COVID19 is accelerating digital economy

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This post is dedicated to all those entrepreneurs who are thinking if it is a right time to start a journey. I believe it is a great time, it is once in a decade shift that will create many new digital business models in coming years – bringing in efficiencies and benefits for our society.

Even though COVID19 has disrupted lives of many citizens, it has also resulted in accelerating digital trends across sectors and geographies. This article is a summary of comments (and observations) by public and private companies across the globe. Some of these trends may be accelerating even further and there may be updated data available, it is worth highlighting how profound the digital shift has been.

Companies mentioned – Tokopedia, Rakuten, Myntra, Etsy, Instacart, Visa, NPCI, Alipay, Afterpay, Klarna, Paypal, Stripe, Square, MPL, Garena, Epic Games, Twitch, Zoom, Docusign, Wix, Shopify, Slack

E-commerce vertical

Tokopedia, one of the biggest e-commerce platforms in Indonesia, confirmed the uptick in this health and personal care segment. “In the health and personal care category, transaction numbers have tripled,” said Tokopedia’s vice president of corporate communications Nuraini Razak in a statement. Compared to the previous months, face mask sales have exploded by 197 times. Disinfectants, tissues, and air purifiers also saw a significant rise. Interest in selected non-healthcare items was also shooting up. Remote workers and students were increasingly looking for webcams, which saw a 1,572% boost. Nintendo game consoles rose 156%. Surprisingly, bicycles also saw a significant increase of 1,036% Tokopedia registered an increase in sales of cow meat, ginger, and dates. The total number of ginger sold on the platform reached 60 tonnes just in March. Indonesians are using the spice for cooking and herbal drinks.

Throughout the world, Rakuten’s marketplaces are helping a wide variety of merchants keep their businesses open and vital. Rakuten Germany helped retailers transition online by temporarily waiving fees for new merchants. Rakuten France is offering reduced fees and personalized support through accelerated training webinars for new merchants impacted by the COVID-19 lockdown. Rakuten Americas moved quickly to launch Rakuten Takeout, a free platform powered by Rakuten Ready for local restaurants to offer takeout options to Rakuten members. For a limited time, members who use Rakuten Takeout are earning 20% cash back on orders from their favorite local restaurants.

Myntra has drawn ~3.5 million customers in its recently-concluded four-day ‘End of Reason Sale’. Even in the midst of a pandemic, that is an increment of 700,000 over last year numbers. Platform recorded over 30% Y/Y increase in traffic and at peak, sold 18,800 items / minute.

From ETSY Q1 earnings – we experienced broad based demand across the marketplace leading to over 100% growth for Etsy marketplace in April.

These last few months have been the busiest in Instacart’s history, and we’re incredibly grateful to the shopper community for continuing to help meet the needs of customers across the platform. One month ago, we shared our plans to bring on 300,000 additional full-service shoppers to help us meet increased customer demand we’ve seen. We quickly met that goal, and are now planning to bring on an additional 250,000 full-service shoppers in an effort to get back to same-day delivery across our platform. We’ll be focused specifically on the areas with the highest demand right now, including regions in California, Massachusetts, New York, Pennsylvania, Washington, D.C. and Toronto. In places where we have enough shoppers to meet customer demand, we’re reintroducing wait lists for prospective shoppers, to make sure we’re thoughtfully balancing the number of shoppers we bring on in each region with customer demand in that area.

Payments vertical

From Visa’s 8-k filed on June 1st, card not present transactions and some other categories as highlighted below are accelerating at fastest pace.

Payments on Unified Payments Interface (UPI) in June hit an all-time high of Rs 1.34 billion in terms of volume with transactions worth nearly Rs 2.62 lakh crore, as per National Payments Corporation of India (NPCI) data.

The mobile payment platform Alipay reported that managers of more than 1,000 scenic destinations, as well as 300 city administrators in China, have set up Alipay mini programs so that users can access services such as carpark payments and make hospital or viral test appointments, without having to install separate apps for each service. As of May 20, city administrators in more than 100 cities across the country have issued consumption coupons via Alipay mini programs, with 90% of the beneficiaries being SMEs.

The pandemic has been a boon for Afterpay’s business. Upon crossing the 5 million active shopper mark in the U.S., the installment payments platform provider revealed that more than 1 million new customers started using the platform since March 1, just as the COVID-19 pandemic broke loose in the U.S. Afterpay said the “number of active merchant partners are up 271 percent with 9,100 U.S. merchants (48,400 globally).”

“For Klarna, actually we have grown and seen much higher growth than we would have seen normally during this time period,” Siemiatkowski, the CEO, told Yahoo Finance UK over Google Hangouts this week. “We’re seeing a massive shift of people’s spending from physical stores into online.”

Speaking from his home in Stockholm, Sweden, Siemiatkowski said there had seen an uplift in both usage of Klarna and merchants signing up since the lockdowns. Retailer signups have risen 20% in the UK over the last two months, for example.

Paypal in Q1-20 earnings call discussed “accelerating April business trends” with 7.4 million net new active accounts, growing 135%; ~250,000 daily net new active accounts added, on average.

Stripe: While the full economic impact of COVID-19 remains uncertain, several years of offline-to-online migration are being compressed into several weeks. The current disruption underscores the need for reliable, easy-to-use infrastructure for internet businesses. In this context, Stripe’s mission—to grow the GDP of the internet—means providing an on-ramp to the digital economy for businesses around the world. The rate of new businesses going live on Stripe has accelerated since the start of the year.

Square’s ecosystem is seeing similar accelerating trends as I highlighted above. These two pictures sum up that acceleration. [source]

Gaming Vertical

MPL platform has witnessed a surge in users across the board. Titles such as the World Cricket Championship, Pool, Fruit Chop are doing exceptionally well. Their WCC gameplays alone saw a 400% increase over a month’s time. [source]

Garena brought in US$369.7 million in the quarter ended March 2020, a 113.2% year-on-year increase, while its other divisions brought in US$266.5 million combined.Garena’s smash-hit battle royale game Free Fire crossed $1 billion in lifetime revenue in 2019 and hit a record 80 million daily active users in May Now, with its latest acquisition of Canadian video game developer Phoenix Labs, Garena is looking to cement its position in the industry.

Epic Games and its video game competitors are becoming destinations to watch concerts and debut movie trailers. Nearly 28 million fans flocked to an April concert by rapper Travis Scott, which was held virtually in Fortnite. In May, Epic aired a new trailer for the upcoming Christopher Nolan movie “Tenet” on Fortnite. [source]

Twitch’s hours watched jumping 50% between March and April and a full 101% y-o-y. It’s now up to 1.645 billion hours watched per month. The site’s “drops” mechanic- wherein viewers had to watch streams to get beta access to the game — drove a full 334 million hours watched on Twitch in April, which made it the biggest category by far on the platform. Next up was Just Chatting, with a very respectable 134 million hours watched in April- bigger than both League of Legends and Fortnite.

Software vertical

Zoom’s revenues jumped by 169% year on year to $328.2m. Cash flow for the quarter totalled $259m, compared with $22.2m this time last year. Meanwhile, free cash flow was $257.1m, compared to $15.3m a year ago. Approximately 265,400 of its paying customers were companies with more than 10 employees, representing a 354% jump on the same quarter last year. There were also 769 customers contributing more than $100,000 in the previous 12 months, a figure that was up by 90%. [source]

Docusign revenues went up 39% as remote working became more prominent. The billings increased by 59% year-on-year. 10,000+ New direct customers were added. It is expected that the trend of digital adoption for document management and signing will be sticky as it saves costs overall and provides a better user experience.
DOCU Earnings presentation

WIX – Demand for creating an online presence is accelerating as businesses around the globe adapt to the current environment. In April 2020 Wix saw a significant momentum across the platform as the need for a dynamic online presence accelerates: Addition of 3.2 million new registered users (an increase of 63% y-o-y), Collections of the April 2020 user cohort were 76% higher than the prior year’s cohort, Net premium subscription additions in the month of April were up 207% y/y. [source]

WIX Q1-2020 earnings letter

Shopify – “Now more than ever, Shopify needs to be there for our merchants, so our focus during these challenging times is to help solve their immediate pain points,” said Amy Shapero, Shopify’s CFO. “We are well positioned to help our merchants, particularly given the accelerated shift to online commerce. Our strong balance sheet provides us with the flexibility to continue investing in the right merchant-first initiatives, supporting our merchants’ success now and well into the future.”
Shopify Q1-20 earnings slide

Slack’s Q1 was historic in its impact, both for Slack and for the world. We believe very strongly the impacts that the COVID crisis will have on the way we work are of generational magnitude and are just beginning to be felt. It’s too soon to understand the impact with any precision, but it reinforces our conviction around this business and our long-term trajectory. [source]

The all-at-once shift to work from home concentrated multiple quarters of Slack adoption into a few weeks. Tens of thousands of new organizations and millions of new users adopted Slack, most of them trying Slack for the first time on our free plan. Existing Users also began to rely on Slack more – for our paid users, average time spent actively using Slack each day increased from just under 90 minutes at the end of Q4 to over 120 minutes per day at the end of Q1. Time spent connected to Slack also increased, from about 9 hours to well over 10 hours per day. We saw similar increases across all related metrics.

I believe there are many similar data points across the world highlighting this digital shift. If you are working on your next startup to capture this accelerating digital trend and are looking for a great partner in this journey, please reach out to BEENEXT team using the pitch section on website.

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