Will Amazon disrupt another industry?

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Amazon, the former book company began as one of the first major companies to sell goods over the internet. Due to success they diversified into many other product lines and services and now are the world largest online retailer. They disrupted the whole retail world by opening up e-commerce. According to an estimation of RBC Capital Markets analyst John Barnes, Amazon ships 5.6 million packages daily only in North-America.

Next destination For Amazon? The transportation industry. The new secret project of Amazon is called “Dragon Boat”. Their plan is to disrupt the transportation industry by managing a delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta. Amazon wants to provide storage, packaging and shipping to merchants selling products on their website.

The largest competitors for Amazon are logically FedEx and UPC but maybe more surprisingly Alibaba. Alibaba and Amazon are both vying for dominance of the growing cross-border e-commerce market. The competitor advantage Amazon is aiming for over FedEx and UPC is bypassing the middlemen who handle cargo and paperwork associated with transnational trade and so cut costs.

With the Dragon boat Amazon can provide the merchants a one click-ship for seamless international trade and shipping. Amazon will make the shipping process a lot easier, more transparent and cheaper by controlling the whole process. The discussion I would like to open up is: What will competition do? Will Amazon totally disrupt the market and will take it over or are FedEx, UPC, Alibaba and maybe other transportation companies fighting back?

sources:

http://www.computerworld.com/article/3032656/retail-it/amazons-supply-chain-move-could-prove-devastating.html

https://www.bloomberg.com/news/articles/2016-02-09/amazon-is-building-global-delivery-business-to-take-on-alibaba-ikfhpyes

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IKEA eat your heart out, Lowe’s is transforming the way we redesign our homes

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Have you ever remodeled a room, or even only tried to imagine how a new colour on your wall would look like? Those of you who did know that this is not an easy process and that it mostly is accompanied with a lot of arguing, deliberation and high costs when it turned out not to be as you imagined. Lowe’s, a fortune 500 home store chain has the answer to all your remodel problems and will transform the whole way we will remodel our houses in the future. IKEA eat your heart out.

Lowe’s teamed up with Pinterest and Microsoft to improve the process of remodelling and here is how they did. The process of remodeling does not start in a home store but way up front on your pinterest walls. By giving Lowe’s access to your pinterest wall in the in store app, the cortana intelligence system of Microsoft can identify for example which kitchen of Lowe’s inventory matches best your pinned pictures on pinterest. The system provides you recommendations based on this match. If you would like to know how this kitchen look like in real life size, you can go to a Lowe’s store where the hololens of Microsoft provides you this experience. Moreover, you can change almost all features of the kitchen and see how they look like combined. When you are satisfied you can order all elements of your own designed perfect kitchen. The Hololens enables Lowe’s to capture the opinion on specific features of their customers by combining the eye-tracker with the Cortana voice recognition. This technology enables Lowe’s to continuously improving their services and products.

It is clear that Lowe’s has some strong new digital capabilities. First, the new technology improves the customer experience by helping tacit ideas in customers minds make explicit and by recommending products based on their true preferences. Second, the new technology shifts the core operations of Lowe’s from inventory management to recommendation and designing services. Less inventory and show models are needed since the products now can be visualized through the Hololens and the products can be made to order. The focus of employees now lies on recommending matching products and designing new features that best matches customer preferences. Third, the new technology changes the whole business model in a way that it becomes a pull rather than a push market. The Hololens and the partnership with Pinterest help customers determine what they want and give Lowe’s insight in what the customers want rather than they push a specific kitchen into the market.

Lowe’s has the potential to become a Digital Master but only time can teach us how Lowe’s will combine these strong digital capabilities with their leadership capabilities to make it an industry changing success. The pilot version was a hit and by the end of 2016 they plan to launch the experience in three more stores in America. When they can successfully roll out the concept in al their stores globally, Lowe’s will be a true Digital Master. IKEA eat your heart out.

What is your opinion on the way Lowe’s remodels the remodeling business? Do you see any complications in this approach? Do you think other firms can learn from Lowe’s or do you think Lowe’s needs to learn from other firms?

Sources:
http://www.lowesinnovationlabs.com/hololens

Westerman, G., Bonnet, D., & McAffee, A. 2014. Leading Digital: Turning Technology into Business Transformation, Harvard Business Review Press, 2014.

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