Will Your Business Survive the Ecommerce Disruption?
Zak Nasser - Product Manager at dubizzle.
Back in the early 1970s, e-commerce was born. The internet didn't connect the world back then, it only connected 20-30 universities in the USA. E-commerce was just local classifieds where students and professors at universities buy/sell goods. Today e-commerce is a multi-billion-dollar industry that has changed how we shop. Tomorrow, e-commerce will change again. Is your business ready?
In the early days of e-commerce, there were a lot of critics and doubters, including tech inventors such as Robert Metcalfe who sold 3Com for almost $3 billion. E-commerce has now disrupted brick and mortar stores and has led many to bankruptcy. The former is a $100 billion annually and growing rapidly in the US, whereas the latter is $40 billion and declining. The common reason for bankruptcy was not reducing fixed costs (debt / stores) in the face of this trend that shifted consumer demand from offline to online.
However, it was clear that e-commerce is better for the consumer. Customers get lower prices and better availability of products. Add to that ordering convenience and customer reviews that are better than an in-store clerk. Why is it that companies still got disrupted?
Let us examine how tech trends evolve over time, maybe that will safeguard us from disruption. Technology starts in research and development labs funded by the government, then slowly grow into a niche adopted by pioneers. Beyond that, not all products evolve into a commodity and become a utility. The ones that do cause a crash. A crash can be a market bubble bursting, companies going bankrupt and new ones being born, or many other things. This crash is a transformation of economy and society as the technology becomes mainstream and part of our daily lives.
One example is mobile. 10 years ago, smartphone penetration was 5% and today it's around 80% in the US. In 2016, eMarketers stated that 86% of time spent was on mobile and 14% was on web. At dubizzle , if we hadn’t adjusted to this new reality, we may not exist today. 3-4 years ago we were debating mobile, but today, 75% of our traffic is on mobile phones. Similarly chat and instant messaging are the preferred communication channel. We adapted and launched chat which has become the most used contact method on dubizzle. We disrupted ourselves. Our website with the mobile site and apps. Our contact methods (call/email) with cha
Another example is 3D printing - this tech trend may change online shopping as we know it. It is still at the niche stage among pioneers, but progress is exponential. Price went down from $50K to $2K for a quality printer and last year there was a kickstarter for a $50 printer. We can now 3D print houses, robots with moving parts, and electrical circuits. All signaling that we will be able to 3D print complex products soon, like home appliances and electronics.
Similar to bricks and mortar disruption, 3D printing will allow for much smaller fixed costs than current e-commerce models. Instead of a big warehouse, a smaller one with 3D printers building the ordered products is enough. Then if 3D printers become a part of every home, online stores will become marketplaces connecting consumers to brands and designers. No warehouse needed. Consumer adoption is aided by 3D printing food. Everyone wants gourmet food with no effort.
What can you do to avoid disruption? First step is to follow 3D printing quarterly, so you can adjust your strategy and fixed cost structure at the right time. Second, improve personalization and understand your consumer to be a better marketplace and match maker.
About Zak Nasser
Zak is a product manager for classifieds and advertising in UAE. He has covered several themes during his time at dubizzle. He worked on new business ventures and launching new advertising products. He was responsible for increasing conversions across the product funnel where he revamped search and launched many UX improvements. Prior to Dubizzle, Zak was a product manager at iMena Group supporting their portfolio companies, mainly Opensouq, on their product strategy and execution.