Archive | September 24, 2015

Technology of the Week “B2C e-commerce”: The future of shopping

deprives-you-of-tangibility

Since the rise of the internet in our everyday life, a lot has changed. Firms had to revolutionise their product strategies, adapt to a whole new 4Ps conception, and serve a whole new platform of markets, namely e-markets. The trend of e-shopping was then introduced in order for firms to increase sales via the e-commerce channel. This lead to further innovations in order to contrast the vicious competitive environment of e-markets, while trying to transfer the in-store shopping experience directly online. With that being said, this article will introduce two new emerging technologies that are involved in the realistic transition between in-store and online shopping through Augmented Reality (AR).

Social Shopping

Social shopping is an e-commerce methodology bridging social media and online shopping together. Social media impacts the shopping behaviour in a way in which other people like friends, family, bloggers and celebrities recommend and suggest certain products and services to the consumers. The idea behind a social shopping website is that it provides the potential customer with blogs and virtual communities to help him in his decision in buying consumer goods and services. This is achieved by the average consumer share his shopping ideas, exchanging opinions on products, and recommending one another on what to buy and what not to buy.

A research on social shopping in 2010 found out that consumers’ trust in product recommendations had not only a direct and significant positive effect on their purchase intentions, but also a strong indirect positive effect on buying the product from that specific website where the information was originally found. The intention of a consumer to purchase a good directly from the website could in that case directly be affected by the trust in the website, thus creating an incentive to build a online shopping platform (Yu, 2010).

To better understand this, we used Shopcade as an example to analyse the technology further, and base conclusions.

shopcade

Shopcade is a website and mobile app that creates a community of fashionistas and allows anyone to easily purchase the items that they see posted. The site has two main sections: the trending section and the feed section.

The trending feed is curated by the app itself. This means that it is a section with content posted only by the Shopcade team. This content comes usually in the form of blog posts regarding different fashion trends, whether it is for clothing, accessories or other items (for example, one post gave the most recent trends in duvet covers). Being a content provider as well as a service provider definitely adds value for the customers of the company. On the other hand, the feed section contains content created exclusively by bloggers and members of the community. This adds even more to the social aspect of Shopcade, giving a very Instagram-like feel to the whole social experience. This is what Shopcade does successfully. It actually created a situation where online shopping offers an experience that would be awkward to achieve in the store.

Below, the SWOT analysis of Social Shopping can be observed. It is directly applicable to the case of Shopcade.

Schermata 2015-09-24 alle 18.43.52

When it comes to their revenue model, Shopcade offers nothing new. As can be expected from such a business, they make money from affiliate marketing and sales. This means that they receive commission for all the purchases made from their website. In addition, some brands want more exposure, which requires them to pay more money to Shopcade.

Virtual Fitting Room (VRF)

Fitsme-has-built-a-virtual-fitting-room-platform-that-can-be-easily-integrated-onto-the-sites-of-online-retailers.

VRFs are the online substitution of in-store fitting rooms. It is available on PC-laptop and mobile devices. VFRs rely heavily on Augmented Reality (AR), which employs specialized software and hardware to merge the digital and the physical worlds by immersing digital information into real video to generate persuasive looking scenes in real-time. Personal measurements can be included online to allow the framework to build a 3-D avatar of the customer fitting the item. It’s built on a three-step algorithm: it builds/scan the user body through data measurements (size, width, length…), reference points (i.e face and figure) via AR, and finally, it builds the avatar incorporating the clothes on a superimposed 3D image.

Software companies such as Virtusize, Fits.me and Clothes Horse have all adapted this new technology providing it to big retail companies, attempting to tackle the fit challenge with a range of technology-based solutions, from “morphing mannequins” to size recommendation engines, all with the goal to simulate the physical fit and sizing experience (G. Randall, 2015).

Often enough shoppers complain about long waiting lines in shops and poorly set up fitting rooms. Conditions such as terrible lighting and a lack of space in the room tend to dominate the endless list of complaints. The slow but steady introduction of VFR has revolutionised the shopping industry, specifically the e-commerce aspect of it.

Using VRFs could actually increase the pleasure of shopping in many ways. Firstly, there is no hassle of having to physically put on several different clothes. The ability to take pictures whilst “trying on” these clothes means that customers can easily compare outfits. Furthermore, many side-menus can be added into the technology, this would be up to a firm to research what sort of features its customers need when trying on clothes. Some great features that many shoppers and experts posted include the ability to like and dislike garments, save pictures of outfits for later, see reviews and prices of products, as well as the ability to call in real-time service (LinkedIn, 2015).

Below, the SWOT analysis of Social Shopping can be observed, applicable to every aspect of the VRFs. As it can be observed, it is filled with opportunities leaving thoughts and space for improvement.

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Future perspectives

With the VFR component only, the customers missed the social element of shopping. On the other side, the current social shopping services do not offer a developed VFR experience yet, making a visit to the store easily a necessity. We believe these technologies will merge together as the result will provide an improved customer experience. In the future those various digital resources – VFR and Social Shopping included- will be combined in an overall bigger market. Indeed, as someone will be shopping from his home -trying out clothes through the VFR system-, the person will be able to ask the opinion of a friend or a shopping assistant; involving social shopping (IBM, 2010).

The combination of those two technologies presses the question whether physical retail shops will exist in the future. It seems not to be a question of “If” but “When” physical stores will become obsolete. The reader should ask himself in how much time this change would have taken place: 5, 10, 20 years? It is difficult to say. Humans tend to think linearly, however the rate at which technology imposes itself on the world rather corresponds to an exponential curve as Ray Kurzweil and the institution of Singularity University (2012) are professing.

Sources:

Yu, K.-L. H.-C.-Y.-P. (2010). Antecedents and consequences of trust in online product recommendations”, Online Information Review.
Randall, G. (2015). Fashion ecommerce: are virtual fitting rooms the silver bullet?. [online] Econsultancy. Available at: https://econsultancy.com/blog/66058-fashion-ecommerce- are-virtual-fitting-rooms-the-silver-bullet/ [Accessed 18 Sep. 2015].
LinkedIn (2015). Virtual changing rooms will revolutionize fashion retail [online] Available at: https://www.linkedin.com/pulse/virtual-changing-rooms- revolutionize-fashion-retail-moles-mba

Team 13:
Claudio Corti
Maximilian Wiedmaier
Alex Furnica
Maxim Gggurevic
Paul Grandjouan

The ‘Google Effect’: We are all suffering from Digital Amnesia

Do you remember the name of that one movie with Robert De Niro? You don’t remember? Then you will probably just Google it to find out. Do you know your mother’s phone number by heart? Why should you, the number is stored in your smartphone. Recent studies suggest that the abundance of information and the accessibility of information through the internet are changing the way of how our memory works. Technology is presumed to change the very way how our brains store information.

Information is everywhere and it is overwhelming. Smartphones increase the accessibility of information even further with Google and Wikipedia at our fingertips. If that is not enough, Facebook and other social media are smashing information in our faces. In order to deal with all the information around us, we tend to save it in our smartphones and pc’s. We literally are ‘outsourcing’ our memories to external devices or the internet. When information is stored in these external devices, our brains do not worry about it anymore. As a result, our brains’ cognitive processes alter which leads to digital amnesia: “the experience of forgetting information that you trust a digital device to store and remember for you”.

So is technology making us dumber? Researchers do not believe so. We are just handling information differently. Instead of taking the effort of remembering, we just search for the answers online. Because we know that answers can be found, our brains have learned to rely on the internet rather than remembering the information itself. Our brains have become more efficient in learning where and how to find information. Consequently, the internet is treated as an extension of our own memory.

However, it is the dependency of our brain on technology what is concerning. For example, when your smartphone’s battery is empty, or the internet itself is out, you cannot use Google to access your ‘outsourced’ memory. Even worse, our external memories will be lost when hard disks or the cloud fails. Because we are so used to outsource our memories, we do not think about how vulnerable our external memories are. Researchers do not yet know what long-term implications digital amnesia has. Should we invent ways to better secure our external memories? Or do we need to train our brains in order to stay fit? I do not know. For now, I’ll just stick to Google.

Homer

References:

Bohannon, J. (2011). Searching for the Google Effect on People’s Memory. Science, 333(6040), pp.277-277.

Roberts, G. (2015). Google Effect: is technology making us stupid?. [online] The Independent. Available at: http://www.independent.co.uk/life-style/gadgets-and-tech/features/google-effect-is-technology-making-us-stupid-10391564.html [Accessed 22 Sep. 2015].

The rise and impact of digital amnesia. (2015). 1st ed. [ebook] Kaspersky Lab. Available at: https://blog.kaspersky.com/files/2015/06/005-Kaspersky-Digital-Amnesia-19.6.15.pdf [Accessed 24 Sep. 2015].

Van Raemdonck, N. (2015). ​Digitaal geheugenverlies: hoe smartphones ons geheugen overnemen. [online] Motherboard. Available at: http://motherboard.vice.com/nl/read/digital-amnesia-hoe-smartphones-ons-geheugen-overnemen?trk_source=recommended [Accessed 22 Sep. 2015].

Google Glasses : Chronology of a failure

I think everybody here knows what Google Glass is, if not I will briefly explain what this device consists in.

Google Glass is a wearable technology that displays information like on a smartphone. It is hand-free (vocal controls) and considered as an augmented reality device. This device is connected to the Internet and has many features : GPS, mails, Internet, photos, camera… It can be seen as a smartphone incorporated into glasses. However if Google Glass can be seen as a futuristic device it didn’t encounter the expected success. Why ?

 Google Glass

2012 : Google presents its new project. Media start talking about this Google Glass project. Many people start dreaming about this futuristic device. In fact, a smartphone instead of your glasses, wouldn’t it be cool ? Google start selling prototypes for 1.500$ that will be available in 2013.

2013 : People start doubting about the product. Google released the prototypes in May 2013 but will make them available to public only in 2014 with no more information about a precise date or price. At the same time an American survey driven by BiTE showed that only 10% of smartphone users are potentially interested about the product, 45% of smartphone users find the product not attractive ! The same year many governments also start worrying about these glasses. What about privacy concerns ? In fact Google Glass have the feature to record instantaneously videos. How will privacy and personal data be protected ? How is Google going to do with all these data ? The success of the product was already compromised.

2014 : Google starts selling the glasses to the public. The price ? 1.500$, such as the prototypes. The price is clearly a brake for the potential customers that find it too expensive. Moreover as the product is quite complex to handle, you have to add the cost of personalized advices from the retailers. Second main problem : the accuracy of the apps. Some of the users judged the functionalities of the glasses inaccurate, especially when you’re using the vocal controls in a noisy space. Finally we could add that such as every electronic device, Google Glass can be subject to overheating. As a consumer I would find it really uncomfortable to wear an overheating device on my nose. Due to the disappointing sales Babak Parviz, responsible of the Google Glass project and Brian Otis, chief of the R&D department resigned. Many developers also left the company after the failure of the project. According to a survey the Google Glass could have penetrated the market if they had proposed their glasses to a price lower than 300$ which is 5 times lower than the proposed price !

2015 : Google definitively stopped selling Google Glass. However the project may not be completely dead. Google tries to find an alternative to this project. Given that these glasses were not popular to the public Google decided to target other consumers : businesses. This relaunch comes only 6 months after the cease of production. Google tries to avoid a complete failure of the project. Google revealed to companies the potential of its glasses especially in the healthcare, manufacturing and energy industry. In fact there are already some surgeons using this device. Voice control and hand-free screen present obviously some significant benefits. To encounter a success Google must improve their prototypes and probably also lower their prices. This new version should be presented before the end of the year.

Google-Glass

After the failure of the commercial Google Glass, are the sales finally going to soar and ecounter some success or is the project already dead ? One thing is certain, Google didn’t give up and does its best to make this project finally profitable.

Sources

The ultimate business travel solution

The problem

With globalization ever-increasing, the amount people who have to travel by airplane for their work also increases (IMR, 2014). Among these business travellers are auditors, consultants (as many of you future consultants will experience later in your careers, consultants generally travel a lot) and general outsourced project specialists. There are still two major issues companies are concerned about regarding air travel by their employees (Surf Air, 2013). The first is that frequent, long and uncomfortable air travel can disrupt an employee’s life and lowers work productivity. The second is about the costs involved. Currently, frequent air travel can become quite expensive (regarding tickets) and takes up a lot of time besides the actual flight duration.

The solution

Surf Air

In early 2013, current CEO Jeff Potter started a subscription-based airline called Surf Air. Starting on one of the busiest business routes in the world (LA-San Francisco) (International Air Transport Association, 2014), Surf Air basically offers unlimited travel at a fixed price per month (starts at $1.750). Once subscribed, customers download an app through which they can check available flights (via Surf Air’s own fleet of private jets) and book a seat instantly. They arrive at the airport just fifteen minutes before take-off (via special business terminals, avoiding long ques), fly to their destination, land and hop in a taxi.

Due to the many shortcuts in the process, travellers are able to save a lot of time which adds to their comfort and saves their company valuable dollars as their employees can spend more time doing actual work. Furthermore, companies can actually save on frequent flyers (5+ times a month) as Surf Air membership is generally cheaper than buying individual tickets.

Making work easier

The strength of Surf Air is that customers allow Surf Air to make the difficult decisions for them. For a fixed fee per month, they provide a(n) (often) cheaper, faster and more comfortable solution than someone could ever provide on his/her own. Surf Air’s current service range includes air travel only, but the possibilities are numerous.

Instant Air

A young company similar to Surf Air is Instant Air. Instant Air is a Dutch company operating in Europe (main route is Frankfurt-Amsterdam) (Instant Air, 2015). Besides offering unlimited travel against a fixed fee per month, Instant Air wants to go a few steps further and offer whole business trips on subscription including taxi’s to and from the airport, hotel rooms and/or dinner reservations. This way, Instant Air is able to facilitate every aspect of business travel outside a company’s core business.

Companies like Surf Air and Instant Air have a major advantage over traditional airlines due to the benefits a subscription-based company has. When the airplanes of Surf Air or Instant Air are not fully booked, they still earn revenue through the subscriptions. When traditional airlines’ flights are only half full, they miss (approximately) half the revenue. Furthermore, Surf Air and Instant Air profit from cream-skimming as they attract only highly profitable business clients whereas traditional airlines (need to) serve the whole market.

Prediction

Personally, I believe companies like Surf Air and Instant Air are one of the lately many subscription-based business model success stories. Regarding the future, I feel major airlines have to adapt or lose their profitable customers to these new players and be left with the not-so-frequent flyers. On the other hand, large airlines, being incumbents, probably possess significant market knowledge to be able to threaten these new entrants. However, whether they will realise the threat in time is another issue…

By Niek Huisman
441788

Sources

IMR (2014). GBTA. http://www.internationalmeetingsreview.com/research-education/gbta-2014-us-business-travel-spending-poised-top-292-billion-99371

International Air Transport Association (2014). World Air Transport Statistics. http://www.iata.org/publications/pages/wats.aspx

Instant Air (2015). FAQ. http://flyinstantair.com/faq.html

Surf Air (2013). About. http://www.surfair.com/

The valuation of start-ups

Not a long time ago companies valued at 1 billion dollar or more were rare. That is why they were called ‘unicorns’ by venture capitalists. Today there are 107 companies worth more than 1 billion dollar and venture capitalists gave them another name called ‘decacorn’. Startups can actually be worth a lot of money, but are they worth a lot of money today? How are they valued? Why are they valued that high? This is something I actually wanted to know because of the very high valuation of Hello Fresh I heard about. This blog will explain my incentive and the method of valuation of start-up tech firms.

Why this topic?

A few days ago, Hello Fresh raised an extra amount of 75 million Euro. This amount brought Hello Fresh to a total valuation of around 2.6 billion Euro. Hello Fresh started during the year 2011 and is currently looking forward to a IPO. The moment this valuation became a little bit strange to me, was when Hello Fresh stated the amount of customers they serve: 250.000 regular subscribers. This brings Hello Fresh to an estimated valuations of 10.000 Euro per customer. Doesn’t this look a bit strange?

How are startups valued?

The valuation determines the share of the company the owners have to give away. The owner always wants to give away as less as possible. This for instance will also result in an higher valuation from the owners side. More important is the valuation startups are actually based on; there is no standard valuation. The valuation is more or less based on the following: Traction, reputation, revenue, distribution channel and hotness of the industry.

Figure 1 ‘Hello Fresh Logo’

hello fresh logo

I would like to try to explain every factor with Hello Fresh as an example. First of all traction; the amount of users. This is, as said earlier, 250.000 users. Second of all the reputation; the strength of the founder himself. But more importantly, the revenue: over 200 million Euro in revenue. Last but not least, the hotness of the industry and the distribution channel Hello Fresh is using, are promising. Online food sales are expected to grow more and more in the upcoming years and the distribution channel Hello Fresh is using, subscription based food boxes delivery, makes them compete with brick and mortar supermarkets.

All in all, I still need to ask myself the same question, and you may be doing that as well, namely: Why a valuation of 2.6 billion Euro, with only 250.000 users and less than 300 million Euro in Revenue?

What to do with this?

When Facebook was publicly offered via an IPO, they were first valued at a 90 billion dollar market cap. Within a week this dropped to 70 billion dollar and after that even lower. In my opinion, the valuation of a technological start-up looks a lot like science. Especially when you have a look at the figure below (for a more detailed look at the figure, please see the link provided at ‘sources’).

Figure 2 ‘Start-up valuation science’

science valuation

Should start-up firms be valued more using present value instead of future value? What will Hello Fresh be worth after their IPO? Will Hello Fresh keep growing or will they be stopped by current supermarkets? But most importantly: Do you think technological start-ups are valued correctly or are we in a so called ‘bubble’?

Sources:

http://www.bloomberg.com/news/articles/2015-09-17/hellofresh-valued-at-2-9-billion-after-venture-financing-round

http://www.reuters.com/article/2015/08/05/hellofresh-ipo-idUSL5N10G18J20150805

http://fundersandfounders.com/how-startup-valuation-works/  (Figure 2)

http://techcrunch.com/2015/05/15/hellofresh-is-delivering-4-million-meals-per-month/

http://www.nytimes.com/2015/05/23/technology/overvalued-in-silicon-valley-but-not-the-word-that-must-not-be-uttered.html?_r=0

*Now you know really everything about your Volkswagen….

In a world where information is becoming more and more important with the second, people track their life. When I want to track particular actions within my day there is a high chance that there is an app supporting this. For example, for tracking my sleeping rhythm I use Sleep As Android, for tracking my nutrition I use Calorific, for tracking my sport performance I use Mytracks and so on and so forth. Fact is that nowadays we can track basically whatever we want wherever we want it.

Now you can also track your car. Volkswagen, literally  translated as “the people’s car company” launched in 2015 an app that displays data about both your car and driving style. Loads of information are tracked within one user-friendly dashboard. First of all, the app provides information to those who forget whether they locked the doors, used the parking breaks or for the extreme cases where their care is. But there is more, it tells you when you have to tank, how much fuel you use, whether you are sustainable or not and much more. Overall, Volkswagen tries to turn driving into a game. Hence, gamification techniques are included within their app. By introducing this app, they claim to invest into a ‘blue’ ‘ecofriendly’ future. It is stated that is increases sustainability by using this app. Personally I think this is a good act against pollution. Making your customers aware is at least a great start and I think it would be useful to get insight into your driving data.

But now comes the most ironical part and also the main reason that I am writing this blog. Ironically enough they launched their “my Volkswagen app”  in the same year that was discovered that VW had been installing elaborate software into ‘clean diesels engines’. Hence, the same Volkswagen that claims to be ‘ecofriendly’ is not that ecofriendly with their diesel engines at all. With an algorithm they tracked certain patterns in the steering mechanism, if this matched and or was close to the programmed testing mode a different engine setting would come up. As a result, the Volkswagen would pass the test instead of failing it miserably.

It is interesting to see how a company uses technology for two completely different purposes. On the one hand they try to create the impression of acting green whilst on the other they use technology for committing fraud.

I will be transparent and not only put Volkswagen in a negative spot. The scandal goes further within the Vokswagen Group, also seat implemented the technology. It is speculated that multiple brands will follow. For example, today (24/9/2015) it was also found that the same technology was used by BMW.

*So question yourself, do you really know everything about a Volkswagen?  I am curious to your ideas about this!

Sources:

Apphttp://www.volkswagen.nl/mijnvolkswagen

Technology:http://www.vox.com/2015/9/21/9365667/volkswagen-clean-diesel-recall-passenger-cars

More brands: http://www.ad.nl/ad/nl/1013/Buitenland/article/detail/4148895/2015/09/24/Dieselschandaal-breidt-zich-uit-naar-andere-merken.dhtml

Image: http://www.bbc.com/news/business-34324772

The future of the Internet of Things

IoT

In the past few years we have seen a huge rise of M2M (machine to machine) communication. Whereas in the early 00s we only had our PCs connected to the internet, we now have multiple devices which are connected either to the internet, or to each other in our homes. For example, we are now able to turn on our lights through our tablets, which are connected with each other through Wi-Fi. Gartner stated that in 2022 an average family home could contain more than 500 smart devices1.

Daniel Burrus even argues that the Internet of Things goes well beyond the scope with which we now view it. He notes that as of now everyone views the Internet of Things as just simply the communication between two machines. He argues that the real strength of the Internet of Things comes from the combination of combining sensors and machines. Sensors are the means of gathering data, whilst machines are the means through which data is leveraged2.

As an example he gives the possibility of smart cement, which is cement outfitted with sensors. These sensors can monitor stresses, cracks, and warpages. With this data readily available it will be a lot easier to maintain for example bridges.

Whilst a lot of people recognize the massive amounts of opportunities that the Internet of Things brings with it, there are also skepticisms. Theo Priestley argues for example that there is no real added value in ‘smart products’. He gives an example of a smart oven, which waits for you to be on your way home before starting to heat your dinner. He argues that the smart oven won’t actually prepare the food for you the night before, so what is the added convenience3.

According to a research done by Nielsen in 2014, the following things have turned up as desired by the consumers:   Nielsen-IOT-Report-e1442827811757

Personally I am a big fan of the Internet of Things, and I am very excited by the prospects it offers. Although I do not believe the Internet of Things will be the solution to big world problems, I do believe it will help us understand our world a lot better.

Sources:

1: http://www.gartner.com/newsroom/id/2839717
2: http://www.wired.com/insights/2014/11/the-internet-of-things-bigger/
3: http://www.forbes.com/sites/theopriestley/2015/09/21/consumers-prepare-for-an-internet-of-very-pointless-things/

Ironic – How Western world media and tech benefit Islamic State

Whatsapp, Facebook, Youtube, Video games – All products of our Western society which are ironically used by Islamic State (IS) for their modern warfare. In 2014 IS recruited around 3400 potential terrorists per month with their successful media campaign (Business Insider, 2014). Geopolitical conflicts in the Middle-East have been going on for ages but IS’s media use is something new.

The last striking recruitment campaign developed by IS was the use of the popular video game ‘Grand Theft Auto V’ to show how ‘cool’ it is so fight alongside IS fighters. Videos of the game were released in which IS fighters bombed military trucks and shot their rivals. Those videos were shared using Whatsapp, Telegram, Youtube etc. (The Guardian, 2014)

Why is this ‘marketing campaign’ not disrupted by taking down their accounts and websites? According to Business Insider there are two reasons for this. The first one being that IS does not only recruit via these technologies and accounts but also coordinates their operations. US intelligence services need the information spread through these channels to be up to speed on what IS’s plans are and disrupt the physical operations.

The second reason IS is still able to recruit and communicate via social media is the increased difficulty for governments to shut down accounts and decode messages. After the revelations of Edward Snowden many of the tech-giants devised better encryption services in order to make monitoring of messages, emails, passwords etc. by US and British spies harder (DailyMail, 2015). New messaging apps like Wickr and Telegram even claim to offer encryption that cannot be decoded by government officials, making it even easier for IS to communicate and recruit.

As a result IS is still able to recruit today and through the development of new encryption apps private communication just got a whole lot easier.

How do you think this issue will develop in the future? Will IS only get stronger through the development of better encryption nowadays or will governments like the US government be able to disrupt IS’s online strategy?

Sources: