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Online retail is a fast moving sector and there are lots of outstanding business leaders out there. Among the best of the best, some really stand out. The way they’ve founded their companies and directed their investments have placed them in the higher echelon of influence in online retail.
Let’s have a look at them and their stories:
Net Worth: $9.6 billion
Company: AliBaba Group
Jack Ma, a former English teacher in China, got his first taste of internet entrepreneurship in 1995, when he founded China Pages, a directory of Chinese businesses. He previously worked as a lecturer in English and International trade in the Hangzhou Dianzi University.
After founding and running China pages he briefly worked for the Chinese Ministry of Foreign Trade and Economic Cooperation, between 1998 and 1999. In 1999 he founded Alibaba, a B2B marketplace connecting Chinese manufacturers to the world.
Alibaba’s spectacular growth pushed Ma and his associates to add new companies to the group. AliBaba Group now owns Alibaba.com, Taobao Marketplace, Tmall, eTao, Alibaba Cloud Computing, Juhuasuan, 1688.com, AliExpress.com and Alipay.
The company is now only outmatched by Walmart in terms of revenue. Recent developments and an increase in online retail spending have made the Chinese market the largest online retail market in the world. The big winner: Alibaba Group. Through its subsidiaries, the AliBaba Group now handles $248 billion in transactions, 84% of the total online retail market in China.
But Jack Ma is not to be stopped. He is preparing one of the largest IPO’s in American history, after failing to reach an agreement with the Hong Kong exchange. His ambition is fueled by a sense of mission to run his company as an army conquering the world:
“I had always wished that I was born in a period of war. I could have been a general, I thought about what I could have achieved in war.” – Jack Ma, AliBaba Group
All signs point to Jack Ma building the hyper company he dreamed of. He is an effective leader, running the monopoly on online retail, in the world’s future largest economy.
You wouldn’t think of the fifth wealthiest man in the world as one of the most influential persons in online retail. But he is. Through it’s flagship company and different personal investments, he is in control when it comes to online retail infrastructure and software.
For once, Larry Ellison is Oracle and Oracle means, first and foremost, databases. Ellison started his career working for the Ampex Corporation in 1970, on a relational database for the CIA. His designs were based on a paper written by Edgar F. Codd, called “A Relational Model of Data for Large Shared Data Banks”. The same design was implemented by IBM, but the company didn’t have time to solidify its dominance on the market. Challengers soon began to emerge.
One of those challengers was Larry Ellison’s Software Development Laboratories (SDL), founded with two partners and later renamed Oracle, based on the database Ellison developed when he was working for the CIA database.
After a long struggle against the largest competitor, IBM (which would push its DB2 and SQL/DS products) and other challengers (Informix, Sybase, Microsoft) – Oracle eventually took lead in the database war. In 2010 the European Union approved Oracle’s acquisition of Sun Microsystems. One of the most important assets Oracle got was the wide-spread, popular MySQL database.
So for one – Oracle now dominates the database market, the underlying infrastructure of connected systems and retailers worldwide.
And that’s just the begging – Oracle is currently on a purchase streak, aiming to build a strong multichannel retail presence. It is second only to Adobe Systems, with its customers registering over $200 billion in revenue in 2013.
It’s presence is split between Social marketing, ecommerce platform software, site search, customer service, personalized content and transportation management.
To give you a glimpse on how serious Oracle is about its investments in multichannel retail – they paid $1.5 billion in 2011 for Right Now Technologies, a company providing customer service software and services to the likes of Overstock.com.
Net Worth: $30.1 billion
Jeff Bezos is the one man we all picture when we think about ecommerce. He is a Princeton graduate with a degree in Computer Science. After graduating from college he pursued a career in investment banking in Wall Street, which he left to found Amazon, after noticing the fast growth in Internet usage.
He set up his company in the proverbial garage with few employees and in 1995 launched the beta version for 300 friends. Days after the launch the book selling eshop managed to ship books across US and 45 foreign countries. Yearly sales in the first year reached $510 000, much more than Bezos envisioned. The company grew and grew, survived the dot com and went on to register $74.5 billion in 2013 revenue.
By expanding the initial book selling operations into CD’s, videos and later clothing, toys, electronics, home & garden, jewelry and even art, Amazon essentially became the “everything store”. Amazon is now the biggest online retailer and a disrupting force in retail.
Everything from the ecommerce revolution to online payments, shipping and marketing has been heavily influenced by Amazon and guided by Jeff Bezos, both a star-gazing visionary and a focused micromanager.
In 2007 Amazon launched the Kindle which soon became a revolutionary device that changed the way we think of books and digital content. In 2013 the company hinted at the idea of using aerial drones to enable faster shipping and in 2014 it announced that it’s now testing its 7 and 8 generation aerial vehicles.
But beyond his influence in online retail and retail at large, Bezos is a special human being. A libertarian, he invested in projects most of us would consider unreal and unattainable. He was one of the first investors in Google, financed a clock that would run 10 000 years and a company that’s working on lowering space flight costs, to allow humanity to explore the great unknown.
This short list, headed by Jeff Bezos, is prone to change. The world around can change as well, partly due to these people’s and efforts. To get a deeper glimpse on how they did it and what motivates them, have a look at Jeff Bezos’ Princeton graduation address, “What matters more than your talents”:[youtube https://www.youtube.com/watch?v=vBmavNoChZc]
Henry Ford said “People can have the Model T in any color – as long as it’s black”, in the early 20th century. That’s when Ford’s innovation, the assembly line, vastly improved productivity thus reducing production costs. Lower costs meant companies could manufacture cheaper products and still be profitable.
The assembly line made possible the mass production of goods. Things that were previously custom-made and unique soon became available to the now emerging middle class. Clothing, food, even cars and houses became accessible to the mass market.
Industries were built around product manufacturing. The customer was no longer the center of the universe. Companies focused on the product. Products were manufactured in large quantities, distributed and sold, with a lot of help from advertising companies. Even though advertising was around, it wasn’t the type of organized industry we now know until the television set became a part of consumers’ daily lives. By borrowing some concepts used in WWII propaganda, experimenting a lot and innovating, advertising quickly evolved in a mature tool to push mass – manufactured products to the market, globally.
After 1970 two trends started to emerge. First one – the mass-manufactured product becomes the norm. Faster assembly lines, improved productivity with better management and companies going global – it all lead to bigger manufacturing facilities and more money poured into advertising. In the western world people were spending earned and borrowed money faster than ever before to buy mass-market products.
The second trend was improving production with help from computers and networks. It all started small and kept growing. Innovation in the IT industry allowed companies to improve manufacturing productivity further. Soon cars stopped being built by people and robots took over. They were faster, better, less prone to error and cheaper in the long run. They also learned new things a lot better. With automated assembly lines, the mass produced goods could be reprogrammed to build new products fast.
The product development cycle was shortened. The fact that now BMW or Mercedes are able to launch a new model every month is possible because of advancements in management and IT. These companies can now target customer groups. Ford’s Model T was a “One Size Fits All” product but now everything’s changed. The auto companies can split their customers and they can build products for increasingly smaller niches.
The internet changed everything. When Michael Dell decided he would create a special PC for anyone willing to pay for it, he probably had no idea what his actions meant. Now Dell is a global company and one of the largest online retailers. When the company decided it was going to offer mass market customization features, it seemed like a really risky move. At that time, computer manufacturers were already engaged in a price war to market accessible computers. It didn’t seem like a good idea to turn a mass produced, mass marketed product in a customizable one.
Dell offered their customers what they wanted: the ability to choose between different options in terms of design, software and hardware. The order, assembly and shipment processes were streamlined using software designed to minimize human input and error. Today’s devices (be it desktop computers, laptops, tablets or smartphones) are available in many formats. Most of them are a hybrid between mass produced and customized products.
The future of mass customization is already here and the company that helped most with making it a reality is the largest online retailer in the world: Amazon.
First off, Amazon made possible a type of personalized experience for customers by providing personal recommendations and notifications based on purchase history. Its second biggest innovation was print on demand. With Amazon, books were no longer published en-masse for long-tail items. Rather, for a small amount of extra cost, they were made available as items printed on demand.
This innovation spawned a new breed of self-published authors, leveling the field for publishing. In turn, readers were now able to read books otherwise unavailable and writers could skip pitching to publishing houses. The effect was so dramatic that some large book retailers had to close their brick and mortar stores.
From shoes to t-shirts to art-prints it seems like anything is game when it comes to online-powered mass-customization. Many companies jumped the customization wagon, but few stand out. Have a look below at these companies:
One of the most popular platforms in the world for Built-To-Order, customized products is Zazzle. Its mission: “To Enable Every Custom, On-Demand Product in the World On Our Platform.” It is a mix between self-curated product designs that can be customized by customers, and a wide variety of products submitted by designers and entrepreneurs in the marketplace.
The company partnered with large brands to provide customizable products for companies such as Disney, Hallmark, DC Comics or even Google. It is growing fast, outpacing its competitors and bringing mass customization for the wide market.
Zazzle’s success is based on two main factors. The first is its ability to customize products that are manufactured separately and customized at the end, with input from the end consumer. This allows for a minimum slowdown in manufacturing capabilities.
The second factor helping Zazzle tackle its competitors is a patented color print technology that allows it to manufacture multicolored items, without signifiant increase in costs and manufacturing time.
It does also help that Klein Perkins Caufield & Byers, a well known Silicon Valley VC firm, backed Zazzle with $48 million. The VC’s have also backed up a couple of companies you might have heard of, such as Google, Amazon, AOL or Electronic Arts.
Ladies – ever felt like you could be the world’s best shoe designer? Felt like you’ve hadn’t had the chance to show what you’ve capable of? It turns out you are not alone. Founders Rumbert Kolkman and Judy Chin believed they could make shoe design a mass-customizable market. In 1999 they’ve built a B2B company that would allow shoe retailers and designers to access a rich supply chain with ease.
In 2013 they’ve opened this option to the public, unleashing the power of mass-customization to end buyers world wide. Prices are ranging from $230 to $1200 and Chiko Shoes allows customers to chose between 1300 material swatches.
We’ve previously listed 3D printing as one of the technologies that are disrupting online retail. Among many other companies providing 3D printing technology, Shapeways stands out as a potential market leader for 3D printed custom items.
The company was founded in 2007 in the Netherlands. It moved to NY, where it received a $5million founding from VC’s including Andressen Horowitz. It now runs a fully operational marketplace where designers can sell their 3D designs and customers can create their own.
As of June 2012 is sold over 1 million user-created objects. Production was provided by its Queens, NY 3D Printing factory that uses 50 industrial printers to manufacture millions of user designed custom projects.
Threadless started as a marketplace for t-shirt designers and quickly evolved into providing other customized merchandise. Users can purchase clothing items (such as t-shirts, hoodies or tank tops), art prints or phone cases.
Although Threadless does not allow mass customization per se it does allow users to submit designs. These designs can be featured and sold to consumers afterwards. What makes Threadless different is the fact that not all designs are accepted and marketed yet those who do are chosen by the community.
Ethreads allows customers to create their very own bags, starting with a blank model and adding options using the online design tool. The shop also offers options to see what others have designed and the ability to buy directly on Amazon.
Fab started as a flash sales online store. Its approach proved very lucrative for a while. The company decided to take another path by providing customized design options for furniture and home deco buyers. Although the change affected only its european operations, it seems the company is heavily interested in developing its customization options. It completely stopped marketing its products and flash sales options in the EU and is fully engaged in providing customized furniture.
The furniture is made-to-measure according to users’ needs. It allows customers to design their own products in 5 main categories: shelving systems, tables, sofas, beds and wall shelves. A complex yet easy to use configuration system allows potential customers-turned-designers to create the perfect match for the home. Inputs allow customization of size, materials, colors, finishing and others. A 3D visualization engine allows customers to view their newly created product before ordering.
This new pivot in the company was made possible after Fab purchased Massivkonzept, a company founders declared was already profitable and growing. It seems Germany is a great place to look for companies focused on customized furniture design. Woonio, a german ecommerce startup, offers customized furniture like tables, beds, lounge stairs.
Examples above show any industry can allow mass customization and is prone to change. Individuals need to feel empowered when purchasing and technology has made this possible. Whether is next year or 10 years from now, mass customization will become massively popular.
For a very long time publishers have been struggling to face a new, harsh reality: their business models becoming obsolete. As traditional customers were switching to the internet, publishers found themselves in a very tough spot. Their product, the information – became a commodity. Anyone with an internet connection and a blog became a potential competitor. News and content became freeware. It wasn’t quality content but people were reading it. For free.
Soon advertising money started to flow another way. More and more ad revenue got directed to internet companies by media buyers and marketing VP’s. Subscriptions kept dropping. People were now subscribing to these new thingies – RSS feeds and email newsletters and a bunch of other stuff. But they were all free.
Some publishers moved with the trend. Although a little late to the party, they moved online. They’ve opened web outlets and although it was a harsh decision – most had to give away content. They’ve tried to charge readers for reading the content they would otherwise find free. It was a failure.
Then came the freemium model and some had a bit of success with it. These were mostly financial-related publishers that addressed a information-hungry public ready to pay for quality content. The Wall Street Journal, Financial Times, Bloomberg built sustainable not-for-free online business. Others had to find new ways to get paid.
The classified ad model and the job board came first. The solution was right there for anyone willing to see it. The classifieds were a model that worked great online, combining the need for C2C advertising and micro-payments. Jobs – everyone looks for one at some point. So why not charge people to post their openings. And guess who could target those willing to pay for these models. That’s right. The publishers.
Large newspapers and magazines alike were popular. By going online their readership increased. Using classifieds software they used the otherwise unprofitable traffic to increase revenue streams. It worked great. In 2013 UK publishers registered almost 30% increase in revenue with recruitment and classifieds.
But there was still room. The publishing industry noticed that a lot of those ads shown to their readers were ran by online retailers. With online retail you didn’t have to have the whole retail logistics to be able to sell stuff. You needed media and a partner to provide the right services.
As publishers saw their revenue switching hands, they too got ready to switch to new models. Below you’ll find a list of 4 models that now help publishers to sell merchandise to their customers. Some more than others.
The Atlantic decided to try selling merchandise online but was unwilling to build a whole logistics chain to handle sales, customer support and fulfillment. They did partner with Zazzle, a platform allowing on demand ecommerce fulfillment. The Atlantic forwards the traffic and endorses the store. Zazzle provides merchandise sourcing and fulfilment.
Among the products available on the store you’ll find clothing items, cards and postage, office products and even electronics.
CNN decided to go “big” with this whole ecommerce thing everyone’s talking about. Although it’s clear they’ve put a lot of effort in manufacturing a lot of stuff with the CNN logo on it – it really doesn’t feel right. Maybe it’s the 90’s web design or the CNN Store 9 to 6 open hours for the *online* store. These things really don’t cut it.
While it might not seem like a lot right now I bet the store was the bomb when people used to access it via dial-up.
While the New York Post seems to try harder than CNN, it’s still not proper. Although I am sure people just love to walk around in a $24 “New York Post” T-shirt , I doubt this is the right formula.
The merchandise listing is targeted at really die-hard fans of the New York Post… which I figure is not much of a market.
Cracked.com is one of the most popular humor websites in the world and provider of fun to american readers for over 50 years. Their store is built around the audience. It features witty copy t-shirts that appeal to readers.
The store is clearly a very important revenue driver (at least is expected to become) for cracked.com as the publisher promotes it heavily.
The New Yorker knows what readers love about it. It is The New Yorker’s style, elegance and wittiness that make it so successful. The store features products that people would love, just like they love the brand: elegant diaries, printed comics, beautiful covers and … well … umbrellas (?!).
Just like The New Yorker, Vanity Fair is a part of Conde Nast media holding. Its store is packed with beautiful premium photographic prints, illustrations and covers, items fans would love to own.
The National Geographic is in a league of its own. Not only has the brand built a strong online store but it also features its own collections, it sells merchandise that appeal to children as well as adults. Its gifts are wonderfully presented and really in tune with the brand identity.
Moreover NG runs a network of retail brick and mortar stores in the UK and US. As a multichannel retailer The National Geographic shows it can build a great retail experience, as well as provide the world with astonishing information on wildlife.
And that’s not all. Customer purchases enable The National Geographic to walk on a noble path. Its mission – to inspire people to care about our planet. It does that by helping cultural preservation, exploration and research and others you can find out about here.
Talk about a great selling proposition – buy stuff and save the planet. The National Geographic shows you can be a great information outlet AND build a great business model. It also shows the online store is a viable option for publishers trying to improve their revenue streams. If they try a little harder.
In 1932, Ben Graham asked a tough question: “Is American Business Worth More Dead than Alive?”. At the time US and the World were struggling through the depths of the Great Depression. The 1929 and 1930 stock market crashes left anyone with a sense of reality discouraged with stock exchange.
But Ben Graham, then a small investor with a brilliant mind, noticed something interesting. The stock market crashes left companies deeply undervalued. The companies were worth more taken apart than sold as a whole. They struggled with banks that not loaning them money and investors far too prudent.
30% of all listed companies had a larger value disassembled than sold as a whole. Their net quick assets (cash, marketable securities, and accounts receivable minus current liabilities) were worth more than the value investors were willing to pay for. Mr. Graham basically said: it’s now safe to invest again.
It’s 2014 and now we wonder how technology companies are evaluated. We strive to understand how something so seemingly small and useless as messaging app, a social network and an electronic market can be so highly valued. If Ben Graham would look at Amazon, would he decide to buy? Well I don’t know about the messaging app or the social network but if it were for the electronic markets, I bet mr. Graham would say: it’s now safe to invest again. Below you’ll find out why.
Ben Graham lived until 1976. Although definitely not a poor man, he didn’t die a very wealthy one either. He had no problem ensuring his wealth increased steadily but he was more fond of reading Proust in French and Plato in Latin than gathering fortunes.
It was one of his disciples that reminded the world about Mr. Graham. It was this disciple, the worlds richest man for a very long time, that made Ben Graham famous, repeating his mentor’s name every chance he got.
Warren Buffet made his first investment when he was just nine. He ran his own business by the age of 14. He was a millionaire by the age of 32. He tried to get Ben Graham to hire him for years until the mentor finally accepted he was ready to join his company.
He than evolved continuously. Using Graham’s method he increased his fortune by the year. There were of course setbacks but he managed his money and his partners’ like no other.
But there was something Warren was not fond of: technology. He refused to be one of the early investors in Intel because he just didn’t understand technology. He was more focused on long term companies that he understood. Amid the Dot Com Bubble, when everyone was rushing in to buy tech stocks he said:
“Technology is just something we don’t understand, so we don’t invest in it.”
They laughed and they lost. The Oracle of Omaha, as mr. Buffet is often called in media, was right again. He left the bubble unwounded. An than he bought tech stocks.
Warren Buffet invested in IBM and Intel. These companies fit his principles. They were strong companies, that he could expect to own indefinitely. They survived the hype and escaped stronger.
Fairness is a concept that sometimes eludes our understanding. At least most of us. Warren Buffet is not like most of us. He was able to see beyond the hype when tech stocks were overvalued and he was able to see beyond the public opinion when important matters were disputed.
He and his wife were one of the few anti – segregation militants in Omaha, back when rasial differences were the norm. He fought strongly anti – semitism in his hometown. He pledged $31 billion to charity and now he is one of the strongest advocates of increased taxation on the rich.
“So let’s forget about the rich and ultra rich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased,” he said. “The ultra rich, including me, will forever pursue investment opportunities.” Warren Buffet
Warren Buffet was never an elitist. He believed everyone should have equal opportunities at pursuing his interests and he stands even today as the living proof fair opportunities make up for very successful people.
But for the recorded human history, wealth has been unequally spread. From the dawn of man kind, through the Roman Empire, the Middle Ages, the Industrial Revolution, one thing was constant: wealth is not distributed equally. For a very long period of time also wealth (especially inherited) also mean life opportunities.
Here’s how we perceive wealth disparity right now:[youtube http://www.youtube.com/watch?v=QPKKQnijnsM]
The long story short:
Wealth disparity may indeed be a problem. If it meant the poor stay poor and the rich stay rich forever.
But it’s not really that way. At least not anymore.
In the past 20 years the top 1 percent increased their share of total net worth from 33.8% to 35.4%, with a peak of 38.5% in 1995. The next 19 percent increased their share of total wealth from 47.5% to 53.5% and all of these at the expense of the bottom 80%, who lost a 7.6% share of total net worth.
The rich 1% didn’t get much richer. The rich 20% got richer on the expense of the poor. It’s not the rich that take away from the poor. Nor is the middle class disappearing . The middle class is getting a lot richer.
Think about it for a second. Are these categories fixed? Are people in the bottom 80% destined to remain there? Are the top 1% staying there forever?
The previous two examples, Warren Buffet and Ben Graham, although not dirt poor, did not come from rich families. Sure, they were not starving (well except Ben Graham, at an earlier point in his life), but they were definitely not rich.
Yes, Warren Buffet’s father was congressmen for 4 terms, but he did struggle at length in his youth to keep the family finances afloat. Through extensive work he managed to provide a decent lifestyle for him and his family, and thus young Warren was provided an opportunity to put his outstanding mind at work.
So did Ben Graham. His mother inherited a decent fortune from his father but lost it all in 1907, when he was just 11 years old. What he did receive was a brilliant mind and before 25 he already had a $500 000 small fortune.
It’s not inherited wealth. Graham and Buffet improved their financial status with as a result from their innate intelligence and hard work. They did not receive a fortune. They received a fair chance at earning their fortune.
They’re not the only ones. Forbes top 10 richest people are similar cases:
And they’re not the only ones. Have a look at Forbes top 400 richest people and you’ll notice the self made billionaire is not the exception. Out of 400 richest people, 386 were self made. That’s an astonishing number. 96.5% of the richest 400 are self made.
So it is not inheritance that builds fortune. It’s sometimes the opposite. As numbers would have it wealth is a result of fair opportunities, a brilliant mind, drive and hard work.
Well … at least if you’re lucky enough to be born in the US.
In the past, before the airplane, the radio, the telephone and eventually the internet chances looked pretty grim for those born outside rich countries. Capital was scarce, life was hard but most of all education was a real problem.
Starting with the industrial revolution, unless you were born in the Western Europe or the Western Offshoots (United States, Canada, Australia and New Zealand) your chances of getting a decent lifestyle were slim to none. Getting an education – even worse.
So if you are reading this from a computer in the western world and you are complaining about the 1% stealing your wealth know this: 96.5% of Forbes 400 are self made. You have an equal opportunity at getting rich.
Those born outside don’t have this opportunity. Or do they?
As the world moved from the pre-industrial to post-industrial era some won and some lost. Income grew and grew, helped by the magical vector of technology. Human workforce was replaced by exponentially growing human ingenuity.
The working hand was replaced by the steam-powered machine. Carriages were replaced by cars, trains and railways. Houses were replaced by steel and concrete behemoths. In the western world people were no longer working the fields but rather in factories and offices. Capitalism fought and (relatively) quickly replaced all other economic ideologies.
Marketing and advertising were born to help sell excess production. The stock markets were fueled and exploded. Multinational companies roamed the world to sell the products the West could make better, faster and cheaper.
Technology patents piled up until masses of workers became nothing but managers, lawyers, tradesmen, pencil-pushers. Those brilliant enough to harness the power of technology and improve their peers’ lives were rewarded with vast fortunes.
The temple of the mighty dollar discovered and pushed new concepts and new ways of doing things, growing faster and faster apart from the rest of the world. Until it built the personal computers and the Internet.
When the Internet came online it was a military application. It quickly evolved into an academic research network that spread throughout the world. There weren’t too many people willing to bet big on its economic impact yet the internet economy is now expected to reach 4.2 trillion by 2016.
Nobel Laureate Robert Lucas stated that economies that are at the forefront of economic and technological development will grow by approximately 2% per year. Those below them are usually kept below by what he called “technology frontiers”. Advances in genetics, IT, robotics and others that help labor and capital be more productive, are technology frontiers. Once technology frontiers disappear, lower economies will grow 2% + an additional growth rate determined by the income gap between itself and the richest country. So – the later the technology frontiers disappear, the bigger the income gap. The bigger the income gap, the faster the growth. The world tends to balance inequality.
Countries that are later to develop can adopt new technologies easier and the main factor that helps emerging markets evolve is technology and education.They can freely adopt and integrate these, without having to go through the research and developed the countries at the top of the food chain had to.
Internet made everything easily accessible. It quickly became the gateway for anyone willing to access the sum of all human knowledge. Western colleges now post courses online free of charge. Online academies help students become specialists in any desired field, ranging from business, to communication to computer sciences.
In a simulation of Lucas’s model (on the left) you can see how countries that are later to break through technology frontiers are also those with the fastest growth. For most countries the bulldozer that broke through the technology frontiers was the Internet.
With the widespread adoption of the Internet, global opportunities shifted quickly. Countries that were previously kept in the dark by economic conditions, lack of education and poor access to information now had a fighting chance. They were no longer tied to menial jobs and export of raw materials. Giant leaps were made in the past twenty years in terms of global access to information and decreasing the opportunity gap between the Western Countries / Western Offshoots and the World.
Jan Koum’s rags to riches story is deeply iconic on how much the field was leveled in the past years. He grew up in a village near Kiev, Ukraine. He lived through poor conditions until he put his skills to use in the US. Just as his country was being torn apart by an anti-government revolution he sold his company, WhatsApp, becoming a billionaire at just 38.
And it’s not just software, code and people. Goods are quickly moving from country to country, continent to continent. All due to the new electronic markets, enabling global access for small to medium producers and retailers.
Companies such as Amazon, Ebay, AliBaba.com are connecting the world and taking out the middle man. With less losses on the way to the end consumer, products are cheaper and competition is itself leveled. Everyone gets an equal opportunity and a decent start.
Take China for example. It was pretty late to the party in terms of economic development. When it did start to grow, it took the world by storm.
As for electronic markets, China hadn’t had to invent or discover the internet. It just adopted it. It made a great leap forward in terms of manufacturing. It made an even bigger leap forward when it comes to e-tailing and electronic markets:
If you look carefully at the China’s e-tailing market growth, the growth rate it’s pretty similar to Robert Lucas’economic growth theoretical modeling. China’s quick adoption of ecommerce as a means to get a larger retailing coverage was a breakthrough in a very important technology frontier: electronic markets.
It is estimated China’s internal ecommerce market will reach $655 billion by 2020. The figure, as astonishing as it may seem, is dwarfed by AliBaba.com’s sales figures.
AliBaba.com, China’s main ecommerce company, is focused on B2B / C2C transactions between Chinese manufacturers and the rest of the world and it reported gross sales of $170 billion in 2012. That figure has only been ever reported by two companies: Walmart and AliBaba. It was founded in 1999 by 18 people and an initial investment of 22 million dollars. Now it is the largest ecommerce company in the world and quickly becoming an unbeatable force in retail as a whole.
The company is a prime example of how a previously complicated international supply chain can turn into a click of the button. AliBaba is responsible for developments in key areas of China’s economy:
Companies such as AliBaba, Amazon , Ebay are supplying the world with something it badly needs: equal opportunities. With electronic markets easily available and growing fast, people all over the world are starting to have, for the first time in history, equal chances at attaining success.
By empowering individuals to access the same wealth of possibilities, the new tech companies are changing the way we think of human development.
Our history has been sadly occupied by mostly dynastic forms of leadership. Aristocracy, brute force ruling, totalitarian states have one thing in common – unequal opportunities for those that deserve them.
Marxism brought a fake yet inciting concept: that all man are equal. Indeed we are all created equal. We should have equal opportunities. But perfect equality is neither attainable nor fair. Even among equally gifted individuals, drive and hard work can shift the balance more than we care to admit.
Equal access to opportunities is needed and desirable. We have to make it possible that even if the future cancer – curing Nobel Laureate is born in a poor village in Africa, he has the chance to rise. Even if the physicist that will invent faster than light travel will be born in a poor family, he has the chance to reach his full potential.
Our electronic markets are so far the only way we can ensure equal opportunities to all mankind. What made Warren Buffet rich was a brief period of time when stocks were great to buy, his innate intelligence, his access to the best information he can get, a close relationship to an intelligent mentor. And hard work.
Beside innate abilities that turn out to be not so important, everything else above is now available or shortly be available to each citizen of the world.
Companies that are building electronic markets are not overvalued. They are a new breed of companies that work for the betterment of mankind. Knowingly or not. That’s why we need to look at them not from the previous brick and mortar, asset only point of view, but a new one. We need a perspective where we look at a company and choose to invest in it based on a simple question: “Does this company get us closer to an equal opportunity world?”
However – be sure equal opportunities do not mean equality. Man was not born a machine. He is a creative force of nature and as long as it will use his creativity and intellect, opportunities will be used.
Unfortunately a dark veil has been pulled over, at the dawn of our productive society. Many of us still act as if we depend on simple, repetitive jobs to make a living. Whether it is our instincts fighting the technology we hardly understand or a self perpetuating fallacy we must stop trying to act as machines.
The world is potentially free. We must leave all repetitive tasks to technology and become the creators we are able to become. Those that fail at this will be the 80% struggling tomorrow.
Did you know that stores use smartphone WiFi and Bluetooth connections to track your movement? Turns out that’s kind of a growing trend right now. Showrooming is ever on the rise so traditional retailers need to act on understanding customers better. Tracking phones is one way to do it.
There are some companies out there (their number increasing) that provide tracking technologies. One of them is Shopper Trak and I had the pleasure of meeting one of their representatives this week. The company uses a combination of WiFi and Bluetooth signal detection to count, profile and report on customer behavior. How do they that? By registering the smartphone’s MAC address.
What are MAC addresses? Good thing you asked. These are unique identifiers for your smartphone. Kinda like your IP, except they don’t change. That’s one great feature if you’re going to track returning customers. Of course – all of these informations are anonymized and encrypted, as Bill McCarthy of Shopper Trak convincingly told me a couple when I had the pleasure of chatting with him.
Working in tech for some time now – i’m not really so sure about anonymous data but the technology is pretty interesting and its applications can work wonders for multichannel retailers.
Being a online-first type of guy, I was surprised to see the kind of tracking you get with Google Analytics in brick and mortar stores. The first question that popped into my mind was – “Can you compare store tracking data with online analytics data?”. Apparently most of the companies that provide such a service do provide a form of data export that can be used to understand online-offline behavior.
The second question was “Isn’t this thing a little intrusive?”. Probably.
Last year Nordstrom decided to find out more about its brick-and-mortar store shoppers. They thought they can get valuable intel by tracking who comes in the shop, which products customers buy more, what’s the return rate and others. You know – the kind of stuff all online shops track so they can improve customer experience and increase sales. Except they did this by tracking customer’s smartphones.
But Nordstrom did something that online stores don’t usually do – they posted a sign announcing shoppers they were being tracked. And the shoppers were not happy at all. You can see in the image on the right the kind of feedback they received.
Fearing increasing frustration with their tactics, Nordstrom discontinued the program.
Atlanta based Brickstream uses a 2d /3d type of cameras to track shoppers inside stores, reporting on queue length and customers behavior.
Brickstream uses path tracking to understand and report customer routes. It also uses height splitting in order to differentiate between different demographics (male, female, child) and 3D technologies to “see behind obstacles”.
Their video intel is, of course, pretty efficient. Used together with mobile tracking- even more so. It is also a little scary for customers inclined to privacy concerns.
Are you are one of those customers? Than you may want to scan through info on the 8 major players in this growing market, Brickstream being one of them:
In-store traffic traffic tracking is an industry lead by these 8 companies, with other minor companies quickly growing. The list is provided by “Future of Privacy”, a think tank based in Washington DC, focused on “advancing responsible data practices”.
One of the younger companies providing in-store analytics, Nomi, which recently received a $10 million funding, mentions the length they go to in order to insure customer privacy. The privacy principles they list on their website are:
So everything is cool right? Well…
So far there have certainly been some concerns regarding privacy. Retailers usually addressed them as quick as possible. And when that was not the case – customers could just turn off their WiFi and Bluetooth connection so they won’t be tracked.
As mentioned earlier the technology only works when there is some type of WiFi or Btooth connection that beacons can track. Without it – smartphones are basically invisible. But than Apple thought – hey, let’s change that.
One of the often left out features when it comes to Apple’s new iOS 7 is the iBeacon. The iBeacon is Apple’s response to NFC (near field communication). When an iOS 7 device comes within range with an iBeacon it emits a BLE (Bluetooth Low Energy) response. It becomes trackable even when the above mentioned connections are turned off.
And Apple is really committed to using it:
The technology laid dormant during the past months since it was announced. Now Apple will instal iBeacon transmitters in its stores. When walking past such a device, iOS users will be notified of additional information they can read and save on their mobile devices.
The technology will offer in-store analytics to Apple, push ads and info to customers, assist in queue lines at the genius bar and of course help with purchases and payments.
Numerous other possible uses come to mind, mostly location based enhancements… Things like door opening for the blind, customized ads, personalized offers and many others will act as an usher in a new age of technology.
This new age, however, does not leave place for privacy.
If you think about someone who was there when ecommerce started, who would you picture? Jeff Bezos? You may be wrong because Bezos started Amazon in 1995, a full 17 years after ecommerce was born, in the UK.
Back in 1979 a 38 year old innovator put together an online shopping system called Videotex. It was one of the first end-user technologies that displayed interactive information on a TV screen. Unlike most other connectivity breakthroughs of that age, the Videotex was more of a TV than a computer.
It was basically a domestic TV connected through a phone line to a central transaction processor. It might sound simple now but at the time things like e-commerce, online orders, online banking and others were pretty close to science-fiction.
One day, early 1979, Michael Aldrich received in his office a 26” TV, capable of teletext. The TV was able to display news and weather information, broadcasted by the BBC. It had several components that allowed it to do that. Among them – a modem and an auto-dialer.
Those two components proved to be really useful to Aldrich. Later that year, after superficially examining the device, Aldrich was out with his wife, walking their dog, Tessa.
They chatted about the kids and such. At some point the subject of weekly supermarket expedition came up. Aldrich was thinking of how could he make that boring trip easier – and that’s when it hit him: He could connect the modem enabled TV to a central server and help companies process transactions and sell things. Things such as groceries.
He worked with his colleagues, set up a basic system and demo-ed it to major companies. As he had sales and marketing jobs before, he was able to convince executives of the system’s competitive advantage.
It as a hit and his team received some heavy requests for the system. He spent most of the ’80s designing and implementing online shopping systems. Remember – this was an era predating even the most basic forms of computer technology – such as MS DOS, the IBM PC , internet and yes, the World Wide Web.
It wasn’t until 1990 that another great brit, Tim Berners Lee would write the World Wide Web and unlock the Internet’s potential.
Truth be told, Videotex never really caught up with end consumers. It was mainly used as a B2B shopping / ordering technology. But people did use it to place the world’s first online shopping orders.
It was May 1984 and Jane Snowball, 72 years old, was pinned in hair chair after she broke her hip. She needed groceries and the local Tesco supermarket had joined a Gateshead Council initiative to help the elder receive groceries at home.
She needed only 15 minutes to learn how to use the remote. After that she was able to choose from the 1000 products available on Videotex. Her order was payed on delivery as no card processing was available at that time. But she did order and the order did arrive.
She, among other senior shoppers, were the first to shop online. What was then a local experiment with little success is now a $1 trillion industry and growing fast.
Aldrich, now a grandfather of 8 grandchildren, may not have been the Jeff Bezos of its time but he is the man that invented online shopping, among others. There was no B2C market for him to work on, but there was a B2B market. His innovations started what we now call the IT industry and revolutionized the way people thought of media (from few-to-many to many-to-many).
This is a man that innovated his way to ecommerce, the IT industry, and basic Social Media notions we apply today. Pretty great, right?
When it comes to ecommerce most of us live in a “Fog of War”. What, never heard about it?
In military strategy the term shows the uncertainty one has to deal with when it comes to battle area, enemy forces, enemy positioning and others. The “Fog of War” can easily be described as a lack of visibility or understanding of engagement conditions. The less you know, the thicker the fog.
In a given “Fog of War” situation, you have to maximize intel by diplomatic, open-source or secret intelligence so as to prepare as best as possible to engage the enemy or prepare for any incoming attack. What is definitely not an option is just sit around and expect the enemy to attack.
The basic thing you need to take away is that when in dark, you have to shine some light by exploring nearby terrain and options.
All in all – mistakes or failures are pretty useless. I mean – of course, Thomas Edison is famous for saying “I have not failed. I’ve just found 10,000 ways that won’t work” when referring to his inability to find a decent light bulb.
Unfortunately for most of us trying to innovate our way to success, what this quote fails to mention is that by that moment Edison was successful enough to fund those 10,000 failures.
The fact is failure is still failure. Mistakes are mistakes. There is nothing great or noble in making mistakes. If possible – don’t make them. But if you do – mark them as not to be repeated and than leave them behind.
No one remembers Columbus for his 17 years trying to get a couple of lousy boats to cross over the ocean while NOT discovering America. No one remembers Einstein for his brilliant carrier as a patent clerk while NOT improving his Theory of Relativity. Everybody gets credit for the things that are NOT mistakes or failures.
However, along the way to success, while discovering and gathering informations to see through the Fog of War, we will make mistakes. Actually most of the things we will be doing will be mistakes. That means we are trying. That means we are searching and while searching, at some point we will come across our objective and then, just then, we will be ready to learn from our mistakes. Not before, because …
You must have heard the phrase “we learn from your mistakes” so much by now that you consider it a fact. Well – it’s not. When it comes to learning and discovering somewhat complex tasks we are really better at learning from successful actions rather than mistakes.
Apparently our brain remembers short term memories that lead to correct actions and forgets useless details that just don’t work. According to Earl Miller, professor of neuroscience at MIT, “it is reward, rather than its absence, that is driving learning.”
So while trying to find out how to outsell your competitor remember what really counts: the times you got something right. That’s when you and your team will be learning the most important things. And you need to learn and discover new things because …
Netonomy.NET being an ecommerce blog, I wrote this post to encourage you to try new things, to innovate and allow yourself the right to make mistakes. However – don’t settle for anything but success.
Watching Amazon, Ebay, Asos.com and all other big online retailers is not enough. Do your own thing. Try, fail, succeed. The next big thing is just around the corner, if you’re willing to go through some Fog of War.