Covid19 Crisis: Business Strategy Framework (Part 1)

Creativity Unleashed

For generations, people across the world will remember the havoc wrecked by the Covid19 crisis. Unlike the financial crisis of 2008–09 or the Twin Tower terrorist attacks of 2001, this event has not spared anyone. The homogeneity and simultaneity of the challenges faced by people due to lockdowns (or “shelter in place”) has created a shared consciousness that will have a profound impact on the humanity with across-the-board revision of outlook towards health and lives, livelihoods, social interactions, office and social spaces, travel, entertainment, spirituality, etc. — in essence, almost all aspects of life that are fundamental to human nature.

Several countries, including India, took proactive steps to contain Coronavirus spread and started imposing lockdowns by late March 2020. In a lot of countries, lockdowns continued for several weeks. (In India, lockdown was enforced from the last week of March till the first week of May 2020 — in other words, for more than 6 weeks.) During this time, people across the world had to radically change their daily routines. Also, even after the lockdown is lifted (or, perhaps, as we enter a “rolling lockdown” period), the practices of physical distancing, wearing masks in public spaces, avoiding enclosed crowded places (such as malls, movie theatres, etc.), etc. are likely to sustain — at least till the war against Covid19 is won.

While the societies reels under the constraints imposed by Covid19, entrepreneurs — who, in “normal” times go through a rollercoaster journey encompassing innumerable highs and lows of emotions — have had to handle a crisis for which they had never bargained for! However, the challenging times often bring out the best in people and we have observed the same with entrepreneurs. Accel India has a portfolio of 150+ companies and we have observed an extraordinary and exemplary spurt in creativity across the portfolio companies.

This creative energy has had an invigorating effect on the Accel India team and we felt that it is important to share these strategies with everyone because they can help startups across the world to gain a new perspective and, therefore, provide directional guidelines to handle the post-lockdown scenarios.

In the first part of the article, we will share seven concrete examples of different strategic responses to the crisis. In the second part of the article, we will provide an outline of a simple Crisis Response framework that can be used by entrepreneurs to pick the most relevant strategy for their companies.

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Seven Successful Business Strategies

[1] Reimagine the Category!

Since its launch in Nov 2016, CultFit had grown at a rapid pace to become the largest health and fitness brand in India. In Mar 2020, CultFit had more than 150 centers and almost 80,000 users were working out in these centers on a daily basis. CultFit had grown 7x in the previous year and was on road to grow 4–5x in 2020 as well.

Covid19-led lockdown, however, completely disrupted the dynamics. Fitness centers had to be shut down resulting in the offline operations coming to a complete standstill. Revenues from the fitness business (which was around $10M per month) went down to zero overnight. Worse, it was not clear when CultFit would be able to go back to “business as usual” — there were concerns that Covid19-related side-effects would last for several quarters even after lockdowns were lifted. With offline operations grinding to a halt, CultFit, however, quickly pivoted to live video classes by adding them to its CultFit app. Earlier, CultFit app had only DIY fitness classes and played a minor supplemental role. [link, link]

Live video classes that users could join from their homes turned out to be quite popular and attracted a large number of non-members as well. Within six weeks of the lockdown, CultFit live classes were clocking more than 500,000 daily active users and had served more than 5 million customers! Before the lockdown, almost 80,000 users were working out in the physical centers on a daily basis. In other words, CultFit grew 6x in the first 6 weeks of the lockdown. [link]

Given the success of the video classes, CultFit is now exploring digital-first strategy more broadly (without geographical constraints and with lower fixed costs) and hopes to re-start the revenue engine!

[2] Engagement & Retention: Drive Higher Usage and Retain the Best Users

Housing (part of the Proptiger group that also manages Makaan.com) is amongst the largest real-estate sites in India. Real-estate industry has had to suffer a double-whammy due to Covid19 crisis: a lot of customers at the “top-of-the-funnel” (that is, those that were in the initial phases of their real-estate buying journey) have deferred their journey; also, customers at the “bottom-of-the-funnel” (that is, those that were close to making the final decision) are unable to visit the shortlisted properties and, as a result, are unable to make the final decision. Even otherwise, the uncertainty created by Covid19 has increased reluctance to make large commitments.

In such a scenario, the best thing a company can do is to keep the customer engaged by providing them with all the relevant information so that the customers can make the right decisions. Housing.com is doing this not only with the help of webinars (who isn’t?) but also by offering video-based consultations. Housing.com is also helping builders and brokers gear up to offer video-based virtual tours to simulate site visit experience (as opposed to static video walk-throughs, slideshows or 3D models of a property — which was done earlier).

In addition, Housing.com worked on adding support to enable tenants to “Pay Rent” via their credit cards. This helps people facing short-term liquidity issues during this Covid-19 pandemic. NoBroker, another real-estate firm, had earlier tied up with HDFC PayZapp to offer similar feature. [link] Pay Rent not only provides additional 30–45 days of credit to customers but also reduces the dependence of cash and other physical payment instruments. Moreover, by providing ongoing service to customers, it helps these companies to stay engaged with customers.

[3] Strengthen Brand: Alleviate Concerns & Deepen Connect

Urban Company (UC) is a managed marketplace that provides beauty-related and home-related services to customers. Beauty services (such as salon, grooming, spa as well as fitness and yoga) have been the mainstay of the company. Home related services include repairs of appliances as well as cleaning, painting, etc.

UC was handling more than 50,000 service orders per day in Mar 2020. India-wide lockdown brought this down to zero. Even worse, the quick spread and extreme virality of the disease ruptured user confidence in any contact with the outside world — whether it was in the form of newspaper, paper money, parcels, or people. [link]

Recognizing the dramatic change in health and safety outlook, Urban Company launched “Mission Shakti” in mid-April to “protect the health, safety and well-being of its customers, service partners & employees.” UC provided masks, gloves, eye goggles, sanitizers, etc. to all service partners in order to protect themselves. UC also provided health insurance and income protection program to all service partners. [link]

UC recognized that in the new world, users will have a difficult choice between going to a salon for haircut (with potentially large set of unknown people) or calling a “stranger” (service partner) home. The latter option has lesser variables — especially if the UC service can be made as safe as possible. UC has introduced new Standard Operating Procedures (that includes sanitizing tools and using single-use sachets and disposables) as well as providing contactless service in categories such as repairs, cleaning, etc. UC also introduced services such as sanitation and disinfection to cater to customer requirements.

All these safety-related process changes were appreciated by the service partners and were reflected in a dramatic 40% increase in the partner NPS scores since the start of the crisis!

[4] Rapid Experiments: Match Evolving User Needs & Goals

Swiggy reacted very quickly during the Covid19 crisis. As the Covid19 concerns were increasing (before the lockdown, that is), Swiggy introduced “zero contact deliveries”. Later, to help customers order from safer restaurants, Swiggy added “Best Safety Standards” badge to restaurants that have introduction additional safety measures to minimize the spread of the disease — these include temperature checks, frequent sanitation, self packing mechanisms, etc.

Second, Swiggy had grocery service support on its platform for more than a year. To match increased customer requirements, grocery services were scaled up rapidly after the pandemic spread. It was also expanded to serve more than 125 cities across India. [link]

Third, Another service that existed before the pandemic was Swiggy Go, which provided instant pick-up and drop service to users. It was renamed to Swiggy Genie and expanded across more than 15 cities to enable family members, friends, etc. to send necessary items to each other without having to step out of their homes. [link]

Fourth, Swiggy Stores service was introduced to help users buy groceries and other essential items from the nearby stores. Swiggy also partnered with several FMCG brands and retailers such as Adani Wilmers, Cipla, Dabur, HUL, Godrej, Marico, Nivea, Procter & Gamble (P&G), Vishal Mega Mart, etc. to supply food items and branded essential products direct to consumers. [link, link]

Finally, Swiggy started to explore meal-kit delivery service. Swiggy introduced DIY (Do It Yourself) meal kits that let users to order ingredients of a specific dish from well-known partner restaurants so that users can cook the meal themselves at home.

Swiggy’s “customer-backwards thinking” has helped it to launch these services in rapid-fire manner. Swiggy uses a number of interesting frameworks (such as “Accepted Customer Beliefs”) to quickly understand evolving customer needs and wants (goals) and an efficient Growth Team Architecture to build and roll out these products rapidly. You can read more about these here.

[5] Build Habit: Increase Repeat Usage

AgroStar is one of the largest agri-tech companies that offers complete range of agri solutions to the farmers. AgroStar is also the largest online farming community (known as “Krishi Charcha”) that provides crop-related and other inputs to farmers. AgroStar provides a combination of agronomy advice coupled with service and agri input products that enable farmers to significantly improve their productivity and income.

The e-commerce aspect of AgroStar had to get suspended in the initial days of the lockdown. In order to continue to deliver value to customers, AgroStar focused on improving community engagement. For this, AgroStar improved both the onboarding and increased customer engagement touch-points. These not only improved customer engagement and retention by 2x (in 6 weeks) but also helped increase number of e-commerce transactions subsequently!

Increasing the number of repeats and engagement helped deliver upfront value to customers, which helped establish trust with the customers. Higher trust, in turn, resulted in more than 2x growth in the transaction funnel. This was all the more impressive because AgroStar had significantly reduced its marketing budget during this period!

[6] Scale Faster: Improve Quantity and/or Quality of Acquisition

While the coronavirus pandemic has hit most sectors, logistics is amongst the hardest hit because “essential items” (corresponding to agricultural produce, etc. for example) constitute only 15–20% of the whole market. The crisis brought almost all the 4 million trucks and the whole industry, literally and figuratively, to a standstill.

In order to get the industry moving again, Blackbuck launched “Move India” initiative that had two main elements [link]:

• First, Blackbuck waived off the commission fees in order to enable any manufacturer or trader (in addition to the 30,000 customers that it already works with) to find the trucks that they need. This has become important due to non-availability of trucks — especially because a lot of truck drivers are reluctant to get back on the road (both to avoid contracting the virus and because petrol pumps, eateries (dhabas), etc. are mostly closed).
• Second, Blackbuck worked to support the supply-side partners (which include includes five lakh fleet owners with ten lakh trucks) to discover demand and procure FASTags (for toll payment), fuel cards, etc. Blackbuck has waived off fee for supply-side players as well. In addition, BlackBuck is offering an added incentive of Rs 2,000 to Rs 3,000 to truckers for every trip they undertake as well as Rs. 50,000 trip insurance that covers hospitalization expenses either due to accident or Covid-related treatment.

Blackbuck, in other words, opened up its marketplace to both demand-side and supply-side participants. The open marketplace helped drive more than 120,000 matches to be made within the first three weeks of its launch and helped get more than 10,000 truckers back on the roads!

[7] Unlock new opportunities!

Moglix is a MRO B2B e-commerce marketplace that helps manufacturers and other businesses purchase ongoing supplies related to maintenance, repair, and operations of their factories and workplaces. Moglix is leveraging technology to improve the B2B supply chain.

The Covid19 pandemic has seen Indian textiles industry move quickly move to start producing Protective Personal Equipment (PPE) kits. At the start of the pandemic, India was manufacturing no PPE kits that were suitable for Covid19 and all the needs were being met by imports. In subsequent two months, India had 400 accredited manufacturers who were producing 300,000 kits per day! And the manufacturing capacity was projected to double over the next 6 weeks. [link] Globally, however, there is major shortage of PPEs. After achieving self-reliance by mid-May, Indian apparel exporters were ready to serve the global demand. [link]

Despite the disruptions introduced by the lockdown, Moglix actively worked to ensure that the manufacturers and customers (State governments, hospitals, etc.) were able to discover and transact with each other using Moglix’s online e-commerce platform. Moglix also worked to ensure that the consignments reached the customers.

Given that there is a global demand for PPEs and the realignment of the global supply chain, Moglix launched its operations in UK and European markets. Despite the constraints imposed by the pandemic, Moglix has, in fact, been able to satisfy the needs of several countries as well!

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Summary

We have provided seven examples of distinct responses to the Covid19 crisis across a wide spectrum of B2C and B2B companies. There are countless more examples across the world. We will love to hear from you: please let us know other examples of companies that have responded quickly to the Covid19 crisis!

In the Part 2 of the article [here], we provide the framework that helps to understand the “why” behind these responses and how you can apply them to your startup or company.

Related Articles:

1. Covid19 Crisis: Business Strategy Framework (Part 2)
2. The State of the VC Ecosystem amidst the COVID-19 Crisis