COVID is the perfect business case study

In what country, in what time, in what generation, have we EVER been presented the opportunity that Corona Virus presented to us?

  1. The entire world affected
  2. Mostly, everyone is confined to their homes
  3. People have more money in their bank than ever before (because no spending on restaurants, salons or entertainment)
  4. Retail is closed
  5. And we have the internet

Theoretically, it was the perfect opportunity for eCommerce to experience a huge boom. How could it not?

In reality? Well, that’s exactly what happened.

For the people who saw the opportunity that COVID presented and knew that if they didn’t step up, they may not have a business, they grew exponentially.

And interestingly enough, the clients who did the best sold the most expensive products.

Here are just a few of my clients who have done really well over this period:

  • The woman who sells cashmere scarves at $200+ an order
  • The woman who sells witchcraft (a hugely saturated market), but is now the biggest and most successful retailer in Australia
  • The woman who is a master shoe creator and sells $400+ shoes
  • The man who sells $599 (per month) supplements

That is just The Lipstick Effect playing out (which really deserves a whole post of its own), but I’ll touch on it briefly here.

What’s the Lipstick Effect?

When an economic downturn or crisis happens, the Lipstick Effect comes into play. It’s what happens when your customers stop spending money on all kinds of services and products (facials, nails and lashes are a good example) and start spending lots of money on less products, but more expensive ones.

Like skin care. And cosmetics. And lipstick.

It’s been shown, time and time again, that businesses who sell product under the $500 mark see the most benefit from these times in history.

But I think the really interesting thing about COVID was that it wasn’t just high-end products that did well. Pretty much everyone who had a business did well.

  • Even the people that decided to start importing bullshit from Alibaba.
  • Even the people selling face masks when they are a dime a dozen.

There’s been no shortage of hero’s tales.

And in that sense, yes – COVID has been amazing for a lot of businesses. On the flip side of that, it has also been incredibly devastating for businesses who did not move fast and adjust rapidly.

You’ll see the streets of Melbourne CBD shopping precinct with empty shops. The market purged businesses that didn’t adapt.

And I think a lot of people in product businesses have become very comfortable again, because they think they made it through the worst part of the virus and some of them even did it with a lot of financial success.

But there’s a really distinct reason why I opened with “COVID is the perfect business case study”. Have you seen it yet?

Is, not was.

Because we are not out of the ‘business case study’ yet. In fact, things are only just getting started.

We are about to see a huge purge in the market.

As you’ve probably felt over the last few weeks and definitely in the last month, the business landscape is changing.

People are going out again. People are spending their money everywhere else, again. People are not confined to their homes. People aren’t bored anymore.

Oh, and Christmas is well and truly here.

Novelty products that lack real value, or businesses built on an Alibaba imports are about to get cleared out. We’re about to see a lot of people who started “opportunity” eCommerce businesses disappear into the void.

The market will do a huge purge and there’s going to be two types of people left over.

  1. People who are very good at sales and managing their cashflow, regardless of their product
  2. People who have an excellent product and are very good at sales and cashflow management.

Notice how I didn’t say people who have an excellent product (but aren’t driving their sales with a specific strategy)? There’s a reason for that.

Even if you have an amazing product business – that you’ve spent time, money and years growing and building – you are not going to be immune to the purge that’s about to happen.

Even if you have good sales. Even if you already have a $250k+ product business.

And in fact, I would say that the people who have spent their time creating a really valuable product and have been in business for years are the MOST at risk when February’s slump rolls around next year.

Which means you’ve got exactly 2 months to put plans into action so that your business isn’t one of the ones that gets wiped out.

This quarter for product businesses has NEVER been more important. Because the sales you make this quarter, is the cashflow that’s going to sustain you when February’s huge slump rolls around.

And let me tell you, February 2021 is going to be a slump like we’ve never seen before.

Consumers are already struggling financially. It’s been a big year and normal people have experienced huge losses. They have less money to spend right now, especially because restrictions are easing.

How does that play out over Christmas 2020?

Well, that really depends on how you approach Christmas.

If you treat it like every other Christmas, and it’s just another year, it’ll probably do well for you. You’ll likely make good money, because you always do, and you’ll help a lot of people find incredible gifts for others and themselves.


The real strategy, for business owners who are smart and want to ride out the purge that’s going to happen early next year, are doing something different.

And the strategy covers three areas:

  1. The sales strategy
  2. The risk reversal around February Slump
  3. The cashflow management

And if you’re not actively looking at your product business right now and managing for Slump across these three areas…

Maybe you won’t be one of the many who aren’t going to make it past early 2021. But I would hazard a (very educated) guess that that’s unlikely.

The market has no emotions. It only respects good business acumen and strategy, executed well.

So the question for you is, are you doing that?

And if you are, great. Good work.

But if you’re not…

Well, let’s talk. Send me an email.

I want to make sure as few Australian product businesses go under as possible.