As the pathogen forces us to socially distance, people are becoming more and more accustomed to not seeing, talking to, and spending time with loved ones. It’s also difficult to get used to life without our favorite restaurant, store, or sporting event. With such a concentrated collapse of business and consumer confidence, the question on everyone’s minds is whether economic activity will even resume this year. The other question is whether they’ll be able to recover from the impact of coronavirus on their business.
How large will the consequences of COVID-19 be on B2B commerce, particularly electronic commerce? This depends on how quickly the virus is contained. But most experts agree that the effects will be significant. In this post, we’ll explore the long-term impact of coronavirus on business and what trends and opportunities to look out for.
Coronavirus and The New Reality of B2B eCommerce
While no one can say what the future holds, one thing’s for certain: we should forget about business as usual and get ready for a new world where B2B eCommerce plays an even more important role. One thing for sure, everyone should be getting ready for the impact of coronavirus on business – and make preparations to pandemic-proof their business.
Business impact 1: strengthened domestic supply chains
Back in 2018, Trump was chastised by critics for imposing tariffs on imported steel. Today, trade wars are being fought on multiple fronts: the US-China economic conflict is only intensifying while France and China spar over linking aid to adoption of Huawei’s 5G technology. With the coronavirus fueling geopolitical tensions, America’s access to regular supply chains is also being tested, driving the demand for homegrown alternatives.
Small B2B businesses such as ShortRunCards implemented a “Produced in the USA” campaign as soon as coronavirus hit China. Jocelyn Silverman, Creative Marketing Director explains that this quickly became the first question people asked when calling in due to coronavirus fears.
Business impact 2: curtailed customer appetites
We already know that businesses in the tourism, hospitality, retail, and restaurant sectors are experiencing some of the hardest hits. However, the consequences of reduced purchases and social distancing slow down unrelated fields such as manufacturing and distribution – especially outside the B2B medical supplies field. The fear of the unknown only exacerbates this trend, as individuals, families and businesses with stable revenues start to limit spending.
These trends put pressure on eCommerce, too.
“We’ve potentially entered an era of cheap clicks and low-conversions — tight-fisted visitors all too happy to window shop.” says Aaron Orendorff, VP at Common Thread Collective.
For brands, this is high time to ramp up sensitivity to customer needs, causes, and realities, while removing every impediment to action.
Business impact 3: omnichannel B2B eCommerce
Worldwide stay-at-home orders mean a large influx of customers moving online, straining all digital commerce merchants from B2C, B2B, to B2D. As people remain isolated and the need for essential goods remains high, they turn to online shopping.
While major players like Amazon, eBay, and Alibaba gain the most, specialty sellers and B2B merchants with high-demand goods have an opportunity to do well, too. The best-positioned businesses are those who embrace mobile and understand omnichannel, including cost-effective home delivery, BOPIS (buy online, pick up in-store), and curbside pickup.
Impact of Coronavirus on Business: 6 Trends to Anticipate
As the general public becomes increasingly reliant on the web browser, COVID-19 is an opportunity for B2B sellers to follow suit. While not everything can become virtual, many areas of business can benefit from technological disruptions. Our readiness to use online tools, combined with an unprecedented wave of social distancing brought on by a global health crisis makes B2B eCommerce ripe for disruption.
In times of crisis, B2B eCommerce businesses pivot and take on new business structures. As B2C experiences shortages, customers turn to the source, leading to B2B2C and D2C scenarios. Other B2Bs see new opportunities where previously there were none. For example, Foodmaven, a B2B food marketplace supplies to kitchens, restaurants, or hunger relief organizations. They used COVID-19 to pivot and sell directly to consumers. Other B2B merchants can do the same by repackaging and reselling items directly to consumers.
“[We’re seeing organizations] re-shifting their supply chain by sourcing online for business partners they’d normally find through other traditional channels.” comments Maya Cress, PR & Communications Director.
When businesses are “posting 5x faster, and connecting 6x faster than average”, there’s no other explanation – they’re preparing for prolonged lockdowns and possible economic fallout.
Some of the biggest disruptions can be seen in the healthcare industry. Healthcare compliance act HIPAA (Health Insurance Portability and Accountability Act) was already amended to give medical providers more flexibility in using digital tools. This means that during emergencies, health care providers can use video chat applications such as Apple FaceTime, Facebook Messenger, Google Hangouts, or Skype to provide telehealth services without the need for risk evaluation and documentation for compliance.
As resources stretch, we see more discussions around B2B telehealth and AI-powered monitoring tools that allow healthcare providers to track patient health remotely and in real-time. Christopher, CEO of Fast Layne Solutions agrees. “We just completed a deal to offer a standalone, Bluetooth-enabled telehealth app with all the base features for up to six months for free to help doctors and their patients get through the pandemic.”
Furthermore, the digital transformation in healthcare allows B2B medical suppliers to benefit from legislative disruption as well. While policymakers debate the implications of China supplying 90% of critical US medicine, domestic suppliers can potentially expect new opportunities in this sphere.
As people get used to staying home, VR experiences will become the new norm: Adidas and Zara implemented concept stores to virtually try on clothing. This trend will spill over into commerce, and B2B eCommerce web stores that offer personalized experiences will remain on the customer radar long after social distancing ends.
Some companies wasted no time in going virtual. Instead of hosting meetings in a conference center, Pathable, a B2B mobile app for conferences and tradeshows, moved online – offering webinars directly on the event’s website.
“We’ve seen roughly half of our clients shifting to virtual, with the balance either canceling, postponing or taking a wait and see attitude.” confirms Jordan Schwartz, CEO of Pathable. “Future events will offer hybrid experiences, where remote attendees can participate via these same virtually, at perhaps reduced prices, while others continue to attend in person.”
About half of the US workforce perform jobs compatible with some remote work, and many companies are embracing this idea. As the underemployed look for new income streams, freelance websites such as Fiverr and Upwork are also seeing a boost in popularity. However, businesses must realize that once their workforce becomes accustomed to working remotely, it will be harder to deny employees this option later.
B2B sellers are taking note of these trends. Branch Furniture puts together work from home packages for employees who need office furniture. They paused advertising for traditional office furnishing and focused efforts on home delivery.
“Our supply chain wasn’t designed to optimize for smaller, personal deliveries, but rather large corporate ones”, explains Torin Rittenberg. “This has been a challenge, but we think we’ve overcome the worst of it.”
It’s difficult to predict the state of supply chains in the long term. Even the largest ones in the world are at risk due to collapse of air travel and auto manufacturing shutdowns, according to Yossi Sheffi, professor at MIT and director of the MIT Center for Transportation and Logistics. “Most auto sector suppliers don’t have much cash on hand – making it tougher for smaller suppliers.”
According to Sheffi, Boeing is encouraged to accept government assistance to protect its global supply chain. As orders dwindle to a standstill, it won’t take long before the coronavirus business impact is felt by fourth and fifth level providers.
Despite the bleak overall picture, demand for certain products has remained consistent. Jake Rheude, VP of Marketing at Red Stag Fulfillment explains, “In a moment like this, companies that sell goods deemed essential (such as non-dairy milk alternatives) are probably the only ones for whom it’s business as usual.” Still, challenges by any supply-side driven downturn can cause bottlenecks for everyone.
In a time of crisis, the economy is the first to suffer. Brick-and-mortar businesses are reducing spending, which hurts the suppliers, distributors and manufacturers in their supply chains. Most importantly, businesses aren’t prepared. According to CPA Practice Advisor, over 69% of businesses struggle with cash flow issues and half do not take measures to prepare for a wide-scale economic downturn.
“Lending is based on a model that’s hundreds of years old, a time when businesses had buildings or equipment as collateral”, admits Keren Moynihan of Boss Insights, a fintech startup. In today’s service economy, most companies aren’t in that position and as a result the approval rate is very low – 28% before this crisis.
“Since COVID, the world has gone digital overnight”, continues Moynihan. Lenders are faced with a surge in applications which they are not able to process in a 100% digital and risk-averse environment. Although some applications can see delays in processing, “we see many lenders extending existing loans with the SMB businesses they already support.”
How Can You Protect Your Business During These Times?
What will the real impact of coronavirus on business be?
As governments battle with infection rates, the economy shows no signs of recovering.
In the meantime, B2B eCommerce businesses should analyze their financial status and the situation around them. In the long-term, businesses will need to contend with challenges like labor shortage in manufacturing, recession impacts, and changing purchase patterns. Chances are the competition isn’t sitting still and is already taking action to face these changes.
In the upcoming webinar titled “How digital commerce protects your business in times of crisis” on Thursday, April 16th, 8 am PDT / 5 pm CET, we’ll explain the right considerations, choices and actions for B2B businesses right now.
They will be joined by Yoav Kutner, CEO and co-Founder of Oro Inc. for a live and value-filled discussion of how digital commerce tools can uncover new revenue streams and boost acquisition during this challenging period.
The webinar has concluded. You can watch the recording for free.