Digital tsunami is coming
A Reuters file image
World economies were already struggling to reopen when they were once again asked to roll back to partial or even total lockdown as coronavirus cases continue to rise at a rapid pace across the globe.
The rising coronavirus cases and dimming hopes for a strong and timely US stimulus package, coupled with the fear of no-deal Brexit, have caused jitters in global stock markets.
While many believe that stimulus packages are the need of the hour and many sectors such as travel and tourism have no chance of survival sans stimulus, government support cannot resuscitate the ailing businesses which are not cognisant of changing realities of the modern economic landscape.
No wonder, the S&P 500 index recovered quickly as the FAANG stocks (Facebook, Amazon, Apple, Netflix and Google) outperformed and pulled the overall index higher due to their weightage.
Did these businesses do well only due to lockdown or perhaps there was some fundamental shift in the way businesses will operate post-Covid?
It is obvious that e-commerce was thriving even before the pandemic and lockdowns merely worked as a catalyst for it to outperform and resultantly shake up the weaker and vulnerable players in the market.
It was a sheer coincidence that the rising power and influence of these giants called for a probe into their business practices and the CEOs of Google, Apple, Facebook and Amazon were grilled by the US Congress for hours.
It is only a matter of time before waves of these technological tsunamis will hit the shores of developing world and challenge the status quo, which is surviving so far due to the insulated nature of the economy.
The disruptive nature of the pandemic has tested our readiness to adapt to the new normal where remote working and learning has pushed society to explore new opportunities.
One of the trends emerging globally is the businesses questioning the necessity of everyone being in office physically and hence the rationale of renting big and expensive office spaces in main cities.
This may eventually result in de-urbanisation of megacities as people can choose to stay in suburbs and work remotely.
This all sounds highly futuristic for developing countries like Pakistan where the labour-intensive and manual nature of economies will resist those transitions but it is just like fighting a losing battle.
Despite the fact that e-commerce giant Amazon has no presence in Pakistan and digital payment solutions like PayPal are not available, there are local individuals circumventing those obstacles to make fortunes and their success stories are spreading all across the social media.
As the Pakistan Tehreek-e-Insaf (PTI) government pushes hard to incentivise those e-commerce solution providers to enter Pakistan, it seems that these growth-hungry giants will not be able to resist their temptation for long to unlock a huge marketplace full of enthusiastic and tech-savvy buyers and sellers.
What does e-commerce mean for the local producers and manufacturers - well one thing is for sure that competition will survive on a global scale.
Imagine if a local seller has to source a product to list on Amazon and he or she has the option to go for a cheaper and better quality product from China and sell to a buyer in Europe compared to an expensive local product which does not even have strict quality control.
Many products listed on local e-commerce platforms are not sourced locally, which means there is little government can do to protect local businesses by levying heavy duties and tariffs.
Also, occasional shortages in the local supply chain such as recent episodes of sugar, wheat and cotton have highlighted the vulnerabilities and inefficiencies, which seem to be beyond the control of government.
The clock is ticking for local businesses to conduct more research, improve their products and increase the yield. The government is running out of fiscal space to subsidise the inefficiencies of local manufacturers.
Automation, digitalisation and innovation are the most critical survival skills that businesses have to learn to live in such a competitive environment, where the rising trend of e-commerce has introduced limitless possibilities for both buyers and sellers.
At the end, the digital tsunami is coming our way and standing at shore and burying our heads in the sand does not make it go away.
The writer is a financial market enthusiast and attached to Pakistan’s stocks, commodities and emerging technology
Published in The Express Tribune, October 26th, 2020.
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