Swarm intelligence and digital self-determination: E-commerce on the verge of the next leap forward
Social networks, real-time information, mobile shopping: The swift advance of the Internet has dramatically changed people's everyday life. This includes their purchasing habits and, closely linked to this, the relationships between companies and their customers are about to change fundamentally. Private Internet users typically embrace new technology much quicker than particularly the established companies can adjust to these changes. These and other views and findings on tomorrow's e-commerce at the intersection between logistics and market and trend research result from the fourth Delphi Dialog of Deutsche Post DHL Group hosted in Berlin: "Is e-commerce the key to consumer happiness? How the internet is changing our buying behavior."
Views and findings on tomorrow's e-commerce from the fourth Delphi Dialog of Deutsche Post DHL Group hosted in Berlin*
Triumphant success of the Internet
It was only in the 1990s when the triumphant success of the Internet reached the broader population and swiftly developed into a mass medium - and its use will likely be revolutionized yet again with the widespread distribution of smart phones. Internet users can access information, do business and get in touch with companies or other consumers everywhere and at any time. Much evidence suggests that they will increasingly use these opportunities going forward - a development with as yet almost unforeseeable effects on relationships between companies and their customers.
Prof. Peter Wippermann, trend researcher and founder of the Hamburg-based "Trendbüro", puts it in a nutshell in his opening address at the Delphi Dialog of Deutsche Post DHL Group in Berlin: "Even today, we all live much more in the digital world than we want to admit to ourselves." Companies, however, find it clearly difficult to keep pace with the rapidity of change in the consumer space, he adds. The past 20 years of the Internet era have shown: "What takes two years for consumers to adapt to may take established companies 20 years to digest", Wippermann points out.
Speaking for the host of the event, Juergen Gerdes, Member of the Board of Management of Deutsche Post DHL Group made it clear that his firm has long accepted the challenge. "We are one of the founding fathers of the mail order business and e-commerce, a natural provider of secure digital information and with our comprehensive infrastructure we are a driver of the interconnection between countries and individuals", Gerdes explains. "With our shopping platform 'MeinPaket.de' and our online marketing subsidiaries nugg.ad and adcloud, we are also active players and partners in e-commerce. As such, it is only logical that we are devoting a great deal of attention to that topic", Gerdes continues.
A representative study by Deutsche Post DHL Group and TNS Infratest published at the beginning of February shows just how much consumer behavior has already changed. The researchers found that e-commerce has reached the "core of society", and online shopping - via PC, smartphone or tablet - is becoming second nature for an increasing number of people.
Gerdes about the study: "We took a different approach. We wanted to understand in what ways the permanent availability of products impacts peoples' perceived quality of life. How must e-commerce be organized when it is about more than just fun and entertainment purchases, but rather about stocking up on everyday life products? The results could not be much clearer: E-commerce makes our lives easier, both at work and at home."
Thus, every third German already made two to three online purchases over the past six months. The majority of the survey participants no longer want to do without online shopping. Two thirds greatly look forward to their shipments; over half even say that receiving the ordered goods feels like getting a gift. The enhanced shopping experience, reduced stress levels and better time management provided by e-commerce improve online shoppers' quality of life.
In aggregate, the results of the study show that, from the consumers' point of view, e-commerce can indeed provide added benefits. Dirk Steffen, head of media research at TNS Infratest qualifies this finding, however: Whether e-commerce adds value also depends on the target group. While many older people cannot use the opportunities offered by the Internet to the same extent or find it difficult to keep pace with the technological development, the younger generations typically are confident in handling the World Wide Web, Steffen explains.
"In fact, today's children grow up with the achievements of the digital world and take them in their stride”, Gerdes adds and stresses that while this offers new opportunities, we mustn't let our understandable euphoria tempt us to neglect the risks that come with it. "The time has come to include the Internet as such in the school curricula of pupils from a certain age onwards and provide transparency", Gerdes adds. "We absolutely need to make an educational effort: The way children use the Internet must be controlled to a certain extent", the manager says.
Time means happiness
For trend researcher Wippermann, the dynamic growth of e-commerce is only one facet of a broader development. "The Internet represents a technical tool to use our time as effectively and efficiently as possible." To put it in a nutshell, he says, it is all about "digital self-determination and digital self-service" concerning all areas of life. By using increasingly sophisticated yet also expensive technology, people are "buying time", Wippermann says. He takes things one step further though, associating Internet usage - with the related possibility to gain time autonomy - to a much more universal concept: happiness.
That much is clear: While information in the Internet is democratized, omnipresent, always available and typically free of charge, the unlimited possibilities of the digital world are restricted by the mundane fact that each day still has only 24 hours and that life is finite.
This creates entirely new time management challenges for people in the Internet era: How much time should they dedicate to potentially time efficient but in reality often time-consuming activities in the Internet? And how much time should they consciously set apart for their offline life? Being unreachable thus becomes the true luxury of our day. If time is indeed the most precious resource of modern man, if gaining time can therefore bring happiness, and if the Internet is the most efficient way to achieve such happiness, future users will likely turn to a much greater extent to the Internet for their everyday activities than they do today.
Information is power
The rationalization of privacy, which is driven by the technological possibilities of the Internet, creates "situative intelligence", as trend researcher Wippermann names it. In purchasing terms, this new concept translates into a wealth of possibilities for consumers that go way beyond identifying and buying products and comparing prices and offerings in the Internet, already a reality for many consumers these days.
We are already seeing the first signs of a more fundamental innovation. The Internet, Wippermann states, allows for "uninstitutionalized actions", i.e. self-organization at a very basic level that can create majorities at the spur of the moment, a phenomenon known as "swarm intelligence". As an example he mentions so-called "shop mobs", i.e. potential buyers who use the possibility to organize into a purchasing syndicate - and spontaneously obtain purchasing power - in order to get the best possible discounts.
This new type of consumer democracy is supported by the technological advance and might well shift the balance of powers between companies and customers - because the latter lose their informational edge. "We can all deal on a par with companies", Wippermann says. If he is right, we will no doubt see the advent of a buyers' market.
"The idea of networks changes companies", the trend researcher concludes. It is based on cooperation, common interests and very likely also on values. Today's Internet users are no longer passive, they are active. They are no longer ignorant, they are well informed. They are no longer isolated, they are interconnected.
Established companies must adjust to this new reality, reorganize and also adapt their cultures. Corporate success is no longer defined by what is technically possible but by what best meets consumer requirements. Essentially, the implementation of new Internet-based distribution strategies is not about technology but about relationships and communication, which are facilitated by social networks and particularly by Facebook with its over 800 million users globally. They are playing a key role for accessing tomorrow's customers.
Prof. Peter Wippermann: "People will no longer manage their basic needs themselves; instead, they will outsource them at the best possible conditions based on their individual usage data"
The customer comes first
Experts and decision-makers agree that interactive connection with customers may, in the not all too distant future, become mission-critical for companies particularly in sales. Still, only a handful are already actively using the new possibilities while most are still reluctant - either from ignorance, inexperience or simply from the fear of running ahead of themselves. "Companies shouldn't perceive social networks as a risk but as an opportunity", market researcher Steffen says. Purchasing decisions can be effectively influenced also - and perhaps particularly - in the web 2.0.
But only if companies move beyond traditional advertising and embrace the communications dynamics of these networks, i.e. if they respect the nature of social media and authentically participate in their communicative process. In this environment, credibility and trust take precedence over influence and power.
Customer orientation is redefined in a broader sense in the Internet world. Companies must try to anticipate or at least keep pace with changing consumer behavior, which, in turn, requires strong customer relationships.
For trend researcher Wippermann, Amazon is a prime example of successful corporate development driven by this so-called "customer centricity". Starting out as an online bookshop, Amazon quickly expanded into other market segments and transformed from a start-up into a global multi-billion dollar group by interacting intelligently with consumers and developing products and services entirely derived from the customers' perspective.
The privacy trade-off
The example shows: E-commerce must offer added value to consumers in order to be successful. Once true added value is offered and recognised - and only then - consumers are willing to alter the boundaries to their preciously guarded privacy, to the benefit of the companies they're dealing with.
Google Street View is a particularly telling example, Wippermann says. Roughly two years ago, the service unleashed broad public protests. In the meantime a lot of people who had the exterior of their homes blurred out have changed their minds because Google Street View pictures are now integrated into 3D navigation systems of renowned car manufacturers. For many, Wippermann adds, being untraceable in this service is equivalent to losing status.
As yet, only every third feels that his/her personal data are well protected the study by Deutsche Post DHL Group and TNS Infratest found. Many online shoppers feel uneasy particularly vis-à-vis smaller, less well-known online shops, from which follows that security and transparency are still key criteria for online purchases.
"The web is also a matter of trust. People basically don't mind disclosing personal information such as account details - as long as they can be certain that those data are treated with due care", Gerdes says. The ability to select the payment method is a key user requirement, closely followed by easy return processes and speedy delivery.
However, Wippermann states: "We are witnessing a reinterpretation of privacy, particularly under the influence of the web 2.0." People are increasingly willing to disclose ever more personal details in return for greater comfort afforded to them by technology - such as navigating the torrents of information via individualized information services or using convenient shopping processes. "They trade largely freely available information for privacy", Wippermann says.
The transparency about themselves and their habits voluntarily disclosed by consumers also benefit market research. "These days, in many areas we no longer need to question consumers because they talk publicly about brands or products", Steffen says. Market researchers, he adds, can obtain new findings and run analyses simply by interpreting the information made available publicly or via social networks.
For companies, this opens up a wealth of new possibilities - way beyond personalized advertising concepts. In the travel business, for instance, providers can localize users via twitter, e.g. in order to send them personalized suggestions for hotel accommodations in real time, Wippermann says.
The "social seating" offering of the airline KLM is taking this concept one step further: When booking online, buyers can link their Facebook account and authorize the airline to take the preferences and dislikes in their profile into account when selecting seats or seat fellows. "This rationalizes social relationships", Wippermann says - thus providing evidence for his view of the Internet as a tool to increase efficiency in the consumer space.
You've got a delivery
Digital self-service, internet as key to consumer happiness, e-commerce boom - all of that would be impossible without logistics. "The old and the new world complement each other very well", states trend researcher Wippermann, and TV journalist Stefan Aust, moderator of the event, concurs: "Even in the era of the stagecoach, the Post was at the forefront of interconnection", the former editor in chief of SPIEGEL magazine says. Today, logistic firms ensure that Internet communication eventually leads to non-virtual results in the sense that the goods that have been ordered online effectively reach their real world recipients.
"For us as a mail and logistics service provider, digitalization is both an opportunity and a challenge", Gerdes carries the thought further. While physical letter writing is declining, he says, e-commerce drives a very dynamic growth in the parcel business. As the world's largest logistics services provider, Deutsche Post DHL Group is not only a great beneficiary of the booming Internet trade.
Its comprehensive infrastructure and its presence in 220 countries and territories worldwide make the company a driver of internationalization and global interconnection between countries and individuals. Gerdes also plans to actively participate in shaping tomorrow's e-commerce. "We want to ensure that everybody can use the amount of freedom provided by the web safely and as comfortably as possible", Gerdes says.
At the moment, he adds, the so-called on-demand delivery concept is very popular with customers. Every fifth customer would like to have a choice as to the actual recipient and the exact delivery time of their shipment - for instance a delivery to a neighbor, a packing station or on a preferred day. If Gerdes' vision for the future of the parcel business comes true, today's offering is a strong indicator of where its development is headed: Namely the customer's free choice to determine a parcel's final destination even shortly before the actual delivery. "Total freedom, access to ordered goods at any time and everywhere is the future of the parcel business", Gerdes explains - awaking the hope that his vision could soon become reality.
Following his profession, trend researcher Wippermann takes a bigger-picture view. He expects the beneficial effects of modern technology to bring about much more fundamental changes in everyday life. "Anything that can be delegated to programs will disappear from daily life", he forecasts. "People will no longer manage their basic needs themselves; instead, they will outsource them at the best possible conditions based on their individual usage data", Wippermann depicts a future with even greater interactive delivery needs. Mail and logistics services provider Gerdes should like that.
- From left: Trend researcher Prof. Peter Wippermann, Dirk Steffen, Director of Market Research at TNS, Jürgen Gerdes member of the Management Board and responsible for the MAIL Division at Deutsche Post DHL Group and Stefan Aust, the former Editor-in-Chief of the German news magazine Spiegel
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