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The many positive repercussions of COVID-19 on business

There is no escaping the fact that the COVID-19 pandemic caused massive deaths and economic havoc. But this crisis has also paved the way for some great business accomplishments

Saudi was estimated to witness an increase of 27.6% in e-commerce sales during 2020 e-gaming experienced 20% growth in 2020 Businesses had an opportunity to diversify, introduce new products, and explore new markets

There is no escaping the fact that the COVID-19 pandemic caused massive deaths and economic havoc.

The region was not spared the carnage. The overall economic growth took a downturn with UAE, Saudi, and Qatar reporting negative real GDP growth rates of 5.9%, 4.1%, and 2.6% respectively in 2020.

Low crude demand dropped Brent oil prices to record lows of $9.12 a barrel in April 2020.

Tourism which previously contributed between 9% to 12% of the GDP of Gulf economies saw inbound tourism declining by 68.7%, 79.1%, and 24.6% for UAE, Saudi, and Qatar respectively.

Real estate and construction sectors, considered key drivers of economic growth in the GCC region, shrunk significantly.

But this crisis has also paved the way for some great accomplishments and saw many sectors flourish during the pandemic.

E-commerce

The e-commerce industry in UAE, Saudi, and Qatar was valued at $18.5 billion, $4.9 bn, and $1.5 bn in 2019.  

Saudi was estimated to witness an increase of 27.6% in e-commerce sales during 2020 followed by 23.6% for UAE and 18.8% for Qatar.   Over 1/3rd of Saudi retailers transitioned to e-commerce in 2020.  

Product line expansions by players such as Talabat, Noon, and Amazon enabled customers to choose from a wide range of products at a lower cost with greater doorstep delivery convenience.

GCC’s e-commerce is all set to increase at 16% annually till 2025 as per Kearney.

E-gaming

The e-sports sector has surged in popularity and GCC’s e-gaming market has become a multi-billion-dollar industry. According to Knoema, e-gaming’s market size in the UAE, Saudi, and Qatar was estimated to be $340 million, $580 mn, and $90 mn respectively as of 2019.

Because of frequent lockdowns, e-gaming experienced 20% growth in 2020, as per Newzoo. Similarly, the market size of this industry in the GCC is expected to grow to $3.8 bn by 2025.

Saudi’s online gaming community also grew by 10% in 2020 and the number of time users spent gaming increased by 50%, according to research by GFK (Growth from Knowledge).  

The rising participation of women in e-gaming and product evolution will help expand the market in the coming years.

Meanwhile, cloud gaming, or playing video games on remote servers, is one of the fastest-growing segments in this industry, allowing players to enjoy games without the need for expensive consoles or gaming PCs.

Omdia estimates cloud-based gaming is likely to reach revenues of  $4 bn globally in 2021, a growth rate of 188% over 2020.

Edtech

The total number of school students in the UAE, Saudi, and Qatar are expected to reach 1.5 million, 10.3 million, and 0.4 million respectively by 2022 registering a growth of 3.4%, 1.8%, and 3.9%. The EdTech industry has been gaining prominence with the smart classroom market in the Middle East & Africa (MEA) region estimated at $3.5 bn in 2019. It is expected to reach $7.6 bn by 2027 at an annual growth rate of 9.8%, according to a report by GlobeNewswire.

 Specialized UAE platforms called “Activity Platform” and “In This Together” helped shift almost 1.2 million students online. The UAE government has also launched its digital teaching platform, ‘madrasa.org’, through which it can offer free education to nearly 50 million school-aged Arab children.

 Online ordering and food delivery

As consumers gained comfort with shopping over the internet, online food ordering followed as an organic next step. According to Statista, the food-delivery markets in Saudi, and UAE were valued at $1.55 bn, $1.09 bn respectively in 2020.

 Subscription-based OTT (Over The Top)

GCC’s television sector, a market that until now was dominated by free-to-air, direct-to-home (DTH) broadcasting, is increasingly being populated by the new pay-TV and OTT players. OTT’s global revenues are expected to top $85 bn by 2025, according to GlobeNewswire.

According to Digital Studio ME, GCC’s OTT industry comprising of free-tv, pay-tv, and online video generated revenues of $2 bn in 2019.

As per MPA’s forecast, GCC’s video industry revenues are expected to increase to $2 bn by 2025, a 5% growth over 2020.

To a large degree, COVID-19 and its after-effects have brought OTT adoption forward. In the UAE, Netflix and Amazon Prime witnessed a 26% and 44% increase during the pandemic.

Digital healthcare

The public healthcare sector in the UAE, Saudi, and Qatar was estimated at $6 bn, $25 bn and $5 bn in 2019, accounting for approximately 1.3%, 3.1%, and 2.6% of their respective GDPs.

But the overall sector has experienced a positive transformation during the pandemic with the integration of digital healthcare solutions. In the UAE, the Ministry of Health and Prevention recorded nearly 50,000 virtual hospital visits by the end of Q3 2020. Saudi’s government and private sectors have developed and launched approximately 19 apps and platforms that have served public health functions and provided online healthcare services. Qatar’s healthcare sector has rapidly diversified and expanded telehealth and telemedicine services for urgent and emergency care, chronic care, pediatric care, mental health, elderly care, and home delivery of medications.

Positive impact on business

Here are 6 ways that Covid 19 has had a positive impact on businesses:

  1. Digital access

From remote work to internal communications, connecting to customers, and managing supplies, organizations had to digitalize rapidly. Things that would have traditionally taken months to negotiate or finalize via the old way of working now take just days or even hours.

  1. Innovation

The pandemic presented a unique opportunity for businesses to prototype their adapted ways of working in a relatively safe space. There appeared to be a period of global understanding and empathy with the challenges that businesses were facing. Customers were patient. Businesses had an opportunity to diversify, introduce new products, and explore new markets, with little risk of resistance. This helped to build confidence among businesses, to introduce change boldly and fearlessly.  

  1. Training and upskilling

During the initial adjustments brought about by the pandemic, employees had to adapt quickly to new systems and software. Some people settled well into a virtual communication space, where others have struggled to get on board with the concept. Employers have a duty to support their staff through such changes and allow time to allocate for personal development.  

  1. Productivity

Prior to the pandemic, the idea of offering a ‘work from home’ option to employees was often viewed as unfavorable and if granted, would come with strict conditions. Time saved traveling and commuting, reduced distractions, and the effectiveness of virtual meetings helped change that.   

  1. Money savings

Due to the unprecedented nature of the pandemic and the lingering uncertainty around the lasting effects, many businesses pulled back on spending. Although installing new ways of working hasn’t come without a cost, including investment into new digital systems, communication platforms, and home setup for staff. But many businesses experienced vast savings from not having to pay daily operating costs of offices or travel expenses.

  1. Community building

Many employees feel their work-life balance is healthier and their general well-being has noticeably improved. Being more present at home has encouraged people to establish or enhance relationships with neighbors and others within the local vicinity. Being part of a community is essential for good all-around mental health.