Written By: Ammar Shahbazi
Back in the 90s, business leaders had begun to invest in a world that transformed our lives forever. Armed with novel technologies, scores of giant businesses injected billions to reach consumers in every corner of the globe. The dizzying range of innovation in the tech sector that gave birth to juggernauts like Google and Amazon only helped shrink the distance between the poles. Humanity had not seen such a seamless movement of people, goods and services in its entire recorded history and then, out of the blue, struck Covid-19 bringing the wheels of the global economy to a screeching halt.
There is hardly any doubt that the Post Covid-19 world will stand out as an epochal moment in our lives. Like our great-grandfathers, who had stories about the Second World War, we, as a generation, will have anecdotes from this pandemic to share with our posterity.
Post Covid-19 World Ahead
But how badly are we affected? Experts are drawing up doomsday scenarios some even predict that the 2008 Financial Crisis would seem a like a glitch in the larger scheme of things in the post-Covid-19 world. So, the wise thing to do is to have a realistic analysis of the situation, which is based on data, no matter how limited.
There is clear indication that the Covid-19 crisis would impact different sectors of the economy differently. There is no doubt that the overall demand will shrink, which in other words mean a recession is on the offing; but the severity of the recession, or even worst a depression, won’t be a death-knell for business across the whole spectrum of the economy.
Distance Is Here
Businesses that rely heavily on human-to-human contact are taking a hard beating. Many are already feeling the pinch while those with stronger coffers are fighting the wind. Two sectors that immediately come to mind are: education and restaurant.
The global lock-down has sharply affected these sectors. If the shutdown continues for several months more, then many businesses in both these sectors will reach the brink of liquidation. If education goes online then students will have more options, including foreign or inter-country institutes and they will opt for centers with better online platforms rather than the ones that, say, organize better career fairs or events.
Similarly, if food sector is forced to switch entirely upon delivery then it will shrink too and the culture of working from home will also affect the usual demand for foods from restaurants. In any case, the prospect for these sectors do not look rosy. It is crucial for business in these sectors to act and act fast.
Supply Chain Gap
During 2008 financial crisis, companies with deeper pockets recovered faster and even saw their incomes soar in the following year. Though a comparison with the 2008 Economic Crisis is not applicable in the present circumstances, but we know for a fact that many firms were practically immune to the financial collapse and managed to weather the crisis without any trouble. However, companies that rely heavily on in-time supply chains need to rethink their business models and come up with contingency plans to survive in these trying times.
The e-commerce sector has witnessed a sharp rise in growth since the world recoiled into a lock-down. Online businesses are visibly eating into the sales of brick-and-mortar stores. The harsh truth is that the Corona-virus crisis has proved to be a boon for the online economy and worked as an unanticipated catalyst for its expansion.
If the crisis continues then Contact-free businesses have to be pro-active. Strategies that once seemed far-fetched have to be executed without wasting too much time on the drawing board. They have to start reflecting on the possibilities of drone deliveries, digital payments and hyper sanitized packaging. Teladoc Health, the largest US stand-alone telemedicine service reported a 50 percent increase in their service in the week ending March 20, which is a very telling stat for people associated with the online economy.
There is little doubt that the impact of the post-Covid-19 economy will be felt by all of us. But can we seize this moment of crisis and redefine the way we live? Can the digital world rise to the occasion with innovative methods to reconfigure the way humanity does its businesses?
That remains to be seen.