The low touch economy
28 April 2020
The emergence and rapid spread of the 2019 novel coronavirus (COVID-19) has disrupted social interactions, consumer behaviour and business globally. The current disruption has changed how we eat, work, shop, exercise, manage our health, socialise, and spend our free time, at an unprecedented rate. Experts predict that the world will experience continuous disruptions over the next two years, as a result of spikes in infection rates, until there is a vaccine or herd immunity is reached.
The post-COVID-19 era will have an economy shaped by new habits and regulations based on reduced close-contact or no contact interactions, which we call the low touch economy. Globally, companies are adapting to the low touch economy in order to meet new consumer demand. The changes are fuelling some existing businesses and also creating new ones. How can startups respond?
Fast and decisive movers will benefit the most from this new economy, these companies will develop products and services to meet new consumer demands. We have observed the following shifts in society, which present new business opportunities:
- Optimised work from home setups – in line with social distancing guidelines, more people are working from home and companies low on cash will reduce their demand for office space and infrastructure. Employees working from home will require home office setups that go far beyond a second screen, such as special equipment and advanced video/audio setups to accommodate this change in lifestyle. Policies and new insurances will need to follow.
- E-commerce – as a result of stores being closed and/or movement being limited, more consumers are shopping online and for the first time and new categories are being explored, particularly groceries and household essentials.
- Financial systems – as more consumers are transacting online, digital payments are becoming more important and payment transactions have increased. The stability of payment systems and online security is crucial to both consumers and vendors.
- Home delivery – contactless delivery is key to reducing the spread of coronavirus and has been implemented by most delivery companies globally. However specialised delivery solutions, such as drop off points for cold chain products, remain unexploited.
Technology is the best enabler for the low touch economy, so we expect to see venture capitalists investing extensively in tech companies providing solutions that will minimise the spread of COVID-19.