The price of US crude oil crashed from $18 a barrel to -$38 in a matter of hours, as rising stockpiles of crude threatened to overwhelm storage facilities and forced oil producers to pay buyers to take the barrels they could not store. The market crash underlined the impact of the coronavirus outbreak on oil demand as the global economy slumps.
Throughout human history, energy has been a key enabler of living standards. To survive in the agrarian era, people burned wood for warmth and cooking. In addition to use as a building material, wood remained the chief global fuel for centuries.
The invention of the first modern steam engine, at the beginning of the 18th century, heralded the transformation from an agrarian to an industrial economy. Steam engines could be powered by either wood or coal, but coal quickly became the preferred fuel and it enabled massive growth in the scale of industrialization. And so began our obsession with oil. What it did do, was establish this valuable new commodity as a household necessity and a utlitity of not just industry, but also underpinned it as a measure of economic prosperity, the benchmark to the world.
Big data and its comparison to oil has long been misrepresented rather than oversold. Our struggles with oil now come from a place we relate to now as a climate change problem as opposed to it in its previous forms. At a macro level, this period we find ourselves in is reminiscent of the industrial revolution with the distinct new problem — Oil and its by products have powered the world for 2 centuries now and that is a grip we are finding difficult to let go of.
What has this to do with #ecommerce? I have asserted for some time that the tools of e-commerce should be the tools that power a modern business — headless platform, omnichannel in approach, single source and data and so on.
eCommerce is not for everyone — not the way we think of it — but let's start with 2 stories of contrasting fortunes but similar in tone and seismic by their nature.
Courtesy of Colin Lewis — say what you see?
Booking.com announce fall in bookings of 85% YOY. Loss in revenue because of reduced rates at hotels was even greater. CEO Fogel says they were cutting costs by “stopping nearly all marketing, cut management salaries + hiring freezes.
Booking’s rival Expedia has already laid off around 3,000 staff this year. Instead of jointly spending $10bn on Google Ads in 2019, this will now be <$1bn — if even that. Google taking a $10bn hit. Thats just 2 companies. What about all the airlines.
However, Booking has $8.5bn in cash at its disposal to see it through the crisis — 4X the amount of Expedia + Airbnb. Who will be the winner in 2022?
Looks like Booking.com could be there to hoover them all up. Some analysts are modeling for a return to 2019 revenue levels in 2022 — others are saying that this “potentially slightly optimistic”.
Back to me for a moment — I will leave this word with you Aggregation! If this were Sesame Street, then call me Big Bird. This word I will return to. The utility demonstrated here is not on Booking, rather Google — it is not a small revenue amount to pick back up.
Penneys or Primark — whichever side of the pond you fall on. This headline is rather misleading and has been quoted as follows: If you’re ever likely to need an image to illustrate the importance of ecommerce, I’d recommend saving this.
I disagree with most of the commentary on this for the following reasons.
- Penneys did an extensive study on their ability to enter this market profitably and concluded they could not for some easy to see reasons.
- In store impulse purchases dramatically increased basket size and AOV.
- AOV online was determined to be too small to be worth pursuing.
So the decision taken was one of pragmatism. Now, could they have looked at this differently and would their outlook be slightly more positive as a result? Problems they would encounter returns, customer service, refunds and more. Are they selling too cheaply? Will they be able to return to a normal supply chain when the stores reopen ? And does the investment in their online business mean they do not have to expand physically — could they in fact bring equity to a brand such as their own? I think not.
- There needs to be valid and well-considered reasoning to building e-commerce. Financial modeling such as capital investment tools and rationale now need to properly attribute cost to technology investment.
- Fashion it seems, is on its knees.
McKinsey wrote their business of Fashion original report earlier this year and has since changed the outlook. The correlation between the personal “global economy” shifts in consumer behaviour and the Darwin effect all paint a picture that leaves us ponder that some of the casualties of this existential crisis were not waiting on the if, rather the when. Don’t believe me?
If stores remain closed for two months, McKinsey analysis approximates that 80 percent of publicly listed fashion companies in Europe and North America will be in financial distress.
Fashion, because of its discretionary nature, is particularly vulnerable. The average market capitalization of apparel, fashion, and luxury players dropped almost 40 percent between the start of January and March 24, 20202 — a much steeper decline than that of the overall stock market.
Let’s get more hopeful thought, right? They set the tone with 100% accuracy in my opinion in closing this great report.
This joint report by the Business of Fashion and McKinsey is an effort to advance the discussion beyond crisis management and immediate contingency planning by outlining the areas in which the fashion industry must focus once the dust settles on the current crisis.
This I will come back to in the closing.
3. Necessity is the mother of survival or invention — depends on who you speak with.
German grocery discounter Aldi have sprung into life to respond to the need for home delivery where they didn't offer full e-commerce capability. Since April 17th the supermarket will be selling food parcels of 22 products for home delivery, including tinned food, rice, pasta, toilet roll and antibacterial handwash. Customers will be limited to one of the £24.99 parcels each.
This is not a subscription box —
ALDI food parcels
Look at how well they put this together also — all the hooks, callouts and even the steps — Setting expectations on delivery, email and tracking. Why?
The listened to customers
Recognised a weakness
Carefully curated the food parcels — knowing their limitation in supply chain ordering was always to have the best sellers in store. This is a genius move.
Responded rather than react — this could be used for college deliveries, to the elderly, to the lazy and to those on a budget — so many use cases that this implementation is here to stay, and rightly so. As a scalable service, this could compete against competitors — it takes away that browse experience and focusses on it’s internal weaknesses and uses them as strengths.
4. Who wants to watch sports stars play video games against each for money? Apparently millions of us. Tens of millions. The Rise of eSports.
Munster Rugby on Tuesday announced it was launching a new partnership that will see Ireland’s most successful esports team Phelan Gaming rename as Munster Rugby Gaming for their participation in forthcoming tournaments. Munster Rugby chief executive Ian Flanagan believes his organisation will be ideally placed to reach a huge audience at home, where there are 700,000 gamers, and overseas with this move, tapping into a team founded in 2016 by Ciarán Walsh that finished third in the 2019 UK and Ireland League of Legends, a competitive iteration of the most popular online game in the world.
Forbes reports with the global sporting shutdown continuing amid the coronavirus pandemic, a host of competitions have been forced to seek new and innovative ways to engage their fans.
For many, this has meant turning their events digital and embracing the fast-growing esports industry.
Already, for several sports, the numbers their digital platforms are reaching far exceed the crowds at their physical events. With 79% of all games purchases made online, and 2.5 billion gamers worldwide to engage with, the potential is huge.
And with Facebook joining the esports/egaming arena this week, you can be sure that this is an area that will attract e-commerce and already has. Why this poses such a threat or opportunity is that they manage all their strengths in one platform now, including the ability to pay, share and talk to brands in a single platform.
Watch out for platforms like “I liketh.at” offering the platform Twitch, the ability to sell merchandise midstream during a game — imagine what you could do during a rookies first pitch of his career — well Match attax do just that and offer real-time baseball card creation. Not just capturing a customer desire at a point in time, but also offering the producer a real-time manufacturing process that means there is no excess cost. This is a space that will prove rich pickings as financially strapped sports brands seek new ways to earn revenue and gain global reach.
Emerging from all of this, is opportunity. Opportunity is not always evident or easy to obtain Right now there is a clamour for internet real estate that has not yet been seen since the gold rush days. But we are all pushing in the same direction, to the same end. At least in principle. Why data willprovde better than oil, better for us today, environmental reasons aside.
For a start, while oil is a finite resource, data is effectively infinitely durable and reusable. This means that treating it like oil — hoarding it and storing it in siloes, has little benefit and reduces its usefulness. Nevertheless, due to the conception that it is similar to oil (scarce), this is often what is done with it.
Oil requires huge amounts of resources (including oil itself) to be transported to where it is needed. Data, on the other hand, can be replicated indefinitely and moved around the world at the speed of light, at very low cost, through fiber optic networks.
Data also becomes more useful the more it is used, rather than its energy being lost as heat or light, or permanently converted into another form such as plastic, as when oil is used. Once processed, data often reveals further applications. For example, medical data collected from patients can help a doctor diagnose and treat an individual patient. After that, it can be anonymized and fed into machine learning systems to generate broader insights that can benefit many, many more.
Treating data like oil — using it once then assuming its usefulness has been depleted and disposing of it — would certainly be a mistake.
Over the last 2 months, data has proved more necessary than previously ever conceived and we face the two biggest decisions of our generation in my opinion —
- Are we ready to give up privacy to better monitor and manage healthcare?
- Are we prepared to allow the earth to breathe again and thrive and live amongst it once more, rather than dominate it as a finite resource?
Surely, if we are to scale e-commerce in the way most likely right now, we will have to find more sustainable ways to do it and there lies maybe the biggest opportunity of all.
I will complete my roundup with a couple or great initiatives and there are so many of them around right now, it almost seems unfair to pick 1 or 2. But I have tried. By now, many of you retailers will also be in the throes of filling out your applications for the Online Retail grant — I will be assisting in the planning and writing of these on request and will be hosting a webinar next week — watch this space or mail me for 1–2–1 session.
Initiatives to follow:
From April 17th, for a minimum of three months, Irish businesses, with or without an existing e-commerce presence, are being invited to use the eBay.ie marketplace with the following benefits:
- Free listings on eBay.ie
- No Final Value Fees (the commission paid to eBay based on the final value of sales)
- Free training that will cover eBay selling basics, how to get the most out of the platform, digital skills, search and listing optimisation and marketing. The training will be delivered through a series of webinars and mentoring programmes from eBay’s dedicated team in Ireland, helping ensure a smooth transition online for those with no or limited experience
With 180+ million buyers across the 190 markets in which eBay operates, the Up & Running programme will allow Irish retailers to reach new customers, both at home and overseas, at a time when consumers are looking to online channels to fulfil many of their shopping needs.
The purpose of this fund is to enable Irish-owned retailers to enhance their digital capability and to develop a more competitive online offer, that will enable an increase in their customer base and build a more resilient business in the domestic and global marketplace both online and offline.
Successful applicants will be awarded funding to support a maximum of 80% of the project eligible costs with a maximum grant of €40,000.
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4. My first podcast link, but Morgan Cummins is know to most of the e-commerce community in Ireland and much loved for his approach, enthusiastic, honest and all about the people. More than ever his skills and compassion will be needed in the months ahead. Take a listen to Morgan talking to Joe in the backed by AIB series and the challenges facing our recruitment and hiring in the immediate future.