After 11 weeks of exploring the world of digital business models, it is time to reflect on what I’ve learned and how it will impact my personal and professional life.
As I would like to work as a consultant in the future, knowledge of these models is very relevant for me. The examples of Tom, Gerrit, Tiphaine, Cara and Maggie show that new business models and radical or incremental innovative changes can bring startups and also established companies in advantaged positions. There is certainly not only one road to success.
2. Worldwide online knowledge sharing
I valued the global exchange displayed on the MOOC, on Canvas and in the comments under my posts from France, Germany, Thailand, USA and United Kingdom. It was interesting to get to know successful Asian companies like Shopee that I haven’t heard of before. Given my degree is called ‘International Management’ the international insights are very important for me and some companies could be potential future employers.
source: canva.com
3. Tops and Flops
It is notable that some companies were mentioned consistently, like Netflix or Amazon. It shows their current powerful position and why some companies are more successful than others. The thread ‘failed companies’ on Canvas was also helpful to understand why some companies failed and what their competitors did instead to succeed. Tiphaines’ post on Sephora showed very well, how the company survives in the highly competitive beauty industry.
However, we should scrutinize successful companies, e.g. how Amazon treats their staff vs. how Sephora increases salaries to cope with longer opening hours. Overall, we should always keep the customer data protection in mind.
This is the end… and the beginning
As you can see, the past weeks have been really eventful and instructive. I am now more aware of the general development and usage of digital technologies and how this will affect companies as well as me and my professional life. I started to read more comments on newspaper articles, developed my critical thinking and I discovered ‘Transferwise’ in Cara’s post, which is very useful for me as an international student in the UK.
In addition, I have set up a personal Twitter account, that I want to use more often in the future. The video I tweeted concludes my digital journey and displays the personal and professional skills I’ve gained by participating in the module.
When I moved to Munich, my car was the first thing I no longer needed. Spending hours in traffic, expensive parking at home and at work, high insurance fees and taxes didn’t pay off anymore. Munich’s public transport is efficient, it’s eco-friendly and I never looked back to my days as a car owner – until I had to go to IKEA or buy groceries for my housewarming party. Little did I know, the perfect solution was parked right in front of my home: car2go.
Cars have been a status symbol in Germany for a long time. Changing demographics and consumer behaviour as well as the usage of new technologies, have resulted in declining car sales. Especially the younger generation and city dwellers are less likely to own a car or even have a driver’s license (Eisele, 2017).
Emission rates rise, environmental awareness increases and the city of Stuttgart started to ban older Diesel-vehicles from the city centre (Stuttgart.de, 2019). The recent Diesel-scandal and high costs show that consumers and big cities are ready for change, which provides possibilities to attract people to carsharing.
Turning car manufacturers into transportation companies
“One-way, free-floating car sharing is taking cars off the road and recuding mileage, as well as emissions.” Susan Shaheen (2016), co-director of TSRC
Automotive companies like Daimler constantly improve technology and comfort of their cars by experimenting with car connectivity, AI and autonomous driving, but they can’t rely on loyal customers anymore. The current changes hold challenges but also opportunities to focus on a new target group. Carsharing guides the transformation from being a traditional car manufacturer into a transportation company.
Daimlers’ car2go is the worldwide market leader in free-floating carsharing with 14,000 cars (Ammon, 2018) and 3.6m users (Niedermeyer, 2019). In late 2018, the EU approved the merger of car2go with BMW’s competitive carsharing model ‘DriveNow’, adding another 1m users and 6,500 cars (DriveNow, 2018). With a yearly revenue of 200m, car2go is only profitable in some cities but has high aims for the future (Pander&Tatje, 2016; Niggehoff, 2018).
Key figures in this business model are mobile internet, smartphones and apps which make the service of car2go not only possible but quick and easy:
Prices depend on the city, vehicle and chosen rate and vary from e.g. 0,19€ – 0.39€/minute in Berlin. Cars in remote areas have cheaper rates; refer-a-friend schemes and packages are available. The price includes free parking, insurance, fuel and service (car2go, 2019). The newly found joint venture between Daimler and BMW, ‘ShareNow’, will focus on building an electric ecosystem by making electric cars even more accessible (Evarts, 2019).
Declining car sales are not only happening in Germany. The same development has been seen in many countries around the globe, including China (Hancock, 2018). It is no wonder that car2go has one of its largest presences in Chongqing, which turned out to be very successful (Helven, 2018).
A digital business model succeeds
The digital business model is mainly ‘access-over-ownership’: customers pay for using a product/service without owning it or having ownership responsibilities (Marsden, 2015). This should not to be confused with the ‘Sharing Economy’ and also not to be seen as a replacement of public transport, but rather as an enhancement.
While introducing carsharing has been a successful decision for both companies, it is important to look at some downsides of it, especially as ‘ShareNow’ creates almost a monopoly position.
Space for Improvement
Daimler and BMW collect a huge amount of data, which enables them to create a personal movement profile. Legal experts warn of an unmeasurable amount of collected data and the ability to examine this anytime (Winter, 2016).
Not only do both companies have access to a massive data set, their strong position enables them to heavily influence prices or change the operating area. Prices increase especially in areas with higher demand (Simon, 2018).
Critics also question if paying-per-minute leads to speeding and not owning the car to an aggressive, irresponsible driving behaviour (Carsharing-Watchblog, 2018).
Another point to improve is the low ‘active rate’ as many car2go cars are parked everywhere. This indicates for some critics that carsharing doesn’t reduce cars on streets and that they are mostly used for distances that could be handled by bike, foot or public transport. Studies deny this by mentioning the reduced number of new purchased cars in some cities (Transport&Environment, 2017). Overall, car owners have to try the service first to see if it supports their lifestyle before selling their car.
Improvement by autonomous driving?
Owning a car is expensive and public transport is not suitable for everyone which is why carsharing can be a good alternative.
Currently, carsharing is only available in big cities and has some disadvantages, which autonomous driving could improve. In the future, cars could pick up the user and look for parking by themselves. It could also support the connection in rural areas.
Until then, ‘ShareNow’ has big plans to expand in Europe and overseas, providing an eco-friendly ‘car on your terms’. The mission is to support the infrastructure in big cities and former CEO Beermann (2016) forecasts: “With changing mobility patterns in cities, the biggest growth for car2go is yet to come”.
My second blog post evaluates how the online retailer Amazon addresses opportunities and challenges presented by operating in both digital and physical locations.
Many high street retailers currently struggle. Especially UK department stores like House of Fraser and Debenhams are hit by consumers shifting preferences to buy everything online – from clothes to groceries (The Guardian, 2018). Even though these shops also have an online presence, there is one online retailer that always seems to be one step ahead: Amazon.
The rapid rise of Amazon
Established in 1994, Amazon became the most valuable company in 2018 (BBC, 2019). What has started as an online bookstore evolved in a multinational company. There is a segment for nearly everything people want to buy and the paid subscription service ‘AmazonPrime’ is a fast, inexpensive and convenient delivery service, with same- or next-day delivery options in some cities.
Amazon describes its mission as the “Earth’s most customer-centric company” (Amazon LinkedIn, 2019) and Amazon’s founder Jeff Bezos confirmed:
“(T)he No. 1 thing that has made us successful by far is obsessive compulsive focus on the customer as opposed to obsession over the competitor” (Premack, 2018).
Amazon’s response to opportunities and challenges online
With over 300 million active customers worldwide, there is no doubt that Amazon has a dominating online presence (Statista, 2019).
The internet offers countless opportunities to start a business and to reach a wide breadth of customers at relatively low costs. Amazon has successfully recognized trends in the past and its additional services are able to compete with high profile businesses such as Google, Netflix, and Spotify.
Being known for selling books, DVDs and CDs, Amazon introduced video and music on demand services, the e-reader ‘Kindle’ as well as an e-book store and the AI-based virtual assistant ‘Alexa’. By introducing the grocery delivery services ‘AmazonPantry’ and ‘AmazonFresh’, Amazon competes against traditional supermarkets. To compete with food delivery services such as Deliveroo and UberEats, Amazon started ‘AmazonRestaurants’ and to enter the clothes market, ‘AmazonFashion’.
These examples show how Amazon managed to use the collected user data efficiently and thinks ahead what their customers would enjoy. This is a clear advantage over competitors and helps Amazon to maintain their strong online business.
Amazon’s entry into traditional retail
It is interesting to look at Amazon’s recent foray into physical locations in a time when traditional retailers are struggling. The first ‘Amazon go’ store only opened in 2016 for employees and in early 2018 for the public (Day, 2018). Since then three types of physical stores have been introduced: Amazon books, Amazon 4-star and Amazon Pop-up. So far, the book and 4-star stores are only available in the US, while the first pop-up stores were introduced in 2018 in Europe (Amazon.com, 2019).
Amazon go (2016)
What are the offline opportunities and challenges that Amazon seeks and faces?
Present staff and additional services
Speaking from my own experience, Amazon has an excellent customer support, that is available 24/7 via e-mail, phone or chat. Offline stores provide an additional opportunity to attract customers that would rather interact with a person or seeing a product before buying it. Additional services could include a repair service of devices or cafés.
Personal Data
Online shops make it easy to collect customer data by tracking their purchase behavior e.g. clicks or views. It is more difficult to collect data offline. With in-store cameras and tracking smartphone movements, Amazon will record facial expressions and motion to analyze the physical purchase behavior of their customers. The company will exactly know who bought what, when and where.
Several challenges in the future will most likely arise around data protection. Data security officers in Germany highly criticize the ability of Amazon to create a comprehensive customer profile by accumulating a high amount of sensitive data (Brauns & Völlinger, 2016).
Technology and physical presence
Physical locations provide the opportunity to see the product before buying it. The cashier-less ‘Amazon go’ stores with payment via app are one example how Amazon tries to simplify offline shopping by maintaining a high technological standard and understanding their customers’ needs.
Challenges are the reliability and security of technology. It has to be user-friendly and easy to access. Current issues are e.g. hacked phones or the inability to enter a store with a broken phone screen if a QR code has to be scanned (Valentine, 2018).
Pop-up stores
By experimenting with pop-up stores, Amazon conducts a lot of research on how to improve their physical locations. They can test different business models, detect technical difficulties (such as the inability of the software to handle more than 20 customers at once in a store (Pakalski, 2017)) and if the current business model does not work out, they can change it easily or discontinue without investing too much time and money.
Now what does the future hold?
As shown, Amazon continues to enhance its online presence by adding more and more features to support their customers daily life. With around 3,000 planned ‘Amazon go’ stores (Soper, 2018) and new private-label products, the retail segment continues to grow (Pandey, 2019).
Amazon itself is currently working on another revolutionary service called ‘Amazon Prime Air’. The future delivery system is currently in the testing phase and will transport packages via drones, but a date has yet to be announced (Amazon.co.uk, 2019).
Amazon Prime Air (2016)
“It used to be that if you made a customer happy, they would tell five friends. Now, with the megaphone of the internet, whether online customer reviews or social media, they can tell 5,000 friends.” Jeff Bezos
This quote from Jeff Bezos in 2017 (Forbes) perfectly sums up the philosophy of Amazon and how they will tackle the future opportunities and challenges in the online and offline world: By entirely focusing on their customers’ needs.
Due to my former job as an HR junior manager, my focus
for this first blogpost will be on changes in the work of
recruiters.
Online
recruiting has been a part of the responsibilities of an HR professional for a
long time. Some significant changes happened especially in the past 10 years
and professional social network services such as LinkedIn became more important
in the process of online recruiting (CV Library, 2018).
Traditional
offline recruiting methods such as newspaper advertisements, job boards,
agencies and fairs are still in use and can be successful, but with the rise of
social media, employment-related search engines such as Indeed.co.uk and
company websites, new ways of recruitment have been introduced. These methods
are all influenced by the traditional way of recruiting: job advertisements are
published online and contain the usual information such as required skills and
responsibilities. As a cover letter and a CV have to be sent to the companies
via post, e-mail or submitted via the companies’ websites, it has been a
relatively easy process but was time-consuming and rather expensive.
E-recruitment
in the form of social network services is now a major supporting tool for HR
professionals. With more than 546 million members in over 200 countries and
regions, LinkedIn is the main professional social network (LinkedIn, 2019). It
is a so-called ‘platform’ where employee-seeking companies and
employment-seeking members can connect and communicate directly (Van Alstyne,
Parker & Choudary, 2016). Every member, currently employed or unemployed,
can set up a personal profile on the website that combines a CV and cover
letter. Companies can also set up a profile and upload current job
advertisements.
All
members can search for jobs and then apply directly on LinkedIn. They can also
interact with the company and their recruiters by sending messages or
commenting their blogposts. Members can also connect with other members working
in the same industry, for the same employer or in the field of their
professional interest. This supports direct networking and provides endless job
opportunities. By listing skills, it is easy to find suitable job offers within
seconds in a preferred geographical area.
The
service of LinkedIn supports the overall recruitment process and makes it
faster, easier and cost-efficient. Expensive agencies are now infrequently used
and the long process of advertising jobs in newspapers or magazines is replaced
by publishing a job advertisement with one click online. A main advantage is
also the wider reach, as the internet provides the opportunity to advertise
worldwide. Companies are more likely to find the best fit by having access to a
great variety of different skills, cultural and professional experience (Crous,
2016). There are also other important networks in different countries such
as Xing with 15 million members in German-speaking countries (Xing, 2019).
To
support the process, Artificial Intelligence will play an important role in the
future of recruitment. It could replace the search of potential candidates by
searching all websites and not only social network platforms to find the best
match. This would make it easier for recruiters to further develop the process
of recruiting (Amog, 2018).
Nina's Online Journey 