Behind the Scenes: Delivering your online groceries

28

September

2021

5/5 (1)

In light of the Covid-19 pandemic and restrictions towards face to face transactions, delivery markets such as courier services are growing explosively due to the proliferation of online transactions. The vast “mobile shift” from offline to mobile purchasing items in sectors such as food & beverage, food delivery, and clothing/household goods leads to the growth of the online shopping market. As a result, 50-70% of customers globally have changed their purchasing patterns from offline to online.

The rapid growth of non face to face distribution and logistics following Covid-19 led to an unprecedented expansion of online e-commerce which required logistics centers globally to accelerate their efficiency and modernization. 

The function and roles of logistic centers are changing due to a surge in demand, the previous traditional market structure relying on inter-company logistics (B2B) has now shifted to satisfy customer-tailored on-demand market structure. The big question is how do logistics centers keep up with the surge in demand?

Current online logistics centers require the ability to quickly deliver individual and small quantities of products ordered by customers as a core requirement, as opposed to delivering bulk products to a distribution center. While the existing logistics center’ functions are limited to loading and unloading cargo, recent logistics centers rely heavily on automation and advanced technological development for logistics facilities that are suitable for sorting and picking smaller quantity products to respond to the e-commerce and home shopping market.

What is the role of technology in this case? 

Automation of logistics centers and facilities is expected and bound to happen rapidly. For example, Korean e-commerce conglomerate Coupang, which has 58% of the Korean market share, has been making large-scale investments to automate their fulfillment centers and modify their processes for online sales. Automated Guided Vehicles (AGV), a robotic automation equipment, has been introduced in their largest fulfillment center, Deokpyeong Center, which possess a mis-delivery rate of 0% (allegedly). 

In the Netherlands, Albert Heijn, the largest online supermarket, fulfills orders for 86% of Dutch households from their 4 fulfillment centers. To keep up with the demand, Albert Heijn utilizes ORTEC’s advanced cloud-based routing solutions to compute optimal routing plans and personalized time slots for customers which consequently, generates monetary and environmental savings. 




From the U.S, e-grocer FreshDirect in New York uses an advanced AI system to deliver 100,000 grocery orders each week. FreshDirect’s process still requires teamwork between AI and manpower, The AI robots divide orders into tasks and autonomously delegate them, they would move package orders from temperature-controlled zones into dispatch areas. The team of employees will then pack the individual orders.

What does the future hold for the logistics industry? 

To keep up with the demand of e-shopping, logistics centers around the world have made technological investments to satisfy the influx of customers. The future of the logistics industry is not only contingent on the automation of its facilities, however, it is also contingent on creating a flexible system that can easily respond to changes in the production environment as well as reduce waiting and travel time. 

References

https://ortec.com/en/customers/albert-heijn
https://venturebeat.com/2020/07/28/microfulfillment-startup-fabric-partners-with-freshdirect-to-launch-on-demand-delivery-in-washington-d-c/
https://www.globenewswire.com/news-release/2020/11/23/2131523/28124/en/Global-663-33-Billion-Online-Grocery-Market-to-2024-with-Potential-Impact-of-COVID-19.html
https://www.youtube.com/watch?v=kQBw7J9S47A&ab_channel=KENGICIntelligentTechnology

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Personalization is key to online survival: a case study of Fashion E-commerce

21

September

2021

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E-commerce is booming. Currently, there are over a 2.14 billion people worldwide that shop online and there are approximately between 12 to 14 million online shops in 2021 [1]. This raises the question how to attract customers to your online company by differentiating yourself amongst all those other choices that customers have nowadays.

Take the case of Netflix. It is clear Netflix has come up with an innovative business model by selling unlimited subscription fees and by doing so providing customers all over the world direct access to a wide variety of films and series. However, one of the key success factors and trivial for the dominance of Netflix in the entertainment industry is the personalized experience by using recommendations algorithms [2]. It allows Netflix to offer multiple products, namely one product for each customer [3].

Personalization cannot only be applied in the online entertainment industry, but in many other online industries and thus in the fashion E-commerce. For this particular industry it’s not a mere possibility, it is an important key success factor. Personalization is the way to attract customers to your online shopping platform and even more important lock them in. In the world of E-commerce there are many choices for customers. Furthermore, customers are able to search very easily across different platforms and switching costs are low [4].

In fashion e-commerce personalization by using algorithms is not yet exploited fully, despite the fact that it provides big opportunities for companies such as Amazon and Zalando. Recommendations can be used in many forms. One of the most basic forms is to simply show recommendations based on the browsing history of the customer. Research has shown that when 24 million of these recommendations were implemented on a platform, another 1.6 million clicks were made. Another form might be that the homepage of each individual could be altered based on previous searches [5].

In conclusion, personalization enhances the customer shopping experience. Therefore, it should be implanted in the long-term strategy of fashion E-commerce companies.

References:

[1]  https://digitalintheround.com/how-many-online-stores-are-there
[2] Amatriain, X. & Basilico, J. (2015). Recommender Systems in Industry: A Netflix Case Study. Recommender Systems handbook. P.385-419.
Retrieved from: https://link.springer.com/chapter/10.1007/978-1-4899-7637-6_11
[3] https://research.netflix.com/business-area/personalization-and-search
[4] Hwangbo, H.,  Sok Kim, Y. & Jin Cha, K. (2018). Recommendation system development for fashion retail e-commerce. Electronic Commerce Research and Applications. P. 94-101, 28.
Retrieved from https://www.sciencedirect.com/science/article/pii/S1567422318300152
[5]  https://www.shopify.com/enterprise/ecommerce-fashion-industry

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How to regulate the platform economy?

15

September

2021

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Platform based business models create value by connecting users (both consumers and producers) on an online network. These platforms gain popularity by network effects and by eliminating barriers between consumers and producers. Platforms can be found in a plethora of industries, for example there are platforms for providing services (e.g. Uber), selling products (e.g. Amazon), processing payments (e.g. PayPal) and more (Chan, Voortman, & Rogers, 2018). Over the years, consumers have enjoyed great benefits from these platforms. However, the general public demands regulations as the rising power of these platforms have negative consequences.

The Amazon example

Let’s look at an example of e-commerce giant Amazon on why regulation is being discussed. Amazon has many third-party sellers on their platform that sell various products. It is great for consumers as Amazon has millions of products on offer for a reasonable price. Yet, what happens to Amazon when something goes wrong with a product? Imagine, a third-party seller of Amazon sells hair-dryers on the American market via Amazon. The seller purchases the products in China and delivers it to an Amazon warehouse. A customer purchases a hairdryer on Amazon and Amazon delivers it to the customer’s home. The product is working well until it explodes in the hands of the customer. After investigation, it turns out that the product did not have the right certificates to sell on the American market. Questions have arrived regarding Amazon’s liability in such a case, one can argue that Amazon is also partly to blame as they offer this product on their platform, send the product to the consumer and do not check the documents. Moreover, with every sale they also receive a fee. Up till now, only the third-party seller is to blame and has to face consequences, but this might change in the future due to the current public demand for regulations.

The current situation

The Amazon example is only one of many examples of platforms having the power to influence a consumer’s and its employees’ life tremendously, without proper rules in place to regulate this. The EU is the first to recognise the threat to consumers and started imposing regulations to platforms (Corcoran, 2020). To fight against online abuse and inappropriate content, social medias like Instagram now need to have a feature where users can report inappropriate content (European Parliament, 2020). These new regulations are written down in the Digital Services Act (DSA), if you want to know more information about the DSA please follow this link: https://digital-strategy.ec.europa.eu/en/policies/digital-services-act-package.

The future

This week, the court of the Netherlands has decided that Uber needs to hire their drivers as they should be given a minimum salary (Deutsch & Sterling, 2021). As you can see, governments are imposing new rules to platform and there are signs that changes to the business model will be inevitable. In my opinion, we are at the start of an exciting time for platforms in which a lot will change and only those who can find a way work with the new regulations can survive. What do you think? Will companies like Amazon, Uber and Airbnb still operate in the same way as they do know or will it change completely?

by Jelmer van Slooten

References

Retrieved from Deloitte: https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/humancapital/deloitte-nl-hc-reshaping-work-conference.pdf

Corcoran, E. (2020, November 20). The EU leads the way in regulating the platform economy. Retrieved from bbva: https://www.bbva.com/en/opinion/new-regulation-to-meet-the-challenges-of-the-platform-economy/

Deutsch, A., & Sterling, T. (2021, September 13). Uber drivers are employees, not contractors, says Dutch court. Retrieved from reuters: https://www.reuters.com/world/europe/dutch-court-rules-uber-drivers-are-employees-not-contractors-newspaper-2021-09-13/

European Parliament. (2020, December 15). Why does the EU want to regulate the platform economy. Retrieved from europarl: https://www.europarl.europa.eu/news/en/headlines/economy/20201008STO88810/why-does-the-eu-want-to-regulate-the-platform-economy

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It’s called fashion, look it up!

10

October

2020

5/5 (1) We have all stood in the extremely crowded stores looking for a specific shirt or pants that we would like to purchase. Other days, we have been in that very same store, wondering aimlessly and seeing if anything pops-out at us. During the pandemic, our physical shopping has been reduced and we transferred majority of it online. However, the experience of going online to search for clothes has not been the same as going to a store. It is nice to scroll through, save time, and go through many different options. However, scrolling online does not feel very human and misses the personalized experience of each store. When you enter a Hollister, a Zara or a Michael Kors, your experience is significantly different and each decoration, sound, and smell has a certain feel that adds to your experience when shopping at the physical store. When scrolling online, besides the pictures and the clothes, there is not much of a personalized experience on the website. Nevertheless, this is all changing as we speak.

There has been an increasing need for more realistic and personalized online shopping experiences offered by fashion brands. Digital showrooms may become the new trend in the post pandemic world. One company, Diesel, has already recognized this increasing need and created their Hyperoom. This is a virtual room, which allows the customers to have a store feeling online with 360-degree displays of Diesel’s products. The following video shows you a better idea of what Diesel’s Hyperoom looks like:

However, I believe these experiences will only be further enhanced with augmented reality experience. The virtually enhanced experience is already offered by Loreal. A consumer can visit the webpage, then upload a picture or allow webcam access. After, they can apply a new hair color or makeup look to try it on in real-time. This will likely be applied even further in the fashion industry, allowing customers to try on a new look virtually through a truly augmented virtual experience. The showrooms, such as the one created by Diesel, are likely just the beginning of the fashion industry’s online transformation. Furthermore, the online showrooms may go beyond a unique 360-degree experience of walking through a store online. This will likely develop further to include avatar chat-bots to help you choose your next style, music to add to the vibes, but also augmented experiences related the brand. Building these unique experiences may be able to help companies not only differentiate themselves, but also connect better with their customers.

There are also expectations of fashion brands moving further than just creating 3D online stores, but rather create gravity defying and creative experiences. When it comes to luxury brands, the in-store experience means so much to certain customers and replicating this online can be more than difficult. However, to what extent could these companies use such technologies to replicate this online? The real question remains though, would you invest your time into a digital clothing shopping experience? Does virtually flying through a store made of candy add to your next experience of shopping for a new shirt?

 

Sources:

https://medium.com/datadriveninvestor/physical-to-digital-disruption-in-the-fashion-industry-1a88be78a3a5

https://techhq.com/2020/07/digital-showrooms-future-proofing-the-fashion-industry/

https://www.vogue.com/article/fashion-is-building-a-virtual-future-starting-with-its-showrooms

https://www.lorealparisusa.com/virtual-try-on/hair.aspx

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Latin America’s Overlooked Digital Transformation

10

October

2020

No ratings yet. Latin America (Latam) is a geographic economy often overlooked by Europe and the US. Nevertheless, in recent years, the region has made some fast advancements in the area of digital transformation. Where once oil and mining behemoths took the highest valuations, the region is quicky catching up with high growth businesses. In the last 3 years the region has seen 17 unicorns raise from conception, and the most valuable company is a digital e-commerce platform: Mercadolibre.

Picture4

According to LAVCA (Latin American Venture Capital Association), VC investments have nearly doubled annually in the region. With investments made in reputable companies such as Nubank, Loft and Wildlife, widely known global VC funds such as sequoia and Andreessen Horowitz have started to leave their staple in the region.

We should not forget that the region counts with a population double of that of the US and half the GDP of china. Moreover, there is widespread amount of economic inequality, where the wealthy in cities such as Mexico City and Rio de Janeiro are living to standards of cities such as London or Paris, the poor battle with issues such as hunger, housing shortage etc. This creates an ecosystem with a lot of opportunities and allows for the attraction of capital and talent.

Indeed, Uber recorded that brazil is their largest market on a global level for volume of ride, with São Paulo recording the highest traffic on the app. Moreover, Rappi, a widely spread (among other things) delivery app with Colombian origin saw its sales grow by 113% over the first five months of the corona crisis.

Even though it might seem, that at a meagre 2.2% of national GDP, the technology company market cap provides a minimal disruption, an average 65% yearly growth from 2003 shows the potential of the industry. This should be compared taking into consideration the 11% annual growth of the US or the 40% growth of China.

Atlanticomarketcap

What factors contribute to this growth? Well, a large survey of Brazilian students shows the population has large interest in contributing to the sector. That is, by working for large techs or start-ups or with the initiative of starting their own company. Besides that, a steady growth in VC investments across the region make for more growth opportunities. Third, the socio-economic status allows for a lot of innovations, with a population that is open for disruption and digital technologies.

Across the Latin American region a lot of investments have been made on a governmental level for incubators and accelerators to increase entrepreneurial activity in the region. And it has, without doubt, brought its results with cities like São Paulo, Medellín, Buenos Aires and Mexico City becoming important tech hubs with strong start-up and investment activity. VC investments continue to steadily rise, with a 100% increase in the last year to $4.6 billion. But, even though investments in starting stages and end stages of ventures have great opportunities in funding, NGO Endeavor has highlighted the need for more investments on a scale-up level. In order to make sure that the companies are able to make the shift from SME/Scale-up to established multination/multibillion corporations. Clearly some cities such as São Paulo have already developed a strong ecosystem with a large eco-system in the areas of Fintech, Housing and insurtech. Yet other cities across the region such as Santiago de Chile and Lima are still struggling to get more capital and movement in their local eco-systems in order to be the driver of change.

An interesting case study is the article from Mariana Palau in the financial times. In order to battle the effects of COVID-19, Colombia has seen an opportunity to make a shift in its economy, moving away from traditional industries with a large ecological footprint such as mining and petroleum. Instead, the country is aiming to make significant investments in the areas of renewable energies, restoration investments in conflict-hit areas from its turbulent past, and last, digital transformation. With initiatives such as a national 4G coverage, digital court files and electronic medical records, the country plans to digitize a widespread of industries in order to assure effectiveness and creating new industries.

 

Sources:

https://www.ft.com/content/6ff1545a-d9aa-4bde-af1e-65ba2107e5c4

Latin America’s digital transformation is making up for lost time

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Can Brick and Mortar Stores Survive in the Digital Age?

7

October

2020

No ratings yet. Popular stores around the world have closed hundreds of stores in the past few years. In the US, stores like Macy’s, American Apparel and Gap are competing against Amazon. In 2019, there were 59% more store closings compared to 2018 (Reyhle, 2020). This ‘retail apocalypse’ is happening everywhere. In Europe, fast fashion brands like H&M and Inditex (owners of Zara and Bershka) are closing doors to focus on their online offerings (Ho, 2020).

The retail apocalypse has started in 2010 and is continuing onward. The main driver of this phenomenon is the shift to e-commerce, facilitated by the digital age we live in. Online shopping became possible when the internet opened to the public in 1991. Amazon was one of the first e-commerce platforms in the US to disrupt the traditional retail industry. Today Amazon and other online-only e-commerce players are forcing traditional retailers to shift their operations to an online platform. Not only do retailers save rent and labour costs by doing so, they also have to keep up with rising consumer expectations. Consumers want a convenient shopping experience, fast delivery and product availability; things they cannot get from physical stores. E-commerce reduces consumers’ search and retail costs, as they can easily learn and compare prices (Pwc, 2020).

The recent COVID-19 pandemic has stimulated consumers to shift to online stores even further. It has forced consumers to change their beliefs and behavior about many daily activities. For example, a study by McKinsey & Company shows that 15% of consumers in the US tried online grocery shopping for the first time during the pandemic (Charm et al., 2020). They did so in order to limit social contact. The majority was delighted by the experience and says to continue online grocery shopping, even after the pandemic. When consumers are positively surprised about a new experience, they are willing to repeat the behavior. The pandemic has therefore forced consumers to adapt to online shopping.

Convenience, price comparisons, product availability, the global pandemic. All these factors undoubtedly seem to have changed the role of physical, brick and mortar stores. It raises the question of whether physical stores are even necessary today. However, brick and mortar stores do have an advantage over e-commerce: allowing customers to physically see, touch and evaluate products. Research (Reyhle, 2020) shows that customers who go to retail stores become more engaged with the retailer’s brand. If they cannot find the right size, colour or type of product they evaluated in the store, they order it through the online channel. This illustrates the need for both physical and online stores.

It is important for physical retailers to recognize that today’s consumers are omni-channel, meaning that they use physical and online stores interdependently in their purchasing process (Reyhle, 2020). Physical retailers should therefore rethink their strategy in order to provide the most convenient experience to the omni-channel consumers, physically and online. They could, for example, think of their physical stores as showrooms of their digital channels. Only then can they survive in the current state of the digital age we live in.

What do you think: will consumers’ behavior change so that brick and mortar stores become unnecessary in the near future? If so, will they disappear completely?

References:

Charm, T., Dhar, R., Haas, S., Liu, J., Novemsky, N., Teichner, W. (2020) Understanding and shaping consumer behavior in the next normal. [online] Available at: <https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/understanding-and-shaping-consumer-behavior-in-the-next-normal> [Accessed 6 October 2020].

Ho, R. (2020) H&M And Zara Are Closing Retail Stores To Boost E-Commerce. [online] HYPEBAE. Available at: <https://hypebae.com/2019/8/hm-zara-closing-retail-stores-online-shopping-ecommerce> [Accessed 7 October 2020].

Pwc.de. (2020) [online] Available at: <https://www.pwc.de/de/human-resources/studie-surviving-the-retail-apocalypse.pdf> [Accessed 7 October 2020].

Reyhle, N. (2020) Brick And Mortar “Showrooms”? How Stores Can Survive In The Digital Age – Retail Minded. [online] Retail Minded. Available at: <https://retailminded.com/brick-and-mortar-showrooms-how-stores-can-survive-in-the-digital-age/#.X34pNJMzZQJ> [Accessed 6 October 2020].

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How the pandemic is transforming the global luxury sector

5

October

2020

No ratings yet. Due to the rapid spread of the Coronavirus many luxury retailers and wholesalers had to close doors during the lockdowns. The implications for the industry are brutal: In the best-case scenario global luxury sales will decline by 18%. However, the worst-case scenario ranges around 35% (Bain & Company, 2020). This implicates a loss of around $50 billion to $100 billion for the industry, which has been growing around 3% (CAGR) annually (PRnewswire, 2020). In a market where only around 10% of sales are made online, the impact of the pandemic was particularly dire. The dependency on wholesalers and physical shopping experiences are only some of the challenges that the industry faces now. The reluctance and inability of the large chinese customer-base to travel is particularly problematic, as they make up 35% of global demand and half of chinese customers make their purchases abroad. While these tough environmental conditions certainly imply bankruptcy for many beloved luxury brands, they also embrace creative flexibility (McKinsey & Company, 2020). As many luxury retailers were forced to close physical doors, many opened new virtual sales channels. The following will highlight some of the most promising and creative digital sales strategies luxury companies have adopted amid the pandemic.

 

The main goal of many new digital strategies was to reproduce the luxury sector’s most important feature: personal and emotional experiences. Many brands such as Louis Vuitton and Gucci launched livestream selling experiences, where goods are presented and customers have the opportunity to interact directly with a salesperson. Furthermore, many companies focused on serving the top 1% customers, sending free samples to their most valuable customers and arranging personal video chat meetings to showcase the products (Lazazzera, 2020). Recreating personal experiences and delivering valuable content online will definitely be a key criteria in defining which brands will sustain the new challenges (McKinsey & Company, 2020).

 

The global watch industry has been hit especially hard from the pandemic’s impact. As only 5% of sales happen online, many luxury watch brands became creative. For instance, Omega and Zenith launched new social media campaigns to stay in touch with their communities. The fondation de la Haut Horlogerie, which is an organiser of watch fairs, built a new digital platform to host online watch fairs. According to them, it was a huge success with more than 44,00 visitors on the first four days. While the digital pattern of these new strategies is striking, many also engaged philanthropic pursues, such as giving away watches for front-line workers and volunteers in the pandemic (Lazazzera, 2020).

 

How do you think brands will overcome customer’s hesitancy to buy luxury goods amid the pandemic?

Sources: 

 

Bain & Company, 2020, Global personal luxury goods market set to contract between 20 – 35 percent in 2020. Retrieved from: https://www.bain.com/about/media-center/press-releases/2020/spring-luxury-report/

 

Milena Lazazzera, 2020, How virtual stores became a reality in the world of luxury Financial Times. Retrieved from: https://www.ft.com/content/ca6bb85f-9af7-4df7-a606-828ceeea5a97

 

Alicia Esposito, 2020, How Luxury Brands Are Responding To COVID Tension With Innovation. Retrieved from: https://retailtouchpoints.com/topics/retail-innovation/how-luxury-brands-are-responding-to-covid-tension-with-innovation

 

McKinsey & Company 2020, The State of Fashion 2020. Retrieved from: https://www.mckinsey.com/industries/retail/our-insights/the-state-of-fashion-2020-navigating-uncertainty

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Picnic – Disruptive Enough?

5

October

2020

No ratings yet. In 2015, online supermarket Picnic was founded in The Netherlands. At that time, this business model was very new and innovative for the Dutch Food Retail market. Although the young company is not yet profitable, this online supermarket has grown enormously over the past five years. In 2020, Picnic has approximately 300,000 customers, 4,000 employees and delivers in 125 cities in The Netherlands and Germany (Schelfaut, 2020). It is expected that the company will even further expand and grow in the coming years. Very recently it came out in the news that they will collaborate with the huge German supermarket chain Edeka to create its own private label that is entirely focused on e-commerce in order to achieve even more sales (Business Insider, 2020). With special logarithms, Picnic is able to drive efficient routes in order to save costs and for sustainability purposes. Furthermore, they strive to deliver on time and to be customer friendly (Van Tatenhove, 2018). Based on these insights, it seems that Picnic is a success story and that it can be regarded as a threat for incumbent firms.

 

However, the competition in the food retail e-commerce has grown in recent years.
Existing physical supermarket chains, such as Albert Heijn and Jumbo, started offering online delivery services as well. Picnic has had a competitive advantage over these supermarket chains for a long time because of its low costs, free delivery and customer centric commerce (Business Insider, 2015). They distinguished themselves as ”the modern milkman” to transform the way people do their groceries (Van Tatenhove, 2018).
However, Albert Heijn for instance has also improved their online service due to the high demand and sales for online grocery delivery. They have reduced their minimum order amount and also set up more hubs across the country in order to be able to deliver even faster (AH, 2019). About two weeks ago, Albert Heijn launched a grocery delivery service application that is very similar to Picnic: Albert Heijn Compact. With this concept, AH delivers groceries free of charge at home, the minimum order amount is the same as that of Picnic and the functionalities of the app are practically the same (Van Woensel Kooy, 2020). This could be a threat to Picnic, as Albert Heijn has a long history, strong reputation, large customer base and much capital. Additionally, another growing online supermarket was introduced in 2018, named Crisp, which focuses on fresh, local food delivery (Crisp, 2020).
As a result of these new entrants in the industry, competition is increasing. Picnic is no longer the only online supermarket in the Netherlands and runs the risk of losing customers to competitors. Furthermore, the turnover of incumbent supermarket chains remains stable, despite the entrance of potential disruptor Picnic (Smit, 2020).

Based on these insights, I wonder whether Picnic is as disruptive as was thought a number of years ago? Is Picnic not at risk of being overshadowed by a newcomer to the market that incorporates even more advanced technologies and really overtakes the existing markets?

Perhaps in future consumers will only have to name what they need, and it will then automatically be ordered for you and delivered within a short period of time?

 

I look forward to reading your views on this.

 

 

 

 

References

AH. (2019). AH kondigt 5e Home Shop Center aan om forse online groei bij te benen. [Online] Available at: https://nieuws.ah.nl/ah-kondigt-5e-home-shop-center-aan-om-forse-online-groei-bij-te-benen/ [Accessed 4 October 2020]

Business Insider. (2015). Dit doet de nieuwe websuper Picnic anders dan Albert Heijn en Jumbo. [Online] Available at: https://www.businessinsider.nl/picnic-online-supermarkt-albert-heijn-jumbo-591766/ [Accessed 4 October 2020]

Business Insider. (2020). Websuper Picnic komt met een eigen huismerk – omdat alles online wordt verkocht zijn de verpakkingen anders dan normaal. [Online] Available at: https://www.businessinsider.nl/online-supermarkt-picnic-huismerk-verkopen/ [Accessed 4 October 2020]

Crisp. (2020). De supermarkt-app voor knettervers eten. [Online] Available at: https://www.crisp.nl/ [Accessed 5 October 2020]

Schelfaut, S. (2020). Picnic breidt capaciteit flink uit na explosieve groei online boodschappen. [Online] Available at: https://www.ad.nl/koken-en-eten/picnic-breidt-capaciteit-flink-uit-na-explosieve-groei-online boodschappen~a872e4a9/#:~:text=Wij%20verwachten%20de%20komende%20weken,mensen%20aan%20te%20nemen.”&text=Het%20bedrijf%20telt%20nu%20zo,klanten%20en%20ruim%204000%20medewerkers [Accessed 4 October 2020]

Smit, P. (2020). Marktaandeel Albert Heijn stabiel op 34.9%. Available at: https://www.nieuweoogst.nl/nieuws/2020/01/21/marktaandeel-albert-heijn-stabiel-op-349-procent [Accessed 5 October 2020]

Van Tatenhove, J. (2018). Picnic: the modern milkman transforming urban distribution. [Online] Available at: https://medium.com/lifes-a-picnic/picnic-the-modern-milkman-transforming-urban-distribution-bae975749a12 [Accessed 4 October 2020]

Van Woensel Kooy, P. (2020). Albert Heijn gaat vol door op online markt. [Online] Available at: https://www.marketingtribune.nl/food-en-retail/nieuws/2020/09/albert-heijn-gaat-vol-door-op-online-markt/index.xml [Accessed 2020]

 

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NIke’s SNKRS App: Driving Sales via Digital Community

18

October

2019

No ratings yet. After the recent decline in sales of Nike, the company decided to change its strategy by focussing its distribution on direct-to-consumer channels (Karwatka, 2018). This has proven to be a successful strategy as digital commerce sales went up 35% for 2019 fiscal year (Nike News, 2019). By establishing a direct relationship with the customers, and building emotional consumer experiences, Nike creates a loyal customer base that drives up the sales.  

At the moment, Nike owns several distribution channels: physical stores, its website, and apps – Nike+ and SNKRS. SNKRS app represents a digital platform centered around sneakers community. It is not just another digital store, but a platform that offers insider access and content about the latest sneakers. According to Ron Faris, CEO of s23nyc, the studio behind the SNKRS app, the digital community consists of 20% of Hyperbeasts, people that are extremely knowledgeable and fanatical about the community, and 80% of Styleseekers who are interested to learn more (The Next Web, 2018). And the key to driving a digital community and creating a powerful social network is to make those that have the most knowledge to share with those who have the least. 

In the case of SNKRS,  it offers consumers a platform to share their enthusiasm for Nike shoes, and creates immersive experiences for a chance to access limited edition styles. It creates a digital community of people that are crazy about sneakers, and uses this community to share and drive sales and engagement better than any advertising campaign as it allows to scale up without much investment. 

In order to energize such a community and create virality, the app is based upon three components: product, story and experience (The Next Web, 2018). By providing its key product, high-end shoes that are surrounded by a folklore story through a special and unique experience, it can make customers very emotional, enticing them to share and grow the community by means of which the product sells through. 

For sneaker community, the experience of buying sneakers as is important as sneakers themselves (The Next Web, 2018). Thus, another component of SNKRS’ strategy is gamification of the purchasing process. The company uses technology, in particular augmented reality, to revolutionize the buying experience by creating a sense of competitiveness fuelled by the adrenaline. For example, SNKRS Stash is campaign that allows users to purchase limited edition sneakers only from a certain location in their city (Karwatka, 2019). With this feature, online shopping can reach another level as virtually everyone and everything can become a Nike store: a poster in a metro, a menu in a restaurant or a concert of a celebrity. 

Thus, Nike is redefining online shopping by engaging with customers directly and creating emotional experiences through the use of technology. 

 

References:

Karwatka, T. (2018). Nike just shaped the future of retail with mobile-first commerce. [online] Divante.com. Available at: https://divante.com/blog/nike-just-shaped-future-retail-mobile-first-commerce/ [Accessed 17 Oct. 2019].

Nike News. (2019). NIKE, Inc. Reports Fiscal 2019 Fourth Quarter and Full Year Results. [online] Available at: https://news.nike.com/news/nike-inc-reports-fiscal-2019-fourth-quarter-and-full-year-results [Accessed 17 Oct. 2019].

The Next Web. (2018). Ron Faris (Nike) on The future of retail and digital community | TNW Conference 2018. [online] Available at: https://www.youtube.com/watch?v=JXLwzm2292U [Accessed 17 Oct. 2019]

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Thinking ahead in the art industry

13

September

2018

No ratings yet. After subscribing to Netflix for watching movies and to Spotify for listening to music, are people ready to subscribe for art in their living room? ArtMgt is an e-commerce startup that is reinventing the way we rent and buy original works of art from critically acclaimed artists.

ArtMgt offers the opportunity to enjoy exceptional artworks without the commitment of spending thousands of dollars. A subscription costs $50 per month and includes insurance and shipping costs. This makes art available to many people with lower incomes. On the other hand are most artists experiencing unpredictability in their monthly income, and ArtMgt seeks to provide a more steady source of income to them. What distinguishes ArtMgt compared to other art rental companies is the website where you can find a specially developed, user friendly art search engine, where you can enter criteria like price category, colors used, or media type and more. As a user, you can organize and save the works online that you are selecting for your home or business. If you want to share your new artwork on social media, you can instantly download it in PDF version. (ArtMgt)

Today’s economy is revealed in what society is consuming: valuing “access over ownership.” People increasingly think it’s more important to enjoy an experience rather than collect and own the products (Haddad, 2015). Millennials don’t seem to have the same collecting gene as previous generations. This doesn’t sound good for the art market, which relies on a cult of possessing (Gerlis, 2018). The art industry has to look for alternative ways to do business. ArtMgt is a great example of adaptation to these changes.

However, they also need to think ahead. The next step might be a version of the sharing economy, where people rent out their art on a platform like Airbnb. The question will be whether that is good for the art industry or not. While ArtMgt’s end goal is to eventually sell the art, a sharing platform for art might make art sales decrease even further and hurt the artist’s wallet. For consumers however, it will be an easy and affordable way to enrich their lives with art. How long will it take for us to start sharing our luxury products like this?

Sources:

ArtMgt: https://www.artmgt.com/

Haddad: http://www.create-hub.com/comment/art-and-the-sharing-economy/

Gerlis: https://www.theartnewspaper.com/comment/can-the-art-market-thrive-in-a-sharing-economy

 

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