There are a few events in history that have changed the course of humanity and this ongoing Covid-19 pandemic may very well be considered one of them.
As the global economic system and many offline businesses almost came to a standstill due to lockdowns and the economic effects of this pandemic, many industries have used technology to change the way we do business and adapt to the current environment.
Tech companies from across the globe came up with solutions to keep people safe and companies running. Companies like Amazon, Google, Facebook and Netflix made lockdowns easier for a lot of people by keeping them connected and entertained.
Other companies like Teladoc Health, Doctor on Demand and MDLIVE provided telemedicine services.
Due to lockdown the restrictions many businesses, education institutions, governments now rely on services like Slack, Zoom and Salesforce extensively to facilitate remote work and staff management.
The increased dependence on technology solutions for companies and individuals saw the Information Technology (IT) and technology industry have a strong performance during this pandemic.
Let’s take a look at some industries that performed well during the Covid-19 pandemic.
- E-Commerce and Online Retail
During the lockdowns, e-commerce companies took center stage in the retail market.
According to data from the IBM US Retail Index, the Covid-19 pandemic has accelerated the growth of the e-commerce industry by about 5 years. Amazon the global E-commerce giant recorded a 37% increase in its revenue in Q3 when compared to last year’s Q3 earnings. Walmart saw a 97% increase in its e-commerce sales and Target set a new sales record when its same-day fulfilment services grew to 273%.
In Africa, the largest eCommerce marketplace Jumia reported a 40% increase in the number of active consumers in Q2-20 Y-O-Y.
The shift away from physical stores to online services was already underway, but the pandemic has accelerated this shift.
As e-commerce companies continue to improve their services by making it easier for people to shop online and reducing service fulfilment times, the online retail industry is poised to take over the retail market.
Retailers that are quick to adapt to this new online environment and embrace new technology will see strong growth in the coming years.
2. Retail Trading and Investing
The pandemic saw massive volatility in stock markets across the globe, with the initial stock market selloffs in March 2020, and the later rally. Many first time retails traders joined the market in 2020.
There are a couple of reasons for this increase in stock trading and investments.
Firstly, volatility breeds opportunity in the stock & other financial markets, and a number of people have started day trading to capitalize on these opportunities.
Major leading global online brokerages like Robinhood, E-Trade and EToro saw some of the highest volumes of trades they have ever seen.
In Africa, South Africa is the largest financial market for stock and CFD trading. Many leading South African forex brokers like Tickmill, Hotforex, IG Markets, Plus500; all reported all-time high trading volumes & active traders.
NSE of Nigeria also reported higher participation from domestic investors, with 89% increase in trading volume in Q1-20 which stood at N374.98 billion, compared to N198.39 billion in previous quarter in 2019.
Secondly, people have more time of their hands due to the lockdowns and are looking for ways to grow their savings or look for side income opportunities.
Online brokerages have made is quite easy for people to participate in the financial markets, and also the access to education, basics of online trading are readily available to retails investors, thereby, encouraging more people to participate in this market.
US based Robinhood alone saw an increase of 3 million new funded accounts by May 2020, around half of which were first time traders.
Thirdly, this pandemic has created new industries and investment opportunities for people.
Companies that offer effective Software as a Service (SaaS) solutions to help individuals and businesses cope with this pandemic are looking attractive to investors and some investors are moving away from their traditional investments to invest in such companies.
Many tech stocks of SAAS, ECommerce & Internet companies like Amazon, Alphabet, Shopify, Facebook, Microsoft, Salesforce, Jumia etc. are at all-time high.
Cryptocurrencies were strong performers during this pandemic with Bitcoin and Ethereum clocking year-to-date returns of 277% and 469% respectively.
During the course of this year, international remittances have seen a sharp decline and one of the significant factors contributing to this was the steep remittance costs. Cryptocurrencies were the perfect tool for foreign remittances as it carries a negligible cost for global remittance.
Investors have also become more comfortable with digital wallets, and with major asset management firms like Alliance Bernstein considering Bitcoin a diversification tool, cryptocurrencies are becoming more mainstream.
In Africa, Bitcoin trading has been grown across the continent especially in countries like Nigeria that have less stable currencies. Bitcoin & other cryptos are now mainstream in Africa with big exchanges like Luno and Ice3x.
Cryptocurrencies like Bitcoin have seen a number of expansions and contractions in their values and this is increasing the interest of investors, the fact that this cryptocurrency has managed to weather multiple storms could be evidence that this is a viable financial system.
4. Digital Payments and Fintech
There are a number of reasons people have made the shift from cash transactions to digital transactions, and the Covid-19 pandemic has accelerated the adoption of this technology.
During the pandemic digital payment platforms like Apple Pay, Samsung Pay and PayPal saw a surge in transactions being performed, this was mainly due to the contactless nature of these transactions.
Digital payments are any non-cash transactions processed through digital channels and many businesses have adopted these channels to facilitate contactless transactions.
Bloomberg reported a 27% increase in contactless payments during the pandemic and this trend does not look like it is slowing down. As more and more people adopt this technology they are realizing the potential benefits of using cashless transactions.
In Kenya & other parts of Africa, mobile payments have already been major part of the economy and banking, and the pandemic has accelerated this shift to cashless bank.
5. Food Delivery and FMCG
The Fast Moving Consumer Goods (FMCG) and food delivery sectors saw a strong performance during the pandemic.
There was a surge in demand for consumer packaged goods (CPG) and household goods. The long-term stable demand for staple products has allowed the FMCG industry to weather the pandemic and positions this sector well for a fast recovery post the pandemic.
FMCG companies have improved the sustainability and inclusivity of their value chains during this pandemic by adopting new technology and expanding their services to existing and new customers.
The pandemic has also increase the use of food delivery apps across the globe.
Food delivery apps in the United States saw an almost 100% increase in demand. Companies like Door Darh, Uber Eats and GrubHub saw a marked increase in users and app usage, this is mainly due to the level of safety these delivery apps offer & consumers preferring to order from home.
Even though food delivery apps are seeing a surge in demand, their high costs of logistics & maintaining the delivery chain, especially in Africa where the costumer volumes are much lower, keep them from posting sustainable profits, therefore, the future profitability of these apps is still uncertain.
6. IT, Cloud and Software Industry
As the pandemic has forced a number of companies to take their processes online and shift from legacy systems of management and operations.
This shift from traditional systems has bolstered the demand for IT solutions and Cloud Computing across the globe.
The healthcare, pharmaceutical, financial services and professional services industries have been quick to adopt new technologies to meet the challenges posed by this pandemic. Companies have also changed the interaction of their supply chains by digitizing core internal operations like back-office, research and development and production.
Cloud based applications & platforms has helped businesses stay connected through this pandemic and is projected to keep growing into the future.
Cloud computing is projected to make up 14.2% of the total IT enterprise spending by 2024, a significant factor contributing to this growth is companies moving to work-from-home models for their employees.
7. Social Media and Online Entertainment
Social media and online entertainment saw strong growth in number of active users & revenue through this pandemic.
During the pandemic social media platforms like Facebook, Instagram and Twitter saw a surge in new users joining their platforms, and today more than 4.5 billion people use social media platforms. Digital platforms like Netflix, Youtube and Amazon Prime also saw surge in users.
As time progresses the use of social media and online entertainment is projected to steadily grow as these platforms roll out new services for users.
8. Pharmaceutical Industry
The pharmaceutical industry saw strong growth during the pandemic as companies were scrambling to produce medicines and medical equipment for patients and hospitals.
A number of pharmaceutical companies delved into virus research during the outbreak, companies like Owlstone Medical which developed breath biopsy tools for cancer and fatty liver disease started using their technology for detecting Covid-19.
Companies like Pfizer have also seen strong performance and one of the major contributors to this performance is their pneumonia medicine called Prevnar 13, which was used to treat pneumonia in symptomatic patients. Pfizer’s collaboration with BioNTech for the Covid-19 vaccine might see it perform better in the future.
The pharmaceutical and medical industry has taken center stage in the fight against Covid-19 and as these companies create successful therapeutic treatments and vaccines for this virus, they will see a strong performance & interest in future.
As countries imposed lockdowns and hospitals reached their maximum capacity, a number of patients with pre-existing medical conditions faced concerns relating to the medical attention they required.
Telemedicine became a popular means for patients to consult with their doctors safely and this service has saved countless lives. Telemedicine also increases participation from people who are medically and socially vulnerable and provides medical services to patients who do not have ready access to medical services.
The Covid-19 pandemic has changed the way we live and do business, and technology has allowed us to adapt to this change relatively quickly.
With tech companies creating solutions for businesses to go online and allowing people to access essential and non-essential services from their devices, the technology and IT sectors are poised to become the primary markets in the future in Africa & rest of the World.