The pandemic showed us the future of business is online

Covid-19 has changed the landscape of many industries, as well as outright interrupting them. Being 18 months into the pandemic, though, more concrete conclusions and predictions are starting to be made.

Early on into the pandemic, the markets tanked. The March crash caused a panic surrounding the livelihood of international business. Supply chains were interrupted, postal services were delayed, and the highstreets were closed.

Besides logistics suffering, with the on-going semiconductor shortage causing the production of cars, video game consoles, and many other electronics to suffer, there have been a lot of winners born out of the pandemic.

Putting aside supply-chain issues, 2020 will be looked back upon as a turning point for e-commerce. Online sellers saw unprecedented levels of demand due to the closure of the high street. It’s a habit that was forced, with many people unable to go into their favorite stores, and suddenly become educated on how to order products online. But it’s a habit that is expected to stick.

The Impenetrable Internet

It sounds obvious but whilst the world was brought to a standstill, with almost everyone and every business feeling vulnerable, the internet breezed through the pandemic. We come online to find the latest Covid-19 news, content is being created like usual, and we saw it as our escape route.

Companies flocked to services offering remote business solutions and SaaS due to their offices closing. VPN sales surged, as did B2Bs offering business management software.

Lockdown very quickly shone a light on companies that lacked a diversified revenue stream. Restaurants who were already using Uber Eats had an instant survivorship advantage, as did online retailers and firms using remote freelancers.

A Flourishing Amazon

Despite being under pressure regarding their environmental impact and grueling working conditions, Amazon’s profits soared 220% during the first quarter of 2021 compared to the same quarter last year.

This is a staggering amount for a company that was already labeled as taking over the high street prior to the pandemic. It also goes to show that sales are far from a temporary response to the lockdowns, as most of Amazon’s customers are currently free to visit the high street.

It’s not just Amazon that is benefiting though, with many small online sellers who use Amazon as their marketplace are performing very well.

International Payments

There is a synonymy between online commerce and international business. Once you are delivering your products through courier service and not through foot traffic, it makes sense for most sellers to open up to international markets.

This is why online payment solutions have also seen a surge in demand during the pandemic. Companies that rely on B2B international payments, so corporations can transfer money internationally, have seen growth during 2020. Wise is one of many examples, which saw 70% growth in its revenue during the 2020 financial year.

This is a strong indicator that international business during covid was a big success. Given that tourism plummeted as borders closed (and has only very recently been opening up more), we should expect to see foreign exchange and remittance firms struggling.

Because we have seen growth, it shows that international business more than made up for the downturn in tourism. It should also be taken into account that it’s not only international e-commerce and B2B firms that make up this FX demand, as some domestic SMEs have turned to hiring remote workers and freelancers overseas.

With offices and commutes being interrupted, it made sense for firms to look worldwide in their remote workforce personnel. Not only did this cut costs, but turning to a more digital workflow became a forced inevitability for many.

Global e-commerce

Global e-commerce rose to $26.7 trillion during the Covid-19 pandemic. It was reported that Covid-19 caused e-commerce’s share of total retail sales to rise from 16% to 19% during 2020, a trajectory that is expected to continue.

The UK saw one of the most dramatic changes in habits, as online’s share of retail sales fell from 15.8% to 23.3%. Though, China and Korea remain to have a greater reliance on e-commerce, with 34.9% and 25.9% shares respectively.

Among other B2C e-commerce companies, Shopify saw a large increase in its GMV, going from $61 billion in 2019 to $120 billion - almost a 100% increase. Pinduoduo and Walmart also saw increases of over 60%.

Shopify has become a useful indicator of the entire e-commerce market. As its market share grows, it helps us discover more about the market as a whole. There are now 1.75 million merchants using the Shopify platform, hosting over 1.59 million live websites. Stretching 175 different countries. Shopify has become a one-stop shop for online sellers.

In fact, it became an accessible way for high street retailers to create a new revenue stream during lockdowns. For example, a beauty salon that is forced to close could simply set up a Shopify store within a day and begin selling some inventory to help meet liabilities.

Customers can also use an automatic currency exchange rate for overseas products, or manually select a currency. This has also led to increased efficiency in the e-commerce market, in which customers are becoming savvy enough to pay for goods in the seller’s base currency.

Eliminating the poor exchange rate that is usually offered by online payment platforms, customers began to exchange their money on their own terms at places like Wise, Revolut, and OFX.

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes