Crisis? What crisis – these companies show that success is possible in tough times
Pandemic is one of the words that has been inflected in every possible way in recent months. It affects not only public health but also the economy on a global scale. Its long-term effects are hard to predict; even now there is talk of both companies fleeing China and that country taking over the position of economic leader. Meanwhile, on a micro scale, many startups not only did not collapse because of the changing conditions, but used them to grow.
E-commerce emerges relatively unscathed
The undisputed winner, if one can speak of such at all, of the current crisis may turn out to be the e-commerce sector. Stores, restaurants and gyms were closed around the world, but people still had to or wanted to eat, dress, exercise, read or tinker. It was therefore natural to turn to e-commerce. Data from the Adobe Digital Economy Index shows that daily e-commerce sales in the United States in April were 50 percent higher than in March. Online food retail had a significant impact on this.
– This trend can be seen all over the world, including in Poland; so-called e-grocery is gaining importance. In recent weeks, several large grocery chains in our country decided to expand or simply launch food sales either through a website or an app. This industry is facing changes, which Amazon had already been signaling for several years. Jeff Bezos' company bought the supermarket chain Whole Foods, and it became clear that the future could be hybrid retail, combining physical stores with online sales. And that is now happening before our eyes. At the same time, the American corporation is developing the idea of staffless stores, and in today's – pandemic – times, they could take the market by storm – recalls Sascha Stockem, CEO of Nethansa. His company is a perfect example of a business resilient to the pandemic crisis. Nethansa specializes in optimizing sales on Amazon, where with the help of its proprietary Clipperon system it comprehensively manages its clients' operations. In May, the average turnover of its clients on the world's largest trading platform increased fourfold compared with the same period last year.
Stockem's words fit with forecasts recently published by eMarketer. They show that in the United States, online food sales will grow by more than 23 percent this year. It will be the fastest-growing category, but at the same time it still accounts for only a small share of retail food sales in the United States – just 3.2 percent. Meanwhile, this is a trillion-dollar market. If the e-commerce industry improved that result by two percentage points and reached a 5.2 percent share, it could count on an inflow of $20 billion. That kind of money is worth reaching for.
Startups see an opportunity
The startup Loop is aware of this. The company, which delivers food and personal care products in specially designed returnable packaging, recently announced via social media that it would expand its reach in the United States and test its solutions in European countries and Japan. It might seem that the pandemic and the promotion of everything disposable would destroy a startup of this type. Meanwhile, it is growing stronger by referring not only to ecology but also to safety: the company assures that its containers are disinfected each time, and that only a limited number of people come into contact with them.
The team at Starship Technologies also saw an opportunity in difficult times. The startup was founded by Skype co-creators back in 2014, which initially gave it considerable publicity. The company focused on creating self-driving robots that could deliver groceries from stores or meals from restaurants. Although the startup attracted investors and developed its business in subsequent years, it appeared in the media less often. Recently, that changed because of the pandemic. The New York Times described how a fleet of wheeled robots appeared on the streets of the English town of Milton Keynes at a time when social isolation was recommended. Interest in the service was so high that residents spent entire days trying to book it.
– This is a perfect time to look for new solutions, break through the market with innovative projects and bold ideas – assures the head of Nethansa. – Those who adapt fastest to new conditions will win. The pandemic disrupted production and supply chains, introduced great uncertainty, but at the same time in many cases it broke old habits and made it possible to open up to something fresh. A substantial share of entrepreneurs had avoided online commerce until now, and now they have realized that was a mistake. Our partners using the Amazon platform have seen perfectly what an opportunity e-commerce creates in times of pandemic – their sales results rose by several dozen percent within a few weeks!
The Canadian startup Blackcart recently proved that bold decisions in times of crisis can indeed bring tangible benefits. The company creating a tool for fashion retail in the “try-before-you-buy” model had planned to test its solution for several more months. However, the onset of the pandemic and the resulting closure of physical stores prompted the team to act faster, as the startup's CEO, Donny Ouyang, told Business Insider. An express search for investors began, with talks conducted via… Zoom. It resulted in obtaining $2 million in funding. At the same time, the company gained a great deal of publicity, which will likely make it easier for it to acquire customers.
Buy now, pay later and Inpost
Some fintechs also quickly noticed the e-shopping boom, with those offering so-called deferred payments reporting substantial growth in results. In April, the startup PayPo said that the pace of its development had never been so fast. Its competitor Twisto is also actively acquiring customers and declares that, with an eye to crisis times and changing shopping habits, it will offer new services. The e-commerce giant Shopify does not intend to rest on its laurels either. Although in one April tweet the platform's CTO, Jean-Michel Lemieux, wrote that traffic on it could soon double, the company still wants to grow. That is why it introduced a goods delivery service and got serious about building a payments ecosystem. Its success may be evidenced by the fact that this business is still looking for new employees.
Similar actions can also be seen on the Polish market, for example by Inpost, still considered by some to be a startup. In recent months, parcel lockers have been overwhelmed due to the boom in e-commerce. An embarrassment of riches could harm many companies, but in this case solutions began to be introduced that make the service run smoothly. These include, among others, the possibility of delivering parcels on weekends, which was introduced earlier because of the pandemic. Inpost's app, which enables contactless collection of shipments from parcel lockers, also proved extremely useful in these difficult times. Recently, the company announced that it already has 4 million active users.
Inpost's founder, Rafal Brzoska, has also been in the news recently because of his investments. Together with several other entities, he financially backed the startup Your KAYA, which offers eco-friendly intimate hygiene products. Why the interest in this particular company? Well, it sells its products on a subscription model, and during the pandemic demand for them visibly increased. In an interview with Business Insider Polska, the investor said that consumers are moving essential purchases online, and new habits will probably become permanent.
– I completely agree with Brzoska. When the pandemic ends and the crisis is brought under control, customers will not abandon en masse the solutions they have now become accustomed to, and in some cases have only just discovered – argues Stockem. – Studies are already appearing showing that people liked e-shopping and moving away from cash and using digital payments more often. For years, cash on delivery held strong in Polish e-commerce; now this form of payment has suffered a shock. And it seems unlikely that customers will return to it. The same will apply to shopping itself. Especially when many new, interesting solutions appear in buying, paying, delivery or returns. The possibilities for growth are now really great. As Americans say, the sky is the limit – concludes the CEO of Nethansa.
Summary
The pandemic turned out to be a catalyst for many companies. The e-commerce sector recorded record growth – in the United States, daily online sales in April rose by 50 percent compared with March. Startups such as Nethansa, Loop and Starship Technologies not only survived the crisis but used it to grow, and Poland's Inpost accelerated the introduction of solutions enabling contactless parcel collection.
Experts, including Sascha Stockem, predict that changes in consumer behavior – such as the shift to e-shopping and digital payments – will be permanent. Companies that quickly adapted to new conditions are already reaping the benefits, as confirmed by the sales results of Nethansa's clients on the Amazon platform.
