People are getting digital
and why you should care about that.
One little change in the shopping user experience brings a huge impact. Agile companies can intercept these trends and build on them.
“Covid19 brought digitalization”: how many times did you hear this statement in the last few weeks?
It’s deeply true: digitalization is changing the pillars of our economy amazingly fast by evolving users knowledge and personal experiences.
Let’s see some examples of the revolution that’s happening right now.
The e-commerce world is converging on 2 models:
the Amazon approach, where one company owns as much of the shopping process as it can, and competes with sellers and suppliers at every level;
the Shopify approach, where companies are enabled to operate an independent business with increasingly powerful software tools.
At the beginning there were a vast number of little and clumsy e-commerce engines, independently developed and deployed, but when Amazon arrived and expanded beyond books, its user experience represented by ‘on click purchase’, huge catalog of products, user reviews, free shipping costs, outperformed the rest of the e-commerce platforms. Immediately after Amazon becoming a huge market monster, some companies felt the need to go back to their independence, opening their own stores with the same flawless Amazon user experience thanks to engines like Shopify. This represented huge opportunities for the “little, local, better”.
This is the same process we described talking about smart cities: at the origin there were the little local stores, then customers moved to shopping malls because they were sure to find everything, every time, without thinking too much about parking slots, business hours, products availability, special offers,…
But we see now that the evolution of this model is the 15 minutes city: a city where everything is 15 minutes walk away and everything is discoverable and browsable, exactly like in a Shopping Mall. So again huge opportunities for the digitalized “little, local, better”.
What happens when you get used to buying from an app instead of a physical store?
You start ordering your food from an app instead of going out. So here it comes Uber Eats, JustEat, Glovo, Deliveroo and other food delivery platforms allowing you to order everything from your sofa assuring you the best digital customer experience possible.
You are not interacting with the Pizzeria or Sushi restaurant anymore, you are interacting with aggregators, they own your journey and your data.
Thanks to the new user journey digitalization, now every restaurant owner is aware that online ordering is an option, but many aren’t willing to make the upfront investment into building a site to handle orders. At the same time, owners are getting more and more tired of the fact that the aggregators actually own their businesses.
So what happens now? You already know: many of them are already starting to go back to the “little, local, better” world.
This creates an opportunity for companies like Flipdish, which makes it easy for restaurants to offer online ordering—and charge lower prices. They’re acting like Shopify to the larger aggregators’ Amazon.
Flipdish is essentially a business whose opportunity was created by the previous generation of delivery options.
Delivery with online ordering was challenging to roll out, but now that it's ubiquitous, it's ready to be unbundled.
The previous generation of delivery companies opted for a full-stack model: online ordering, a marketplace for finding restaurants, and a logistics network to deliver meals. As it turns out, one part of that stack—ordering online, rather than by phone—was what some restaurants really wanted. Some of them needed their own delivery team at first, but they’re better able to outsource this now. And by controlling their own digital storefront, they keep control of their brand, rather than ceding customer access to Uber Eats or another platform.
It’s similar to the unbundling of other platforms, like lodging: large hotel chains nudge customers to book directly rather than through online travel agencies, so they don’t give up 20% or more of the booking to an aggregator. Flipdish spotted one part of the bundle that was in higher demand than the rest, and is selling it separately for a lower price.
And what about the insurance that covers all the vehicles involved in this exploding Delivery market?
Ride-sharing and delivery services work because they take advantage of the high ownership yet low utilization of vehicles. But they're not a perfect fit for how vehicles are generally used—or how they're generally insured.
Zego is an insurer targeting delivery workers. It offers car insurance for increments as short as an hour, and covers the commercial uses that aren't covered by standard car insurance policies.
Why the success? By tying cost to usage, Zego converts insurance from a fixed cost to a marginal cost, lowering workers' barriers to entry. In one sense, Zego is the insurance industry's answer to the on-demand economy. Zego is a way to rent insurance, rather than buy it.
Zego works with food delivery companies to promote its service. It's beneficial to both sides: delivery companies don't have to worry about missing out on uninsured workers, or losing workers who get in trouble for operating without insurance.
They don’t just assist in operations, but in driver acquisition: Zego runs ads targeting people who don’t do delivery because they don’t have insurance. Getting commercial insurance is a barrier to working in on-demand delivery, as more apps start to suggest it or require it, and Zego has built its business on knocking down that barrier
So what
These are only just some small examples of how one little change in the shopping user experience brings a huge impact on many industries. The companies that are agile enough to intercept trends with market insights can become the next unicorns.