Digital Disruption, Digital Transformation & eCommerce Being Boosted by Crisis

Digital Transformation & eCommerce Are Being Super-Charged

The crisis is driving more of us online, boosting ecommerce and forcing us to go virtual. So, it’s inevitable that many industries are experiencing digital disruption and transformation during this tsunami of change.

‘Digital disruption’ can be defined as the transformation caused by adopting digital technologies and new business models.

Do you know what’s happening in your sector? Perhaps you’ve moved quickly and already invested in ecommerce, or adapted your own business model in other ways to embrace this new reality or plan to?

You can start with small steps.

• Drawing flow diagrams of your business processes or value chain, can be a good way to work out your options.
• What are your customers’ problems?
• How can you improve your sector’s value chain?

For example, one of Real Marketing’s clients, a central heating specialist, has been improving a new boiler quote programme on their website which provides estimates in less than a minute. The online quote system automatically generates new prospects and should help the company fill up its post-lockdown order book, helping it get back in business faster than some of its competitors.

For my own marketing consultancy, Zoom video calls have replaced face-to-face client meetings. Luckily, it was easy to redesign and adapt my consultancy processes so that they work digitally and remotely. As one of my clients on the free Expert Help Marketing Consultancy programme for East Lothian small businesses (SMEs) said:

“The Zoom meetings worked very well indeed. Initially, I was quite sceptical of the idea but it was probably as effective as any face-to-face meeting could have been!” (Phil O’Brien, Forth Blinds)

The crisis is speeding up digital transformation. Can you transform and adapt your own business to make it more digital, automatic, online and virtual to help you survive or to give you a long term competitive advantage?

How will the move to remote working disrupt the telecoms, commercial property, retail, transport and travel industries, and other sectors?

eCommerce is Booming

Yes, delivery is slower and some supply chains have been interrupted, but the data confirms that ecommerce is booming during lockdown, as McKinsey reports:

• Ecommerce in Italy during mid-April has increased 81 percent compared to the last week of February.
• US consumers have increased online spending by about 80%.
• In China online shopping has increased 15 to 20%.

“With offline shopping collapsing, companies’ strategies will need to focus on fortifying their web presence and, in some cases, building an online business.” (McKinsey)

Even before the unprecedented global lockdown, ecommerce and productivity gains in retail were expected to reduce the number of retail shops by as much as 15%. How much higher will that percentage go by 2021?

As one local client, Svetlana, who owns the enticing Cheese Lady shop on Haddington’s High Street, said:

“We have had to completely rethink our trading model – we went from a physical store with some online presence to a purely online store.

“There were many challenges when we had to completely change the way we used to operate. From staff and stock shortages to an unexpected waste increase. It is also hard to deliver exactly the same service as we used to in the physical store because we have a reputation for recommending and sampling our fine cheeses in our shop. Online you cannot do that, so it all hinges on our existing good reputation, customer product knowledge and our good product descriptions and photography.”

Does Svetlana think more shops should be looking at ecommerce to complement their traditional shops?

“Without a shadow of a doubt – yes. It is not easy (or cheap) but it is worth it. Our online shop has grown many-fold. The online ordering is working well but I do see areas for improvement. There are many tasks that can be automated and systemised to speed up the process and allow us to fulfil even more orders.”

Some shops have already moved rapidly to invest in ecommerce. So, if you’ve had to close your shop, restaurant or café, or had to stop delivering your service, now could be the right time to consider starting to sell online. And, adding eCommerce to your website needn’t be expensive and can be achieved in less than 2 weeks for some small businesses. See more on my fast, inexpensive eCommerce solutions.

What is ‘Digital Disruption’ and Who are the Disruptors?

Disruption is to existing businesses and business models what Indy’s Smith & Wesson was to the sword.

Digital disruption meant that EMI, the hundred-year-old company that invented electric recording and signed the Beatles and thousands of other musicians, simply ceased to exist.

Today’s examples of disruptive technologies include e-commerce, ride-sharing apps, GPS systems, cloud computing, the Internet of Things, big data, and artificial intelligence (www.zdnet.com). Disruptive technologies replace established systems and habits when customers see them as superior.

The main areas of digital transformation are: business processes, business models, relationships with customers, and culture.

A lot of digital disruption comes from new internet-based business models that are shaking up established industry structures.

We can probably all quote examples: Walmart is being disrupted by Alibaba; Gillette is being disrupted by Dollar Shave; the taxi industry by Uber; hotel chains by Airbnb; and, today, incumbent telecoms giants are being disrupted by video call providers like Zoom.

Companies such as Amazon, Google, and Facebook are just some of the huge number of companies that have focused on the Internet as a disruptive technology.

“In the logistics industry, the use of sensors, big data, and analytics has enabled companies to improve the efficiency of their supply-chain operations.” (McKinsey)

Disruption can come from learning to reuse, repurpose, and recycle the R & D of others to create new products in new categories never imagined by the original creators.

What are the benefits of disruption? 83% of executives who see their organizations as market disruptors report increased revenue over the past three years, compared with 54% of those in non-disruptive or partially disruptive enterprises. (Forbes Insights 2018)

Advances in 3-D printing that create products just-in-time are said to threaten 320 million manufacturing jobs around the globe.

Self-driving cars, trucks, and drones are forecast to displace tens of millions more workers.

Renewable energy, such as solar photovoltaic cells, which have decreased in cost by more than 85 percent since the year 2000, will transform economies which are currently run on oil and gas.

According to a McKinsey Global Institute study, the automation of knowledge work will have a $5 trillion to $7 trillion impact on white-collar jobs.

The ‘Digital Vortex’ is the inevitable movement of industries toward a new ‘digital centre’ in which new business models, propositions, and value chains are digitized as much as possible.

Three key areas of digital transformation in businesses are: customer experience, operational processes, and business models. (Brainly.in)

But, the most common disruptions are driven by customers. They decide whether to adopt or reject new technologies or new products. (HBR 2019)

However, there are some challenges when introducing digital transformation at many businesses:

• Employee resistance.
• Lack of expertise to lead digitization projects.
• Existing company structures.
• Lack of overall digitization strategy.
• Limited budgets.

If you want to discuss your business model and digital options, you can contact me, Christopher Lamotte, or request a free Zoom Website and Marketing Review over a virtual coffee!

Start by Understanding Your Customers’ Problems

To digitize your business, you need to understand your customers’ problems:

• What are their pain points?
• What problems can we solve much more effectively for our customers?
• How can we leverage digital technologies to achieve this?

Find a problem, disrupt it, and solve it. The bigger the problem, the more people your solution helps, and the more money you can make. Disruptors are simply problem solvers.

“All problems are opportunities in disguise,” says bestselling author of ‘Chicken Soup for the Soul’, Mark Victor Hansen. “Every problem is a prospective opportunity.”

More often than not, a big idea is just a simple solution to a small problem.

You need to think in terms of your business model holistically. It is not enough to change only individual dimensions. The potential efficiency and cost savings are often significant and help companies stay competitive.

However, don’t focus too much on efficiency gains. We need to think more about novel digital products, services and new business models.

But, in the end, it is about fixing your customers’ problems, identifying new growth areas and creating digital business models.

Some of the key questions are:

• Which new customer segments and new customer benefits are enabled by digital technologies?
• Which new products and services will enable digitalization?
• How do digital technologies change our value processes?
• What are new marketing strategies emerging through digitalization?

Build your organization’s data and analytics competency for digital transformation success. … Data and analytics should be a key driver of an organization’s digitization and transformation efforts. (www.gartner.com).

“Data has become the new corporate asset class – and the best way for companies to generate and access it is to digitize everything they do. Digitizing customer interactions provides a wealth of information for marketing, sales, and product development, while digitizing internal processes generates data that can be used to optimize operations and improve productivity.” (Holger Hürtgen and Niko Mohr, McKinsey, 2018)

But, business transformation programs can fail because of lack of understanding and trust. The root causes of failures are less related to technology and more often down to process and particularly to people.

We already know that 70 percent of change programs fail to achieve their goals, largely due to employee resistance and a lack of management support. (McKinsey)

Disruption is a customer-driven phenomenon. New technologies come and go. The ones that really stay with us are those that our customers choose to adopt.

Many of the fast-growing startups such as Uber, Airbnb, Slack, Pinterest, and Lyft don’t have access to better innovative technologies than industry incumbents. What they have is an ability to build and deliver faster and better exactly what their customers want. This can drive big changes in market share very fast. (HBR 2019)

However, when it comes to disruption Europe lags behind the US. A McKinsey study claims that only 12 per cent of the digitization potential has been used in Europe, compared to 18 per cent in the USA (Bughin et al., 2016).

It’s not surprising to find that digital transformation is currently being dominated by Silicon Valley companies. New technologies are changing the entire economic structure, society and the way we live, work and consume with remarkable speed. New business models replace traditional ones and many established companies are struggling. (The Crusade of Digital Disruption 2017).

Under-resourced start-ups continually disrupt the dominant players in their market.

Are There Dinosaurs in Your Sector?

Established companies are often great big dinosaurs who are too busy competing against other big dinosaurs to pay attention to the disruptor. There was a moment in the evolution of every great disruptive company when the dominant market leaders could have crushed (or bought out) their future competition, but they were focusing on the wrong competitors.

Disruptors often operate in senior management’s blind spot. Many industries are littered with the fossils of companies that failed to evolve.

So, disrupt or be disrupted.

Senior management in today’s public companies are less interested in the long-term survival of their companies than in hitting their numbers and making their bonuses.

In 2007 Microsoft CEO Steve Ballmer infamously said that Apple’s iPhone was “the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good email machine.” He clearly didn’t imagine a world where consumers would download a hundred billion mobile apps each year.

“Business organizations are not built for innovation,” Govindarajan writes. “They are built for efficiency.”

Whatever industry you’re in, the technologies that drive it are going to change. Your customers are going to demand new solutions. Your competitors are going to alter their tactics.

Can You Transform the Value Chain in Your Industry?

The least costly step may be the one that generates the greatest monetary value. Some links in the value chain aren’t worth breaking, while others hold the lion’s share of potential profit.

Unlike the uniform links in a bicycle chain, the five links in a company’s value chain – research and development, design, production, marketing and sales, and distribution – are not equal.

Once disrupted, a broken value chain is never repaired. The value of the new link can transform the market, and create a more efficient, more valuable process.

Unless you are diligent about always challenging what you know and what your market wants, a newer, more nimble upstart could come along and disrupt your business.

There’s a Lot of Innovation and Creative Disruption Happening Right Now

Now may be the time to make some aspects of your business digital, automatic or remote. And, it could give you a competitive advantage that will help you survive and thrive in these times of rapid change and disruption.

If you want to discuss your business model and digital options, you can contact me, Christopher Lamotte, or request a free Zoom Website and Digital Marketing Review over a virtual coffee!