5 ways business models will be affected by Corona virus
In Seattle a restaurant is redesigning its business model in response to Corona virus. The restaurant has opened up three pop-up distribution outlets: a bagel shop, a drive-through burger joint, and a “family meal” delivery service in a bold attempt to stay afloat in a situation where fine dining is the last thing on people’s mind.
The Seattle restaurant is by bar far the only business redesigning or diversifying its business model in response to the effects of the Corona virus. Neither is this the first time in history we have witnessed how external events have challenged existing business models and paved the way for new.
The Great Depression spurred a "waste not, want not" attitude that defined consumer patterns for decades. The 1970’ies energy crisis challenged manufacturing companies on the supply of cheap and reliable energy and increased demand for insulation and alternative sources of energy. And during the 2008-2009 financial crisis Netflix secured more than 3 million members due to their new tv/movie streaming plan, which allowed subscribers to stream unlimited amounts of entertainment a month, along with their disc-delivery service.
But how will business models be affected by the Corona virus. Below I present 5 ways business models will be affected by Corona virus.
# 1. Restructuring of supply chains
The US trade wars with China and the Corona virus has exposed a vulnerability in western supply chains where 81% of companies in some way rely on a limited number of (Chinese) suppliers. China will no doubt remain an important trade partner but my guess is that a lot of companies will diversify their sourcing strategies to reduce risk in the coming months and years.
#2. Working and studying form home will reach a tipping point
Working and studying from home in the US has been increasing at a rate around 10% annually for the past ten years according to Kate Lister, president of Global Workplace Analytics and during the Corona crisis this tendency has intensified as white-collar employees and students through-out the world have been forced to work or study from home.
My prediction is that once effective work-from-home policies and practices are established, they are likely to stick, spurring increasing demand for work-from-home infrastructure like high speed broadband and videoconferencing equipment from start-ups like ZOOM and Webinarjam. The same goes for courses in distance leadership tools and practices.
#3 The supply of streaming services will surge
During the Coronavirus millions of people are left without their usual sweat destinations at a time when fitness spending was rising. Now several of those gyms are offering on-demand workouts for free. The same goes for churches which are live-streaming services and offering resources to worship online. The examples are plenty and my prediction is that in the future we will witness an surge of new streaming services.
#4 The end of Cash?
Cash has been on the decline for years and the during the Corona virus many businesses like Costa Coffee in the UK has refused accepting coins and banknotes as a means to prevent the spread of virus and to protect employees. My guess, is that the move towards a cashless society has been greatly accelerated by the Corona virus.
#5 Ecommerce will expand its market share
All over the world people are moving online to do their shopping. Amazon alone has added more than 100,000 new jobs to manage the extra demand. Other marketplaces are struggling to add capacity. Recently online grocer Nemli.com temporarily had to suspend new orders until it was able to clear its backlog of deliveries.
My prediction is that brick and mortar retailers that have never truly developed sound e-commerce capabilities - or, worse, walked away from the channel – will be forced to attempt a 180-degree turn and put a massive push behind getting their online operations into competitive shape. And if the fail, they will soon be out of business.
A key lesson about business models from the Corona crisis
You can probably find more examples of how business models are affected by the Corona virus. But this is hardly as interesting, as trying to understanding what can be learned about business models from the current crisis when the dust settles. For me a key lesson is, that mapping out your existing business model and continuously testing new and improved versions of it, in the light of potential possibility and threat scenarios pays off and should be a core discipline for all businesses big or small.