#5, June 1997
of Through the Loop's role is to look at the
emergence of new markets, services and categories
as the market-place continually evolves. One of
the most fundamental structural shifts that we
believe will alter the face of many markets in the
future is the progressive introduction of
electronic commerce. Electronic commerce sounds
deeply unfashionable and untrendy, but the reality
is somewhat different. It will deeply affect many
industries from consumer banking, various sectors
of the travel industry, all forms of retailing and
also many business-to-business operations. As a
result, this will lead to increased consumer
demands for access, convenience, choice and
dialogue across a wide range of product fields and
categories. There are some "category
killers" which will devastate previously
are some key hypotheses underlying the creation of
introduction of electronic commerce in many
industries decreasing the need for large
back-room processing operations, e.g. travel
industry, consumer banking, other financial
services such as insurance, etc.
expansion of electronic commerce for
business-to-business and business-to-consumer
introduction of call-centres.
diversification of retailing channels.
and dog tracks cross the snow. Tell me timing
of the opportunity areas which will develop or
services will alter the fastest in spite of much
vaunted consumer apathy. First Direct in the UK
has shown that consumer banking habits can change.
The introduction of the Prudential
Corporation telephone banking (one of the
leading UK insurance companies) shows also how the
discrete product category borders will change. The
supermarket move into banking services will
inevitably place a question mark over whether the
main clearing banks should have such extensive
physical presence or can they be channeled
areas of financial services will look for new
models of distribution and customer service. Which
brands will be able to demonstrate credibility in
this area? What is the role for financial advisors
or mediators in this new environment? On-line
brokers and advisors such as Motley Fool show that
financial advice can work differently. Call
centres allow 24-hour help and care lines to be
put in place. Cross-border financial services also
become a reality once regulatory issues are
businesses will demand all the information
technology functionality of big companies. This
will have an impact on all elements such as
software design, networks, product and service
provision, payment systems and telecommunications.
Who will be the small business advisor in this
changing environment? Which companies and brands
will have the credibility, flexibility and culture
to service this increasing group? The Internet
will add to small company capability. Information
technology companies will be less able to set
benchmarks, which apply as ultimate standards for
substantial periods of time.
retailing has always relied on physical presence
either in the high street or out-of-town. However,
there are some product categories that can easily
make the jump to electronic commerce without
requiring investment in physical premises. For
example, music in whatever form, computers,
software, white goods, books and so on. Just look
at the success of Amazon.com
and the Internet
Bookshop. More product fields will look at
forms of electronic delivery such as greeting
cards, sheet music etc. Many more new brands will
emerge in this area to reach certain segments of
the population. Development speed and
time-to-market are dramatically altered.
commerce will expand.....to date, definitions have
been too restricted and too narrow. Companies such
as Cisco, Dell
Computers and the two earlier examples of
Amazon.com and the Internet Bookshop show that
viable business can be conducted in this way.
retailing is shifting to using many channels
including home delivery. Brands such as Peapod
and the Food Ferry Company show that new models
can evolve in spite of the much vaunted
difficulties of home delivery. The UK supermarket,
also experimenting with a number of formats to
reach different customer segments who find
difficulty shopping. These segments range from
housebound people to those who just do not have
enough time to shop.
fast food companies have already moved into the
home delivery channel. Consumers will become more
used to this as one of the accepted standards.
Through the Loop forecasts that the quality and
availability of delivered food will improve
companies of all types could gain in this new
environment as consumers seek to behave more
flexibly for either their home or work
environment. Rather than becoming fixed on the
home as a delivery point, many other locations
will be possible. "Walking the dog"
could take on a new meaning as deliveries are made
to the equivalents of local post offices or pubs
and cafés. Those delivery companies with an
excellent ground service have the opportunity to
transform their businesses as they act as part of
the supply chain to reach the consumer.
Just-in-time delivery will take on new meaning.
companies and the brands with the most to lose in
this changing environment are those placed in
intermediation and advisory functions. Without
extending up and down the supply chain, or
partnering other companies, their competence/ies
will easily become devalued. For these reasons,
the role of travel agencies could alter
significantly in the future, as the shopping
experience offered to consumers is not that
exciting or attractive.
there is one over-riding objective that electronic
commerce has to deliver to the consumer, it is
satisfaction and even delight across all elements
of the purchase, consumption experience and
after-sales service. To give just one example of
this on a micro-scale, Haagen-Dazs has worked out
a new way to deliver instant gratification to its
consumers with the introduction of the Midnight
Cookies n' Cream service. This will deliver
Haagen-Dazs ice cream to your home in the early
hours of the morning within a certain radius of
London. The only boundary is company imagination
in this area.
think you understand the situation, but what you
don't understand is that the situation just
it can be seen there is not one key driver behind
many of these changes although it is clear that
technology is the main enabler. Consumers' needs
can be shaped as they learn new ways to consume.
Finding the unexploited needs becomes the key
strategy. For this reason, companies cannot be
sanguine about the future stability of the
categories and sectors that they operate in. New
brands will emerge and they will seek to develop a
fuller range of attributes, as they become mature.
Growing brands will demonstrate growing pains as
they seek to widen their franchise. They may even
start to use more mainstream techniques such as
advertising! This will be a more quantitative
world as feedback becomes instantaneous.
Effectiveness will be easily demonstrated.
the Loop has been using both different ways to
imagine the future in a number of product category
areas. Techniques such as scenario planning can be
used to develop models of the future and
evaluations can then be made of the most probable
path. Wild cards can be more easily understood
once conventional stereotypes are altered. The way
of doing business is not the same as before.
Horizons will shift. The ability to "imagineer"
will become more critical. The competitive set is
fundamentally altering and companies too narrowly
focused will fail.
and new companies will be looking for new business
and marketing models. In this changing
environment, understanding brand dynamics has
never been more important. Looking for
benchmarking and best practice brands can only
enrich and enhance these models. Through the Loop
has been building a considerable database in this
area across many categories and sectors.
development of Electronic Commerce will force
considerable transformation in many current
sectors and enable new category killers to emerge.
It is important to watch over the horizon to
understand where how forms of competition can be
generated. Equally, the benchmark of performance
is consumer satisfaction and delight. To date,
comparatively, few brands are achieving this.
Through the Loop has been collecting examples in
order to generate a best practice template area.