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  • Dec 07, 2018
Going Digital

Walmart the world’s largest company is only the third largest company in eCommerce, behind Amazon and Apple. In fact, Amazon’s eCommerce sales (USD 94.67 bn) is seven times as large as Walmart’s eCommerce sales (USD 14.43 bn). It is not that Walmart woke up to the eCommerce much later in the game for itsl low sales – Walmart has been online since the early days of the Internet. Yet, despite all its financial depth and managerial strength it has allowed a newcomer to upstage it. How? Why?

Vision is fundamental

Any successful business starts with a vision. So too with online. As we saw earlier the power of digital is potentially disruptive. So, whether a new business or integrating online into ones existing business the key to harnessing this disruptive power is having a clear vision. Without that vision, either the foray into digital will be a tepid venture or the digital initiative will subsume one’s life.

It is often assumed that Amazon started business in order to sell books at a lower price than bookstores did. This is far from the truth. Amazon’s vision is to be “… the world’s most consumer-centric company, where customers can come to find anything they want to buy online.”. This vision, according to folklore, led the founder of Amazon to zero in on books as a starting point because even the largest book store could only hold a few thousand titles, while an online book store could potentially hold all the titles published in the world, whether it had one buyer or millions of buyers. Amazon’s development, then and subsequently, has been driven by this focus of enabling consumers to find anything they want to buy online.

Walmart, in contrast, saw eCommerce, at best as an adjunct to its brick and mortar empire. Consequently its focus was on creating an online presence, modelled along the lines of its brick-and-mortar stores. Also, as was the viewpoint in the early days of the Internet, it is also possible that Walmart saw embracing the web as hurting the brick-and-mortar infrastructure. Following from this Walmart’s eCommerce offering failed on many fronts across all the prime requisites of a robust digital strategy, leading it to be an also ran on the digital front.

It can be argued that it is easier for a start-up to have a digital vision since it does not have the baggage of the analogue investments. In and off itself this proposition is valid. However, if businesses with significant analogue businesses do not embrace digital and plan for it, their analogue businesses are fated to become extinct. This is happening worldwide already, including in India. In India, stock broking and travel services are two industries, where those who were late to change have had to close shutters. The rapid proliferation of Uber and Ola is shuttering car hire companies and, anecdotal evidence abounds of footfalls dropping precipitously in certain kinds of retail stores.

Thus, while the emergence of digital technologies opens new frontiers, these frontiers are for all and not just the newcomers.

‘Go West Young Man, Go West’

Thus exhorted Horace Greeley in early nineteenth century to the adventurous young men of USA seeking fame and fortune. In today’s digital world, the west is wherever one is and the west can be where one is with a little bit of imagination and a lot of planning.

The most important element in unlocking the digital puzzle is determining what one wants to achieve. Catching up with the Joneses or it being a hygiene requirement is not one of them! Given its vast diversity, digital has the potential to add to one’s entire business or improve elements of business processes that have an impact on business health. Here are some examples.

Government department promoting rural artisans are restricted by Government run emporia promoting the output of the artisans. Most such efforts restrict the market for the output of the artisans and rather than promote and grow the skill base of the artisans, only serve to prop up an activity that will eventually peter out. Going digital would expand the market reach of such artisanal output to a global audience, enable newer opportunities, recognise artisans, promote traditional skills, etc. Appliance manufacturers can ensure trouble free performance of household appliances by automating signals from installed appliance that predict potential malfunctions.

The possibilities are limitless and have the ability to overwhelm. That is why a clearly defining the outcomes of what one desires by going online becomes important.

Take the promotion of handicrafts by traditional artisans. The market for such goods can be positioned in multiple ways – as substitutes for normally used household articles, as objects of art, as interesting gift ideas, or as all of these. The actions to be taken will be different for each of these approaches. If one wanted to promote these as substitute for household articles on the brick-and-mortar side, the product strategy would need to be aligned to that use. On the digital side, the marketing would need to create the web resources – website, search strategy, eCommerce and marketing to compete with products that consumers normally use. Take the user experience of the website. Typically, handicrafts are promoted for their artistic expertise and cultural heritage. Thus, such products are placed in contexts that highlight these. Such depiction, even if it is not intended, could restrict the adoption of handicrafts in the mainstream. Therefore, if one wants to make such handicrafts as mainstream usage products, the context of depiction of the products should be in normal usage. Similarly, when aiming to generate sales online, the target for search optimisation should be relative to other products that consumers use for the same purpose, rather than how one would promote culture and craftsmanship in general terms.

Thus, as can be seen, a headlong rush to the Internet, just to keep up with the Joneses will not yield satisfactory results. On the other hand, outcomes linked to a digital vision will provide the scale of satisfaction that the disruptive ability of the Internet.

But, why digital?

Given all this, one might wonder why go digital at all. After all, Walmart still is five times the size of Amazon.

As Theodore Levitt, observed in his landmark article, The Marketing Myopia, “…there is no such thing as a growth industry …companies organized and operated to create and capitalize on growth opportunities.” Quite obviously, if consumers are migrating to the Internet to sate their consumption needs, it behoves the business to be in that channel.

Besides this, as we have seen previously, Internet affords the possibility of achieving scale at a relatively low cost. Consider, the handicraft example we saw. Such an entity even in its wildest dreams cannot conceive of creating a global market in a brick-and-mortar world, because the cost of doing so would probably equal the entire federal budget of the country. However, the Internet now makes it possible to for the emporium to dream big, because the costs of reaching out to the world are well within the business budget of the entity. A caveat though, participating in the digital market place is not as expensive as in the brick-and-mortar terra firma, but it is neither free nor cheap, as is often made out.

And, of course, the digital paradigm of interaction and aggregation gives us many opportunities that were hitherto not possible. Just look at the entirely new range services such as ride sharing, food delivery, fitness tracking, online education, to name a few that have emerged empowering individuals in ways that were not possible just 15 – 20 years ago. In the process they have enjoined new phrases and words to the economic capability of humans such as micro-entrepreneurship, gig economy, etc.

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