Coronavirus vs apps: which are the most affected verticals?

Insights Mar 18, 2020

An overview of coronavirus’s impact across key app verticals and the new initiatives developed to contain the outbreak.

Mobile usage is also going viral 📈

As the COVID-19 outbreak spreads globally and people in the most affected areas are recommended to stay at home, users are turning to their phones for entertainment and help in accessing key services. In China alone, the amount of time spent using mobile rocketed from 6.1 hours a day in January to 7.3 hours after the Chinese New Year1, when the virus spread accelerated.

Source: "The Impact of Coronavirus on the Mobile Economy," App Annie 2020.

As indicated by a recent Dentsu Aegis Network report, COVID-19 has led 22% of businesses in China to change their advertising efforts as regards campaign markets and creative approach, and a further 14% suggested they were moving budget from offline to online media2.

The state of top app verticals amidst the outbreak

Operating in the midst of a global pandemic outbreak, some apps providing services that require face-to-face interaction have been forced to take strict measures. However, not all app verticals have been affected in the same way. Some have actually seen an increase in sales or app usage.

China, the epicenter of the virus, is functioning as an example for the many countries where infection rates are growing and businesses are planning different strategies in the face of uncertainty. Read on to learn about the new health initiatives, as well as how different verticals are coping with the virus.

Travel 📉

Unsurprisingly, Travel seems to be the most affected vertical. In China, major hotel chains like Wyndham have temporarily closed or are seeing a great decline in occupancy; domestic and international flights in the country went from an average of 15,000 to just 2,000 between January 23-February 133, and holiday travel for the Lunar New Year dropped 50%, the lowest in 20 years4.

Travel apps daily installs in the 1st week of March were 72% lower than in the same period in January, when the outbreak started to gain relevance5.

Initiatives: As the outbreak slows down in Asia, some regions have started taking measures to slowly jumpstart travel. In Indonesia, the government issued $6B as an incentive for airlines and travel agencies, $7.1B for tourism marketing and promotions, and about $5B for social media influencers that help promote Indonesia’s tourist attractions6. Garuda Indonesia, the flag carrier, slashed flight fares by 50% to the top ten tourist locations6.

While in other regions Travel apps are developing new initiatives to safeguard future results, several airlines like Delta, United, American Airlines, and KLM are waiving fees for passengers looking to postpone flights. Similarly, hotel chains like Hyatt and Marriot are implementing cancellation waivers. In the case of apps, Airbnb has introduced “More Flexible Reservations”, a tool that makes it easier for guests to cancel or postpone their lodging plans.

In spite of international travel bans, just prior to the official quarantine measures, apps reactivated business by offering super cheap deals on domestic flights (up to 40-70% off the usual price in the US7). Discounts will likely continue as a measure to inject new business opportunities as soon as the travel ban lifts.

Taxi & Ride-Hailing 🤔

As China’s National Taxi Association (NTA’s) president Raymond Ong put it: “there is a sense that drivers fear losing their livelihoods more than the virus itself.” According to China’s National Private Hire Vehicles Association, private drivers saw a decline of over 30% in earnings on the second week of February8.

Source: "The Impact of Coronavirus on the Mobile Economy," App Annie 2020.

Before the lockdown, the US showed very different results. As the virus started to spread, people avoiding public transport services opted for Taxi or Ride-Hailing apps. In fact, some Ride-Hailing app companies like Lyft were recording an unparalleled rise in revenue, according to the blogger Harry Campbell (aka The Rideshare Guy). That said, app usage will likely decrease as more and more people begin to work from home in line with the new restrictions.

Initiatives: Drivers are now focusing on offering services that are health-safe. The Land Transport Authority (LTA) in China announced new measures like a supply of 300,000 surgical masks for the taxi and ride-hailing industry, and companies are implementing temperature screenings for drivers, who get a “I am OK” sticker.

These measures are fundamental for markets like Singapore, where users hail a ride at least once every month (more than anywhere else in the world)9. Key players are making sure to secure the safety of both drivers and riders: in China, DiDi committed to investing over $14M in prevention initiatives, while Singapore-based Grab has temporarily suspended its ride-share services.

Uber and Lyft are also suspending group rides in the US and offering financial assistance for drivers diagnosed with the virus and under forced quarantine. As part of the measures to contain the outbreak, Uber riders will see an in-app message before every ride reminding them to travel only when necessary.

Food Delivery 🤔

The influence of COVID-19 has led some major food brands like Starbucks, McDonald’s, and KFC to shut their stores temporarily. But this hasn’t stopped food consumers…

  • Carrefour 🇨🇳: 600% YoY increase in vegetable deliveries during the Lunar New Year period4.
  • JD.com 🇨🇳: 215% YoY growth in online grocery sales during a 10-day period between late January and early February4.
  • WeChat 🇨🇳: 115% and 168% YoY growth in supermarket mini app and vegetable & fruit mini app, respectively10.
  • Lazada 🇸🇬: 300% increase in RedMart’s online supermarket weekly average when Singapore’s disease response level jumped to orange11.

Food Delivery apps have become a helping hand for people looking to avoid going out to physical stores, resulting in a visible increase in Food app usage across key markets around the globe.

Source: “Mobile Minute: Food Delivery Apps See Spikes Amid Global Coronavirus Quarantines,” App Annie, 2020.

Initiatives: While one would expect Food apps to take a hit with users not wanting to consume meals that may have been affected along the way, many companies were able to change this around. Food Delivery apps have implemented security measures such as including cards with cooks' and couriers’ temperature readings to keep users reassured.

To avoid food contamination, Food Delivery apps are leveraging contactless pickup and delivery services. So far, Meituan-Dianping, a Food Delivery app, stated that 80% of all orders made between January 26-February 8 were conducted through contactless delivery12. Recently, Postmates, Favor, and Instacart have introduced a new delivery solution which allows customers to have deliveries left at the door.

eCommerce 📈

According to an Alibaba report, online sales for social nonessentials, such as cosmetics and alcoholic beverages, have drastically declined in comparison to the previous year13. This shift in online purchases is expected to continue as consumers in China think the outbreak will last for another 4-5 months14.

Coronavirus is causing shifts in online purchases
The graph below shows the year-over-year sales growth during the second half of February (specifically the first 13 days of 2020 Lunar New Year.)

Sources: Alibaba Tmall; Bain analysis; Bain and Kantar Shopper Report.

While people have proved to be shopping more for daily essentials or short-term stock-up goods, there are virus-related disruptions affecting logistics and delivery services.

Though major retailers like IKEA, Nike, and Uniqlo have closed their doors until further notice, 6 in 10 Chinese consumers still expect to spend the same or more in eCommerce in the next 3 months (vs. the same period last year)14. In fact, there are businesses forecasting eCommerce ad spend to grow by 17.7%2. Similarly, Amazon is hiring 100,000 warehouse workers and raising pay as the coronavirus causes an 'unprecedented' increase in demand for this time of year.

Initiatives: In February, Singapore and Hong Kong announced to be setting aside a monetary stimulus to aid citizens hit by the outbreak and boost consumer spending: Singapore will be disbursing $4B, while Hong Kong is giving $1,200 in cash to about 7M people. South Korea has recently followed suit with a package of $9.8B.

From the point of view of apps, retailers could consider contactless delivery options currently being tested by Food Delivery apps.

Workout & Fitness 📈

Lockdowns are keeping gyms closed, so what’s the best alternative to stay active during a lockdown? The answer is apps. Fitness and Wellness apps have been experiencing a rise in popularity as a practical way to access home workout routines. Newly registered users in Chinese online workout platforms grew almost 10 times between December and January15. In mid-January, China’s Keep app jumped from #260 to #79 in the Apple App Store downloads ranking15, and it’s not the only one to show growth:

Source: “Coronavirus economy: these 5 industries are currently thriving,” NoCamels, 2020.

Many gyms have also started to offer workout sessions through platforms such as WeChat, one of the top Chinese super apps, and PP Sport, where online broadcasts of fitness classes have increased by 513% since the courses were launched in late January15.

Gaming & Education 📈

Whether it’s the lack of commuting or not being able to go out for sports and other activities, one thing is certain: people caught in quarantine or secluded to avoid infection have more free time. As a result, more and more users are tapping into Gaming apps, followed by verticals such as Education and Entertainment16.

In February alone, global game downloads increased by 39%, with China representing a considerable portion of the boost17. At the moment, Gaming app advertisers are trying to keep the momentum going by optimizing in-game purchases options to further engage users under lockdown.

Wrapping Up

In spite of suffering the impact of the virus, app marketers have known how to adapt their businesses to counter a decline in sales and usage. The new measures seek to secure a safe system that works for both employees and customers, making essential services accessible to people forced to stay indoors.

As the COVID-19 expands globally, more and more markets are likely to take cue from China’s initiatives to operate safely.

To learn more about the latest insights in the app marketing industry, visit our blog or contact us to schedule a demo.

References

[1] QuestMobile, 2020.
[2] “Coronavirus will impact ad spend but could drive shift to utility, e-commerce and live-streaming,” The Drum, 2020.
[3] Flightradar24 via The New York Times, 2020.
[4] “Coronavirus' Impact on Consumers and Businesses in China,” eMarketer, 2020.
[5] Jampp internal data, 2020.
[6] “Garuda Indonesia slashes flight fares by 50% to 10 tourist locations,” Marketing-Interactive, 2020.
[7] “In the meantime, the Travel app Hopper says airfares from the US to international destinations,” Chicago Tribune, 2020.
[8] National Private Hire Vehicles Association, China, 2020.
[9] “Grab and Gojek scramble to curb coronavirus spread in Singapore,” KrAsia, 2020.
[10] China Retail & E-commerce weekly updates,” FBIC Group, 2020.
[11] “Demand for online grocery and food delivery ticks higher in Singapore amid coronavirus outbreak,” CNBC, 2020.
[12] “Fast food cooks and couriers in China are giving their temperature readings to customers,” Business Insider, 2020.
[13] Alibaba Tmall; Bain analysis; Bain and Kantar Shopper Report, 2020.
[14] “Consumers in Crisis,” Re-Hub, 2020.
[15] “Coronavirus economy: these 5 industries are currently thriving,” NoCamels, 2020.
[16] “China app downloads surge due to coronavirus outbreak,” App Annie via Financial Times, 2020.
[17] “Mobile Game Download Surges in China As Coronavirus Keep People Indoors: Here Are The Top Downloaded Games,” Tech Times, 2020.