DHL Express: positive disruption during the COVID-19 crisis
The speed at which the business community reacted to the global lockdown of shops, factories and offices was staggering, as we saw organisations quickly pivot and adapt their services in ways far beyond what we might have imagined possible. As a business that continued to operate throughout the lockdown facilitating global trade, we have a rare insight into the many creative ways the world adapted. While some of the measures may have been costly to implement, perhaps causing a dip in productivity or requiring an expensive redesign, there have also been plenty of examples of positive disruption in recent months. While no one would want to frame this period in terms of the positives, there are certainly learnings that have the potential to reshape the way we do business for the better.
The shuttering of high street shops has been one of the most visible and worrying lockdown measures, but in reality the ongoing challenges in bricks and mortar retail has meant that some of our customers were already quite well prepared. In the years leading up to the crisis, there has been a gradual decline in high street footfall and most retail and FMCG businesses have, to varying degrees, embraced the opportunity in e-commerce. However, a total closure of high street stores has sharpened this focus, and businesses that didn’t have an e-commerce platform sprang into action to maintain some revenue. Those that are able to consolidate their ecommerce presence have been able to exploit this new way to maximise sales.
Likewise, most consumer brands, particularly smaller businesses, tend to focus their efforts on the domestic market. But the lockdown has caused these businesses to look at all avenues to drive revenue and this has given many the confidence to tap into other markets, particularly beyond Europe. In ordinary times, e-tailers trading internationally achieve on average 10-15% higher revenue than those only open to UK customers, an uplift that becomes even more meaningful for businesses which have been heavily impacted by the sudden high-street shut down. Businesses broadening their horizons in this way could open the door to significant long-term growth of both product sales and their brands.
Up until recently, the B2B market has been slower to embrace the e-commerce model. But throughout the crisis marketplaces like Alibaba, who have a strong focus on wholesale, have been a lifeline for many businesses. The necessity to provide online options has also seen many B2B businesses rapidly develop their own platforms, as business focus and priorities quickly changed to respond to the pandemic. The benefits are very similar to B2C e-comm, with lower overheads, reduced cost of sale and data driven targeting, but the barrier has been a long-established cultural one. Previously the old ways of doing business have been hard to shake but this short-term necessity to move online will hopefully shine a light on the long-term opportunity of trading online.
There has been much speculation about the future of globalisation and whether in the UK we should reduce our reliance on other markets, but global connectedness builds economic wealth, higher salaries for frontline workers, and ultimately innovation and creativity. In many ways global connectivity has got us through this crisis and it’s highly likely that it will return to the levels we were used to pre-crisis. However, diversification of supply chains has proven to be a sensible strategy. Businesses with heavy reliance on China suffered during the country’s lockdown and then through the subsequent backlog upon reopening. In some cases, where the challenge was gaining access to goods, the solution was to source goods domestically but that too comes with risks as well as a higher cost. The best long-term strategy for resilience is to have a foothold in multiple countries. For example, we’re already seeing the emergence of Turkey as a regional sourcing hub for the fashion industry, not as an alternative to China but in addition to. Going forward we can expect to see new networks like this become established.
They say that necessity is the mother of invention, and this has been proven over the last few months. From pubs converting to convenience stores, to DIY meals from Michelin star restaurants, and Gin distillers producing hand sanitiser, businesses have pivoted at phenomenal pace to meet the needs of customers and keep afloat. Some of these adaptations may be circumstantial but many more will be here to stay. For instance, conferencing platforms have recently launched features for users to ‘put their hand up’ to better facilitate online school lessons, an enhancement that will encourage more online learning even when schools and universities reopen. In our own business we have introduced more choice for customers in the way they receive their goods, to enable safe, contact free deliveries that suit each individuals’ circumstances. This is a change we expect to see in place for the long-term. So perhaps it is not the crisis that has driven innovation but a sharpened focus on the customer. Going forward, we’re likely to see more shifts in lifestyles, behaviours and buying patterns so it will be important that businesses stay in tune with customer needs as they evolve.
One of the most important examples of positive disruption through the lockdown has been the environmental benefit. In April carbon output was down 31%, the air was cleaner, and birdsong became the backing track for zoom calls up and down the country. Many governments are using the reopening of businesses and public spaces to maintain this progress, or at least avoid going back to pre-Covid levels of pollution. In Italy car free zones are being created and plans are afoot for similar changes in some UK cities.
Businesses that use this opportunity to re-evaluate their operations and make the environment a central part of their re-start planning stand a stronger chance of long-term success. This of course also applies to our own business which has been operating throughout the lockdown, as an essential service, delivering healthcare, ecommerce and other essential goods. The electrification of our fleet is the only way forward on our mission to be carbon neutral and to create a cleaner, green world.
One of the factors contributing to the recent reduction in air pollution is the sudden shift to home working. Not only is this taking cars off the roads, it is driving positive change for many businesses too. Midway through the lockdown we conducted a company-wide survey on the new home working arrangements, primarily to check in on the wellbeing of our colleagues. The results were overwhelmingly positive and in favour of continuing remote or flexible working into the future. The potential for improved work-life balance, environmental upsides and real estate cost savings of home working, will surely spur an overdue re-evaluation of what the workplace looks like and how productivity is evaluated.
During this uncertain time it can helpful to look at other markets as a reminder that businesses and economies can recover. China, several months ahead in its journey, is starting to pick up in terms of production and consumer confidence. While not all businesses will come through this crisis unscathed, I have strong hope that many will emerge with renewed ambition and clearer focus that will serve them far beyond the initial period of recovery.