Interview with Flow CEO Rob Keve: Impact of Global Market Disruptions On Retail

March 23, 2020

I sat down with our CEO Rob Keve to ask his thoughts on the current and future impact of the global pandemic on retail and e-commerce. He provided a number of insights that we wanted to share with our readers.

What can we expect in terms of logistics bottlenecks for online orders in the coming weeks/months?

In the short term, despite the large scale disruptions to passenger travel, logistics for e-commerce are still operating surprisingly well. Express shippers in particular have been operating normally in most parts of the world since they are not subject to as many restrictions and they also own portions of their own infrastructure. There are, however, service delays in expected locations such as China, Italy, and other parts of Europe. Standard service carriers, which secure large volumes of space for packages on cargo planes, will continue to operate normally as long as these cargo planes are able to continue running and the postal service in the destination country is operating as expected.

Looking further out, there are many factors impacting logistics that hang in the balance, particularly for cross-border shipments, and many of these depend on the willingness of different governments to keep borders open for freight and on-the-ground infrastructure. This will have a direct and immediate impact on third party logistics (3PLs) providers, in particular, and their ability to provide fast and efficient transportation options to businesses shipping goods domestically or cross border.

What are the technology challenges companies are facing?

I’m reminded of the Warren Buffet quote “It’s only when the tide goes out that you learn who has been swimming naked.” In the current circumstances, I’m starting to see plenty of businesses that have inadequate contingency plans. Some businesses haven’t been prepared for a situation that would call for employees working remotely en masse. This includes poor planning around tools for communication and collaboration, the ability to share files, and ensuring employees have the access and resources they need to work remotely and still maintain normal productivity.

Even tech companies that have solved many of these technological challenges struggle with the new normal. There have been ripple effects in businesses that may have employees with confirmed cases of the virus and are trying to figure out how to mitigate the risks and impact on other employees with whom they may have come in contact. There is also widespread uncertainty around rules for daily routines imposed by different cities and states that are resulting in increased anxiety and distraction. Furthermore, while working remotely for some businesses may be more common than for others, having the whole company suddenly work from home creates a shift in culture as employees learn to adjust to a new paradigm for collaboration, brainstorming, and working in teams.

Among many common challenges, all companies offering a tech product or service struggle with reassuring clients and customers that they are able to provide uninterrupted service. We have prioritized communicating regularly with our clients and increased our cadence of contact as well as providing new features in our product to help our clients adjust to their current condition. Increasing the level of service and providing transparent communication to reassure clients and customers can be challenging for many businesses but should be a priority.

What retail segments are going to be hit hardest?

In general there is a risk of an economic slow down due to the potential ripple effect of the unfolding crisis. The uncertainty surrounding the present circumstances will shift consumer spending. Reduced demand for certain types of goods will negatively impact supply chains and result in closures of factories and warehouses. The practice of ‘social distancing’ and certain states being on “Pause” or “shelter in home” is having an immediate impact on brick and mortar store sales, making e-commerce an even more important channel to support overall retail businesses. Pop-up shops that were planned for spring are being moved to later in the year, and any in-store experiences will need to be moved online to capture the increasing number of consumers in physical isolation.

Consumers won't stop spending completely, but spending has softened in the immediate term, particularly for discretionary items. Consumer spend is shifting over to stable goods such as groceries, healthcare and supplements, personal care, baby products and pet products. Many consumers will pull back from discretionary spending on luxury items and will look for good value and competitive prices on day-to-day and necessary apparel and home goods.

With so many people confined to their homes in this time, there are some categories poised for growth.  These would include digital goods such as entertainment media and gaming, work-from-home and communication technology and e-learning platforms, among others.

This may be a time of uncertainty, but there are ways to think about future-proofing your business in the event of disruptive global events. At times like these, cross-border can be an opportunity to help keep e-commerce businesses going. If you have questions or would like to learn more, get in touch today.