The effects of digital technology during the COVID-19 pandemic

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The Coronavirus pandemic has brought an unforeseen acceleration of the use of digital services worldwide. Digital technology has allowed us to telework, attend classes, shop online and even receive healthcare all from the comfort of our homes. Society has become more reliant on digital technology, which has resulted in a combination of opportunities and challenges. On the one hand teleworking, telehealth and e-learning have proven to be acceptable alternatives and are expected to partially remain in use even after the end of the pandemic. On the other hand, the accelerated digitalization of society has also highlighted remaining challenges such as the growing importance of creating a level playing field with third country providers in the European market, as well as the need for sustainable technologies and an increased emphasis on privacy issues.

Opportunities

Digital technology has provided a large array of online activities to increase our connectivity during the conditions of social isolation. In particular, e-commerce has proven to be pivotal for the continuation of economic activities across Europe. Consumers have turned to e-commerce to access products and services during the lockdown measures. Online grocery shopping and telemedicine, for instance, proved instrumental in avoiding in-person contact and reducing the risk of new infections. While greater demand has led to strains on the supply chain and delivery channels, it has also opened the way for new solutions. There has been an accelerated development of new omnichannel solutions by brick-and-mortar shops of all sizes to address the COVID-19 outbreak. These retailers are more rapidly developing an online presence, transforming stores into fulfilment centers and offering safe contactless product deliveries at the consumer’s location or, where possible, contactless click-and-collect. The latter allows consumers to safely collect their order at a pick-up point, thanks to delivery teams loading the products in their vehicles without any contact. Any solutions like the above, allowing retailers to limit the number of customers in shops, facilitating social distancing, but also limiting interactions between employees and customers, is key during the exit phase and can be fully embraced in the new normal era.

Additionally, e-commerce has helped in the preservation of jobs during the pandemic. Online deliveries have allowed for many restaurants to remain in business while people working the fields of education, business or consulting have been able to switch to teleworking via videoconferencing solutions. In some cases, e-commerce has even created new economic opportunities due to the increase in demand.

Video chats, movie streaming, and online education have made physical distancing measures more bearable. Streaming has become more popular than ever, with Netflix gaining 15.8 million new subscribers just for the first quarter of 2020, and there have also been significant increases in e-sports and video games.

Challenges

Despite the many positives from the use of digital technology during the pandemic, it has also highlighted some of the challenges the e-commerce sector is facing. Firstly, the crisis has proven especially difficult for smaller EU companies lacking the resources and preparation to effectively transition to new modes of operation. SMEs remain crucial for the stability and competitiveness of the EU economy and should receive support on domestic and European level to ensure the development of new technologies in the EU. Changed consumer behavior is increasingly requiring flexibility from online merchants. Despite a general increase of online purchases, consumers have developed a stronger preference for sustainable practices and often for locally sourced products. Therefore, a real challenge for the sector becomes offering a full range of products and ensuring their swift delivery, while proactively anticipating consumer demand. Since January 2020, Ecommerce Europe is actively working on sustainable e-commerce through its Sustainability Working Committee.

What the EU is doing?

Furthering the Union’s digital transformation has risen to the top of the EU’s political agenda and has been identified as a key priority for fostering future growth in Europe. The Digital Europe program, which has been included in the Commission’s 2021-2027 Multiannual Financial Framework proposal [1], is the first funding program solely dedicated to supporting the digital transition. Further EU action will be needed in terms of infrastructure building, boosting investment and innovation and foster the digitalization of EU businesses. In terms of improving digital literacy across the Union, the Commission has announced the publication of an updated Digital Education Action Plan in the third quarter of 2020. The new Action Plan, which is due to run until 2027, should extend the scope of action and set specific targets to address persistent gaps in digital skills and promote gender equality. Additionally, enhancing EU cybersecurity capabilities and ensuring respect for privacy and data protection remain on policymakers’ to-do list. The key role of digital technology in the Coronavirus crisis has further underlined the importance of continued network investment to meet the Commission’s objectives for 2025.

[1] https://ec.europa.eu/info/sites/info/files/about_the_european_commission/eu_budget/1_en_act_part1_v9.pdf

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