The victim-count of Coronavirus has increased to 28,276 while taking 565 lives already.
With the virus epidemic being on the verge of becoming pandemic, there is a cloud of concern hovering over not just the affected nations but also the rest of the entire world.
The grim picture of Coronavirus is not just of the virus making its way around the world, but also of the lack of crucial medical supplies. Red Cross China has also come under fire for failing to deliver urgent supplies to the front line hospitals. In its apology, Wuhan Red Cross mentioned that it has called for an overnight emergency meeting for discussing internal problems and have pledged to hold people who are in charge of relief distribution, accountable.
The fund shortage has led to a number of hospitals in Wuhan who are looking after coronavirus patients to seek charities on social media platforms. Many of them said that they are in dire need of basic protections against this contagious pathogen. While on the other side, people from all corners of the world who came together to donate money to the coronavirus patients and to aid treatment creation, expeditiously, are outraged at the unfair distribution of their funds.
To solve the challenge of unfair donation distribution in real-time, Hyperchain, together with Xiongan Group, Fuxing Group, and other well-known establishments, is taking Blockchain’s help.
Utilizing everything that Blockchain in Healthcare has to offer, Hyperchain is building a platform which would ensure that the entire Coronavirus donation process is traceable, immutable, and reliable. Announced in a press release on 4th February, the platform will act as a medical supply donations portal for supporting medical institutions operating in central China.
It is going to be a transparent portal that will also act as an information exchange enabling donors to see where their donations or funds are going. Through the platform, the donors will get proof of receipt and proof of need which would ensure that their funds have reached the intended party in real-time.
Hyperchain, Hangzhou Qulian Technology Co., Ltd , formed in 2016, is a tech company providing blockchain solutions. It excels in the development of underlying blockchain platforms, security platform and data sharing, supply chain finance SaaS platform, BaaS platform, and digital evidence services.
The lack of transparency and censorship are often two of most debated challenges that emerge during every epidemic outbreak. What happened with Red Cross China is simply a wake-up call for the dire need of the inclusion of a Blockchain development company in every world-affecting event and process.
There is a need for credible and transparent mechanism based society and Blockchain is the answer.
The radical transformation in how people across the world are living during the Coronavirus pandemic is having a significant impact on internet businesses. While some are seeing sales plummet, others are struggling to cope with growing demand. In this post, we’ll look at how the online marketplace is changing in the current circumstances.
1. Growing demand for streaming services
Millions of people are turning to movies and box-set series to keep them entertained while they are cooped up indoors. As a result, streaming services are seeing growth not just in the amount of time people are watching but in the numbers of new customers flocking to use their services. In Europe, Netflix has had to reduce its picture quality by 25% to ensure bandwidth capacity.
Increased demand means that in North America, Netflix is now forecast to more than double expected growth in new subscriptions, from 1.6% to 3.8% over the year – and that’s in a region where it is already well established. Internationally, growth is expected to rise by over 30%.
It’s not just Netflix that is benefitting. So too are other streaming services, like Amazon Prime Video, Hulu and Now TV. Recently launched services like Disney and the BBC-ITV venture, Britbox, which may have struggled to compete, might find opportunities that wouldn’t have arisen in normal circumstances.
2. Online gaming taking off
Although a narrower market, younger people forced to stay at home are driving up demand for gaming. This isn’t just increasing subscriptions for online gaming services but also helping retailers of downloadable PC games. PC gaming platform, Steam, for example, has seen its highest number of users in 16 years with traffic spikes of over 20 million at times.
3. Big impact on PPC ad spending
The travel industry has been one of the most affected sectors by the virus and this has resulted in a slump in advertising from travel-related businesses, with some market experts suggesting it could lead to 15 – 20% reduction in travel advertising revenue for Google and Facebook. This figure is likely to be compounded by all the other businesses that rely on tourism also cutting their ad spend.
It is not just travel-related businesses who are reducing advertising. With many companies forced to close due to the effects of social distancing, they too will be cutting back or suspending advertising altogether. In 2018, McDonalds spent over a billion dollars in advertising just in the US. It has now closed all its UK stores and is shutting thousands of others globally as the pandemic spreads. It obviously won’t be damaging its cashflow by spending huge amounts on ads over this period. With industries such as entertainment, high street retail, restaurants, etc., also affected, Google and Facebook could see ad revenue fall by up to 45% over the next few quarters.
However, it is not all bad news. With fewer advertisers competing for ads, the cost per click in many sectors is likely to reduce, meaning those companies that can still derive value from advertising will see their budgets go further. In addition, consumers are clicking on more ads associated with employment, education, hobbies, leisure, arts and entertainment.
4. Holiday bookings won’t dry up
While travel is out of the question for most people at the moment, more than half of those who take frequent holidays are likely to book trips further into the future. Business travellers are even more likely to make long term bookings. While this is not the immediate relief those in the travel industry and all the depended industries need, the taking of deposits can help with current cashflow problems. Most of these bookings will take place over the internet.
As the pandemic begins to recede, it is predicted that most holidaymakers will, initially, seek domestic holidays where there is likely to be less disruption impact by failing tour operators and airlines and where the impact of the virus is more certain than abroad.
5. Global increase in online shopping
As fewer people go out, their shopping habits are moving online. Even retailers seeing a boom in sales, like supermarkets, are having more customers using their delivery service simply to avoid the risk of going to the store.
This rise is happening globally. An Ipso-Mori study found that 18% of UK consumers were shopping more online. In countries which have been more badly affected, the numbers of people increasing their internet shopping is even more substantial: 31% in Italy and 51% in China. However, the biggest increases are in countries like India 55% and Vietnam 57%. This rise has meant some companies are struggling to cope with demand. Amazon, for example, is so busy it is recruiting 100,000 additional staff, raising wages and making its employees work overtime to meet demand.
One area of particular growth is in the use of grocery apps, which are seeing unprecedented numbers of downloads in the US. Instacart downloads during March are already more than triple that of February while Walmart’s app has seen a 160% rise.
Conclusion
Coronavirus is having a significant impact on consumer behaviour and this is affecting internet businesses in different ways. For many, there are challenging times ahead as consumers drop plans to travel and stop online bookings for local businesses. However, there has been a sharp increase in online shopping with some retailers having to expand their workforces to cope.
The Coronavirus outbreak seems to be having an unprecedented effect globally. While brave health workers are confronting the fatal virus head on, business leaders from several service providers are playing an important role in the background. In addition to medicine and healthcare, basic food items are essential. Retailers are working round the clock to ensure that they can deliver essential items in a timely manner. While some retailers are better prepared than the others, most retail management teams are facing a few looming challenges:
Challenges faced by the retailers
Logistics disruption caused by city closures due to quarantine process. Employees are unable to come to work due to illness and/or regulatory advisory
Supply crunch due to closing of factories. It started with the production break in China. However, the demand for certain categories surged due to panic purchase
Lack of E-commerce readiness for retailers. Many retailers are not e-commerce ready and are not able to deal with the scale where almost all purchases are expected to happen online.
Lessons from the past
Although the Coronavirus outbreak is unprecedented and the impact is on a different scale, we may still learn a few lessons from the recovery pattern of the previous two epidemics and two natural disasters, such as, the SARS outbreak in China in 2003, Hurricane Katrina in 2005, the Fukushima disaster in Japan in 2011 and the MERS outbreak in South Korea in 2015.
The magnitude of the impact of these events were varied, however, there were similarities with respect to the demand fluctuation patterns during and post crisis for the following three distinct class of products:
Staples, fresh food, and other essentials – the demand was very high during crisis and slowly stabilized post crisis
Healthcare essentials, disinfectant, hand sanitizers, cleaning products – the demand spiked during crisis and dropped sharply post crisis
Clothing, cosmetics, toys – these discretionary spends seemed to dip significantly during the crisis and spiked immediately after the crisis, due to the pent-up demand. The stabilization was gradual.
Retailers can take a lead in helping the community face the crisis and, in the process, build a stronger, long-lasting brand. For example, certain retailers deepened their trust with the consumers by rapidly resuming operations, staying at the forefront during the crisis and demonstrating their commitment towards the community. A case in point is the retail brand Costco , Costco has kept their stores open to supplying food and essential resources to the community. Similarly, Walmart has opened their parking lots for Coronavirus test centers. Walmart is working with restaurants and hospitality groups to hire people who are facing layoffs and furloughs. GameStop implemented changes to their retail operations so that they can continue to provide essential products to their customers that allow them to stay connected and enable better experience while working remotely.
Another long-term change in consumers’ preference was observed with respect to their food habits and lifestyle changes. A large segment of the consumers seemed to prefer fresh healthy food at a convenient price point. Thus, food safety, compliance and brand building were important for retailers to earn consumers’ loyalty.
How can retailers be better prepared
Reports indicate that the online sales increased between 200% -650% YOY in China during end of Jan to Mid Feb in grocery, fresh vegetables, and disinfectant categories.
Retailers need to energize the e-commerce arm and be ready to cater to higher demands.
Overcome supply-chain obstacles
A significant portion of supplies of consumer products come from China. Some factories in China and other South East Asian markets are partially operational or not operational. In addition, there are government regulations imposed on movement and some cities have been quarantined causing huge transportation disruption. Some of this supply chain impact is inescapable. It may help if retailers assess this challenge by category of products and take necessary steps.
For example,
Monitor the inventory situations at zip code/store/fulfillment centers constantly
Redirect inventory to the worst hit locations
Impose restrictions on allowable transaction limits
Explore additional suppliers and consider reviewing the existing supplier capacity especially the local ones. These considerations may benefit long-term post crisis period as well
For consumer products such as electronics items, inform the consumers about the delay. This may help earn consumers’ trust rather than missing promised date. AliExpress did this prudently to manage consumers expectation
Rebuild AI
The trends and patterns have shifted for some of the key business metrics such as sales, demand, inventory, cost, supply and logistics etc. This means that the decision engines and the AI systems have not observed this trend-shift in the current data before. Hence, their effectiveness will soon be impacted. The AI algorithm should be revisited to account for the new trend.
Overcome technology challenges
Most retailers believe that they are equipped with adequate technology to deal with sudden surge in volume. They must validate this understanding by analyzing click-steam data, audits/logs, and call center data to identify technology challenges faced by the visitors and put systematic fixes to drive better experience through-out the purchase journey.
Follow ethical business practices
The e-commerce marketplaces allow third-party sellers to sell products. Some of these sellers may spike up the price to make money during this crisis. We have read in the news that 2-ounce hand sanitizers from a well-known national brand was being sold for $400 and masks’ prices were up by 10 times. In the process, the consumers build negative sentiment towards the brand and retailers. Retailers and brands should monitor the prices of their products frequently and take necessary actions against the violators.
Additionally, there are duplicate product “counterfeit” in the market presented as the national brands. The description, texts and images look very similar to the original products. It’s been reported that searches for keywords related to Coronavirus, COVID-19 have increased several thousand percent in giant ecommerce brands on the search engines. This is triggering inappropriate listing of product claiming health benefits and misleading consumers. Retailers and Brands must track inappropriate listings and de-list them as soon as possible.
Hire additional resource
Retailers need to plan of on-boarding additional resources to enable omni-channel functions. There will be operational challenges that can be dealt with by additional resources in the short-term. For example, calling specific consumer segment that is less used to using technology will help the community, and drive online adoption further. Similarly, manual processes can augment short-term systematic delivery or pick-up challenges. Amazon has announced hiring of additional 100,000 employees, while Walmart is in the process of hiring 150,000 associates.
The loyalty and brand value can be re-established during extreme social stress. Consumers want the essential products whenever they want at a fair price. And they want to trust the retailers they buy from and product brand they choose to buy. While retailers have been in the forefront helping the communities fight this pandemic, they should focus on building a stronger brand that will ensure sustainable growth once the crisis is over.
The COVID-19 pandemic is fast becoming one of the biggest threats to human lives and the global economy. With governments across the world taking preventive measures of quarantine, social distancing and travel bans, hospitality is one of the first industries to be adversely hit. The impact is not just limited to Italy and China anymore but is increasingly visible across the globe resulting in steep decline in booking trends and occupancy rates.
Impact on US Hotels
The United States has seen an exponential growth in the number of COVID-19 cases in the past couple of weeks. The impact on hotels can be seen in the below chart.
The trends clearly indicate a continuous decline of room occupancy with a steep change over first two weeks of March. As of 2nd week of March, the industry reported a YoY decline of
24.4% in Occupancy
10.7% in Average Daily Rate (ADR) and
32.5% in Revenue per available room (RevPAR).
Based on the research done by CBRE (Coldwell Banker Richard Ellis), below is the depiction of expected trends for US.
US is 2 weeks behind Italy and 8 weeks behind China in terms of being affected by the pandemic
impact on market demand on
If China and Italy are any indication on how the pandemic and its subsequent impact spreads, the major disruption is observed within the first 3 months. For the United States hotel industry, this translates to a steep fall in the occupancy rates reaching 25% to 30% in March and 10% to 15% in April.
A study by hotelAVE estimates that 15% to 20% of the hotels in the United States will close temporarily by the end of March because the fixed carry costs are less than the negative cash flow projected from staying open. While this might be true for certain properties, other hotels and properties are taking some temporary measures to reduce operational costs which include
Shutting down of floors
Cutting down on amenities and services
Cutting down and closing of F&B outlets
Encouraging hotel staff to go on unpaid vacation
Irrespective of the measure the properties undertake, there is a high risk of 10% properties to have a permanent shut down as they would not be able to sustain this period.
Past Demand Shocks – An Overview:
2001- During the recession of 2001-02, there was a noted decline in RevPAR by an alarming 10.2%
2008 -The period of 2008-09 saw the RevPAR plummet down by a shocking 16.8%.
2002 – The 2002 SARS outbreak saw occupancy rate decline by a 26% in a comparison between the April-June quarter in 2002 and 2003.
2013-2014 – The Ebola crisis saw a 15% decline in room occupancy rate in sub-Saharan Africa between 2013 and 2014.
The recession periods resulted in a slump in the consumer surplus and leisure travels took the hardest hit. In addition, with increased number of lay-offs, people undertaking business travels were also curtailed.
In contrary, during the SARS or the Ebola outbreaks, there was a consumer surplus, but also an aversion to travel because of perceived hygiene and safety issues.
How does COVID-19 outbreak compare to the past demand shocks?
Vs SARS/Ebola: The first difference is the sheer scale of COVID-19’s impact. Ebola and SARS epidemics were contained in certain geographical areas, but COVID-19, due to its highly contagious nature, has now permeated across the globe.
Vs Recession: Recession periods tend to have a time lag between the actual onset and the start of decline in revenue for the hotel and other industries.
For COVID-19, the impact was instantaneous. In case there is a steady recovery from COVID-19 outbreak, the impact on hotel industry may not linger on for the whole year. But, it must be noted, that with the scale of economic loss across industries (and given that 2020-21 was already susceptible to a recession in the organic cycle of the business), there is a slight chance that as the COVID-19 outbreak is subdued, it may lead to a prolonged recession – which will in turn result in more losses for the hotel industry.
Time of Recovery in Past Demand Shocks:
In case of prior demand shocks like SARS or Financial crisis, there were at least two quarters before an indication of recovery was shown – in the form of positive monthly growth of occupancy rate.
It also must be brought to attention that metrics like Demand and Occupancy recovered earlier than revenue related attributes like ADR or RevPAR, indicating aggressive marketing and discounting of room prices to get traffic into the hotels.
Following table summarizes the time of recovery that was exhibited by prior demand shocks:
Road to Recovery
Given that the revenue hit almost zero, most hotel businesses are focusing on reducing costs, and pursuing alternate ways of generating revenue to keep the properties up and running – eg: As some countries lift their lockdown with a mandate of 14-day quarantine period on the incoming travelers, hotel chains are offering quarantine zones for these travelers to ensure footfall. Similar avenues can be approached by other hotel chains to make sure that they do have some revenues trickling in through these tough times.
Once the situation returns to normal, we may see some consolidation amongst the hotel chains, especially amongst the boutique hotels. Businesses would be forced to take a hard look at any new investment they make, and they will be looking at ways to optimize cost.
To nudge customers into their travel patterns, we will see a co-opetition, where all the companies in an industry work together to benefit the industry.
We will witness a lot of re-defining of brands through AI and automation– e.g. Employ innovative usage of Internet of Things (IoT) to enable mobile check-in. This can be leveraged to give a zero-contact experience to the guests thus ameliorating their fears over the disease and its transmission.
Post-recovery, the landscape of the hotel industry will go through a massive overhaul. Given that urban hotels have been hit harder than their rural and sub-urban counterparts, we may see some of the urban properties going into a partial or total lockdown to recuperate some of the loss. Smaller hotel chains may be acquired by the hotel industry giants like Marriott, Hilton etc.
Overall, it is predicted that the world economy, despite taking a severe blow, will be back in positive direction in a years’ time, and will take around 3-4 years to completely nullify the losses accrued during this period.
What do you think? We would like to know your opinion.
