COVID-19 & BUSINESS
Since there is no vaccine to prevent the spread of coronavirus disease 2019 (COVID-19) to date, the only prevention that people have is to avoid being exposed to the virus. This can be achieved through social distancing, personal hygiene measures, and avoiding contact with the infected person.
To mitigate the risks involved with contagiousness of the disease, several countries and their cities have been put into lockdown, placing quarantine measures on the entire population. This has confined the citizens to their homes unless they have to buy food, medicine, or seek any medical treatment.
Along with this, global companies like Google, Microsoft, Apple, Salesforce, Twitter, etc, have rolled out mandatory work-from-home policies amid the spread of COVID-19. People are advised to avoid social gatherings and traveling to different countries/cities to avoid further spread of the disease.
Cities in lockdown, travel restrictions in place, plant and office closures have affected Global trade, commerce, tourism and investment, and thus, supply chains are in disarray. It is being speculated that the global economy will grow the slowest since 2009 due to the outbreak and it will suffer a capital consumption of over $2 trillion.
A look at the various sectors and their current scenario-
1. Insurance
The rise of coronavirus cases may end up with the demand for certain insurance types. As the COVID-19 virus continues to dominate the headlines, there is a hike in demand and awareness about insurance plans for health and life coverage.
Apart from this, insurance companies are receiving fewer claim requests than usual. For example, travel insurers can benefit from people traveling less to different cities and countries. Due to the COVID-19 outbreak, many events and conferences have been cancelled, which again restricts the business reps to travel less. This, as a consequence, leads to fewer cases of insurance claims for treatment in foreign countries. In fact, most travel insurers do not even give coverage for a pandemic, epidemic, or infectious disease.
Similarly, travel insurers will have fewer cases for flight cancellation & delay reimbursements, loss of possessions, accidents, etc., which is an advantage. However, at the same time, fewer travelers means less new insurance cases. So we can say that the insurance industry is not adversely affected by the COVID-19 outbreak.
2. Entertainment
Disney and Universal Studios have planned to shut down several theme parks as large gatherings may trigger the spread of coronavirus.
The NBA has suspended its season after a player was tested positive for COVID-19. Also, Arsenal has placed it's players in self-isolation and postponed the Manchester City game due to coronavirus. In india, the Indian Premier League (IPL) has been postponed till April 15 and it is very likely to be cancelled. The Tokyo Olympic Games, the Euro Cup and the Copa America, which were scheduled to be held this year, have been postponed to 2021. This will hit the sponsors gravely who have invested huge sums of money in these grand sports events.
Movie theatres are temporarily locked down in many parts of India, amidst the COVID-19 spread.
The entertainment industry is adversely affected by the coronavirus outbreak. However, as more people stay at home, in self-isolation, and take quarantine measures, there is increased use of alternate entertainment services such as games, video-on-demand, etc. According to the Financial Times, the number of app downloads surged in China after the nationwide isolation measures were taken. Video streaming companies such as Netflix, Amazon and Disney+ are expected to have a rise in the number of subscribers due to COVID-19. However, traditional cinema and theatres are not doing much as well because they have stopped playing their movies and plays as it gathers crowd. The Hollywood and the Bollywood industries are going to suffer a lot.
3. Hyperlocal Marketplaces
While there is a business slowdown and people are under isolation to mitigate the impact of COVID-19, hyperlocal delivery services are making the most of it. Doorstep delivery services for food, medicine, grocery, packages, etc are gaining ground. To make it safer for the recipients as well as for the delivery persons, food delivery companies such as Deliveroo, Postmates, Instacart, Zomato gave options to choose contact-less delivery, wherein the rider drops-off the package outside the doorstep. However, the people are still skeptical to order online amidst the fears and prefer to buy local.
4. Tech
This year, 10 major tech conferences including Google I/O, Mobile World Congress, Facebook F8, SXSW, Electronic Entertainment Expo (E3), etc. have been canceled due to the coronavirus outbreak.
Coronavirus has a mixed impact on tech companies. With work-in-isolation policy being a mandate for employees, there are companies that make the most of it in terms of profit. For example:
i) Slack Technologies Inc. confirms that due to the global fallout from COVID-19, there is a surge of interest in workplace-collaboration software;
ii) Zoom, an enterprise video communication solution, is one of the most downloaded business apps in the US on Apple Store in the 2nd week of March 2020 (according to App Annie).
Since technology companies have closed their offices and stores, prohibiting their executives to travel to the affected areas, it also has an effect on supply chains. For example, manufacturers in China are the key suppliers to technology companies across the globe. Manufacturers who have been impacted by the coronavirus are failing to make on-time delivery, thereby impacting various tech businesses.
On the other side, IT firms are realizing the benefits of outsourcing more than ever. Remote working has been given preference amid the COVID-19 and thus functions such as software development & maintenance are least affected by the coronavirus.
5. Travel & Tourism
The travel & tourism industry is severely affected by the coronavirus outbreak. With COVID-19 being declared a pandemic, people are avoiding travel to different countries and cities, which has negatively impacted the travel business and has affected the tourism benefits of the affected countries.
Airlines have cancelled all of their flights domestically as well as internationally. According to the International Air Transport Association (IATA), global airlines may lose $113 billion in sales if the coronavirus continues to spread at this pace.
The U.S. airlines asked for over $50 billion in federal assistance due to the dramatic decrease in passenger traffic.
At the end of the year, airlines can have 11-19% loss in global passenger revenues, according to IATA.
6. Retail & eCommerce
Malls, shopping centers are temporarily shut down in effect to COVID-19. Also, since people distance themselves from social gatherings and crowded spaces, they prefer ordering their favorites or necessities online. Similar is the case with the retail business.
On the contrary, digital commerce businesses are trying to make the most of this situation. Nevertheless, thriving in such an outbreak is still a challenging job for eCommerce businesses, because the delivery is becoming harder and harder due to lockdown of the countries.
7. Fintech
The COVID-19 spread is proven to be the biggest threat to the global economy and financial markets. If we look at the short term impact, we could see people making safer investments in the market. This means there are fewer investments in the stock market, which is a negative impact on VC funding of existing and new fintech firms.
The Fintech sector have experienced a drop in transactions at all levels. Since people have self-isolated to protect themselves against the COVID-19 spread, they are spending less than usual, leading to a low transaction rate. In fact, cryptocurrencies such as Bitcoin, Ethereum have experienced a major dip amid the coronavirus effect. The indices around the world have depreciated alot. Most of them are tumbling down tremendously as shown below:
🇺🇸 -26%
🇬🇧 -26%
🇨🇦 -25%
🇧🇷 -27%
🇷🇺 -20%
🇦🇪 -19%
🇿🇦 -16%
🇦🇺 -24%
🇮🇳 -14%
🇸🇬 -17%
ðŸ‡ðŸ‡° -12%
🇰🇷 - 17%
8. Pharmaceutical sector
It can be said that it is one of the sectors which is prone to this outbreak. There is no effect of the pandemic on the pharmaceutical sector as the medical stores are still open and every pharmaceutical company is in a race to make a vaccine for the pandemic. The Indian government has also given the permission to a few medical centers to test for Corona virus. This will increase the bed occupancy at these centers.
9. Telecom Sector
The growth rate for the first two months of 2020 was the highest in the last 12 months. Mobile data traffic, too, rebounded after declining for 10 straight months, the data showed. Subscriber additions, however, took a hit, likely exacerbated by the lockdown. This was due to the quarantine and work from home measures. In January and February, when China—the epicenter of the virus outbreak—was under lockdown, revenue of telecommunications services rose 1.5 percent compared to last year. Bundled plans that offer long-term recharges assure good revenue outlook and customer adherence to the sector.
10. Fast Moving Consumer Goods
Lack of clarity with regard to operations owing to the coronavirus lockdown, and the manpower shortage have disrupted the functioning of FMCG majors like Hindustan Unilever (HUL), ITC and several others. This has resulted in full-fledged factory closures leading to limited manufacturing of even essential items.
11. Real Estate
The real estate industry is being clobbered by the coronavirus, and it’s going to get worse before it gets better. The effects on real estate will vary by sector and market, and the extent of the effects will depend upon the duration of the economic shutdown. Supplies that the builders and developers need are being interrupted more and more as workers stay home due to business shutdowns, quarantines and curfews. Huge numbers of layoffs will lead to further contraction in consumer spending, starting a downward spiral of economic activity. Together, these forces are already pushing the economy into recession.
However, in the end, policies, health and our very survival are within our control. The governments of various countries are already issuing numerous grants for the people as well as industries. Optimism and anticipation of work can be powerful tools to imagine a possible future that is not crippled, and instead, is jolly and prosperous. We must take measures that prevent, and where needed, prepare us for those futures we do not want. Well, we all will prepare for the worst and hope for a new dawn without the nemesis of COVID-19.
~Team Entrepreneurship Development
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