What's your covid score?

Earlier this year, COVID forced most businesses to change their foreword looking budgets and plans for 2020. Some businesses experienced an acceleration in their business operations while most experienced a deceleration. The companies focused on selling essential goods and services were able to double down on their growth while others were forced to slowdown or pivot in some form or another.

Keeping this in mind, we created a scorecard that will help assess how prepared your business is to thrive in a post COVID world.

What is this scorecard?

The scorecard is an assessment of a business on six key parameters that we believe will determine how a business is able to cope over the next 12 months. The six key parameters are: Online Presence, Essential vs Luxury, Provenance, Hygiene, Sustainability and Work from Home.

We recognize that every business is unique and every industry has its own challenges and will evolve differently. Hence, we would like to highlight that the scorecard is by no means a definitive indicator of the health of any business. It should be viewed as a tool that sparks some thoughts and ideas on how entrepreneurs and investors make their business more future proof. This scorecard is best suitable for consumer businesses and not SaaS businesses.

Six parameters and their weightage in the scorecard:

1. Online presence – In the past few months, online businesses have done extremely well as offline businesses remain shut. According to Redseer, in the first 6 months of 2020, the penetration of e-commerce has grown from 3.4% to 5.1%, an accelerated change in 6 months that earlier took more than 3 years to happen. Going forward, the expectation is that the habit of online purchases is going to stick which will only accelerate the penetration of online retail. So, if a company doesn’t have their product /service available online they will potentially lose out to their digitally enabled competitors.

Weightage – 25%

2.  Essential vs Luxury – With household consumption going down and savings going up it is expected that a higher share of the wallet will be focused towards essential spends “need to have” rather than luxury spends “nice to have” products/services. So, it’s important to understand if your users finds your product/service an essential category or a luxury category.

Weightage – 30%

Essential Needs - Grocery, Medicines

Basic Needs - House, Education

Mix of Basic and Luxury – Soft Drinks and Juices, Clothing

Premium Category Spend - Branded apparel, Restaurant food, Cars

High Luxury spend – Vacation, Travel

3. Provenance – One of the fallouts of the COVID19 pandemic has been uncertainty around which cities and markets are under lockdown and disrupting supply chains. This has further translated to displacement of human capital creating a disequilibrium of supply and demand of labor in cities. In this pandemic, the government of India has initiated an increased push for India to be self-reliant i.e. increase manufacturing in India as well as promotion of local brands. In summary the disequilibrium in human capital, an increased push for local businesses and broken global supply chain will cause businesses and brands that are not made in India to be unfavorable

Weightage – 10%

4. Hygiene - Due to the current health crisis, hygiene has become the new security. Businesses that are able to ensure the highest level of hygiene across each phase of their supply chain will benefit from increased customer trust. Whether offline, online or omni-channel, businesses that maintain the highest level of hygiene and are transparent about these efforts are most likely to benefit.

 Weightage – 15%

5. Sustainability – Sustainability has been a buzz word for years now, with little or no change. But, post COVID, consumers will be more conscious about their emissions. Pre – COVID, no one believed that a global health crisis could ever take place, but looking at the impact of COVID, there is a growing concern in communities that the next potential crisis, which the scientists have been warning us about for a long time, is climate change. Hence, a belief that businesses providing consumers with a sustainable product/service will receive increased loyalty from the consumers.

Weightage 5%

 6. Work from home – With strict lockdown measures, businesses and consumers were forced to follow a Shelter in Place (SIP) protocol. This protocol has led to businesses being forced to adapt to a non-office environment. In the past few months, businesses have adjusted to it graciously, something that was never thought possible earlier. Furthermore, handful business have even declared a permanent WFH measure for some of their departments. Due to this trend, consumers will stay at home more often or will move to non – urban cities which will in turn affect businesses directly or indirectly in terms of consumption. For example: consumption on commutes, cars, and formal clothes.

Weightage – 15%

Consumer focused businesses:

We have assigned scores accordingly for each parameter below:

So, go on! Do give the scorecard a try and check the results for yourself!

Calculator:

What does the score suggest?

Note: A high score or a low score doesn’t guarantee the success or failure of the business. It’s just a benchmark to see where you stand and which factor you could improve or double down on.

To better understand this scorecard we have applied this scorecard to two of our portfolio companies – Nua and Dunzo.

Nua

Nua is a women's wellness direct to consumer brand that provides femcare products like sanitary pads.

Weighted Score for Nua:

Factors that the company can improve on:

• The company currently has a disadvantage in having its product manufactured by international manufacturers. If possible, use Indian manufacturers to avoid stock outs and potential delay in shipments due to uncertain lockdowns.

Factor that the company can double down on:

• Double down on its online sales channels to reach customers. As people in India have become comfortable with online shopping and incumbents in sanitary napkins industry lack an online presence, it gives an opportunity for Nua to reach a larger number of customers.

Dunzo

Dunzo is a hyperlocal delivery service that delivers anything you want, anytime and anywhere within a city.

Factors that the company can improve on:

• Provide a more sustainable way for delivery of goods/services. Increasing electric fleet for delivery partners which will make it a sustainable and environment friendly business could increase loyalty among customers (more than it already has)

Factor that the company can double down on:

• As Dunzo has become the go to option for delivery of essential goods/services for consumers because they maintain high hygienic conditions and are a convenient option, they can leverage this to reach and retain users on the platform.