With the new updates from the World Health Organization in regards to the slow removal of quarantine and city lockdowns, it’s expected that this COVID-19 situation is going to linger. Some were anticipating a parabolic curve similar to a bell curve that governments around the world are trying to flatten, however it appears that it will be more like skewed curve with a steep uphill and a very long decaying tail. Hence longer business shutdowns in different industries such as entertainment, clothing, catering or whatever store you find in your average shopping mall. Some actually as the tail lingers might, as a last resort, vacate premises leading to a sharp fall in commercial real estate rents and values.
On the other hand as people stay home for both work and leisure as they self isolate, there will be demand for online services like never before. Online VOIP communication tools such as Zoom are being deployed and used by churches to hold their congregations. People are buying their groceries online to avoid getting infected as they queue in front of cashiers. People stuck at home who got bored of the content offered by Netflix are starting to explore other venues of entertainment online. People, possibly recently laid off, trying to spend this phase of their life in a productive way watching online MOOCs to upskill themselves in preparation for what to come. So in essence, the demand won’t be just for work collaboration tools such as Zoom, Teams and online file editing and sharing tools, but for every need and want driven by our human nature, either it’s ordering food, seeking entertainment, learning new knowledge or even attending to their own beliefs.
Businesses trying to pivot their brick and mortar business models to the digital world, soon they will realize that physical advertising on billboards and street signs is no longer of use and they will cause a surge of demand on online advertisement causing rates to soar high making it difficult for pre-existing small online businesses to out bid them so they would go for other alternatives such as content advertising on either their websites to attract traffic or online services such as Youtube, Instagram, Facebook, etc.
And of course after the large brick and mortar businesses realize that online shopping carts won’t really cut it specially for luxury goods and services, they will switch to online sales and formulate virtual call centers where their sales people will need business applications such as CRM systems to coordinate and organize their efforts so they can stay in business. And of course, on-prem implementations of these systems will be out of the question, causing a further surge of demand for online services.
All of this combined will cause data centers around the world to run out of infrastructure capacity for storage and computation power leading to eventual increase in infrastructure spot prices. I’m talking of experience on this one as pretty recently one of the major cloud services providers was not able to offer capacity in certain regions in Europe for days. Also ironically as I was drafting these lines, Medium website kept going offline. I may speculate it was an infrastructure capacity related partial outage.
Some small businesses might actually crumble due to heavy weight giants suddenly entering what used to be their digital playground niche markets. These giants have massive supply chains at their disposal and what used to be stores now warehouses around the globe not to mention huge capitals behind them, they can easily drive prices way down as small businesses struggle to negate shipping hurdles during COVID-19, while outbidding them on online advertising and services.
Whomever is going to survive this digital business holocaust will take all, as a consolidation phenomena might actually take form and shape the future same like what happened during and after the 2007/8 global credit crisis where smaller banks got acquired by larger ones as they couldn’t sustain operational expenses as interest rates got low. Nevertheless, small businesses can capitalize on their agility to move first with this understanding of new market dynamics in mind to better orient themselves before the giants awaken, or at least opportunize the current new circumstances to generate enough new revenue streams to sustain them what to come.
In conclusion, COVID-19 is a change and a business disruptor, it depends really on which side of this change a business will be as its anticipated consequences unfold. So in order to survive it they need to start orienting themselves now with no further hesitation, hence, time is of the essence.