Going Digital for Survival

Faced with lockdowns and social distancing measures mandated by the pandemic, physical businesses flocked to the digital world to stay afloat.

Nearly 75 per cent of companies in Singapore have accelerated digitalisation efforts because of the pandemic. Regardless of industry, companies today are using digital technologies, from the Internet to artificial intelligence, to rethink their business model, supply chains, product offerings and customer interaction.

Even the most unexpected businesses have made the move online. Who would have imagined that concerts, museum visits and even doctor appointments could shift onto our screens?  

While COVID-19 may have been its catalyst, the digitalisation trend is here to stay. Customer needs and expectations have changed — 75 per cent of people using digital channels for the first time during the pandemic say they will continue using them when things return to “normal”, according to a McKinsey survey.

All aboard the digital train

In a global economy shrouded in uncertainty, the ever-expanding digital economy remains a bright spot.

In Southeast Asia, the number of Internet users grew by 40 million in 2020 alone, twice that of the past five years. Consequently, from 2019 to 2020, e-Commerce and online media industries grew by 61 per cent and 22 per cent respectively.

For industries whose conventional operations were upended by the pandemic, diving headfirst into the digital economy brought about unexpected advantages. The shift from a brick-and-mortar store to a digital model cut fixed costs on rent and labour while expanding markets.  

For instance, sneaker retailer JD Sports was able to capitalise on online storefronts and social media to maintain profitability despite lockdown restrictions in 2020, while home-based businesses flourished thanks to their use of digital platform like Instagram, and e-payment methods such as PayNow.    

But please mind the gap

Yet, as our economy shifts more into the digital realm, a new schism in society has appeared: the digital divide.

While digitalisation has made experiences and services more accessible and convenient for most, socio-economic status or age can constitute a significant barrier in reaping the benefits of digital services.

Only 31 per cent of one- to two-room HDB households have a personal computer, compared to 95 per cent of households in private housing, underlining significant disparities in digital access. This divide inevitably translates into difficulties working and staying connected with others in this new economy.

Insofar as digitalisation has brought about big winners for companies that could adapt their business models to this new world, other industries have struggled. The American Alliance of Museums estimated that up to 12,000 American museums could close due to a lack of revenue, despite 75 per cent providing online educational resources and 64 per cent launching digital activities.

Moreover, small businesses whose owners are not digitally-savvy face substantial challenges. “Digitally disadvantaged” hawkers in Singapore have been disproportionately hit by restrictions on dining in as they struggle to use social media or delivery platforms to gain visibility.

Digital infrastructure and uptake are also highly uneven across the world. Only one in five people in least developed countries (LDCs) uses the Internet, compared to four in five in developed countries.

Economies’ ability to harness data and technology also differ significantly. The African and Latin American regions, in combination, account for under five per cent of worldwide data centres. The dearth of digital technologies in LDCs limits the value of digitalisation and exacerbates global inequalities in income and development.

Moving forward, together

Asthe global economy undergoes a digital transformation, consumers and businessesalike enjoy and harness the opportunities itbrings. Yet, the reality is that its gains are now concentrated in selectcountries, industries and individuals.

Only by bridging the digital divide through careful policymaking and global cooperation, can we fulfil its potential for the many rather than just the few.