By Dima Kulakov
Throughout the pandemic, online businesses and services have seen increases in use and revenue. However, as things begin to return to normal, or, at least, the new normal, will this trend continue?
COVID-19 has forced consumers to turn to e-commerce. In fact, Morgan Stanley predicts a 25% growth in e-commerce by the end of 2020 and a 10% growth throughout 2021, which can be attributed to a number of factors. People are still wary of shopping in person and consider online shopping a safer alternative. Additionally, because of their increased use of e-commerce during quarantine, many have discovered the convenience of online shopping. Almost anything can now be delivered, saving time and effort. Finally, since many physical stores have closed during the pandemic, shoppers have been, and will be forced to resort to the internet to purchase what they had previously found in physical stores.
It is also expected that as these electronic consumer trends continue, companies will adapt by providing more and improved online services. Currently, businesses such as Amazon, Apple, Nike, etc. have successful online stores, and have seen an immense increase in revenue come from online sales, especially in the past few months. Data from Mastercard shows that e-commerce grew by 93% year-over-year last month. Consumer spending on Amazon has increased by more than 60%, Nike reported a 75% increase in digital sales in its May-ended quarter, despite a 38% total revenue (all sales) decline, and Best Buy announced that its online sales were up 255% year-over-year. As other companies capitalize on the online market, consumers will be further pushed towards e-commerce.
Businesses that do not sell goods but provide services have also seen online financial success during the pandemic. Online banking has been one such field. People have become more accustomed to online banking during quarantine, as they have been unable to perform in-person transactions. Similarly, online gambling/betting companies will likely benefit, moving forward. Morgan Stanley foresees increased legalization of online gambling post-COVID-19, as “budget shortfalls compel states to legalize gambling more broadly in order to increase tax revenue.” Lastly, telemedicine is expected to continue to grow. Teladoc, the most established online telemedicine company, saw its shares increase by 160% this year, and has an average predicted 2020 sales growth of 52%! As consumers and doctors realize the benefits of virtual healthcare, they will likely continue to use services such as Teladoc, even when in-person medical visits become “safe” once again.
Overall, COVID-19 has set the stage for, and, in a way, accelerated the inevitable takeover of internet-based business. Companies that capitalize on this, will almost certainly see financial success, and prevail over their competitors.