software industry has also seen an unprecedented demand for telemedicine or secure video conferencing apps for physicians who are required to provide distance health consultations and evaluations for patients at home.
Creating a Long-Term Contingency Plan and Strategy While Exploring Innovative New Ideas
In the first quarter of 2020, businesses learned which aspects of their model were most vulnerable to the impact of social distancing protocols. Hardest hit has been businesses that cannot provide the product or service they sell to consumers remotely. This includes fitness studios, dine-in restaurants, hair, wellness and aesthetic services, and manufacturing businesses that do not have the technological ability to create safe distance for workers in the production facility.
Your contingency business plan should evaluate what aspects of your business will not recover until the Covid-19 health threat is effectively managed. For some businesses, it may require a pivot to goods and services that can be provided right now, without impact from a health and social distancing protocols. Focus on those deliverables as new profit centers for your business.
Can aspects of your product or service delivery method to your B2B or B2C customers be changed to accommodate social distancing? We have seen restaurants pivot quickly to provide enhanced delivery and order-ahead for pick-up services while closing the dining area to prevent infection. Pharmacies which can be the epicenter of increased infection rates have also made a move to telemedicine consultations and pick-up or delivery of sundries and prescription medications.
For all businesses impacted by Covid-19, there is no contemporary playbook or ‘one strategy fits all’ resolution to the challenges of the current pandemic. This period of transition (while difficult for most businesses) can also provide a benefit; it can make your business rethink redundancies, streamline processes, significantly reduce operational expenses, and create salable goods or services which can be delivered.
An innovation. How have consumers' needs changed to the extent that they are seeking out products that they have not needed before the Covid-19 pandemic? One success story is WebAround, founded by Linda Boyay (CEO).
With a low manufacturing and shipping cost, the WebAround background filter has a Velcro belt that attaches to the back of a desk chair. Green screen models allow professionals to put a chroma key custom background (available in Zoom, GoToMeeting, and Skype) of a logo, or other stock images. At the time of writing, the popular tool for video conferencing background privacy was shipping internationally but is currently sold out.
In the midst of adversity lies opportunity, and part of your Covid-19 recovery planning may involve new product or service research that addresses many new needs that consumers did not have before the pandemic. The possibilities for growth are there, and many companies are increasing research and development budgets to discover new revenue sources in this ‘new normal’ business climate.