How the pandemic helped the service industry break the internet

Just 15 years ago, the thought of shopping for clothes online was stressful and confusing. How would you try them? How would you return them if they weren’t to your liking? What if the photos don’t really reflect the product?

Along the same lines, just two years ago most of us thought that online fitness classes were a fancy idea that would never take off. How would you get proper instructions from the trainer if you are not there in person?

And more importantly, why would you pay for online courses when you can get them for free on YouTube?

In both cases, our assumptions and predictions turned out to be wrong.

Buying clothes online is no longer a niche option – it’s the norm, especially with physical stores closed due to lockdowns. According to US census bureaue-commerce sales for the second quarter of 2021 totaled US$211.7 billion, or 13% of all retail sales.

Likewise, the service industry is booming online. Just as the retail sector shifted to e-commerce more than a decade ago, the pandemic has seen the service sector shift to online offerings, virtual experiences and digital courses.

For many service businesses across Australia, online courses and events have enabled them to weather the cash bumps of periodic lockdowns and reduced capacity due to social distancing measures. Keeping staff active and making money from physical closures has been key to retaining staff and maintaining morale.

The online fitness revolution

Take online fitness, for example, which is estimated to be worth more than US$6 billion and growing annually by more than 33%, according to Allied Market Research. Australian fitness studios are able to compete for clients around the world with very little investment beyond a smartphone.

Exercising at home via an online platform is something many of us have embraced since the pandemic hit in early 2020. While for some, home workouts are just a stopgap until the gyms reopened, for many people they proved invaluable.

Online classes have given consumers a wider range of choices in their fitness routine. You can take Pilates, yoga, group exercise, bootcamp, and just about any other class you can imagine with teachers from all over the world. Apple recently launched Form+ program proves that online courses are becoming mainstream and the concept is here to stay.

According to mind bodyonline pre-recorded fitness classes have nearly doubled since the pandemic began, and live-streamed classes have more than tripled.

This incremental growth in live classes suggests that customers are looking for human interaction, which most people find valuable in their in-person fitness classes.

Similar to the early days of online retail, we are seeing an explosion of smaller operators in the online fitness space, alongside a handful of larger companies.

Barriers to entry for new online fitness businesses are almost non-existent, causing many exercise instructors to branch out and offer online workouts to their clients without going through a studio or gym to take a share of their profits.

A new way of thinking

The move to the internet is happening beyond the fitness industry. In fact, a wide range of service companies have moved to online offerings for the very first time, and there is no indication that they will slow down once the pandemic is over.

Medical departments, including therapy and psychology departments, have begun to realize the benefits of telehealth offerings. Therapists can now accept patients from entirely different states, opening up their potential clientele and helping those who live in remote areas access services that were previously too remote to consider.

Elsewhere, conferences are moving to a hybrid format, where attendees have the option of attending the conference in person or online. This makes it much easier to adapt the content of the conference to people’s schedules, as well as to open up potential clientele.

In the past, video-based offerings had to have professional backgrounds, lighting rigs, and cinema-level editing. Fortunately, the pandemic has changed our expectations.

All you need to host a successful event, class or online course is a smartphone with internet access and a few square meters of floor space. People care a lot more about the actual content provided than fancy lighting setups and professional backgrounds.

Of course, as the industry grows and matures, we are likely to see vertical and horizontal segmentation as well as a decreasing number of players as the market decides who is going to stick around for the long haul. Eventually, the market will segment into several larger players, each with a larger share of their particular market.

However, we are only in the early stages of the initial service industry explosion. This is an exciting time for consumers and business owners as new business models create opportunities and lower barriers to entry for service industry professionals; and dramatically increased choice and accessibility for consumers.

Raphael Bender is the CEO of Breathe Education. In 2006 Raphael opened a Pilates and yoga studio in Melbourne’s CBD called Breathe Wellbeing.