2014 Digital Year in Review

2014 continues the trend of digital disruptions of existing businesses and business models. Marc Andreesen called it “software eating the world”. Whether its eating or disrupting the world, technology is changing businesses in front of our eyes. Ask Microsoft if they realized back in 2006 that Apple would be worth nearly 2x Microsoft in 2014?

Q: What % did Amazon grow their e-commerce “biz” in Q4

A: 27% instead of projected 22%

Why? Existing customers are ordering more from Amazon than they have in the past because Amazon is delivering goods faster to these customers. Selection and price are not sufficient to maintain loyalty.

Why this matters?

  • Speed of delivery matters more than ever.
  • The “get-it-now” differential that retail has had over Amazon is fading. Retailers cannot rely on the “immediacy and convenience” argument as same-day delivery services make inroads in major metro areas.
  • E-commerce platforms that compete with Amazon will need to step up their logistics game.

Implications for 2015: Same day delivery service will begin to disrupt traditional models

Industries it affects:#Retail, #Distribution, #Transportation, #E-Commerce

Q: How much did mobile shopping grow in 2014?
A: 174%

Shoppers took to their phones in droves. Mobile traffic accounted for 57.1% of all online traffic on Christmas Day, according to IBM.

Why this matters?

  • Consumers can simplify their purchase process in their mobile apps. A number of mobile app vendors have made it super easy for consumers to complete a purchase from their phone without resorting to their wallet or cumbersome user interfaces to enter their card info.
  • Expect mobile commerce to grow much faster now that the friction of payment has been eliminated with a press of your thumb. (see the Apple Pay above)
  • Most enterprises lack mobile skills and it shows in app ratings and reviews. Bad apps hurt the brand and turn customers sour.

Implications for 2015: Companies with poor mobile experiences will lose customers as customers expect better mobile experiences from brands. Experimentation is over.

Industries it affects: #Retail, #E-Commerce

Q: Who grew their mobile payment usage by 100% at McDonalds and Walgreens and who shut down their digital wallet?
A: Apple and Amazon

Apple Pay is growing quickly. Bank of America stated that over 800,000 signed up for Apple Pay in December. The banks are advertising heavily to support it. Oh, and despite what the industry thinks, Amazon does kill things that don’t work. And their digital wallet (mobile payment platform) did not work. (link)

Implications for 2015: Retailers will be increasingly be viewed poorly by their customers if they do not support Apple Pay
Industries it affects: #Retail, #E-Commerce, #Distribution

Q: Who is getting into the IoT (Internet of Things) space?
A: Intel

Intel has agreed to buy German network chipmaker Lantiq for an undisclosed amount to expand its range of chips used in Internet connected devices (IoT). (link)

Why this matters:

  • The sensitization of devices is going to affect every and moving part in today’s commercial/industrial world. Automated feedback at minimum will become a critical requirement for companies selling industrial or consumer durables goods.
  • Companies who lag the sensitization of their products risk displacement. No brand is exempt. Its just a matter of time.

Implications for 2015: IoT product capabilities will distinguish brands and lead to increased sales.
Industries it affects: #Industrial, #ConsumerDurables

Q: What was the yoy % growth in online education student enrollments?
A: 3.7%

Why this matters:

Its the lowest growth rate in 12 years!. Despite the press around Moocs (Massive Open Online Courses), the Babson survey (link) cites a number of troubling stats:

  • Only 28% of academic leaders say their faculty accept the value and legitimacy of online education
  • Adoption of MOOCs (Massive Open Online Course) is reaching a plateau, only 8.0% of higher education institutions currently offer one, another 5.6% report MOOCs are in the planning stages
  • The proportion of academic leaders who believe that MOOCs represent a sustainable method for offering online courses dropped to 16.3%

Implications for 2015:

Higher ed institutions will be in a world of hurt if online platforms do not improve. Except for the most very elite families, $60,000+ annual costs, which continue to rise at a historic 20 yr CAGR of over 4%, is not sustainable. The student debt totals exceed $1.2 Trillion and shows no sign of abating. Expect to see significant, continued investments in alternative, competency-based training as an offset to these spiraling costs and lumbering models of education.

Industries it affects: #Education