COVID-19 and online platform economy
by Alena Sokolyanskaya, Lucie Lechardoy
The COVID-19 pandemic has created an external shock, a situation of a “natural experiment”, where opportunities and limits of the online platform economy could be explored. The pandemic led to shifts in consumer behaviour – how consumers learn, shop, work and play, impacting the online economy worldwide. Confinement measures and closure of frontiers have led all sectors of industry and society to digitise at lightning speed in order to be able to pursue their activities, as well as boosted companies that serve stay-at-home economy.
When comparing the data on traffic share of online platforms by sector in March 2020 vs August 2019, we can see that people started using more search engines, social media and online entertaining media, while the traffic share of marketplaces (including OTAs) has decreased.
|Type of online platform||% change in traffic in March 2020 vs. August 2019|
Source: own elaboration of data from Similarweb (August 2019, March 2020)
According to some research, consumers started spending less during the lockdown and retail sales went down, though those who were shopping online before tend to use online marketplaces more often. On the one hand, the closure of physical outlets has boosted the services of online marketplaces and online grocery or food delivery. For example, since mid-March of 2020, Amazon has hired 175,000 workers in the U.S. to meet the increasing demand for online shopping. On the other hand, in Europe most national ecommerce associations assume that the COVID-19 crisis will lead to a decline in sales and a release of staff.
Online entertainment media and video streaming have been on the rise for over a decade, but the number of subscribers drastically increased lately. For example, this year Netflix has seen a significant increase in subscriber numbers: almost 16 million people created accounts in the first three months of 2020, what is almost double the final months of 2019, and the company hired an additional 2,000 customer support staff to handle the increased interest.
With some more recent data, the distribution of online traffic across different industries demonstrates some major changes. While online traffic for supermarkets increased by over 60%, the traffic share of tourism websites dropped by almost 50%.
|Home furnishings / DIY||15,5|
|Jewelry & watch||30,5|
Source: Statista (survey by ContentSquare)
According to recent surveys, when it comes to B2B ecommerce, companies see digital interactions more important to their customers than traditional sales interactions. They have reacted to the changes due to COVID-19 almost immediately: around 90% of them are working via videoconferencing or phone. Furthermore, about 70% of B2B companies have established multi-disciplinary commercial nerve centers to manage sales operations during this period.
Overall, although we can already observe changes in consumer preferences and a boost of some sectors of the online economy, there is still a lot of uncertainty regarding the impact of the COVID-19.