Use of technology has exerted a transformative effect on businesses since the late 1800s, but the process has accelerated during the last five years. Mobile devices in particular have
sped up the integration of commerce and technology. For example, Statista reported in 2015 that 27 percent of all online sales in the United States happened on mobile devices.
Technological advancements in the next five years will undoubtedly continue to change the ways in which consumers purchase goods and services. It will also alter the way customers or clients interact with businesses. The following four trends show how use of technology is disrupting traditional business models.
- On-demand supply
- Contextual shopping
- Sustainable consumption
- Global commerce
The traditional business model for manufacturing basically consists of making many units of a particular product first and then trying to sell them. However, the need to create inventory before you find customers is being eliminated as manufacturers become capable of faster turnarounds. A business model based on on-demand supply would allow a customer to place an order directly to a manufacturer, who makes the (sometimes customized) product and ships it to the customer. This business model places demand before provisioning, which would transform our current view of supply chains.
The Internet of Things consists of trillions of sensors and display devices connected to each other over the internet. It uses data like buyer preferences and inventory location to provide shoppers with a more individualized experience. This trend means that customers are more likely to bring a warehouse to them via the internet rather than visit the physical warehouse. Contextual shopping will therefore disrupt supply chain logistics.
An on-demand economy means that consumers are increasingly likely to see the value of sustainability. For example, businesses such as eBay, Airbnb, and Lyft specialize in selling products and
services that customers may only need for a short period of time. This trend means that the decision to buy a used product is no longer just a value-based decision. World Economic Forum estimates sustainable consumption could prevent 340 million tons of waste from going into landfills each year.
Mobile technology is driving the trend towards global commerce, as indicated by the continued growth in internet advertising. Venture capitalist Mary Meeker’s report on internet trends shows spending on internet ads reached $600 billion in 2016. That’s a growth rate of 20 percent per year. However, significant obstacles still remain for cross-border trade, including customs, duties, and tariffs.
Take-away message: Increased use of technology (and expansion of technology tools) is a disruptor that has forever changed how businesses function. The rate of business globalization has accelerated over the last few years, resulting in a rapid adoption of an on-demand economy. Technology is changing the way consumers shop by blurring the lines between their online and offline worlds, especially mobile technology. Businesses must therefore adapt their business models to take advantage of the $14 trillion online market.
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