Digitization, a lifeline for companies during the pandemic

Digitization, a lifeline for companies during the pandemic

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The coronavirus crisis has tested thousands of traditional businesses that, after closing their doors to the public, have been forced to resort to online sales to continue operating.

At number 24 on the central Madrid street of San Bernardo, the Luna Rossa pizzeria closed its doors on March 14 after declaring the state of alarm. This small restaurant that for 27 years had lived off the clientele who tasted Italian food in its living room, needed a plan b to resist the crisis. “We are a family-run and home-made restaurant, but a year ago we started working on a digital platform that allowed us to place orders, although we didn’t pay online. It was not well known or we were not using it much. At the end of March I started to get informed and I found a person who has helped me transform our website, which was a mere showcase, into an online store. In ten days we have had to do everything and there are little things that sometimes fail, but you can pay by card. I will deny that at first I was very scared, but I have a waiter who understands computer science helping with online orders and in the few days we’ve been open, it works“explains Anna Carla Zucchini, owner of Luna Rossa.

Like her, thousands of restaurant, clothing store (like Pronovias), food store (like Mahou distributors) or bookstore owners have had to put the focus on the Internet to realize that while everything is closed, online commerce is your life table. “That delivery was the future was already seen to come, but now there is no other,” says Zucchini.

At Luna Rossa they have opted to place orders through their own website, but > many businesses have chosen to use existing delivery platforms to reach digital consumers. In Deliveroo claim to have added more than 700 new restaurants local in recent weeks, “as it is their only way to operate.” From the platform they say they are facing “an unusual situation in which many businesses want to go digital, but need tools to let the public know that they are open online. That is why we have also made marketing tools and experts available to them to show them how to promote themselves. “they explain.

At Uber Eats, where 70% of restaurants are small or medium-sized businesses, have carried out communication campaigns among their user base “to encourage demand for orders from the more than 6,000 restaurants that only have the option of food delivery as a means of income.”

Both have changed the payment system to favor business liquidity. In the case of Deliveroo, with a new weekly payment service to its associated restaurants, and in the case of Uber Eats, with daily payments to improve cash flows.

Glovo, for its part, has doubled the registration of new partners In this period, more than 750 restaurants have joined the platform. According to what they indicate, daily orders have risen by 48% and catering SMEs that continue to bet on shipping via the platform have seen their daily sales grow up to 90% compared to data prior to the health crisis.

“With platforms of this type it is easy to start the journey online, I highly recommend it, but not all the work is done, you have to reach users, those faithful diners who had confidence in your business. Now this is not easy, You need a lot of investment in digital marketing and this is very expensive, but you can progress with a presence on social networks or even put a sign on the door of the restaurant that indicates that you are open online, “explains the associate associate professor of digital marketing at Esade, Franc Carreras.

Big consumption

These platforms that a few weeks ago focused on the distribution of restaurants have also been transformed to help make the jump online to other types of businesses aware that the largest volume of online sales is being made in the purchase of food. According to Glovo, which already carried out home deliveries beyond restoration, supermarket orders have soared 450% in confinement, surpassing those of restaurants. Since the day the alarm was declared, 7,500 packages of flour and 2,500 cans of Sanytol have been ordered through the application. Likewise, the platform has incorporated more than thirty new supermarket chains and the new pharmacy and parapharmacy outlets have doubled.

For its part, Deliveroo announced in early April an agreement with Unilever to order at home 25 references for personal care, food and ice cream, and a few days later announced a collaboration with Repsol to bring the purchase of the gas station home in more than 20 Spanish cities.

In the case of Uber Eats, from April 1 It is possible to buy online at Galp gas stations from eight provinces. In addition, the platform has incorporated pharmacies in which to buy food, cleaning and parapharmacy products.

More striking has been the latest move by Just Eat, which will begin to deliver food to the Swedish company Ikea in Madrid.

The consumer market (food, beverages, personal care and household) grew in the online channel in the accumulated of January and February -before the coronavirus- by 12.1%. Since the crisis started, Between March and the first three weeks of April, the cumulative growth of online reached 78.6%, according to Nielsen. In the last four audited weeks, from March 23 to April 19, the online channel has been breaking records week after week, such that in that first one it grew 74%, in the second one 81%, the third, which corresponds to that of Easter, 98%, and the latter left a new record of 286%, according to Nielsen data.

According to the consultant, as a result of this crisis, the number of households that at some point makes online purchases has doubled, going from 2% at the end of 2019 to 4% today, that is, in just 7 weeks the market has multiplied by two. Already more than 700,000 households are filling the cart by clicking.

Boost for SMEs

“Right now, a good online presence has the power to put SMEs where their customers are looking for them. What’s more, it could be said that not being on the Internet carries the risk of disappearing“explains Javier Castro, CEO of BeeDigital, a company that for two months offers its digital marketing tools for free to companies that need it.

Precisely to support small and medium-sized companies is a leap into the online world, the Ministry of Economic Affairs and Digital Transformation through the Secretary of State for Digitization and Artificial Intelligence and Red.es, have launched the Accelera Pyme program, in order to articulate a set of initiatives and grants to SMEs and the self-employed to support their efforts in innovation and financing. “In this web space you can find practical solutions for teleworking, electronic commerce, cybersecurity and also training pills, advice or lines of financing. This will be joined by the aid programs for the development of technological solutions and other initiatives we are currently working on. “says the Director General of Red.es, David Cierco Jiménez de Parga.

“Digitization can save many SMEs right now. In fact, there are several examples of very quick adaptation of self-employed or retail companies that have successfully started selling online or restaurants that serve ready meals that have never used this option and are moving forward, “says the manager. From that the portal was launched a little over a month ago, they have received more than 240,000 visits and proposals from more than 700 technology companies that want to provide solutions.

Among these technologies are giants like Amazon, Facebook, Google or Microsoft, according to Cierco Jiménez de Praga “this portal was born as a collaborative project, where both public and private entities shake hands to make themselves available to SMEs and the self-employed. For this reason, the collaboration of companies is essential for us. They are those that provide solutions and applications. ”

In addition to their collaboration with Acelera Pyme, the technology giants have launched initiatives to help companies in need in their digital transformation. For example, Microsoft offers the Administration and Spanish private companies its Microsoft Teams tool for free for six months and on Tuesday announced that it will offer four hours of free assistance to companies to drive the implementation of teleworking. In the case of Google, the company has focused on offering free tools like Google Meet (video conferences) to improve productivity, improve cybersecurity for small businesses and help SMEs to better understand the digital consumer.

“There are two types of companies: those who knew how to see the benefit and were not concerned with the cost of digitization and those who saw it the other way around, saw the cost of change as excessive. Now they have found that the cost does not matter because the benefit is to stay alive. Those of us who have spent years preaching that change is necessary, we see that many now step on the accelerator. It does not mean that they are doing well. The rush will cause when this is over, back off or have to do a more organized reinvention“says Franc Carreras.



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