How the Coronavirus will affect your online business!
- By Oskar Gräsman
- March 20, 2020
We are currently in the eye of the storm. A storm most of us couldn’t even imagine. It is less than 90 days into this year and the biggest pandemic in the last hundred years has hit us. A lot of countries are in lockdown and people are put in quarantine or self-isolation, including most of the Wincher team. We do feel with everyone affected by this situation, especially those who get really sick and those who might lose friends and family. But we also feel for those people who will lose their jobs.
Because this pandemic is not only taking lives. It’s turning the world economy into a bloodbath. It looks like it’s getting a lot worse than both the financial crisis 1997 and 2008.
A lot of the big traditional offline businesses are suffering. The bigger the industry is, the bigger the companies are, the bigger the redundancies will be.
Online businesses have a huge advantage in situations like this. We can easily mobilize ourselves and our staff and bring our offices home. But all online businesses are in no way protected from the economic consequences of the COVID-19 pandemic.
Here is what is happening and what we think might happen to some of the biggest online industries.
The traditional shop-like travel agency is long gone. A few have managed to stay alive thanks to old faithful customers or by being super niched. But online has been taking bigger and bigger pieces of the cake and is currently holding 82% of all travel bookings.
All COVID-19 affected countries are either closing their borders or at least recommending people to stay at home. Obviously this makes the whole travel industry take a huge hit. You have probably already read about the empty airplanes flying between airports in Europe. And with barely any travellers on the flights, restaurants, bars and especially the hotels will be losing a lot of business.
Expedia Group and Booking.com, which both are hybrids between online travel agencies and super-affiliates, are taking a massive hit on the stock exchange.
Our prediction: As far as we know the COVID-19 pandemic can go on for months, but even after we, as a society, have managed to stop it from spreading it will take time for the travel industry to recover. Unfortunately, a lot of people will be struggling financially and travel won’t be on the top of the list of priorities.
There’s also a big risk that a lot of people will have a bad association with travelling, with the COVID-19 still on their minds.
The year 2020 was predicted to be one of the best years in history for the online betting companies with several huge events lined up. First up was the UEFA Euro Cup 2020 which would have started in June, but has now been postponed to 2021. If the Summer Olympics of 2020 in Japan is getting postponed or cancelled, is yet to be determined. The Eurovision Song Contest 2020 which was supposed to take place in the Netherlands in May, just got cancelled as well.
On top of this, most sports events and big soccer leagues have been cancelled as well. Don’t take our words for it, the public gambling companies are crashing on the stock markets.
Our prediction: Huge events like the Olympics, UEFA and Eurovision Song Contest have a tendency to attract everything from people who normally don’t bet to professional bettors.
Since these and a lot of other events won’t take place, including most of the big soccer leagues, neither these potential new bettors or the pros will make it to the betting sites. Although, people who really love to bet will find other things to bet on, so this business won’t be completely dead.
We know this is a bit wide. But the e-commerce business looks very different in different countries and regions. Countries who have access to Amazon, and certain regions with access to Amazon Prime. Amazon recently announced they are gonna hire another 100.000 staff to meet the increasing demand due to the coronavirus.
In countries where Amazon is not present there’s still a lot of smaller and more niched e-commerce businesses. Among them, there’s a huge gap between those who have seen an increase in orders, and those who have seen their business decline. We have spoken to a couple of e-commerce owners who have already seen their sales drop by 75% in the last weeks.
Our prediction: A lot of e-commerce businesses will suffer a lot. Some might not survive the COVID-19 outbreak at all. It all comes down to what you are selling, and adapting to the current situation.
Of what we can see, food ordering online is increasing rapidly. Both when it comes to home delivery of take out food, but also groceries. Obviously the demand on protective gears, like face masks and gloves, are high. As well as hand sanitizers and drugs.
But there’s hope. Whilst people have been busy stocking up on the most important things like groceries and toilet paper to prepare for self-isolation and quarantine, the boredom of sitting at home will soon hit. This will likely result in a slow increase in people ordering stuff online. But don’t be surprised if the shopping pattern is a lot different than usual.
Streaming and On-Demand Video
There’s no doubt more people will sit at home watching TV, and especially services like Netflix during this crisis. In fact, the EU is worried that the load on Europe’s infrastructure might not be able to handle it. The increase of people working from home in combination with the huge amount of people streaming has urged the EU to ask services like YouTube and Netflix to temporarily limit their streaming to standard definition, rather than 4k and HD, and that consumers should be conscious of their data usage.
But Netflix, for example, has Open Connect which offer ISPs to cache the content themselves which takes the load of the core infrastructure of the internet. Although a lot of big streaming services already have similar programs in place to tackle this, Netflix just agreed to limit their streams to standard quality within the EU.
Adult movie streaming is also expected to increase. One of the bigger online adult movie providers offers their premium services for free to Italians stuck in quarantine, in what looks like a clever PR stunt.
Our prediction: As long as we have the internet, the online video streaming services will flourish. Although, Netflix has not been exempt from the blood bath we have seen on the stock market. But they have not been as badly affected as many other companies and will probably recover a lot faster than others.
But there might be a backlash for the streaming giants, depending on how long this will be going on. Netflix, Amazon, Apple, and so on, might be struggling to create new content. This potential backlash will not show itself until several months after the crisis though.
As opposed to online betting, there’s currently nothing that indicates a decrease in online casino players. Most people who play at online casinos do it as a form of entertainment. So being locked up in quarantine wouldn’t change that a lot. We did reach out and managed to get hold of a few industry professionals. Some have noticed little to no difference, others have seen a slight increase in activity.
Despite this, most gambling companies on the stock exchange have taken a massive hit. Mainly because most of them offer betting as well, which have taken a huge hit.
Our prediction: In the short run there won’t be a huge change in this industry. Possible a small peak as the boredom hits. But depending on how long people need to stay indoors, with potential financial uncertainty, there is a big risk online casinos won’t be prioritized.
Software and SaaS
This is also a quite wide area to cover and it’s obviously gonna be very different for every company depending on the character of the software. Today software is everywhere. On our computers, on the internet, on our phones and in a lot of our home gadgets.
As the outbreak started in China, an eight year old mobile game reignited and hit the top positions in the AppStore. The mobile game is called Plague inc, which is a pandemic simulation game, where your goal is to create a virus that wipes out the world. Three weeks ago the app was removed from the Chinese version of Apple’s AppStore. But as the coronavirus spreads over the world, so does the popularity of the game.
Our prediction: For B2C companies who make entertainment software like games and mobile apps probably have a lot to look forward to. Normally people would be spending more time outdoors as the spring approaches, now a lot of people will be locked up inside.
For B2B software and SaaS companies, it won’t change massively. The growth might slow down a tiny bit, but more or less business as usual.
There might be exceptions though. B2B companies serving offline industries might see a decline in business. Softwares that caters for shops, hotels and bars might start to see customers leave. On the other hand, software companies that help restaurants to offer take out with home delivery, have already started to see a huge increase in business.
Last but not least, affiliates. It doesn’t really matter if you are relying on SEO, PPC, social media or email marketing. You will be affected. How you will be affected all comes down to which niche you are operating in.
As mentioned before, the world’s biggest travel affiliates, Expedia Group and Booking.com, are both taking a massive hit on the stock exchange. Obviously, all travel affiliates and travel guides sending traffic to these two networks will also suffer when travel-related searches and traffic plummets.
For online betting affiliates, it will be tough as well. Both searches and general interest will obviously be close to zero when it comes to cancelled events. Your best bet is probably to push events that are still taking place.
For Amazon and general e-commerce affiliates, you might easily be able to adapt your sites to promote necessities and things that will help people who are self quarantined. Especially people who are home with their kids might need help finding things to do, like board games, jigsaw puzzles and books.
For streaming, online casino and software business – we don’t expect any huge short term changes.
No one really knows when this will be over. All of these predictions are educated guesses, but after all, guesses. We have based it on search trends, news reports on the COVID-19 outbreak and looked at how some big industry leaders currently are performing on the stock market.
Our intention with this blog post is not in any way meant to help people take advantage of the coronavirus outbreak, but to help people to adapt their businesses to the current situation. For every business that can keep on running as usual, a little less will the overall economy be affected.
I think all of us that are affected in any way are just waiting for everything to go back to normal. And for most of us it will. But it will take time.
In all, it feels good to see how people are doing everything they can to help their peers. And how we are keeping our hopes up and doing our best to tackle the coronavirus with a smile and a big dose of humour. This chapter will be known as peak-meme in the books of internet history.
Please let us know what you think of this post and feel free to share your own COVID-19 related stories in the comments.