InsightOn: Editorial – Bill Meahl 05Dear Reader,With the growth of e-commerce, the way people consume is changing rapid-ly, with strong impact on the way many companies do business and on theirsupply chains and logistics.There’s no doubt that e-commerce empowers consumers through ease of useand broadening product choice. Plus, for logistics providers, it opens up awhole new area of potential, because, of course, products ordered online needto be delivered to doorsteps. Those doorsteps might be in the next town; butthey might also be on the other side of the world. For every opportunity, there’sa challenge. How can good delivery performance be achieved cost-effectivelyin an era of higher fuel prices and higher volumes, for example?Collaboration may be one part of the solution. Collaboration is frequentlydiscussed in business, yet not always fully understood in its entire scope andpotential.Most commonly, companies think of collaboration as what happens at a con-solidation center, when manufacturers and retailers work to share warehouses,transport infrastructure and information. Some people call this ‘horizontalcollaboration’, and it is indeed an option that many companies are pursuing ashigher e-commerce volumes change the equation on the market.Then there’s ‘vertical collaboration’ in which suppliers in a single industry, suchas the semiconductor industry, consolidate goods and share transport, sincethey are often retracing each other’s steps and sharing the same customersfrom a logistics point of view.True collaboration is hard to achieve, of course, as you’ll read in the secondhalf of this report. Luckily, it’s also a topic that inspires a great deal of ‘thoughtleadership’, some of which is highlighted in the following pages.I invite you to enjoy our take on e-commerce and collaboration and to find outmore about what experts from around the world have to say about both.Best regards,Bill MeahlChief Commercial Officer at DHL
InsightOn: Contents 07 ContentsEditorial – Bill Meahl Page 05Contents Page 07Editorial – Ken Allen Page 09Facts & Figures Page 10The Game Changer Page 13Life – Plugged In Page 14Consumption 3.0 Page 20The Expert View – Johan Paludan Page 25Reaching Customers – Globally and Locally Page 26Perfection: What Customers Expect with Online Shopping Page 34The Ripple Effect of Online Purchases Page 38Global E-Facts Page 42E-Commerce: The Growing Pains Page 44The Expert View – Christoph Wenk-Fischer Page 50E-Commerce and Collaboration Page 53An Evolution of Collaboration Page 55Collaboration – The Human Factor Page 58Collaboration: A Foundation for Supply Chain Innovation Page 65The Expert View – John Gattorna Page 70Orchestration: The New Form of Collaboration Page 74The Foundation of Future Business Page 76DHL Case Studies Page 78Background and Bibliography Page 90
InsightOn: Editorial – Ken Allen 09E-commerce revenues worldwide are expected to reach 1 trillion US dollarsthis year. By 2015, the world will have 3.7 billion internet users. Already, thenumber of internet users in Asia is double that of Europe, even though pen-etration rates in Asia are still low.The numbers are staggering. And, as e-commerce flourishes, they are only setto rise. For retailers with an online offer, then, the international opportunitiesare both hugely exciting and there for the taking. The phenomenon of onlineshopping (and it is a phenomenon, touching everyone wherever they are inthe world) allows enterprise the chance to break into new markets – particu-larly lucrative developing ones. It also allows them to build a prosperous andtruly global customer base.There is, of course, a ‘however’ – and it’s this. Successful product shipment isgoing to become more critical than ever for retailers who want a slice of thee-commerce pie. You might have developed a truly groundbreaking product,but if you can’t transfer it easily from your website into the hands of yourcustomers, your business will never succeed.Studies have shown that effective logistics – particularly in the retail e-com-merce sector – are a competitive differentiator for merchants. If you can offerthe items that people want or need and ship them more efficiently than yourcompetitors, you offer something of real value. Your business is duly markedas a cut above the rest.For those who recognize this, online is a real growth opportunity, a pointmade in the first half of this InsightOn: report which explores the trends,prospects and challenges of e-commerce. The second half of the report looksat collaboration as a means to tackle some of the more taxing problems andcomplexities of e-retail.Collaboration is a word we know well at DHL. We believe in close collabor tion awith businesses in order to drive sustainability initiatives, reduce costs andimplement the best, most efficient integrated solutions for their individual needs.Of course, we are well known for providing critical services that enable thevast flow of goods around the world, and for our ability to move high volumesfrom one corner of the world to another on time and within budget. But wealso do far more to support our customers who run businesses online. Forexample, we provide software products that make it easy for merchants to shipand track their packages and manage their returns – a facet of e-commercehighlighted in this report.Whatever viewpoint you are reading from, e-commerce isn’t a subject any of us canchoose to ignore. Online retail, with all its multi-faceted challenges, is here to stay.With that, I’ll leave you to explore our latest InsightOn:. Enjoy your read.Best regards,Ken AllenCEO, DHL Express
10 S AL E 68% of American retailers polled expected 2011 online holiday sales to increase by at least 15% from 2010 26% projected annual growth of e-commerce in countries such as Spain, Brazil, China, Russia and Mexico through 2015 More than 1000 16 – number of top 50 online retailers 101 to 1000 7 that featured more than 1,000 videos on their site in Q1 2011. 11 to 100 9 Under 10 18
InsightOn: Facts & Figures 11 48% 2/3 – fraction of smartphone users of monthly retail who shoppedbudget that U.K. shoppers by phone in spend online September 2011$ 1 400 000 000 000 2015 – the year that global e-commerce, including travel and auto purchases as well as online retail sales, will reach an estimated 26 – average number of hours internet users in Europe 75% spent online in March, 2011 224 000 000 ‘mobile commerce’ grewbetween 2010 and 2011,as measured in the e-tailinggroup’s 14th Annual Mystery Shopping Study – number of ebay’s unique visitors per month
InsightOn: The Game Changer 13The Game ChangerE-commerce once described how companies operating in the B2B sector conducted business bysharing information electronically. Nowadays, it has a completely different meaning: e-commerceis ‘online shopping’ and all that comes with it, such as social shopping, multimedia entertainment,immediacy and, of course, ease.E-commerce is a truly ground-breaking inter travel to the end user. There are human factorsnational phenomenon — a consumer in Madrid, to consider, too: Collaboration between internalsay, can order goods from a seller in Missouri. team members and their managers, for example,Yet, from a logistics perspective, this involves a and cross-collaboration between their oppositelong supply chain that crosses borders, curren- numbers in external (and sometimes competing)cies and customs regimes and requires a cost- organizations. For this to be successful, a com-effective and consistent solution. The consumer’s mon focus and open communication is needed;repeat business depends on it. plus an understanding of the end goal by staff at many different levels within a business.Returns is another conundrum. How does afaulty or unwanted product go back through the So how do companies collaborate successfully?supply chain in a way that serves and satisfies the What challenges and barriers must they over-customer, but doesn’t squeeze the margins of the come to do it effectively, what is its true cost ande-retailer or the logistics provider? It’s a question how can it be encouraged? In the second halfthat the logistics industry is still grappling with. of this report, leading international academ- ics and logistics experts (including author andThere’s no doubt, however, that e-commerce is consultant John Gattorna, and Richard Wilding,a game changer for the retail industry. It’s also a professor of supply chain strategy at Cranfieldgrowing exponentially. Online companies who School of Management) offer the latest thinkingwant growth – and what ones don’t? – know and strategies on collaboration.they need to set up their businesses and sup-ply chains to take advantage of a new shopping Could it be a turning point for e-commerce?reality. The ones who don’t won’t be around totell the tale about how they tried to turn backthe e-commerce tide. So, in the first part of thisedition of InsightOn:, we look at the continuallyevolving e-commerce landscape and investigateits trends, opportunities and challenges from theviewpoints of the consumer, enterprise and thelogistics operator.If retailers are going to thrive in the age of e-com-merce, then collaboration could offer a way toimplement greater competencies in logisticsplanning and execution. At its simplest level,collaboration is about the sharing of equipment,vehicles and carriers; but it’s also about sharingcritical data on the movement of goods as they
14Life – Plugged InThe digital world – with its always-on, 24-hour cycle of information, communication and media – ermeates lifestyles, shaping the way people interact, consume and make sense of the world we live in.p The changes are well documented. Anthropologists Futurists predict that our electronic connect- have shown how text messaging – expected to top edness will continue to impact daily lives in 9.4 trillion messages by 2016 (Informa Telecoms profound ways, including the way we consume. and Media, May 2012) – has transformed language; It may seem far-fetched now, but some futur- how instant messaging has shortened attention ists can see the day when you might not have to spans, and how consumers are collaborating and shop for yourself because your fridge will do it sharing in new-found communities that are no for you. It will be intelligent and, knowing when longer restricted by physical boundaries. it is getting empty, able to initiate an order from an online shop – thus taking you, the consumer, These communities often pursue a greater good, out of the equation. such as reducing their carbon footprint or help- ing others with practical information on things Your bathroom mirror, meanwhile, could have as diverse as home health remedies, fashion a dual role as a message centre, reminding you trends and where to spot a shopping bargain. about your schedule as you get ready for the day, and/or summarizing your home’s energy From a consumer perspective, computer technol- consumption and production. By tapping your ogy has had the greatest impact of all by revolu- mirror you post these results on a social net- tionizing the way people shop. Now everything working site, where you are challenging friends from groceries and home furnishings to cars and to earn the most points to exchange for games holidays can be bought over the internet. More and prizes to be collected online. than this, however, consumers can collaborate and share information, write reviews and impart If all this sounds outlandish, scroll back to the tips in new-found online communities. Shoppers world today and notice that what was considered are no longer restricted by physical boundaries. science fiction two decades ago is not only part Technology has empowered them. of the new reality – it is driving expectations
InsightOn: Life – Plugged In 15for consumers. For instance, between meetings It’s no wonder then that retail e-commerce is DELPHI THESIS 46at work, the busy consumer can now place an booming. For several years now, it has beenonline order for a dinner to be delivered to their steadily taking market share away from tradi- IN FUTURE …home at a time of their choosing. All they need tional bricks-and-mortar retailers. In the US, for … the internet connectsto make this happen is two minutes’ access to example, e-commerce reached 8 percent of over- 100% of the world’sa PC, laptop, mobile or tablet – and a reliable all retail sales in 2011, compared with roughly 4 population, based on adelivery service, of course percent in 2004. new infrastructure (e.g. glass fiber, satellite, mobile With reliable delivery and plenty of choice, devices). consumers have discovered that click-and-ship“With reliable delivery is in many ways more gratifying than traditional PROBABILITY Deﬁnitely not: Deﬁnitely: shopping. People find that it fits into their lives 13 % 12 %and plenty of choice, much more easily than a trip to the store, where Unlikely: 25 % selection may be limited and comparing prices isc onsumers have discovered done the old-fashioned way: Manually.that click-and-ship is in And that’s not to mention the benefits for life- Probably: logistics: No more vying for a parking spot at a 31 %many ways more gratify- shopping area, waiting in line to try on clothes, Possibly: 19 % waiting in line again to pay and then fightinging than traditional traffic or crowds on the subway on the way Delivering Tomorrow: Customer Needs in 2020 and Beyond. A Global Delphi Study (see home.shopping.” p. 113 for details) Governments, too, are keenly aware of the advantages that come with e-commerce, and they’re keen to boost computer and internetMultiple means of communication – or hyper- usage to keep their economies and workforcesconnectivity – is the new normal. According to competitive.Robert Greenhill, the chief business officer ofthe World Economic Forum, hyperconnectivity As part of its Digital Agenda for Europe, theis redefining relationships between individuals, European Commission has set a target of enbetween consumers and enterprises and between abling 75 percent of the population to be regularcitizens and state. He has said, “We are begin- internet users by 2015, with the proportion ofning to see fundamental transformations in all the population that has never used the inter-areas of the economy and society.” net decreasing to 15 percent. Within the same period, 50 percent of the population should beMost experts believe that e-commerce is not buying online and 20 percent of the populationthe driving force, but rather e-connectedness. should buy cross-border online.Once connected, people then transfer theirexperience of instant information gratification For businesses and consumers alike, this trendand empowerment to the realm of e-commerce. opens up whole new worlds of opportunity.In other words, e-connectedness means con-sumers want their products fast, easy and ontheir own terms.
16 E-commerce trends SoLoMo Many people use social networks to research pur- chases and learn about products. For example, We are perpetually in motion. Thanks to online Mumsnet in the UK, a place where mothers compare technology, we can now all have a home and office notes and collaborate, has built up such a following on the move. With our mobile phones and tablets, that is considered crucial for influencing product we can field business queries, monitor our Facebook choices – and even elections. In India, India Con- pages, send a Tweet, add to a blog and book a table sumer Forum is an online platform giving consumers for dinner while we’re, say, sitting on a train or re- the chance to share information about goods and laxing at a café table. services, post grievances and give helpful consumer- related tips and advice. Then there is US site Pinter- Internet trend watchers have come up with a new est, which invites visitors to share their favorite acronym that could describe this behavior as well things on ‘pinboards’ and follow collections created as one of the main trends on the world wide web: by others, and has over 12 million users a month. SoLoMo, short for social-local-mobile. Plus, many retail sites have developed a sellers and buyers community forum – discussion pages where The term conjures up a world dominated by social potential consumers can read comments and re- networks (So), in which local (Lo) commerce and views by posters who have already bought a partic- communities thrive while people interact and ular product. US retail giant Amazon, for example, transact from their mobile (Mo) devices. launched its customer discussion board in 2007. “The Social, Local, Mobile (SoLoMo) revolution is Christoph Schwarzl, a Kurt Salmon partner and the here,” says Daniel Laury, the CEO of LSF Network, a author of the book New Online Retailing, said, US-headquartered global digital marketing company “Many shoppers now consult their peers online be- offering digital advertising and performance marketing. fore they make major purchases. For them, other “With rapid rates of smartphone and tablet adoption, consumers are considered more reliable and trust- consumers are on the move, looking for information worthy than advertisers.” quickly and expecting relevant results on the go.” Going Local Already in 2007, social networking surpassed email in terms of time spent online. By 2011, users in Next comes business, with a definitive local twist, I srael, Argentina, Turkey and Chile all spent more driven by social media users on mobile devices. than 10 hours a month on social networking sites. While business may be global in many ways, com- They were most likely sharing and commenting on panies like Groupon and LivingSocial help generate photos of friends and family, swapping recipes or demand for products and services locally. And comparing their opinions on films, books and cur- check-in services like shopkick drive foot traffic rent events. into retail outlets.
InsightOn: Life – Plugged In 17 DELPHI THESIS 48 IN FUTURE … … all across the world, communication costs decrease extremely – information and telecom- munications are available to everyone at any time and almost for free. PROBABILITY Deﬁnitely not: Deﬁnitely: 2% 12 % Unlikely: 19 % Possibly:Indeed, a survey by comScore in 2011 showed that smart-phone or tablet. The device will be the cen- 27 % Probably: 40 %local listings are among the most relevant and trust- tral nervous system of their lives and the placeed search results for consumers. Some 61 percent of where they conduct their affairs, relying on the Delivering Tomorrow: Customer Needs in 2020 and Beyond. A Global Delphi Study (seeonline searchers consider local search results to be opinions of people in their social networks and ser- p. 115 for details)more relevant, and 58 percent consider local search vices provided locally.results to be most trustworthy than others, it said. In South Africa, for instance, internet use grewRelevancy typically means that users recognize the 25 percent in 2011, mostly due to access via mo-name or address of a business that has the products or bile phones. And India may be raising a “mobile-services they want in a specific location. For business- only” generation, according to one study. It foundes, it translates to a more targeted readership for ads. that 49 percent of people who are using the mobile internet either never or infrequently use it from a“For a local company looking for local customers or desktop.a national company steering customers to localstorefronts, local search provides targeted messages Essentially, the SoLoMo trend is another exampleto the consumer searching for a product or service in of how electronic connectedness and new consumera particular area,” Laury said. The “Mo” trend in technologies have eliminated information asym-SoLoMo is also moving forward at full speed. metries from the consumer‘s shopping experience – and put power into the consumer’s hands.Almost shockingly, more people on this planetcould access a mobile phone network than electric-ity, if cost were no factor. According to the GSM As-sociation and the United Nations, commercial wire-less networks can reach 85 percent of the world’spopulation while the electrical grid can reach only80 percent of the world population.With wireless access widely available and mobilehandsets far cheaper than desktop PCs, it’s clearthat users of the mobile internet will far outnumbertheir fixed-line brethren. At the time of writing,PCs are still the preferred way of connecting to theinternet; but a new study by NPD DisplaySearchpredicts that tablets will overtake PCs by 2016.Indeed, experts say that most of the mass marketconsumer world will never have a PC, but only a
18 The Internet and the Developing World exponentially: 2011 saw 25 percent growth in Indian internet users over just 12 months. The internet may have its roots in Silicon Valley, but statistics show that its future will be decidedly in- The future of the internet in India looks set to be ternational. driven by mobile devices. Figures from wearesocial. net highlight that 59 percent of all Indians only Already, the strongest growth in number of users – a ccess the internet via mobile technology. With an and the sheer largest number of users overall – is increase in 3G and 2G services, and an Indian in developing countries. Europe and North America G overnment roll-out of low-cost tablet devices now have the highest proportion of internet users across schools nationwide, internet use is going to among their entire populations, but the overall get much higher, very soon. number of users is dwarfed by countries in the de- veloping world. With more and more citizens online, e-commerce in India is on the rise. In 2011, it was estimated that China, for instance, added more internet users in the value of online business in India had reached three years than all the internet users combined US$10 billion. Popular sites in India include that exist in the US, according to Mary Meeker, an 20North.com, offering electronics, books, music analyst at venture capital firm Kleiner Perkins Cau- and movies; the fashion site 99labels.com; and field & Byers and a recognized expert on internet Dealsandyou.com, which features deals and dis- trends and business. counts on a variety of products. China had a population penetration of internet us- The same story is being repeated in parts of Africa, ers of only 34 percent in 2010, but that rate was where undersea cables have opened up high-speed growing at 20 percent per year, according to the In- online access and dramatically increased business ternational Telecommunications Union and the opportunities. Mobile is big news here: By 2015, United Nations. What’s more, the total number of mobile phone subscribers are expected to reach internet users in China in 2010 – some 459 million 850 million — of which 250 million will have mobile – was already nearly double that of the US, where broadband subscriptions. In Nigeria, according to 244 million people were accessing the internet. statistics from the ITU (International Telecommuni- cations Unions), 35 million new internet users Popular sites in China include the marketplaces came online during 2007 and 2010. Mobile use is Tao ao and 360buy.com, which had more than b high in the country, with over 95 million mobile sub- 40 million registered users in early 2012 and pro- scribers (Nigerian Communications Commission). cessed 400,000 orders a month. In South Africa, smartphone users also represent In 2011 in India, 121 million people were estimated the future potential of internet growth. At the end to be internet users. If that sounds like a lot, then it’s of 2010, 6.8 million South Africans were using the nothing compared to the overall Indian population, internet; but by the end of 2011, that figure had in- which stands at 1.2 billion. In such a big country, then, creased to 8.5 million; and by the end of 2012 it is 121 million is a low figure; and, if internet growth was estimated to topple the 10-million mark. standing still, it would be unremarkable. But internet growth in India isn’t standing still. According to re- search aggregated by wearesocial.net, it is growing
InsightOn: Life – Plugged In 19E-commerce in South Africa is growing accordingly, as are used by far more non-Americans than Americans.noted in an Internet Economic Impact Study survey by For instance, more than half of Google’s trafficindependent technology research and strategy organi comes from outside the US. And the market valua-zation, World Wide Worx, published in May 2012. tion of Chinese and Russian internet companies“The study… indicates that e-commerce is growing has been rising quickly, according to Meeker. As ofat a rate of around 30 percent a year, and is showing late 2011, Chinese companies like the search-engineno signs of slowing down,” said Managing Director of giant Baidu and the online service provider TencentWorld Wide Worx, Arthur Goldstuck. “In fact, taking were valued at more than US companies such asinto account the fact that a number of major consumer priceline.com and Yahoo!brands and chains have not yet devised comprehensiveonline retail strategies, the scope for future growth is These rising figures have real implications for com-even greater.” The result, says Goldstuck, is that an panies’ logistics operations. If businesses are notinternet economy worth R59 billion in 2011 and making already shipping to developing markets, then theyup 2 percent of the SA economy could grow to as much had better prepare to seize the opportunity in theas 2.5 percent of the economy by 2016. coming years. A rising, internet-savvy middle class in the developing world is busy writing the nextOther points in case: the world’s largest internet chapter of the e-commerce story.properties may be American companies, but theySale, Sale, Cyber Sale Often, stores stay open until midnight to attract as many shoppers as possible.Black Friday, the day after the Thanksgiving celebra-tion in the US, consumers typically begin their Christ- In recent years, however, Cyber Monday, the firstmas shopping. It has become a discount shopping Monday after Thanksgiving, has become almost asday when millions of US shoppers hope for massive important to retailers. It’s the day online shopping issavings. The term Black riday illustrates the point F gauged to predict how strong the holiday shoppingat which stores start to make a profit, or go "into the season will be for retailers overall. With full stores andblack." The holiday shopping season is important rising gas prices, online shopping is gaining ground asfor the economy because 19 percent of retail sales people simply do the job from their desktops or hand-occur between Black Friday and Christmas. For helds. During the 2011 post-Thanksgiving weekend,some retailers, such as jewelers, the period may Cyber Monday sales alone hit US$1.2 billion, making itbring in nearly 40 percent of their annual revenue. the heaviest US online spending day in history.
20Consumption 3.0Once, the mantra for successful retailing was “location, location, location.” Now, e-commerce is re-defining the concept of place, allowing companies to create a virtual identity that can be marketedjust like a physical one and enabling people to travel between both worlds. Take the phenomenon of pop-up retail. In draw large groups of people; typically, they work DELPHI THESIS 56 New York, Paris and Berlin, shops can appear through social networks and rely on social IN FUTURE … quickly – and be gone a few days later. m edia to spread the word about deals at shops. … Web-connected inter- faces make private homes The idea is to create a buzz online that trans- intelligent environments, fers back to the physical world, enticing people where temperature, aroma, to partake in short-term, limited offerings at “Digital natives don’t personalized broadcasts, frequently changing locations in city centers – and information are i.e. pop-up locales. want to waste their time. automatically adjusted to the preferences of the Over the past few years, Toys ‘R Us has They will only go shopping inhabitants, at all times. opened hundreds of holiday pop-up retail PROBABILITY shops using otherwise vacant retail space, for one reason: To have fun.” Deﬁnitely not: Vogue magazine has rolled out temporary Unlikely: 8 % 2% Deﬁnitely: stores for teens that don’t sell any items but 13 % offer makeovers and model castings, and US retailer Target offered New Yorkers two The Psychology of Shopping weeks to buy regular store items onboard Over the course of time, shopping has always a 220-foot long glass-topped boat that it been about more than just meeting the daily m otored into Chelsea harbor. needs of life. The acquisition of certain goods re- Possibly: mains a central way for people to distinguish 36 % Probably: Johan Paludan, a futurist who has worked at themselves socially and economically from oth- 41 % the Copenhagen Institute for Future Studies ers. And marketplaces have historically offered since 1976, says the pop-up retail trend is part an important space for social interaction, the ex-Delivering Tomorrow: Customer Needs in2020 and Beyond. A Global Delphi Study (see of a wider ongoing transformation of retail change of information and spectacle.p. 123 for details) space to event space. According to Paludan, the future of “live” shop- “Bricks-and-mortar shops are quickly finding ping may hinge on its ability to continue to meet out that they must offer something special to these key needs as it adapts to changes in the compete with the benefits of buying online. It way we peruse and pursue goods. won’t be long before people head to shopping areas not to buy things – but to seek entertain- For hundreds of years, people visited ancient ba- ment,” Paludan said. zaars, seaport commercial districts and general stores to select the things they needed. Then “Digital natives don’t want to waste their time. came downtown department stores and sub They will only go shopping for one reason: To urban shopping malls. have fun.” But all this was before e-commerce was a force Those retailers who are successful in pop-up to be reckoned with, with its 470 billion US dol- selling often use the techniques employed by the lars in sales that are expected to exceed 1 trillion flash mob performance art movement to quickly US dollars worldwide by 2012.
InsightOn: Consumption 3.0 21Despite its tremendous size, the experience of CBRE Group, Inc, it was reported that e-commercee -commerce is not even fully evolved yet, says had seen its share of core retail sales captured risePaludan. Right now, popular shopping sites in- from 3 to 6 percent during the past six years; whileclude large marketplaces that aggregate the goods the majority of bricks-and-mortar retailers’ sharesof thousands of sellers, such as Amazon.com and declined during the same period. Jeffrey B Edelman,Alibaba.com, or giant retailers with a large web Director of the assurance, tax and consulting firmfootprint such as Walmart.com. McGladrey & Pullen, LLP, believes that “2012 will be another year of lethargic growth, store closingsIn the future, we may shop in 3D virtual malls that and increased focus on everyday low prices byare architectural masterpieces and, at some point, s everal major retailers, all of which will have awe may even be able to have sensory and tactile s ignificant impact on the entire retail landscape.”experiences while shopping online. “Merchants He adds that multichannel is key to survival formay be able to pipe the smell of bread into your many; and that online retailing also threatensown home, or you may be able to print out sample e xisting store economics, measurement systemsfabrics to explore their feel,” said Paludan. and incentives.With the fast uptake of e-commerce, and such fan- According to a UK-government backed report byciful developments on the horizon, some experts Mary Portas, a retail marketing expert, TV person-are already predicting the death of the shopping ality and fashion designer known as The Queen ofmall. They say that e-commerce could leave shop- Shops, town center vacancy rates have doubledping malls in a bind, just as those very malls and over the past two years, and 50 percent of consumerhypermarkets have played a part in high vacancy spending takes place off the high streets. Portasrates in downtown shopping districts. In the US, in a dvocates turning the country’s town centers intoa May 2012 report from real estate services firm cultural and social meccas. She says, “I fundamentally BUY
22 believe that once we invest in and create social expect to find there. It’s a bridge between event capital in the heart of our communities, the eco- shopping and old shopping – as consumers go back nomic capital will follow. and forth between the worlds,” said Paludan. This is omni-channel retail – the ideal aim for many e-re- Others don’t see e-commerce as such a threat. tailers and the ultimate evolution of ‘multi-channel’ Paludan, for instance, believes it and real-world and cross-channel retail. The idea of omni-channel shopping can co-exist and be mutually beneficial. retail is that consumers will be able to access the He says the most successful real-life shopping retailer from whatever platform is available to them venues will actually be a blend of both – offering in whatever part of the retail process they are, and interaction between the virtual and real worlds and enjoy a co-ordinated and cohesive experience. striking the right mix of entertainment and shopping. Already, people and merchants connect the two worlds. Users do so when they redeem electronic “The idea of omni-channel coupons for real-world goods in stores or follow the recommendation given on their handset to retail is that consumers are walk into a particular store and interact with products. There’s also the trend of sharing your able to access the retailer location with friends by checking into physical spaces – like a Starbucks – using a smartphone from whatever platform and services such as foursquare or Facebook’s location-sharing feature. Often companies will is available to them in reward users with discounts for checking in. whatever part of the retail Companies, too, are transcending cyberspace. The auction site eBay did so by setting up a process they are.” pop-up shop in central London for wares avail- able only online. And the carmaker Renault has plugged the virtual into the physical world by erecting an information kiosk at a car show in To this end, one company has even reproduced Holland and enabling visitors to “like” particular the image of a grocery store on a poster – just models on their Facebook pages. like a Potemkin village – and is giving people the chance to buy items in what appears to be a typi- “I see companies combining real-world locations cal store. Hung in subways by a Korean division of with digital messages of what the consumer can the UK grocer Tesco, users approach the posters
InsightOn: Consumption 3.0 23and place orders for home delivery with their working to make target marketing enhance the DELPHI THESIS 57smartphones while they’re waiting for their train. shopping experience. The profiles generated from collected data also help companies interact with IN FUTURE …Though some companies like Tesco seem to be consumers, offering them more chances to be a … purchasing decisionsembracing these types of new marketing op- part of the design and production process. A UK are based on peer-to-peerportunities and creative ways to position their furniture company, for instance, offers “democrat- advice (e.g. via the internet);brands, others still see altered buying behavior ic” designs by asking its customers to vote online classical advertising is dead.as a threat, says Paludan. about which pieces it should manufacture, and PROBABILITY wearers of Nike shoes can now design their own Deﬁnitely not: Deﬁnitely: styles and colors, complete with their own initials. 8% 5% Probably: 16 %“In the end, shopping will Other campaigns are even more ambitious in their Unlikely: 45 % size and scope and don’t even involve the productbecome much more itself. In 2011, Johnnie Walker, the blended Scotch whisky, launched its Keep Walking campaign toindividual, as merchants galvanize support for three innovative initiatives Possibly: in the fields of the arts, technology and business 26 %collect intricate data in a number of markets, for example Brazil and Delivering Tomorrow: Customer Needs in Thailand. The Johnnie Walker consumers in eachabout our preferences.” 2020 and Beyond. A Global Delphi Study (see p. 124 for details) market were urged to debate, over Facebook, which initiative they thought had the most poten- tial to shape the future in their country.At present, many retailers are working through This offered consumers “a collective sense oftheir policy for dealing with shoppers who participation and achievement and (will) hope-compare prices online for items they see while fully spark new thinking about what can bestanding in a store. Some retailers may conclude achieved by working together,” said Gavin Pike,that it’s best to forbid the use of virtual shopping Global Brand Director for Johnnie Walker. “Byassistant applications, while others have already using our communications to encourage like-accepted the writing on the wall and are actually minded consumers to connect, collaborate andfacilitating customers as they make purchases via champion causes that inspire them we will deliv-the web or phone – while visiting an actual store. er a deeper engagement with our brand as well as showcasing some of the pioneering thinkingThe way consumers shop may be shifting, but it’s that could lead us towards a better future.”a slow metamorphosis. Yet some things neverchange: Currently, whether consumers purchase “Whether online or in a store, we’re seeing grow-in store or online, goods need to reach them as ing interaction between the consumer and thequickly and as effectively as possible – other- producer,” said Paludan. “Call it collaborativewise their custom will go elsewhere. Retailers consumption if you will.”are urrently facing the twin-pronged reality of cbricks and mortar and e-commerce and realizing the key role that logistics has to play in both.They are understanding the importance of asmoothly operating supply chain. Poor deliveryservice in either area may have a long-termnegative impact on their entire brand, after all.Collaborative DesignIn the end, shopping will become much moreindividual, as merchants collect intricate dataabout our preferences, Paludan says. That data isalready being used for target marketing cam-paigns i.e., a strategy whereby retailers focus on agroup of potential customers in specific locationsor demographic groups; or even shoppers withsimilar attitudes, tastes and lifestyles. Sellers are
24 Try This on For Size – actually available to shoppers around the physical Shape-Fitting Technologies and digital worlds. Walk into some stores these days and the sales In the UK, shoppers at Selfridges and New Look clerk may call your attention to the screen on the can have their bodies mapped by BodyMetrics, and back wall instead of the coat on the rack. online shoppers can do the same with home-based camera technology. After the profile is made, it be- There you can position yourself to play a game of comes a tool for trying on garments across multiple shopping in a Wii-like way. The program will react stores on the web. Shoppers will try on clothes via when you raise your arms and move your body to a personal avatar that is an interpretation of their signal which items you like and dislike. shape. You may motion to remove an item you’re viewing If body measuring technology became the basis for that has been fitted to your personal avatar, or you online shopping, it could do even more by helping may swipe wide and twist to have it returned to retailers improve their manufacturing, warehous- center-screen for your inspection. ing and stocking processes because of the ability to predict demand more precisely for particularly- What you’re doing is interacting with a computer- sized items. ized personal shopping assistant. Such technolo- gies are no longer the realm of futuristic films but Now that’s a good fit for retailers.
InsightOn: The Expert View – Johan Paludan 25The Expert View –Johan PaludanMany people shop online in marketplaces (like Which products will disappear from the traditionaleBay), but the experience doesn’t feel like that of retail trade as consumers shift to online buying?v isiting a mall. Why not? Johan Paludan: The current situation gives theJohan Paludan: Online shopping is fundamen- answer: Those products where it is not impor-tally different from traditional shops. A traditional tant to feel, taste and smell were among the firstshop has a general display, where the shopper has to be popular online, such as books and music.to find what she wants. Online shopping will in- Ultimately, all products could disappear fromcreasingly be based on the supplier knowing more the traditional retail trade once the digitalizationand more about the individual shopper. Online of taste and smell has been accomplished. Rightshopping is therefore much more based on the in- now, that process is still in the lab. Traditionaldividual displaying what she or he is known to like. retail will have to survive on the social needs of Johan Peter Paludan servesWhat online shopping misses is the social dimen- people and location-based marketing. When you as the Director Emeritus atsion. Man being a social animal, I expect we will walk in the city you – or rather your smartphone the Copenhagen Institute forcontinue to go to traditional shops to experience – will be bombarded with messages about what Futures Studies (CIFS). Heother people. you could get just round the corner. Instant grat- is widely known as a crea- ification is always tempting. tive thinker on social trends,That brings up privacy concerns. education, business and What is the role of logistics in this picture? the popular imagination. AJohan Paludan: The basic situation is that sup- privately funded, non-profitpliers will know more and more about the individ- Johan Paludan: In traditional retail, the con- think tank, CIFS provides in-ual consumer. The talk is about “big data” and sumer takes care of the last leg of transport from terdisciplinary statistics-basedabout how to exploit it. People know that the ad- shop to home. In online shopping the retailer has and subjective research on avantage is that they will only get information they to take care of the last leg, hence this becomes an variety of topics.find interesting and spam becomes truly a sin. The important element in the competition with thers. oother side of the coin is that this development will People are often away and cant receive their goods. Paludan earned a master’sindeed negatively affect privacy. As somebody said, My vision is that every home will have an installa- degree in political science from“Privacy is gone – get over it.” It does, however, only tion like the trap door some people have for letting Aarhus University and workedtake a couple of scandals of somebody misusing their cat go in and out. For goods, it would have to as a high school teacher beforethe data before we have a new situation. It is basi- be a one-way mechanism with built-in cooling/ joining CIFS in 1976. His pub-cally a matter of trust, and trust takes a long time to freezing facilities. lications include ‘The Nordicbuild and a short time to demolish. Welfare State’ as well as ‘The Strategy of Corporations: The most Likely Future and the Wilder Alternatives.’ He also contributed to the production of ‘The Dream Society – From Information to Imagination.’
26Reaching Customers –Globally and LocallyWhen surfing and shopping the Web, national frontiers are hard to spot. One click leads to another,and the product is suddenly in your shopping basket. For the consumer, it is of little concern that thewebsite is based outside their country of residence. For the merchant behind the website, the shop- Yet a retailer’s ability to serve customers abroad per’s physical location is far from irrelevant. may make or break a business, especially during L ogistically speaking, where the customer is can tough economic times. In the UK, for example, have a major impact on how quickly – or even if merchants are clearly responding to growing – they can be served. Shipping goods overseas competition from domestic websites and cutbacks means dealing with issues surrounding different in household spending due to the financial crisis: currencies and customs regimes and longer A recent survey showed that 64 percent of online transport times. Overheads – such a factoring in retailers there plan to expand internationally in the costs of returns from abroad – may put a 2012. Good logistics will therefore play a central squeeze on profit margins. Suddenly, from the role in future competition among e-retailers. e -retailer’s perspective, delivering the goods from A to B is fraught with difficulty, especially if A is “The real growth opportunity is international,” on one side of the world and B is on the other. says Andrew McClelland, the Chief Operations
InsightOn: Reaching Customers – Globally and Locally 27& Policy Officer of the Interactive Media in Re- Chinese market, and to better understand how DELPHI THESIS 52tail Group (IMRG), a UK e-retail trade group. consumers across China interact with Macy’s and“Overseas e-commerce markets offer a com- the products we sell,” said Terry J. Lundgren, chair- IN FUTURE …pletely fresh customer base and one that is in- man, president and chief executive officer of Ma- … more than 3 billioncreasing exponentially.” By the end of this year, cy’s, Inc. “We know that Macy’s is very well known people in the world run theirthere will be 2.5 billion internet users worldwide. and regarded in China through international tour- businesses completely andBy 2015, this number will rise to 3.7 billion. ism, globally broadcast events such as the Macy’s more effectively than ever Thanksgiving Day Parade, and movies such as Mir- via the internet, makingFor merchants, going global is easier said than acle on 34th Street. But we still have a great deal to use of the World Widedone. And it’s just one of the many challenges to learn about the shopping patterns and merchandise Web’s marketing power;tackle as the e-commerce market matures and preferences of consumers in China’s very diverse 50% of B2C transactionscustomer demands rise for the best service and and rapidly emerging consumer marketplace. are carried out online.the best prices. PROBABILITY “We continue to believe there is significant long- Deﬁnitely not: Deﬁnitely: term opportunity internationally for both Macy’s 1% 10 % and Bloomingdale’s. But we need to be certain Unlikely:“A retailer’s ability to serve 25 % Probably: that our future decisions in this regard are based 27 % on fact and experience.”customers abroad may Macy’s are not alone in being cautious in enteringmake or break a business, new territories. Only a small proportion of the Possibly: sites the IMRG has surveyed offer currency con- 37 %especially during tough verters or customer support in a local language. Delivering Tomorrow: Customer Needs in 2020 and Beyond. A Global Delphi Study (seeeconomic times.” One hurdle they face is missing infrastructure p. 119 for details) for cross-border transactions. Search engines, which know no geographical borders, may drive traffic to a retailer’s site, but sales are lost withoutBeginning in the early 1990s as a curious new the requisite checkout, customs and delivery ser-form of distance selling, e-commerce has be- vices for international clientele, as well as a hostcome an overwhelming force to reckon with – of other adaptations.for both small and medium enterprises (SMEs)and the world’s largest retailers. While early en- These include site-specific ways to handle lan-trants like Amazon.com and eBay continue to guage and cultural barriers as well as the chal-drive expectations with their giant marketplaces, lenges of cross-border fulfillment and returns. Forexperts say much unclaimed territory is still example, not all merchandise can be shippedavailable to those online sellers that get multi- across international lines without incurring taxeschannel retailing right and learn to cross borders or duties, and returns from a different country areeffectively. more complex and costly than domestic ones.Opportunities – A Click Away European Cross-Border E-CommerceAccording to recent industry surveys, even the big- Cross-border e-retailing within the Europeangest names in retail e-commerce are taking a slow, Union would seem easy enough since internetmeasured approach to expanding abroad, given the use and online buying from domestic websites isrisks of failure, which would be costly and damag- on the rise across member countries, led bying to hard-won brand confidence. For example, in adoption in Norway, the UK and Sweden. TheMay 2012, US retailer Macy’s announced its inten- percentage of individuals who made purchasestion to dip a toe into the Chinese market by selling over the internet has, on average, more thanan assortment of its private brand merchandise di- doubled from 20 percent to 43 percent betweenrectly to consumers in China through a Macy’s sec- 2004 and 2011, Eurostat says. In addition, thetion on omei.com, a newly established China-based European Union’s 27 member countries have aonline retailer of in-season luxury and fashion common legal basis for trading and 17 countriesbrands operated by VIPStore Co., Ltd. share the common currency.“Our relationship with VIPStore will allow us to Yet significant barriers to cross-border e-com-gain additional experience in the fast-growing merce still exist in Europe. In 2010, some
28 74 ercent of EU online retailers did not sell to p Many companies simply underestimate the cul- other EU countries. tural divide present when expanding to interna- tional markets. Experts believe they do so be- A report released in 2011 by the European Par- cause of the lingering myth that technology liament found a lack of consumer confidence in eradicates borders in our lives. cross-border online commerce. Apparently, cus- tomers hesitate before making purchases outside their home countries because of differing rules on sales taxes (VAT), returns and the inability to “There are still a significant compare prices in different languages. This fear of the e-commerce unknown seems to be easily number of consumers who overcome, however. A 2011 report, published DELPHI THESIS 54 by the European Consumer Centres Network, are not yet aware of the found that 61 percent of the consumers who IN FUTURE … have already shopped across borders are equally offers and competitive rices p … people are “always on” confident in cross-border and domestic online the internet, surrounded shopping, compared to only 33 percent of the that are available from by easy-to-use appliances general population. and virtual “smart agents” cross-border retailers.” automatically assisting the Europe needs more multilingual price compari- users in their daily activities, son sites, says Pablo Arias Echeverría, the rap- filtering information and porteur for a European Parliament Working serving as personal coaches. Group on e-commerce. “There are still a signifi- Yet, by neglecting to adapt to local conditions, cant number of consumers who are not yet some retailers could be cutting themselves off PROBABILITY aware of the offers and competitive prices that from growth: During recent years, e-commerce Deﬁnitely not: 2% Deﬁnitely: 16 % are available from cross-border retailers. Despite sales have been the main growth engine of the Unlikely: 9% the 300 price comparison websites that exist, retail sector. According to the European Com- only a handful provide cross-border price re- mission, e-commerce is the dominant distance views,” he has said. sales channel and accounts for around 4 percent of the total retail sector. Consumer uncertainty and language barriers Possibly: 29 % Probably: have made themselves visible in the numbers as Getting Cross-Border E-Selling Right 44 % well: From 2008 to 2010, cross-border e-shop- Amazon.com has successfully expanded to inter- ping in Europe only grew from 6 percent to 9 national markets. Yet the world’s largest onlineDelivering Tomorrow: Customer Needs in2020 and Beyond. A Global Delphi Study (see percent while domestic online purchases rose retailer, with 48.08 billion US dollars in net salesp. 121 for details) twofold. in 2011, acknowledged in its latest annual report
InsightOn: Reaching Customers – Globally and Locally 29that international operations present risks such viding call centers. That’s because some consum- DELPHI THESIS 53as a relative lack of operating experience in a ers only feel comfortable making a purchaseparticular country, legal and regulatory uncer- fter finding out that the company is ‘real’ by a IN FUTURE …tainty and established local brand-name compa- a ctually speaking to someone. … rapidly expandingnies as competitors. mobile infrastructures and US retailer Walmart operates a website in China free access to informationStill, a “significant” portion of the company’s to- that is highly tailored to the local market. Where- let emerging economiestal revenues come from outside the US, and it is as its global site is designed for consumers who catch up with Westernclearly a leader off of its home turf. Some ana- want to purchase online, its Chinese site is made societies.lysts believe the Seattle-based company may be to have an “official” look and feel appropriate for a PROBABILITYentering a new international expansion phase af- retailer with the size and clout of Walmart. Deﬁnitely not: Deﬁnitely:ter slowing the pace following its 2004 debut on 4% 5%the Chinese market. Amazon has retail websites According to an analysis of the site by a group of Unlikely: Probably: 31 % 24 %in the US as well as in Canada, the UK, Germa- professors from universities in the US, Hongny, France, Italy, Japan and China. It launched in Kong and Taiwan, Walmart’s site rightly focusesSpain in 2011, and reports say the giant is now on what’s important in the Chinese market –eyeing new markets. i ntroducing the company, cooperation with the government, social responsibility, the latestEven as market leaders like Amazon.com or Ali news, supplier services and food security. Possibly:baba.com forge ahead outside their home markets, 36 %significant opportunity still exists. But what works Scott Price, the Asia CEO of Walmart, said the Delivering Tomorrow: Customer Needs inin Michigan won’t necessarily work in Mumbai. company is “very keen” on the online market in 2020 and Beyond. A Global Delphi Study (see p. 120 for details)So how must businesses and supply chains adapt China. Walmart operates about 370 bricks-and-when going abroad? Researching customers and mortar stores across China and has a minoritymarkets is critical, naturally, because each market- position in Yihaodian, a company that hasplace is different. Apart from getting a handle on carved a niche in same-day or next-day deliver-culture, language and etiquette, retailers will need ies in five cities. Walmart is applying to take ato understand what product – and packaging – majority position in the company. “We’re com-will work best in the locations they are targeting. mitted to the Chinese market,” Price said.Experts agree that “local” is the lingua franca. The Localization IndustryThey say companies should start exactly there by For retailers large and small, the cross-bordermaking shopping carts, websites and customer o pportunity is too attractive to ignore, and anservice available in the local language and pro- i ndustry of boutique companies has cropped up
30 to help others properly design localized, multi Macy’s is addressing all these questions and lingual websites. According to some estimates, the more as it expands abroad with its Macys.com decade-old industry is already worth more than website. The company’s flagship store in Man- 10 billion US dollars. hattan is a popular destination among foreign shoppers, and Macy’s has tried to cultivate that These consultants are prepared with software customer segment for years. and solutions that will help companies run fl exible websites that can scale up and down In 2011, the company began offering shipping a lmost by the minute – as demand dictates. outside the US. According to a news report, its website is being reconfigured to detect a shop- per’s location worldwide and display a welcome screen in the appropriate language. Shopping “The future will be to figure will then continue in English, but at checkout, the consumer is notified of the price and ship- out how to encourage the ping costs in the local currency. online customer to come to Overall, Macy’s online sales are booming. CEO Terry Lundgren said in a TV interview that he the stores, and encourage expects them to exceed 2 billion US dollars in 2012. “We’re one of the most advanced com the customer in the store to panies when it comes to the online business. And we’ve been investing there. A lot of the capital shop online.” investments I’ve made for the company over the last three years have gone into technology. It’s r eally paying off.” They also help retailers consider critical questions Shopping Channels A La Carte – when reaching out to new markets: Is your prod- In Store, By Phone, Online uct selection adapted to local tastes and are prices Macy’s international push online is part of its competitive? Does your advertising comply with overall strategy to meet the demands of sophisti- applicable law and does the approach resonate cated shoppers who want access to Macy’s prod- with locals? And are your fulfillment process and ucts and services in a multi-faceted way. logistics effective and cost-efficient? “Today, the most important customer and the most important trend is what we call the ‘omni- channel consumer,’” Lundgren told a reporter. “This is the consumer who is shopping on his or her phone, shopping at their desktop and going into our stores. The future will be for us to figure out how to encourage the online customer to come to our stores, and encourage the customer in our store to shop online.” As a result, the retailer is now testing or imple- menting capabilities such as digital receipts, free Wi-Fi in stores and tablet computers for sales clerks that will help improve customer service by giving easier access to online information. And Macy’s already has the technology at its cash reg- isters to allow sales clerks to search for an item online that may not be available in the store and complete an online purchase for the customer who is standing in the store. The UK department store House of Fraser and others have taken the multi-channel idea one
InsightOn: Reaching Customers – Globally and Locally 31step further. In a move that was unimaginable “This isn’t about taking baby steps – it’s aboutonly a few years ago, it has opened stores in cen- committing to multi-channel and aligning yourtral shopping areas in Aberdeen and Liverpool incentives and your organizational structure inthat don’t sell any products at all. such a way that you can set yourself up for suc- cess,” she was quoted as saying.Instead of walking in to find racks of products,shoppers enter what looks like a lounge where And if retailers get it right, the bounty could bethey can browse – but mostly online. Packages rich for society at large. In Europe alone, theare delivered to the customer’s home or to the gains to consumer welfare could be 204 billionshop for pickup the next day. If the consumer euros or 1.7 percent of GDP, if e-commercehappens to be un-initiated into the world of on- grows to be 15 percent of the retail sector, theline buying, a friendly assistant is there to help European Commission says.the person navigate the clicks. The Economist magazine predicts winners andThe move by the House of Fraser illustrates losers in what it describes as the “coming retaila nother way retailers are coming to grips with boom.” With shops representing a fifth of smallshoppers who want to browse and buy in all businesses in Europe, it says many will have to ossible ways and at their own whim. At anyp change their strategies when they face up togiven time, these channel-hopping consumers competition from their larger counterparts.may want to research online, view in a store,purchase via the web or handle returns by mo- The magazine wrote: “But the winners will out-bile phone and mail. number the losers. Some of Europe’s small shops will give up the battle… and reinvent themselvesFor many consumers, deciding if, when, where as stylish showcases for e-commerce. Oddlyand how to shop is a matter of “personal free- enough, the old continent’s best chance of pre-dom,” and those vendors who don’t enable them serving its cultural traditions lies with harness-to move freely among the channels end up, well, ing new technology, not ignoring it.”cramping the shopper’s style.Accordingly, retailers should carefully organizeand plan cross-channel efforts for optimal exe-cution, says Sucharita Mulpuru, vice presidentand principal analyst for Forrester Research, inthe Retail TouchPoints 2010 Outlook Guide.
32 China’s Big Sellers: Alibaba, TMall, Taobao B2B trade, retail and payment platforms, a shopping search engine and distributed cloud computing ser- Tmall, which is part of the Alibaba Group, was launched vices. Privately held, the group reaches internet users in April 2008 and is the most visited online retail web- in more than 240 countries and regions and employs site in China, offering an extensive brand selection more than 25,000 people in some 70 cities in China, of consumer electronics, home furnishings, designer India, Japan, Korea, the UK and the US. footwear and beauty products, to name a few. Alibaba also owns Alibaba.com, a global e-commerce Chinese consumers are certainly buying: Tmall reached platform for small businesses and the Taobao Market- its highest single-day transaction volume during a place, a popular C2C online shopping destination. special promotion on November 11, 2011. That day, sales of goods reached a volume of RMB 3.36 billion Alibaba.com provides three marketplaces: (531.76 million US dollars), or an average of more • global trade platform (www.alibaba.com) for a than RMB 38,000 (6,022.18 US dollars) per second. importers and exporters Tmall’s owner, the Alibaba Group, is a family of • Chinese platform (www.1688.com) for domestic a internet-based businesses that include online mar- trade in China ketplaces which facilitate international and Chinese • nd a transaction-based wholesale platform on a the global site (www.aliexpress.com) geared for smaller buyers seeking fast shipment of small quantities of goods Together, these marketplaces form a community of more than 79.7 million registered users. Further- more, the company offers Chinese traders a wide choice of business management software, internet infrastructure services and export-related services. Taobao Marketplace was launched for consumers in China. With more than 800 million product listings and more than 370 million registered users in 2012, it is one of the world’s top 20 most visited websites. Clouds Parting Above the Developing World to launch new services (such as social media) with minimum risk. Just as the advent of internet technology allowed giant online marketplaces to flourish years ago, As such, its uptake is increasing. UK industry body the low-cost and scalable software and services the Cloud Industry Forum (CIF) recently conducted a enabled by so-called “cloud computing” could give survey across 250 UK-based organizations and found a spectacular boost to e-commerce – also in the that 61 percent are currently using cloud-based developing world. services, with a 92 percent satisfaction level. The research also showed that the primary reason for the The cloud computing business model is designed to adoption of cloud is the flexible model of delivery provide digital storage space on a shared network (71 percent), scalability (66 percent) and the low cost (i.e. in the cloud) along with the latest versions of soft- of adoption (58 percent), although operational cost ware and supporting services. This means businesses savings were not the major driver. using internet-accessible services from the cloud can avoid costly upfront investments in servers or For instance, international aid organizations often software that needs to be installed on desktops. stress how the “digital divide,” or the lack of access to broadband networks and the internet, harms the The cloud revolution, say some commentators, is economic growth prospects of billions of people liv- coming – and it could be a breakthrough for many ing in developing countries. Now some have pinned when it does. In part, that’s because it offers com- hopes on cloud computing as a way for countries to panies scalability, flexibility, agility and the chance catch up, once the broadband networks are available.