Commerce Department figures out Tuesday (Dec. 22) showed that the U.S. economy snapped back at a 33.4 percent annual rate during the third quarter following the second quarter’s 31.4 percent COVID-related tumble. That’s an even larger Q3 rebound than the 33.1 percent annual rate that the Commerce Department originally estimated — with the connected economy playing a leading role.
Consumers kept spending — and when the physical economy shut down, digital platforms sprang into action — enabling digital-first and even digital-only shopping options for everyday essentials and the things that consumers deemed essential as the pandemic dragged on.
So, here are five ways FinTech, BigTech and connected economy companies have helped keep the U.S. economy functioning over the last nine months and armed the 110 million consumers who’ve shifted digital for buying retail products, groceries and restaurant food over the last nine months.
1. Google’s SMB Tools
Google rolled out new tools and information early on in the pandemic to help small- and medium-sized businesses increase their digital-first abilities and let customers know whether or not they were open.
“Access to information has never been more important, [and] our products and investments are making a real difference as businesses work to recover and get back on their feet,” Sundar Pichai, CEO of Google parent Alphabet, said during the company’s recent earnings call. “You can now find useful information about offerings like no-contact delivery or curbside pickup for 2 million businesses on Search and Maps … and we have used Google’s Duplex AI technology to make calls to businesses and confirm things like temporary closures. This has enabled us to make 3 million updates to business information globally.”
Google also made it easier for SMBs to accept donations, allow customers to buy gift cards or make appointments online or update their profiles in Google Search and Google Maps to denote offerings like online classes.
2. Walmart And Others Boost BOPIS, Curbside Pickup And Home Delivery
Walmart, Target and other chains offered options like curbside pickup and Buy Online, Pick Up in Store (BOPIS) before the pandemic, but kicked those efforts into high gear once the outbreak began.
For instance, Walmart CEO Doug McMillon told analysts in May that “as this crisis created a need for social distancing and required people to stay at home, customers embraced pickup and delivery even more. … The number of new customers trying pickup and delivery has increased 4x since mid-March.”
Six months later, Walmart reported that 3,700 of its locations offered in-store pickup, with the number of employees assigned to handle such orders doubling year over year to some 140,000 workers. The company also said 2,700 of its stores offered express delivery that in some cases brought groceries to someone’s home in less than 30 minutes. And Walmart just announced a program with FedEx to pick up merchandise at consumers’ homes for returns.
“I think the ability for Walmart to be a real leader in the online pickup and delivery space is real, and I’m excited about the opportunities it has for us in the next couple years,” John Furner, president and CEO of Walmart U.S., told analysts.
But Walmart wasn’t the only one. From big box retailers to SMBs on Main Street, curbside became the hottest feature in town as consumers could still shop physically, but in a way that was most comfortable for them.
3. Amazon and Shopify’s Platforms Help Third-Party, DTC Sellers Find New Clients
Online retailers giants like Amazon and Shopify have offered small businesses a lifeline to finding new business in a world where digital first was digital only for a time.
Amazon Chief Financial Officer Brian Olsavsky said that third-party sellers — most of which are SMBs — grew to 54 percent of the company’s unit volume during the third quarter during the company’s latest earnings call. “We’re investing heavily to support sellers and are pleased to report that over [500,000] sellers are seeing record sales in our stores this year,” he said.
Amazon added that third-party sales on the company’s Oct. 13-14 Prime Day shot up nearly 60 percent over year to more than $3.5 billion. Meanwhile, Shopify said that it had more than 1 million sellers from 175 countries on its platform during Q3, with gross merchandise volume soaring 109 percent year on year during the period.
“Shopify’s tremendous third-quarter results reflect the resilience and entrepreneurial spirit of our merchants,” Chief Financial Officer Amy Shapero said. “More entrepreneurs are signing on to Shopify so they can quickly and easily put their ideas into action.”
4. Card-Not-Present And Card-Not- Needed Solutions
In the aftermath of the 2008 financial crisis, consumers basically had three choices to pay for goods and services: cash, credit and debit. With the advent of digital payment mechanisms like mobile wallets (Apple Pay), instant payments (Venmo, PayPal), QR codes and the ability for merchants to accept payments (Square) the game has changed. Add in one of the most dominant trends in payments this year, (buy-now-pay-later) and consumers had options that not only enabled more ways to pay, but enabled more ways to finance the payments.
These new payment methods have become more important during the pandemic, which appears to be enhancing mobile wallets’ and other online payment methods’ roles. For example, digital payment service and wallet provider PayPal saw its overall payment volume grow to $68 billion for Q1 2020, a 22 percent increase from Q1 2019 with the addition of 70 million new users over the course of the pandemic. The rush of those who are downloading finance, food delivery and grocery apps they can link to their debit cards also shows mobile has become a robust channel for eCommerce and finance in consumers’ minds.
5. Apps Brought The Restaurant To The Consumer When The Consumer Couldn’t Get To The Restaurant
Food-delivery aggregators are criticized over their fees, but many restaurants admit that apps like DoorDash and Uber Eats have helped them acquire customers and stay afloat during the pandemic.
A recent PYMNTS survey revealed that more than one-third of eatery operators said they would have shuttered during the COVID-19 crisis had it not been for such partnerships. Additionally, nearly 28 percent said they expected to close their dining rooms and exclusively offer delivery and pick-up service — using a combination of aggregators and their own in house services boosted by platforms that make the logistics of doing so manageable.
Such demand has sent food-delivery apps’ businesses soar in recent months.
For instance, DoorDash reported in an S-1 filing ahead of its recent initial public offering that revenues shot up 226 percent year over year to $1.92 billion during 2020’s first nine months. The company also reported a $23 million profit for the second quarter — its first black ink in history.
Similarly, Uber reported that the adjusted net revenues for delivery, which includes Uber Eats, grew 190 percent year on year during the third quarter to $1.14 billion. The company added that the number of restaurants actively partnering with Uber Eats rose 70 percent year over year.