Next big things – which and from where (East or the West)
I believe that in the next 5 years we are going to see quite a lot of disruption because of internet in some of the old industries – coming from both the west (US and EU – UK, France and Germany above all) as well as from Asia (India and China – potentially also Korea, Thailand and Indonesia).
The old industries that are going to be hit the hardest are going to be service industries and among them especially:
- retail,
- finance,
- media and
- business services.
Retail is going to be more and more influenced by e-commerce. It is not going to substitute regular brick&mortar shops, but it will coexist and will be blended in wholesome shopping experience. One (of many) example will be, that you will be able to order products in brick&mortar shops via some sort of web interface (touchscreens, mobile apps etc.) and you will pick them up on your way out of the store (together with »regularly« purchased goods, for instance (you will even get the shopping option in all facilities next to the store – i.e. in all bars, restaurants, cinemas etc. – while you order your food, you also do your shopping and when you are finished with your meal, you pick up the goods together with your receipt, for instance). Such cases you will find mainly in the US and EU part of the world. In Asia, e-commerce will be even more ubiquitous, because there are relatively few big format shops and quite a lot of retail is still done via small local shops (especially in India). Small shops will need to fight hard with regular e-commerce and with arrival of big box shops. And precisely this is the reason why I believe there will be innovative business models, which will help such smaller shops – combining their resources, giving them seamless e-commerce channel not only for sales but also for purchasing – meaning they will be able to compete with bigger retailers – both brick&mortar and e-commerce. And such innovation will be soon copied and transferred to US and EU as well (not the other way around this time J ).
Finance will be disrupted at its core – at payments (which is already happening). Once payments companies have certain number of users, they will be able to start offering also other financial services to their customers. And because they will develop their services from ground up, they will be able to offer their services cheaper, more user friendly and in the end more effectively than their »old« counterparts. Most of this disruption will not come from the wealthiest people, but from poorer population. The ones that are only starting to use »regular« financial services will be the ones that will use »new« services first – millennials in EU and US, and much broader population base in Asia… Most innovation in this industry, however, will most likely come from EU and US, simply because companies will be able to generate much more revenues with far less customers – less hassle to get to scale quickly and iterate with improved and new services.
Media will need to reinvent its business model. News of whatever kind are always among the most read websites – in all areas of the world. Yet they have trouble monetizing their position with advertising – their regular business model. They will need to realize their strength, which is that they provide local news to local population in local language. And in this “local” direction, they should seek their new business model. Because they are local and attract local population, they are in ideal position to offer their readership base not only content but also services (and in certain cases products) to their readers. They will have to tap into local SMEs in order to persuade them to market and sell their services and products through them. This means that they will need to find resources (in addition to their access to readership base) to invest in proper start-up in order to do this. If they will offer best selection of local and niche services and if they will charge SMEs success fees / sales fees instead of regular advertising, they will have found their new business model. The first media company that will do this successfully in a single local market will be in a position to offer this type of services to others. Which means that some of these media companies have a chance to transform to big players with well-diversified revenue streams, which opens them a range of new possibilities. Most of innovation in this area will come from developed markets of US and EU, because Asia has, in general, less developed media market and as such does not have the same pressures for transformation as are present in US and EU.
Business services are an industry that is on one hand diversified and full of relatively small players and on the other you have few players that control big-ticket deals. Selling is really hard in this market and is comprised mostly of direct selling – which is costly, takes a lot of time and is based more on personal contact than on other factors. This is main reason, why currently innovation in this industry is happening really slow and through existing players (for example, existing ERP providers are offering cloud based products, which are mobile friendly and similar). The problem with innovation through existing players is that they do not want to hurt their current revenue streams and they see new innovative services as such cases, which is why they do not decide for disruption but only for incremental innovation. This is also the reason why disruption in this industry will come in individual niches, such as, for example, management reporting, controlling or invoicing (among others). The new players, which will be able to get big in their niche, will expand to other niches and in the end will offer business services as one-point-stop service. This is also an area, which could see disruption from specialized media… In my opinion, innovation in these services will come mostly from US and EU.
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