In two years, the pandemic transformed supply and demand and the way of doing business

On March 16, 2020, Executive Decree No. 1017 declared a state of exception due to the COVID-19 pandemic, and from March 17 the measures began to be applied, including mandatory confinement, the suspension of the face-to-face day of work, among others.

It was also the starting point for a process of transformation of the economy and of doing business, which after two years managed to position strategies that in many cases triggered supply and demand in certain sectors and kept others afloat so as not to disappear and now they seek to return to a physical space.

Roberto Unda, owner of Rundacar, that is dedicated to the sale of automotive parts and that before the pandemic had a physical location in the Guayacanes citadel, saw how the channel on-line saved his business from disappearing, however he recognized that his income levels were never the same as with a physical space.

Unda rented a place in partnership for $300, now alone, he assured that he spends almost the same amount per month on advertising on social networks to attract customers, although without the expected result and believes that having a physical space would have more exposure and thus accelerate his recovery, although his plans are long-term, as he plans to be ready in about three or four years.

Other businesses that were born and grew under the modality on-line they ended up opening physical spaces, in this last year.

BurgerLabwhich began in December 2019 in Quito as a virtual brand with the ‘hidden kitchens’ modality through mobile applications, already has two stores in Tumbaco and Quito under the BugerLab and WingLab brands, said its general manager, Rafael Chiriboga.

In a pandemic, virtual brands and hidden kitchens took off in Ecuador

Chiriboga explained that the ‘hidden kitchens’ worked well at first, however, he pointed out that the fact that the applications of delivery charge between 20% and 30% in commission represents a great impact for a business that is starting up and that its only way of making home deliveries is through these applications.

“(The physical stores) We opened them precisely for that reason, because being only as ghost kitchens our income was very limited,” said Chiriboga, who acknowledged that they still sell most of their products through applications 60% and 40% directly at the premises; however, he assured that it helps a little to cushion the impact of having to pay such a high application fee.

The businessman also highlights the limitation of not having a physical location and depending on the client having to search for his business only in the applications.

“Not many people can get to the business because they have to look for it on a platform and that implies higher marketing and advertising expenses,” Chiriboga said.

For economic analyst Jorge CalderónIn general, the pandemic was a good opportunity for businesses to reinvent themselves and experiment with other ways of selling and reaching customers.

” We saw that food businesses became deliverybecause that is their strength, it is a business and although the sales may not have been the same, at least they were stable, it allowed them to maintain the business”, mentioned Calderón, who assured that the digital applications skyrocketed in volume and the Transactions grew, some rapidly at first, perhaps with logistical problems, but with the unfolding of a dynamic that changed the way of doing business that underpinned the digital transformation in the country.

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Leonardo Ottati, president of the Ecuadorian Chamber of Electronic Commerceconfirmed the growth cited by Calderón, indicating that on the supply side, companies turned to trying to meet the needs of their consumers through non-face-to-face channels.

“Many were advanced and others obviously woke up or started working on their non-face-to-face strategies from the moment of the pandemic,” said the expert, who said that the demand was also forced to dare, in some cases, to make its first non-face-to-face transaction and those who already did, to speed up their frequency, creating a snowball effect.

One of the consequences of this effect is that within the billing of companies, today, the digital channel is much more representative than it was before.

Ottati gave banking as an example. “The bank has an absolute digital preference for its services, the digital channels of the bank are by far the most used by the majority of customers,” acknowledged the leader, who recalled that in 2020 the e-commerce in Ecuador it closed with $2,300 million and for 2021, for which there are still no official figures, it is expected to close with 20% more, that is, $2,750 million.

Between $2.76 billion and $3.22 billion moved, at least, e-commerce in Ecuador in 2021

For its part, Paola Aulestia, financial consultant for small and medium-sized companies, recommended to companies that closed their physical spaces at the beginning of the pandemic to sell on-line and that have grown in this way, evaluate their indicators before deciding on a possible return to the physical channel.

“If you consider that your clients adapted well to the on-line, maybe open a hybrid. Do not completely undo and change back to the physical, leaving the on-line that sustained you during these two years, because you saw that the tastes and preferences of your clients are those”, recommended the expert.

Aulestia believes that this year SMEs should make an evaluation based on the last two years due to the pandemic, and analyze what their clients’ preferences have been.

For example, in places that went from physical to on-line, certain restaurants that only work to take away, or that do not open them completely due to the issue of equipment or also of reforms that they have to do, because the fixed costs still do not allow them to make those changes, but where there are clients who press for to open a physical location. (I)