Coronavirus

The Innovative ‘Green Shoots’ Growing Out Of COVID-19’s Scorched Earth

Innovations Stemming From COVID-19

There seem to be countless sources of collateral damage associated with the unexpected appearance of COVID-19 in early 2020 – the shutdown of production in China, the ripples through the global supply chain, the virtual zeroing out of the travel and events vertical and the carnage on Wall Street. The uncertainty injected into the market, as Ning Wang, co-founder and chief business officer at PingPong, told Karen Webster in a recent conversation, is having undeniable effects worldwide – which are not likely to wear off anytime soon.

“I do believe the situation in Europe, and especially in the U.S., is going to get worse before it gets better. As long as the weather’s still cold and people are not voluntarily and strictly carrying out isolation policies and quarantining, this is going to spread,” he said.

But the effects aren’t quite being felt evenly across the economy, he noted – a fact that is becoming clearer as the virus spreads. eCommerce, particularly the cross-border type that PingPong enables, will feel the effects – though it likely won’t be the “wipe-out” situation that players in the travel industry are experiencing.

In the global world of eCommerce, said Wang, digital trends that had already started to emerge in the market – around decentralized work, remote communications and pushing global remittances, for example – are now mission-critical in the age of COVID-19. What might have been considered optional six months ago, he noted, might make the difference between which firms are here six months from now and which are not.

“The ones who react quickly will adopt new processes and practices and will be able to survive and take market share,” Wang told Webster. “The weak ones that move slowly will probably suffer tremendously.”

For PingPong, he said, the goal is to help their partners land among the former rather than the latter as the world recovers – and to be ready to “cross-pollinate what they’ve learned at the height of the crisis in China, as the rest of the world struggles to get through the darkness before the dawn.”

The Holistic Approach

There is never a good time for the emergence of a global disease, of course, but certain periods are markedly worse than others. Among PingPong’s sellers, the fact that the outbreak was caught between the Chinese New Year and spring festival celebrations meant there were already significant inventory build-ups going into the season, which managed to absorb many of the supply chain and production issues.

PingPong did an exclusive survey of 500 merchants about their inventory level and sales expectation. More than half of respondents indicated that their total inventory in possession (FBA, in transit or received) will last less than two months, while close to 25 percent of those surveyed had inventory for less than a month. When asked how the virus will impact sales, the average estimate is about a 20-30 percent sales drop for Q1. Bear in mind that this was back when the virus was mostly limited to China, before it became a global threat.

But that piece of fortune has combined with a segment-wide, global collaboration to keep cross-border commerce moving forward. That is observable in the major marketplaces – Wish, Amazon and eBay are all cutting merchant fees in response to the increasingly uncertain market. PingPong has been indirectly involved in that effort by making it easier for institutions to collect charitable donations, noted Wang, and they’ve also pitched in by donating medical supplies, such as masks.

“I think PingPong has donated more than 50,000 items to our merchant base so far,” said Wang. The company also set up a multi-million-dollar subsidy program to reduce operating costs and capital risks for their merchants, in an effort to help them get back to work safely and efficiently.

According to The National Development and Reform Commission, by the end of February, more than 60 percent of the country’s logistics companies had returned to work.

The world has been rattled – but realistically, it can’t come to a full stop in the face of COVID-19, Wang pointed out. The key to keeping things moving is providing merchants with undergirding support – from flexible pricing to accessible financing – which will give them the stability they need to not only weather the storm, but also to combine digital tools with the rarefied situation to reap the rewards of boldness.

An Opportunity for Innovation 

As the situation evolves, Wang told Webster, the innovative responses are doing the same. He’s seen real estate firms successfully leverage digital platforms to kick-start a market that is stalling in certain places. He’s seen TikTok become a B2B marketing platform where players are “singing funny songs, telling jokes and learning how to really interact online.” He sees virtual reality (VR) technology tying into big-ticket item sales, with customers suddenly open to a reasonable facsimile of in-person shopping.

The opportunities are numerous and emerging – even if they are still a bit unpredictable.

One example is a publicly-traded real estate developer called Evergrande Real Estate Group. The company mobilized its offline sales force and encouraged them to use VR and social media to better engage customers. In addition, the company changed its formerly non-refundable deposit policy to be fully refundable, exclusively for the online channel. Within three days, customers locked down 47,540 houses online by paying a mini down payment of 3,000 RMB ($431). As a result, the company’s sales reached 44.73 billion RMB ($6.4 billion) in February, up by 118 percent, topping the February housing sales list.

Another example is that almost all grocery delivery services saw record sales growth, as people were constrained in their compounds due to isolation policies. The formerly unattainable senior citizens were quickly converted to mobile grocery shoppers, abandoning their lifelong habit of buying only things they could touch, taste and pick.

“We see the green shoots of new growth here and there, and that is definitely going to be a major enabler and accelerator,” said Wang. “The winners will be the ones who know how to tap into this and figure it out.”

They can then carry the lessons, experiences and habits they are building with their consumers into the future – when digital is no longer just a means of hiding out from a virus, but a means of tapping into a wider range of commerce modes, with a bigger range of partners all over the globe.

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PYMNTS LIVE VIRTUAL PANEL: WHY SWIFT GPI IS JUST THE BEGINNING 

On Tuesday, March 31, 2020 at 9:00 AM (ET) join PYMNTS CEO Karen Webster and panelists Vincent Kilcoyne and Roland Brandli of SmartStream for an in-depth discussion on the need to use transformative digital strategies to remain relevant in today’s challenging financial landscape. The discussion will cover strategies that will allow clients to improve operational control, reduce costs, build new revenue streams, mitigate risk and comply accurately with regulation.

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