The new Digital Economy: Shared, Collaborative, On Demand

New Digital Economy banner

In recent years a number of online services have emerged that promise to reshape the way that Americans shop, eat, earn a living, go on vacation, get from place to place, and share goods, services and money with each other. Commercial juggernauts like the ride-hailing app Uber or the home-sharing platform Airbnb represent some of the most well-known examples of these new services, but they encompass the host of services, apps and online platforms of various sizes that are generally considered to be part of the shared, on-demand and collaborative economy. These new platforms serve a wide range of markets and objectives, but several characteristics help to define the landscape of this corner of the digital economy.

One characteristic of these services is that many maintain little (if any) inventory themselves. Instead, they often function as a platform for connecting excess goods or capacity – an old piece of furniture, space in the passenger seat of someone’s car, a room in someone’s home, a parking space, a designer dress or workers’ time and skills – with people who want to purchase or simply use those items or services for themselves.

These services also tend to rely on flexible forms of employment as a key element of their business model. Just as many of these services tend to maintain little in the way of real-world inventory, most directly employ a relatively small number of workers. Typically the people who actually interact with customers and other end users are so-called 1099 workers (a reference to the tax form that independent contractors receive each year) who are not employed by the service itself. This arrangement allows these workers to offer services on a flexible or part-time basis – but also means that they do not qualify for many of the government-mandated benefits available to traditional employees under law, such as employer-subsidized health insurance or the ability to get reimbursed for business expenses.

Finally, these services are often premised on removing the friction, hassle and inconvenience from users’ everyday lives – for a price. For services that offer physical products, this might mean offering same-day delivery of a variety of household items so that users are saved a trip to the grocery store after a long day at the office. For more task-oriented services, this might mean offering users the ability to instantly summon a driver or personal chef at a moment’s notice from a smartphone app.

As is the case with many of the services themselves, the way these services function is not necessarily new. People have been selling used or handmade items on peer-to-peer commerce platforms like eBay and Craigslist since the early days of the modern web; Amazon introduced its Prime expedited-shipping membership service in 2005; and the dot-com bubble of the late 1990s prominently featured a number of on-demand delivery services, ranging from the famously short-lived Kozmo.com (which promised to deliver a variety of products to customers within one hour with no delivery charge) to the still-operational grocery delivery service Peapod.

But while these new shared and on-demand services are in some respects little different from others that came before them, they have presented a number of challenges to regulatory and policy structures that in many cases predate the internet era by decades. For instance, cities around the country have struggled with how to incorporate ride-hailing apps and home-sharing platforms into existing regulatory structures governing the for-hire vehicle and hotel markets. And the piecemeal, episodic nature of employment in the emerging “gig economy” has placed new challenges on workforce regulations and social safety net programs that were designed for an era when the distinction between workers and contractors was more clear-cut.

These services have also touched off a wide-ranging debate about their impact on the economy and on society as a whole. Many laud these services for the convenience and efficiency they bring into users’ day-to-day lives. But others worry about the vast quantities of cardboard and other waste that are the byproduct of this convenience, or express concern that these services are simply helping the already-fortunate to lead more comfortable lives – with little long-term benefit to the broader population who cannot afford to use these services, or to the workers who ultimately make them possible.

No matter what work you do, you have most likely taken part in the new digital economy. Well, at least 72% of Americans did…

New Digital Economy

Wanna know more? Pew Research examined Americans’ use of – and attitudes toward – the shared, collaborative and on-demand digital economy. The following chapters offer an in-depth examination of three archetypal examples of the most recent wave of digital innovation.

  • Chapter 2 examines the nature and impact of on-demand services in the context of ride-hailing apps.
  • Chapter 3 uses the example of home-sharing services to examine issues related to the sharing economy more broadly.
  • Chapter 4 uses a series of questions about crowdfunding platforms to examine the scope and impact of collaborative platforms.
  • Chapter 5 discusses usage data for a number of other digital economy services.

3 hot-topics for your eCommerce: Social Users, Webrooming and Showrooming

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2014 has seen the most concerted efforts so far by some of the world’s biggest social networks to integrate e-commerce into their platforms. And, as a recent GWI Commerce report shows, it’s a move which is likely to resonate with significant sections of the social audience.
Globally, 7 in 10 active Facebook users say they have bought a product online in the past month, with the equivalent figure among Twitter’s active user base climbing to approach the three-quarter mark.
What’s more, a quarter of internet users say that social network-based retail stores make them more likely to purchase online – with a notable peak among Twitter users. In this context, it’s not hard to see why both Twitter and Facebook are trialing ‘Buy’ buttons in the hopes of opening up new and lucrative revenue streams.

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Let’s also take a look at the impact of webrooming (where products are researched online but bought in-store) and showrooming (when items are tested in-store and then purchased online).
With the chart looking at the ratio of online researchers to buyers across nearly 30 different product categories, it’s clear that there are some big differences in evidence.
Where the ratio is above 1 – meaning there are more researchers than purchasers – the products in question are susceptible to webrooming. Perhaps unsurprisingly, this is most likely to be taking place for big-ticket items such as cars, laptops, mobile phones, tablets and games consoles. Internet users might be discovering and researching them online, but the purchase journey is being completed inside a physical retail environment – whether to take advantage of customer service, to “test” the product or to gain a sense of reassurance about their financial outlay.
In contrast, many other categories have more purchasers than researchers and hence have a ratio below 1. Some of these products are simply too low in value, or else are purchased so habitually or on the basis of deals, that no research is necessary. But there are others where a degree of showrooming is likely to be taking place – as with clothes and shoes. Evidently, some consumers are using retail stores to find correct styles and sizes, but then purchasing the products online to get the best prices. And this is a trend that’s likely to have special importance as we approach the Christmas period when people invest greater amounts of time and energy in locating the best presents.

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Free delivery is the most effective Online Purchase Driver, followed by Rewards and Customer Reviews

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As explored in the new GWI Commerce report, free delivery is the most effective online purchase driver. Of the 15 different options tracked by GWI, it’s this measure which scores the highest response globally – with 4 in 10 internet users saying it makes them more likely to purchase something online.
The power of free delivery is far from even across regions, though. It exerts its biggest impact in Europe and North America but is less important in a market like China (where internet users instead place the highest premium on customer reviews and feedback).
As the chart demonstrates, other important global motivators include:

  • Financial rewards such as coupons or discounts (35%)
  • Customer reviews (34%)
  • Loyalty points (29%)

For reviews, though, there’s a clear disconnect between supply and demand; from market to market, there are more people writing reviews than actively looking for them.

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[Source: GlobalWebIndex]

How Do You Get the +Factor?

Social Commerce: Which Social Media Platforms Drive the Most Sales?

Business owners often wonder about the “ROI of social media”. Is my Facebook page actually driving sales? Is all this tweeting really doing anything for my bottom line? Should I be on Pinterest and Instagram?

Well it turns out, when it comes to ecommerce, being social matters.

To better understand how social media is impacting the ecommerce industry, Shopify analyzed data from 37 million social media visits that led to 529,000 orders.

Here’s some interesting data points they uncovered:

  • Facebook dominates as a source of social traffic and sales. Nearly two thirds of all social media visits to Shopify stores come from Facebook. Plus, an average of 85% of all orders from social media come from Facebook.
  • Orders from Reddit increased 152% in 2013.
  • Perhaps most interesting and surprising was community style site Polyvore which is generating the highest average order value ahead of Facebook, Pinterest and Twitter. Also noteworthly in this category is Instagram which is also generating higher average orders than those same sites. This is especially impressive considering the only clickable links in Instagram are those in profile bio’s.
  • Facebook has the highest conversion rate for all social media ecommerce traffic at 1.85%

In addition to these stats, they’ve also analyzed specific industries to determine which platforms are performing better. You can check out all the findings in the infographic below.

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[Source: Shopify]

The Digital Factor 2014 Infographic: PwC overview of Italian landscape

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PwC Total Retail 2014

This survey, PwC’s seventh annual study in a series tracking changes in global consumers’ shopping preferences, is our biggest one yet: 15,000 online users representing 15 countries.  Among the expectations that global consumers now have are:  24/7 retailer availability, real-time insight into the retailer’s stock, compelling in-store technology, and consistent prices and offerings across all the retailer’s assets.

Today’s consumers have raised the bar for retailers. Multichannel shopping is a given — the price of admission into the conversation. Within our data we’ve unearthed eight customer expectations that transcend geography and product category, and will require that retailers evaluate their business model from top to bottom.

  • A compelling brand story that promises a distinctive experience
  • Customised offers based on totally protected, personal preferences and information
  • An enhanced and consistent experience across all devices
  • Transparency, real-time, into a retailer’s inventory
  • My favourite retailers are everywhere
  • To maximise the value of mobile shopping, both store apps and mobile sites must improve
  • Two-way social media engagement
  • “Brands” act like retailers, and we’ll treat them that way

Take a closer look at the main takeaways and feel free to discuss and share them! Please, don’t hesitate to contact me for any doubt and follow the hashtag #TotalRetail!

You can find all the contents, video, and much more on www.PwC.com/TotalRetail

1. “Trust the brand” is the #1 reason people shop at their favorite retailers, so retailers should change how that brand is communicated, both internally and externally.

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2. Retailers need to strike a balance between customization and security because online shoppers demand customized offers based on totally protected, personal preferences and information.

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3. Consumers expect a consistent experience across all devices, so companies need to ensure that customer information “travels” securely with each device.

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4. The back-office of retailers needs to move at the speed of the customer because shoppers want real time, transparency into a retailer’s inventory.

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5. Favorite retailers are everywhere, so retailers should examine their store portfolio taking into account how consumers want to shop.

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6. To maximize the value of mobile shopping, both store apps and mobile sites must improve. Businesses should focus on the mobile browser experience first, and then ramp up apps.

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7. Online shoppers seek two-way social media engagement, so retailers need to listen to customer’s comments and turn that commentary into actionable data.

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8. Shoppers don’t see the difference between manufacturers and retailers, so both sides need to work together to share consumer insights and collaborate to enlarge the pie and drive more success for both.

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