If history of pandemics or crisis is a guide, this contagion, just like all the others, will spark a wave of innovation. Each prior pandemic/crisis has resulted in the growth and prosperity of some new business or industry by changing the way we lived and function. Let’s look back over the years on what came out of them.
SARS (2002-2004) – ALIBABA & TAOBAO
Did you know that the SARS pandemic of 2002-2004 catalyzed the meteoric growth of a then small ecommerce company called Ali Baba and helped established it at the forefront of retail in Asia? SARS had put the company on its path to becoming a $470 billion e-commerce empire. This growth was fueled by underlying anxiety around traveling and human contact, similar to what we see today with COVID-19.
China’s economy was faced with a major challenge as SARS turned into a pandemic in 2003. Factories were closed and retail sales decreased significantly because workers were staying at home and reluctant to venture out to stores. Alibaba was also in the midst of launching Taobao so the SARS outbreak had actually hit them at the worst possible time. It had resulted in the threat of halting the company’s growth and delaying the launch of their new venture.
How did they do it?
To prevent the spread of the virus, Jack Ma (Founder of ALIBABA) made the decision for his employees to work from home. This ensured that the B2B E-commerce platform of ALIBABA remained up and running. Secondly, they wanted to ensure that their new venture (TAOBAO) would continue as plan. A team worked in Jack Ma’s own apartment to finish building the consumer-focused TAOBAO website and they managed to launch the website on time.
By that time, majority of the people in China were already staying home from work out of fear of contracting SARS. The quarantine actually worked in Jack Ma’s favor as consumers were turning to the internet and doing more online shopping. ALIBABA being an internet, e-commerce company, benefited from this as more and more consumers were driven online to buy and sell goods. ALIBABA was the perfect platform to cater to their needs and TAOBAO attracted customers by allowing new users to sell their goods on their platform free for three years.
Today TAOBAO has over 600 million monthly users, and it helped turn ALIBABA into one of the world’s largest e-commerce companies with over $56 billion in annual revenue!.
WALL STREET CRASH (2007 – 2009) – AIRBNB & UBER
The financial crisis was surprisingly kind to tech startups at that time. Startups like UBER and AIRBNB were both founded in the midst of the Global Financial Crisis.
The financial crisis of 2008 produced its own disruptive side effects but it was also a great time for software infrastructure and development tools.
Airbnb and Uber shot up in popularity. The wall street crash meant people were faced with lower incomes and savings and had to resort to share their assets in the form of spare rooms and car rides in order to overcome the shortfall. That’s when the “Sharing Economy” came about. People were increasingly in the need for using such platforms such as UBER and AIRBNB to share rides or rent out their rooms to save cost and earn some income.
Fast forward now to 2020 and we are faced with COVID-19. We are already seeing early signs in a shift of how consumers and businesses are behaving. Some of these changes are short- term, however some of these shifts will continue on, creating a long-term digital disruption that will shape businesses for decades to come. Remote working is being encouraged by tech and non-tech companies and retail stores are closing their doors and leaning to online sales.
Recessions and pandemics usually either brings about an acceleration in business model change or enabling entirely new categories of businesses to arise. This is proven from the above mention of businesses that gained scale around the time of global crises.
So what changes can we expect to see right now?
Stay tune for our next article as we delve into the changes that are happening and the opportunities that are arising.