Unintended Commerce Consequences

There are bits of positive news and surprising patterns among the economic carnage inflicted by COIVD-19. For one, consumers have dramatically shifted behaviors. A senior citizen in my family, just recently set up with the internet over the holidays of 2019, is now regularly ordering Walmart curbside pickup on her mobile phone. COVID-19 has forced almost everyone to change their habits.

The following articles highlight businesses that have seen an unexpected windfall or have had to significantly pivot due to COVID-19.

WSJ - How Etsy Became America's Unlikeliest Breadbasket

  • Etsy now sells food - namely baked goods 0 thanks to “cottage food laws” enacted over the past seven years

  • Etsy is becoming to go-to for everyday staples

  • Backdrop of new CEO who streamlined and experimented to get Etsy on a path towards growth/profitability

  • The baked goods category is exploding, “reported increases in orders of between 200% and 450% in the past two months, compared with a year ago

  • Etsy was well positioned to buffet COVID-19 as creators are usually based at home. Interestingly, the article notes how Etsy customers are loyal and prefer to shop with Etsy versus other lower priced competitors like Amazon and eBay. Etsy is a platform that fosters goodwill between both sides of the market. For example, buyers and sellers are encouraged to message each other.

Meal Kit Trends

WSJ - Can Meal Kits Remain the Flavor of the Month

WSJ - Meal Kits Thrive During Lockdown

  • Meal kit makers are busy. Direct to consumer meal kits have thrived during the lockdown imposed by COVID-19 in early 2020.

  • HelloFresh is one of the more popular services

  • While Instacart staffed up and restaurants shuttered, meal kits helped fill the void.

  • “HelloFresh grew first-quarter revenue by 37% compared with the final three months of 2019 and made its first quarterly net profit. Blue Apron, which has struggled to execute on its promises for several years, made more muted gains of 8% quarter-on-quarter and remains in the red.” (Flavor of the Month)

  • But meal kit services are beset by high churn rates.

  • Unsurprisingly, BlueApron is still financially struggling, but they are aware that they need to adjust to retain customers: “To keep customers for the long run, the company said it is boosting marketing and offering more flexible menu choices.” (Thrive During Lockdown)

  • Once the economy opens up, will meal kits see a precipitous decline is usage?

WSJ - The New Recipe for Restaurant Survival? Become the Next Dominos

  • The non-delivery software that support restaurant operations like Toast and ChowNow - are what interest me. Restauranting is operationally intensive and could benefit from streamlined processes enabled by software. However, the margins are often razor-thin. What are the products that truly grow the pie as opposed to just taking a cut?

New York Times - Your Kitchen Can Be as Well Stocked as Restaurants Now

  • Restaurant suppliers quickly pivoted to the retail market.

  • Once they figured out consumer distribution strategies, suppliers experienced faster payments and presumably lower nonpayment rates. Normally restaurant suppliers and farmers extend credit to the restaurant clients.

  • Consumers are benefitting from the high quality meats and produce and experimenting with new ways of cooking.

Will this trend stick? Will restaurant suppliers permanently nurture enthusiastic retail customers who want quality food and have a desire to support small businesses?

It's not just food. All categories have been impacted in surprising ways

New York Times - Americans Keep Clicking to Buy, Minting New Online Shopping Winners

  • Of course, on aggregate, there has been a major economic contraction. However, not all categories of spending have declined, especially when it comes to e-commerce. According to the article, e-commerce electronic sales have experience a 200%+ growth in sales.

  • Shows us that Instacart and Amazon are the only major players in grocery delivery. Grocers need to be on Instacart to compete with Amazon. Due to the network effect, it generally doesn’t make sense for a grocery store like Vons or Pavillions to be on a smaller outfit like PeaPod. Thanks to COVID-19, Instacart is back to a going concern.

  • Walmart and Target’s online business has grown.

  • DoorDash is to food delivery as Instacart is to grocery delivery.

  • No one is interested in wearing anything but rayon-spandex blends. LuLuLemon’s online sales are up by 200%+, while major players like StichFix & Rent the Runway are flat or declining. Even MeUndies is flagging.

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COVID-19 upended human interaction in 2020. Most if not all in-person events scheduled after COVID-19 took hold in North American were cancelled. As the world grappled with the deadly disease, technol