miércoles, 17 de enero de 2018

Digital breathing air is diminishing

According with the available data, in 2017 among the top 6 companies by market capitalisation 5 are ICT companies, 4 of them close to the concept of "digital platform". These companies are Amazon, Alphabet (Google), Facebook and Apple, the GAFA. Only Google was among the top 20 companies in 2009, Apple was below the 30th post in the 2009 ranking, neither Amazon nor Facebook were in the top 100 companies.

The phenomenal growth of the GAFA is not completely understood yet today. However, it is sure is that working for more thatn a decade in an innovative and not tightly regulated sector has had a big influence in the current situation. The bigger the space you have to breath free of any other living being in the surroundings the more you can expand yourself. But suddenly, the space has started to decrease.

The breathing air for digital platforms is composed by two main elements: the usage of connectivity infrastructure deployed by other companies and contents created by third parties. The connectivity is used in the same conditions as other users without taking into consideration its role as producers and the content is exploited in an indirect manner without any charge for its intermediary role. Both of these elements are on the road of getting more expensive for platforms, and therefore, diminish the space for the benefit obtain from its usage for business purposes.

Starting with connectivity, US Government repealed Net Nutrality regulation. From now on, telcom operators can negotiate paid deals with websites for so-called fast lanes to consumers  as long as they disclose those practices to the public. This could mean in the future higher prices for those (as digital platforms) which are traffic sumps on the Internet, that could be forcedto pay more to have better access to consumers.

On the content side, there are two pressures towards more expensive contents. Firstly, the governments are looking for a bigger control of contents by the digital platforms in order to suppress extremist messages as soon as possible. More control means more humans analysing each piece of content, and, therefore, the need to pay more salaries. Secondly, some content producers are asking for tools to obtain a bigger piece of cake of money obtained for services by platforms built around their news, videos and so on.

So platforms are facing a new challenge: showing that the business model is healthy in spite of the diminution of benefits and the increase in expenses. A change on the landscape that could change the balance of forces in the digital ecosystem.

miércoles, 10 de enero de 2018

Omnichannel: Brick-and-mortar is not dead but the cog of a more complex mechanism

Christmas is over. There are no more gifts under the tree and even the tree has been dismantled. Online sales may have reached a new peak and its for sure that its growth has surpassed once more the growth of brick-and-mortar sales. Back in September, Deloitte forecasts a growth of holiday sales growth of as much as 4.5 percent while e-commerce sales would increase 18 to 21 percent. Taking into account these numbers you may be tempted to close your physical store and you will make an error if you do so.

Although it may look so, the future of sales is not the Internet. At least is not only the Internet. The combination of offline and online shopping is not a provisional stage but a permanent one. According with a survey, in the last Black Friday/Cybermonday campaign in USA while over 58 million shopped online only and over 51 million shopped in stores only, over 64 million shopped both online or in stores. However the future of shopping is also beyond multichannel, it lays in what someone calls omnichannel.

What's the difference between multichannel and omnichannel? Basically, it is a question of customer experience. While in a multichannel strategy a shop print a range of lightly connected options to the shopper, in an omnichannel strategy there is a seamless continuity of the actions done by the shopper through the different channels. For instance, the shopper is free to start the relationship with the commerce through one channel and end it in a different channel.

The implementation of the more basic cases of omnichannel strategies is growing. The US merchants offering omnichannel services as buy online/pick-up in the store or ship to store doubled from 2015 to 2016. But more complex cases are already being implemented. My favourite one is the "My Disney experience" that allow you to start planning your trip to the magic kingdom from your PC to fully enjoy your days with SnowWihite, Peter Pan and the rest of the troop.

So in the end it looks that it could be true that digitalisation will not be the end of jobs but the start of a new breed of them. Omnichannel is the first step in that direction on the retail world.
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