COVID-19: The world on reset
The novel coronavirus has put the world in an unprecedented situation, one we have not witnessed in our generation. Of course, we have seen other outbreaks such as SARS, MERS, and H1N1. And we weathered the 2008 subprime mortgage market crisis in the US, which eventually led to an international banking collapse and what was considered the worst financial crisis since the Great Depression.
None of the other outbreaks have affected the world to the extent that COVID-19 has. Its rapid spread has forced governments to impose quarantine-like measures that are predicted to hit the global economy as hard as post-World War II.
The world will be completely different once this pandemic is over. The challenge is how fast we can adapt to living and doing business in our new reality, starting now.
The commerce world on reset
In the United Kingdom, retailers such as Next, River Island, and TK Maxx closed their online operations, warehouses, and distribution centers due to health concerns for their staff. On the other hand, online grocery sales around the world are growing day by day. On VTEX Commerce Cloud, that segment spiked 357% in sales, comparing the third week of March with the same week of February.
As this shift in consumer behavior presents opportunities for some retailers, it also exposes infrastructure and workflow issues for others. Online stores that have not been implemented on a multitenant, cloud-based infrastructure can face catastrophic instability. This is what happened to the UK’s online-only supermarket Ocado on March 13th. Buyers who managed to avoid website and app crashes were only able to book deliveries for the following week.
In a recent report, IDC states that in times like these, all the company’s systems – including ERP, procurement, manufacturing, financial, and supply chain – need to be robust enough to handle new strategies and behaviors.
More than ever, the ability to respond to the crisis quickly will be the litmus test for people and companies. Agility in taking the necessary actions to mitigate risks – therefore reducing the negative impact on your operation – and the ability to pivot quickly to embrace new business models and sales channels will be decisive for the survival of your business. Here we share how some of our customers from around the world have already responded to this challenge.
From Miniprix to Minimarket
Romanian fashion brand Miniprix attributes 75% of its turnover to physical stores. After seeing sales declining due to the COVID-19 pandemic, the company reacted fast and launched Minimarket in just over a week, featuring household and non-perishable goods.
Customer feedback dictates the products being offered on the newly-launched online grocery. Recently, Miniprix extended their offer to include fresh ingredients – available for Bucharest residents – and “combo boxes” sourced directly from local farmers. With the achieved results, Miniprix is now planning to turn Minimarket into a stand-alone business unit.
Marketplace platforms drive collaborative commerce
With most people practicing social distancing and offices shutting down across Europe, Romanian companies F64 and Dacris – a photo and video equipment retailer and a B2B office supplies store, respectively – teamed up to answer new customer demands for remote working.
By using VTEX’s Marketplace platform, F64 started selling office equipment on its website, with orders fulfilled by Dacris. At the same time, Dacris is plugging into F64’s inventory to sell cameras, microphones, and home studio equipment for video conferencing.
In Colombia, hypermarket giant Grupo Exito is using VTEX’s Marketplace platform capabilities to connect with more than 1,000 retailers. This is one of the ways to increase inventory and product lines while allowing smaller merchants to reach new audiences.
These companies are not alone. Our data, aggregated from all marketplaces on VTEX Commerce Cloud, shows that the strategy is trending. From March 1st to March 22nd, we registered nearly two times more orders than February.
Turning brick-and-mortar stores into distribution centers
In Brazil, one of the most common actions taken by local governments was the closure of physical stores – excluding supermarkets, pet shops, and drugstores – and shopping centers. This affected the toy retailer RiHappy, which relies heavily on brick-and-mortar and omnichannel operations.
By acting fast, the brand was able to repurpose its stores into distribution centers, increasing ship-from-store fulfillment and shortening delivery times. It also allowed more sustainable inventory management, reducing e-commerce catalog item shortages.
Every disruption brings new perspectives
These are just a few examples of how retailers have pivoted their business models as a response to the demands of the new world brought about by the pandemic. Here at VTEX, we are giving full support to our clients in every way we can. And we’ve learned a lot from our clients worldwide.
Sign up and join our webinar (available soon) to hear more cases of commerce transformation from clients from around the world, deep dive into strategies and results and learn how you can rapidly implement practical solutions for your business today.
(IDC, Pandemics Increase the Need for Digital Enterprise, March 2020)