Digital Transformation Project – Ocado: A Virtual Store

13

October

2016

5/5 (1)

Ocado is a purely online grocery store founded in 2000 based in the United Kingdom. It’s business is composed entirely online and as such, challenges the traditional way of doing business in the retail industry by not having any physical stores – also known as brick and mortar business. Currently managing over 150,000 customers per week in addition to a customer satisfaction rate of 91%, Ocado currently holds about 14% of the online British online-grocery retailing industry according to research firm Kantar.

 

The firm has transformed from an online grocery-retailer to a technology solution provider, for this very same market. Their solution is composed of both software and hardware, which enables end-to-end processes associated with business-to-consumer (B2C) e-commerce. This proprietary technology it has built up over the past 15 years is now being sold to other retailers under the name of “The Ocado Smart Platform” (OSP). This fundamental concept further enables the firm to manage relationships with retailers, partners and suppliers, facilitating the growth of the online grocery business for all stakeholders involved considerably, with less capital investment. The OSP enables the end consumers to shop via the e-commerce website and mobile applications. This further includes all front-end and back-end systems that are the foundations linked to Ocado’s ERP system, enabling management of personalized promotions for specific customers, recommendations as well as management of algorithms designed to optimize prices.

 

As an increasing number of innovative channels open for consumers to do their grocery shopping, an emerging technology that has the potential to transform Ocado’s competitive advantage is: The Virtual Store.

 

Tesco, the world’s third largest retailer after Walmart and Carrefour, has already implemented this strategy in their former South Korean retail chain Home Plus. This strategy is based on QR codes and mobile technology, with posters raised on walls and digital screens in metro stations, displaying hundreds of products with respective QR codes. The posters in virtual stores are further designed to resemble actual-size products, adding to the customer experience. The customers use the dedicated mobile shopping application to scan and order the QR code of their desired purchase.

 

With Ocado operating solely in the UK, there are prime focus areas such as the big cities (London, Birmingham, Manchester, Glasgow etc) where this concept could prove to become a very strong success. Annual passengers that use TfL (Transport for London) services alone are just over 1.3 billion. This, in addition to leveraging the centrally located stations such as London Waterloo, which sees around 95 million passengers passing through annually, establishing an infrastructure for a virtual store has the potential to generate additional strong returns. Ocado could further benefit from using QR code and mobile technology by extending their innovative presence in the online shopping market – given that they are already dominating this segment of the market.

 

The virtual store strategy would enable Ocado to further leverage the ‘first-mover advantage’, as a result of implementation in Europe. No other European retailer or e-tailer has currently deployed such a concept, despite its level of success in tech-savvy Seoul, South Korea. Moreover, with Ocado having an e-commerce based business model, this emerging technology fits with the firm’s overall online strategic orientation. Once implemented, Ocado could then enhance this strategy through setting up the virtual store’s in other public spaces including subways, billboards, bus-stops and other advertising platforms. By exploiting the high foot traffic, in addition to more than 70% of the UK population using smartphones, Ocado could further disrupt the retail industry as a result of the large cost savings and economies of scale.

Group 95

Please rate this

Cloud Computing

8

October

2016

No ratings yet.

417346-back-up-your-cloud-how-to-download-all-your-data

Cloud computing has forever transformed how we manage, process and store our data. Without having to physically carry external storage devices, cloud services have enabled us to access our digital information from virtually any internet enabled device. Whilst this is a practical solution especially in today’s data-driven world, hosting data on external servers has also resulted in a wave of contemporary and more advanced security threats for this form of information good.

The cloud computing market offer services that are tailored around three primary service models; Infrastructure-as-a-Service (IaaS); Software-as-a-Service (SaaS); and Platform-as-a-Service (PaaS).

SaaS is the most notable, largely acting as the clients’ initial access point to a digital portal on the host’s server. Familiar applications that are categorized as SaaS include Dropbox, Facebook, iCloud and Google Drive. PaaS are aimed at enterprises providing platforms on which software can be deployed, which may include hardware and primary software such as an enterprise operating system on a server, in addition to as a developers’ toolkits and channels for payments. IaaS consists of the primary foundations on which PaaS and SaaS are installed. These are the principal operating resources such as the physical servers on which the network and consequently ‘the cloud’ is hosted, as well as the IT network infrastructure.

Of the many security concerns that consumers have towards cloud computing, the most notable are data breaches, hijacking of accounts, data loss, abuse of cloud services as well as insecure API’s. Consequently, whilst data stored in the cloud is commonly password protected and more than often the data is encrypted, data being stored online instead of on a portable/physical device may pose a degree of apprehension for consumers (whether private or business) in migrating to cloud services.

Ultimately, I feel cloud computing provides consumers with the ability to modernize an outdated IT infrastructure, without incurring significant capital expenditure costs associated with the hosting and maintenance of data centres. Migrating to the cloud further enables firms to focus on core revenue driving operations instead of data centre expansion.

Please rate this

Technology of the Week: E-Commerce Platforms: Alibaba & Amazon.

6

October

2016

5/5 (1)

Picture1

Introduction:

Electronic markets have empowered buyers and sellers to bypass geographical boundaries as well as overcome economic barriers to exchange goods and services with one another. Moreover, with the current growth rate of innovations in information technologies, the time and cost of processing and communicating data have enabled firms like Alibaba and Amazon to leverage their dominant positions in the market to further develop their IT mobile capabilities such as cloud computing, as well as their mobile payment solutions for facilitating trades.

Business Model [Amazon]:

Amazon currently has five primary revenue driving models that make up the vast majority of the its business. Undoubtedly notable for dominating the e-book market with the Kindle(1), this ecosystem alone brings in revenue streams by selling e-readers and e-books, as well as a publishing platform for authors. Amazon Marketplace(2) is a platform acting as a sales channel for private users and business re-sellers. Fulfilment by Amazon(3) is a system for reselling partners, which manages orders and inventory in exchange for a fee per item. Amazon Prime(4) is a top-tier membership offering all premium Amazon services for an annual fee. Finally, Amazon Web Services(5) offers their rapidly growing cloud computing services in addition to several other services more aimed towards corporate clients.

Business Model [Alibaba]:

Alibaba has its roots and business models embedded in electronic markets. Despite many similarities to Amazon however, their approach towards innovation was distinct. Alibaba’s primary operations were founded on a service-based e-commerce model, an online sales platform for buyers and sellers Taobao(1). This is complemented by Tmall (2), which merely focuses on the increasingly affluent Chinese consumer base. In 2004 the online payment system Alipay (3) was launched, processing roughly half of all online payment transactions within mainland China. Similarly, Amazon also offers Amazon Payments, but it does not cover anywhere near as much of the market as Alipay in Asia. Alibaba cloud, (Aliyun (4)) is the final notable business model for Alibaba and was first established in 2009, providing cloud computing services covering IaaS, SaaS in addition to big data solutions.

SWOT Analysis:

Screen Shot 2016-10-06 at 12.51.21

Future Prediction of Technologies:

With the current pace of IT evolution, technology infrastructure and IT capabilities remain significant factors for both Amazon and Alibaba to be able to adapt to future customer preferences. This is primarily due to the exponentially growing number of consumers who are shifting to mobile payment solutions.

Like Amazon, Alibaba’s cloud service emerged from the enormous CPU power needed to handle millions of online shopping transactions. Unlike Amazon however, it enjoys home-field advantage in a vast Chinese market where internet-based computing is still novel to many enterprises. Consequently, in order to succeed in China’s developing retail technology infrastructure, Alibaba will need to stay as agile as possible in the mobile space, as more consumers (500 million) have begun to use mobile devices to make purchases. This strategic decision led AliBaba to release a mobile OS.

Ultimately, whilst cloud computing remains merely 4% of Alibaba’s overall business, it has the potential to account for more than $1 billion of sales by 2018. By comparison, Amazon Web Services’ revenue was just over $2.6 billion in the March quarter. This emphasizes the importance for Alibaba to effectively manage their cloud computing strategy, given the market position of Amazon and as a result, the attractive competitive environment.

GROUP 95

 

Video Link: https://youtu.be/dBhUREVs704

 

Please rate this

Branchless Banking: FinTech & Digital Disruption

2

October

2016

No ratings yet.

Picture1

Advancements in technology have forever transformed the relationship that consumers have with their banks. With digital solutions such as mobile banking apps and services merely offered via internet banking (e.g. online chat), consumers today rely increasingly less on traditional bank services that were previously only offered in branches. Furthermore, strong digital awareness along with the numerous channels available for consumers to access and manage their personal finances, have diminished the barriers to entry to the financial industry.

This form of digital disruption has stimulated the growth of the FinTech (Financial Technology) industry, which has been estimated to generate annual revenues of GBP 20 billion in the UK alone. China currently takes the lead with having some of the biggest FinTech firms, dominated by the internet giants Baidu, Alibaba and Tecent. This is due to the internet parent companies intending to facilitate payments on their respective e-commerce platforms when they were initially established over a decade ago.

Whilst FinTech firms like TransferWise act as a P2P (Peer-to-Peer) cross-currency money transfer firm, this merely enables consumers to exploit live mid-market exchange rates in a decentralised manner. Due to incoming European regulations, some firms will now legally be permitted access to banks’ client databases. This will further foster the growth of FinTech firms in the finance sector, enabling them to gain more market share and act progressively as brokers, for financial products offered by banks and other financial institutions. The increased competition that will follow indicates a heightened risk however, that some of these new firms could fail, potentially leaving substantial damage to the stakeholders involved.

More recent and enhanced start-ups such as Monzo, have acquired regulatory approval to offer branchless and solely mobile based banking in the UK. Many other ‘neo-banks’, as they are referred to in the industry, are aiming to differentiate themselves by offering mobile budgeting and investment applications in addition to instant statements on spending patterns and enhanced anti-fraud capabilities. As these services are solely available digitally online, it poses further threat to banks who are already under intense scrutiny from regulators.

Should FinTech firms be regulated as intensely as banks? With technologies such as bitcoin and blockchain already permeating the financial industry, banks are forced to take cost cutting measures in addition to implement digitalisation strategies to retaliate and stabilise profits.

 

References:

UK Trade & Investment Report 2016: Landscaping UK Fintech.

Click to access Landscaping_UK_Fintech.pdf

Bloomberg: Neobanks Chasing UK’s biggest lenders face battle for survival.
http://www.bloomberg.com/news/articles/2016-09-28/neobanks-chasing-u-k-s-biggest-lenders-face-battle-for-survival.

 

Please rate this