Top Five CX Trends in Hospitality for 2023
How WFH Culture Has Changed Commerce Habits
How WFH Culture Has Changed Commerce Habits
When the lockdown order came at the height of the COVID-19 pandemic, businesses scrambled to convert their daily operations to remote workspaces. Luckily, we live in an age that offers enough technology, such as high-speed internet, online payments, and video conferencing, to make work from home (WFH) successful. Although WFH was difficult for some businesses, it proved to be a practical and sustainable business method for eCommerce companies. With the WFH culture in full swing, commerce habits switched heavily to online purchasing and affected consumers’ purchasing. As the Covid-19 public health crisis enters its third year, political leaders and business leaders are in the process of reframing Covid-19 as an endemic disease, one that society must learn to cope with indefinitely. As restrictions lift and case numbers decrease, employers must navigate unfamiliar waters as they attempt to return to normal business operations and embrace changes in the workplace. As companies adapt to fully or hybrid work arrangements, it seems WFH is here to stay. Therefore, the eCommerce industry will need to focus more of its efforts on B2C and D2C.
What Goods Are Consumers Buying Online?
A 2020 study by J.P.Morgan states that eCommerce made up 16.1% of all U.S. sales in the second quarter, compared to 11.8% in the first quarter.1 This trend continues upward even as the majority of stores have reopened to the public. Remote and hybrid work schedules may result in permanent changes to how Americans work, live, and spend. So, what is the average consumer buying? More time at home has allowed the workforce to create unique spending habits.
Cleaning products
Covid-19 case numbers may be on the decline, but consumers are still spending money on cleaning supplies, including disinfecting wipes and sprays, gloves, masks, soap, and other essentials. Even as demand for cleaning products decreases from our stockpiling days during the height of the pandemic, people are still purchasing these items more than before. Shortages of essential items due to supply chain breakdowns resulted in many customers turning to online shopping to stock up. This forced eCommerce platforms to get creative with the increase in online shopping and logistics of delivery. A study out of IEEE discusses the impact of COVID-19 on digital platforms and how eCommerce is an effective method of buying and selling essential goods. With the help of machine learning (ML) and artificial intelligence (AI) technology, route mapping makes it possible for deliveries to occur quickly and safely.3 Digital platforms have leveraged technology to help everyday consumers purchase essential goods online.
Home Improvement
With employees spending more time at home, it’s no wonder that homeowners are completing projects they have been putting off. WFH flexibility makes getting projects done either by DIY or hiring a contractor easier. A study by Harvard University notes that in 2020 the economy shrank by 3.5%. However, spending on home projects was up 3%, almost $420 billion.2 How are consumers shopping for the materials needed to complete these home projects? Whether it’s a kitchen redo, home office build, or something else around the house, eCommerce provides the perfect B2C and D2C solutions to get the job done. However, the materials used in home improvement typically have a higher cost ratio. So, with more shopping done through eCommerce, businesses need to ensure consumers feel safe completing transactions online. The study out of IEEE also states how eCommerce businesses have adapted the use of secure digital wallets and blockchain technology. Blockchain technology allows eCommerce businesses to cut out intermediaries and distribute directly to the consumer.3
What Lessons Can Businesses Learn From WFH Culture
It seems WFH is here to stay as many employers continue to offer hybrid work schedules. Recent studies suggest 25% of all professional jobs in the U.S. will be remote by 2022, and opportunities to work remotely will continue to increase through 2023.4 It’s safe to say that some form of WFH will stick around for years to come, and with the continued flexibility of being home more often, eCommerce will only become more popular as an option for consumers. So what can businesses learn from pandemic era consumer habits? More consumers feel safe making purchases online because of improved digital wallets and blockchain and enhanced delivery with help from ML and AI. However, there are more lessons to be learned, including the importance of website optimization. With the influx of online shoppers, a business’ website is its most important asset. If the site cannot handle a large number of transactions each day, companies will lose sales. So, updating performance through user experience, omnichannel options, and bandwidth is a must. Business owners will need to start spending less on their real estate and more on the online marketplace.
It is undeniable that COVID-19 and WFH culture have changed the commerce landscape. Even businesses that have traditionally done well as solely brick and mortar need to prepare for an increased number of online consumer shopping. When businesses learn to embrace the recent changes in commerce habits rather than try to ignore them, they will be better suited not only to adapt to a new reality but to thrive in it. That’s why now is the perfect time for businesses to develop an effective eCommerce strategy for B2C and D2C.
Footnotes:
The Future of Retail Part II: Retail as an Experience
The Future of Retail Part II: Retail as an Experience
We continue our exploration of the current and future shape of retail around the globe as brands commence the lengthy road of recovery for some and normality for most.
What will the new retail landscape look like? Now that the wide scale lockdowns are mostly over, supply chain issues and staffing woes still abound, hampering a return to retail as we knew it. How will brands adapt to these new consumer behaviors and are they here to stay? Read on.
Physical Stores Still Have Their Place
Despite the normalization of online shopping and home delivery during lockdown, many consumers were counting the days before they could walk through the doors of physical stores again. Tomorrow’s retailers still need to win hearts and minds in the real world and shouldn’t give up all their store space just yet.
One of the reasons for this might be just how much people love browsing. Shopping online tends to be goal-based and transactional, but people browse in-person not only because they need something, but because they enjoy it. A study by Michael Guiry,1 Associate Professor of Marketing at West Chester University of Pennsylvania, suggests that for some of us shopping forms part of our self-concept, cementing, and playing back, our ideas of who we are. Although customers appreciate the best efforts of online retailers in creating browsing journeys, they are still only a facsimile, lacking in the excitement and sensory details that are so much part of the experience in real life.
For all the news headlines on the rise and rise of online shopping, most retail is still taking place in physical spaces. In the US, by February 2021 it had settled at around 15% of sales.2 And although many retailers have closed branches and reduced shoppable space they’re unlikely to get rid of it completely. The digital and physical stores of the future will have a symbiotic relationship, with digital driving footfall to physical stores that support online sales.
A Future Of Experiential Retail
Real-life shopping at its best isn’t just about making a transaction, it’s about entertainment, about entering a different space and socializing with friends, family, and community. Physical retailers can offer many of the things we’ve all missed during the pandemic: the excitement of new discoveries, human connections, personal service, sensory moments. These experiential retail experiences, powered by new technologies, will be center stage in the next couple of years as retailers try to tempt consumers back, and with footfall likely to be reduced, they will be looking to squeeze every drop of value out of the customers who come through the door.
For example, Nike, always ahead in experiential experiences, have launched Nike Rise in Guangzhou, China and in Seoul, South Korea: technology-driven retail hubs that work with the Nike App to create experiences powered by customer data.3 Dick’s Sporting Goods in the US opened its biggest-ever store in the spring of 2021 in a bid to drive deeper engagement with customers. The ‘House of Sport’ site in Victor, New York includes an indoor rock-climbing wall, golf driving bays and a putting green, as well as a health and wellness shop and a track and turf field.4
In London, with the pandemic still on everyone’s minds, Lush’s redesign of its Oxford Street store includes tech innovations imported from its Shinjuku store, with QR codes and video displays creating an interactive experience that doesn’t have to be hands-on – no mean feat for a cosmetics retailer.5 Meanwhile, shopping mall Westfield London is launching Situ Live, a ‘discovery playhouse’ where customers can try out new products.6
In the post-Covid world, retailers will be looking to use technology to examine footfall, drive sales and create new customer experiences. LiDAR technology uses infrared light to sense movement, meaning that retailers can measure footfall and dwell time as well as analyzing the success of visual merchandising and customer engagement, tracking individuals with no loss of privacy as only an outline is ever recorded. Simultaneous Localization and Mapping (SLAM) technology can help anyone with a smartphone navigate around a mall, but it can also be utilized by furniture retailers. IKEA’s newly revamped IKEA Studio app not only enables the user to see a chosen piece of furniture in situ in their home, it allows them to redesign the entire room.7 In-store QR codes can provide product information, special deals or an easy way to buy online in a bid to lessen the practice of ‘showrooming’, i.e. looking at goods in physical stores before buying them at a lower price from an online competitor.
Local Shopping For Local People
Repeated lockdowns and the shift towards home working has meant a new focus on shopping locally. In the UK the number of independent stores grew in the first half of 2021 for the first time since 2017,8 able to take advantage of government support measures, such as business rates relief and furlough schemes, as well as deals on rent offered by landlords keen to fill spaces vacated by failing chain stores.
There’s an opportunity for local main streets to evolve to serve new needs: a return to the times before out-of-town malls and retail parks. Even before the pandemic, city planners across the world including Paris, Barcelona, Portland, and Melbourne were responding to climate change by encouraging ‘15-minute cities’, creating blocks where people can access all their everyday services within a short walk or bike ride, reducing traffic and pollution and creating more space for trees.9
Larger chain retailers are already responding to new patterns of hybrid working. In the UK Sainsbury’s has recently announced a new partnership with Itsu, Leon and Wasabi, trialling ‘lunch stands’ across 300 stores, aimed at consumers working from home or in the office. Sainsbury’s Food for Later category planner Frances Hughes said: “As a hybrid style of working becomes more normal, we’ve been working hard to analyze customer needs when it comes to their lunchtime meals…the introduction of the in-aisle lunch stand makes it easily accessible for anyone to pick up an affordable and balanced meal, no matter what your daily ritual is.”10
Downtown Areas Need New Purpose
Downtown areas that were once busy with office workers are significantly quieter since the pandemic. In the future they will need to find new reasons to attract visitors and fill space, with shops, grocery stores and restaurants alongside medical centers, community, leisure, housing and workspace.
There needs to be a greater emphasis on flexibility and sharing, finding purpose for underused spaces, and providing the amenities that communities need, supporting small businesses, creatives and social enterprises who might otherwise find it impossible to have a physical presence. And it’s the perfect time for experimentation, finding out what works as we move into our post-pandemic future. In some ways the lasting effects of Covid could give a new lease of life to physical retail locations that had been declining over the years.
But it’s not just down to stores and other businesses to create the successful downtown shopping areas and main streets of the future. Governments and landlords will need to work with them to create areas suited to local communities and their changing needs. They also need to relook at rates and rent models that have decimated businesses unable to operate during lockdown. The alternative is yet more businesses going under, boarded-up shops and the hollowing out of retail areas. Some landlords have already offered their retail tenants turnover-based rents in a bid to save main streets. In the UK, the government are under pressure from within their own party to reform business rates, and the opposition Labour party has already announced their wish to scrap them in favor of a new system that increases the digital services tax on tech giants.11
Footnotes
- Defining And Measuring Recreational Shopper Identity, SpringerLink, https://link.springer.com/article/10.1177/0092070305282042
- State Of Retail, National Retail Federation, https://nrf.com/topics/economy/state-retail
- Nike’s Latest Retail Concept Powered By The Pulse Of Sport, Nike News, https://news.nike.com/news/nike-rise-retail-concept
- Dick’s Sporting Goods Just Opened A Massive Store With A Virtual Driving Range And Outdoor Track. Here’s A Look Inside, CNBC, https://www.cnbc.com/2021/04/09/dicks-sporting-goods-new-store-has-a-driving-range-and-outdoor-track.html
- In Pictures: Lush Oxford Street Reopens With Innovative Global Concepts, The Industry.Fashion, https://www.theindustry.fashion/in-pictures-lush-oxford-street-re-opens-with-innovative-global-concepts/
- “It’s Not A Store, It’s A Venue”: How Situ Live is Transforming The Way We Shop, Charged Retail Tech News, https://www.chargedretail.co.uk/2021/05/19/its-not-a-store-its-a-venue-how-situ-live-is-transforming-the-way-we-shop/
- IKEA’s Fancy New App Lets You Design Entire Rooms, Wired, https://www.wired.co.uk/article/ikea-studio-ar-app
- Independent Retail Sector Returns To Growth, Drapers, https://www.drapersonline.com/news/independent-stores-benefit-from-chain-closures
- The 15-Minute City – No Cars Required – Is Urban Planning’s New Utopia, Bloomberg, https://www.bloomberg.com/news/features/2020-11-12/paris-s-15-minute-city-could-be-coming-to-an-urban-area-near-you
- Sainsbury’s Launches News In-Aisle Concept With Over 20 Lunch Meals, The Grocer, https://www.thegrocer.co.uk/sainsburys/sainsburys-launches-new-in-aisle-concept-with-over-20-lunch-meals/660142.article
- As Macy’s and Sephora Flee the Mall, Will Other Retailers Follow?, The Motley Fool, https://www.fool.com/investing/2020/02/13/as-macys-and-sephora-flee-the-mall-will-other-reta.aspx
What’s in a name? Facebook, Meta, and trust in the metaverse
What’s in a name? Facebook, Meta, and trust in the metaverse
Towards the end of October 2021 Facebook announced big news: the corporate business was changing its name to Meta, while Facebook the social media platform would remain.
Mark Zuckerberg has solid reasons for the rebrand. The company needed a broader title, now that it also includes Instagram, Whatsapp and Oculus VR as well as mobile web analytics company Onavo, and Messenger precursor Beluga. Meta reflects a new focus on the metaverse and demonstrates the ambition to lead the way in this future digital realm. As an aside, it’s also worth noting that Facebook the social media site is more popular than ever, but it’s not attracting young people like it used to. A shrewd operator like Zuckerberg knows that it’s better to shift focus when a successful product is at its peak rather than on the decline.
All of this makes sense. First imagined in a 1990s sci-fi novel and conjured up in movies from Total Recall to Wreck-It Ralph, the future metaverse is an exhilarating concept, a place of boundless possibilities and experiences. Zuckerberg wants his company to be its guiding light. Yet many people are sceptical. Was this really the deciding factor for the name change, or was it to distance the business from negative press?
Trust in Facebook was already low after testimony from whistle-blower Frances Haugen hit the press, telling of polarizing algorithms, understaffing in key areas concerned with safety and a culture that ignored known problems. The rebrand hasn’t helped its cause. A survey by SightX reported that 37.5% of respondents did not believe the name change would bring any real changes to the organization. Many believe it was because of poor public perception, rather than to better fit the company’s future goals and vision. Still, 2022 is a new year and as people start to see the metaverse taking shape they may be more accepting of the reasons behind the rebrand.
The good, the bad, and the need for regulation
Like Coca-Cola, Facebook the platform is nigh-on universal; open to anyone with internet access. Most of us have been Facebook users at one time or another and have had largely positive experiences. We’ve enjoyed its window into the lives of friends, family and colleagues, the way it has re-connected us with those we had lost touch with and enabled groups of people from all over the world to create communities around niche interests. But there’s no ignoring the bad stuff.
That bad stuff has been coming from all angles. Privacy and a lack of transparency over user data is one issue; the company’s low tax contributions is another. Cloning competitor apps like TikTok (Instagram Reels), and Snapchat (Facebook Stories), has also attracted criticism. Content moderators brought a lawsuit after reporting poor working conditions and post-traumatic stress disorder; some have now been compensated for their experiences.
But the biggest concerns are to do with the disconnect between Facebook’s mission statement of bringing the world closer together, and the real-world damage caused to individuals, minority groups and sometimes entire nations because the business hasn’t done enough to take down and prevent the spread of fake news and harmful content.
A Wall Street Journal investigation found that changes to Facebook’s content algorithm stoked division and did not do enough to reduce Covid 19 vaccine hesitancy. In addition, Instagram was harming the mental health of teenage girls. UK natural beauty company Lush recently took the radical step of quitting Facebook and Instagram alongside Snapchat and TikTok, citing the negative impact the social media sites have on young people’s mental health.
Comments made by ex-members of Facebook staff together with the company’s own leaked research and that of many other organizations also suggest that not enough is being done to deal with misinformation and malign content. Former Facebook executive Chamath Palihapitiya didn’t pull any punches about the seriousness of the issue, saying ‘We have created tools that are ripping apart the social fabric of how society works’.
Meta/Facebook stress that they make robust efforts to deal with negative content. The company has just announced the development of a new AI which is quick to ‘learn’ to spot harmful content, rather than taking months of training.
However, the company has been criticised for placing too much emphasis on reacting to problems and not enough on preventing them. So far, AI does not seem to have been able to spot harmful content before the damage is done. Is it possible to do enough? And how can they be confident about policing behaviour in the future metaverse, with its billions of tiny interactions in every moment? We just don’t know the answers yet.
Meta’s Horizon Worlds platform may provide a clue as to how moderation of the metaverse might work. Users in this colorful virtual space can report harmful behavior and send recorded data from their device as evidence. They can also activate a ‘safe zone’, a personal space where they can take time out and mute, block, or report users if necessary. Users can be suspended or permanently excluded if they are found to be breaking the rules. Community Guides with their own avatars inhabit the space and keep an eye on things. It’s a mostly reactive rather than preventative approach, but then it’s hard to see how prevention could work. Though some warning signs can be noted, we can’t – yet – predict crime in the way shown in Minority Report.
People might just have to accept that a future virtual world, like social media, reflects society and so will never be perfect. Techdirt editor Mike Masnick put it like this: content moderation is impossible to do well at scale, because in a situation where there are billions of interactions, even if 99.9% of content decisions are ‘right’, the 1% of ‘wrong’ decisions could still represent thousands of negative experience. It will be up to individuals to decide how much time they want to spend in the metaverse and, to a degree, how to keep themselves safe.
But more regulation will be needed. Businesses exist to make money; it’s governments who must take charge of putting in measures for the sake of the public good. Future metaverse users will be under constant surveillance. VR headsets will be tracking what users see, hear, feel and how they react, both physically and mentally. This puts current concerns about how much Google and Facebook/Meta know about us in the shade. In the metaverse, users could be subject to a constant deluge of exceptionally nuanced marketing that taps directly into the emotions felt during virtual experiences. It needs regulation to ensure that users can control who their data is shared with and always know when they are being marketed to, whether they’re watching a video or talking to an avatar. Somehow, limits for manipulation, whether political or commercial, need to be set, so that people are free to enjoy the metaverse without fear of exploitation.
The metaverse must be built
The consensus is that the Metaverse should be built by communities, rather than by one corporate entity with a guiding hand at best, or ultimate power at worst. Even Zuckerberg seems to agree, stating in his Meta Founder’s Letter that ‘The metaverse will not be created by one company. It will be built by creators and developers making new experiences and digital items that are interoperable and unlock a massively larger creative economy than the one constrained by today’s platforms and their policies’. Though it’s hard to see Facebook’s name change to Meta as anything other than an attempt to ‘own’ the space.
Just in 2021, Meta spent $10 billion developing metaverse technologies. The company is creating 10,000 jobs in the EU as part of its growth program. It recently invested more than $50 million in non-profit groups to help ‘build the metaverse responsibly’. Other major players turning their attention to the metaverse are Epic Games, creator of Fortnite, Pokémon Go developer Niantic, graphics technology company Nvidia, blockchain-based virtual world Decentraland, Microsoft, and Apple.
Meanwhile Elon Musk believes that his own Neuralink brain interface products will eventually offer a better way to experience virtual reality than spending much of the day trying to move around in a VR headset.
So, the issues of the future metaverse, the problems around trust, privacy, transparency, manipulation, and possible harassment are not just Meta’s to solve. All the more reason why it’s important that government regulations keep up with the technology.
The metaverse will transform our lives. It could enrich our day-to-day experiences, and even reduce our environmental impact by allowing us to be ‘present’ in the office, ‘attend’ concerts hundreds of miles away, and ‘travel’ to see the world’s sites without ever leaving our homes.
Like the internet in general, and social media in particular, the metaverse will hold a mirror up to our world. There’s extraordinary potential for good, and equally for bad. Meta and others cannot just go through the motions. To create trust, companies need to demonstrate that they are truly doing all they can to keep users safe.
Above all, metaverse businesses and governments must work together to build the metaverse we want – a creative, inspiring space worthy of exploration, a place where we feel safe and protected, but have the freedom to make up our own minds.
- Founder’s Letter, 2021, Meta, https://about.fb.com/news/2021/10/founders-letter/
- Facebook Wants To Attract Young People, But Gen Z Teens Say It’s A ‘Boomer Social Network’ Made For ‘Old People’, Insider, https://www.insider.com/facebook-gen-z-teens-boomer-social-network-leaks-2021-10
- This 29-Year-Old Book Predicted The ‘Metaverse’ — And Some Of Facebook’s Plans Are Eerily Similar, CNBC, https://www.cnbc.com/2021/11/03/how-the-1992-sci-fi-novel-snow-crash-predicted-facebooks-metaverse.html
- Facebook Whistleblower Hearing: Frances Haugen Calls For More Regulation Of Tech Giant – As It Happened, The Guardian, https://www.theguardian.com/technology/live/2021/oct/05/facebook-hearing-whistleblower-frances-haugen-testifies-us-senate-latest-news
- Facebook’s Name Change Receives Poor Marks In New Poll, Forbes, https://www.forbes.com/sites/edwardsegal/2021/10/29/facebooks-name-change-receives-poor-marks-in-new-poll/?sh=30c5c49a444b
- Facebook Will Pay $52 Million In Settlement With Moderators Who Developed PTSD On The Job, The Verge, https://www.theverge.com/2020/5/12/21255870/facebook-content-moderator-settlement-scola-ptsd-mental-health
- The Facebook Files: A Wall Street Journal Investigation, https://www.wsj.com/articles/the-facebook-files-11631713039
- ‘I’m Happy To Lose £10m By Quitting Facebook,’ Says Lush Boss, The Guardian, https://www.theguardian.com/business/2021/nov/26/im-happy-to-lose-10m-by-quitting-facebook-says-lush-boss
- Ex-Facebook Executive Chamath Palihapitiya: Social Media Is ‘Ripping Apart’ Society CNBC (via YouTube), https://www.youtube.com/watch?v=MakEIlvlyfE
- Our New AI System to Help Tackle Harmful Content, Facebook/Meta, https://about.fb.com/news/2021/12/metas-new-ai-system-tackles-harmful-content/
- Horizon Community, Oculus, https://www.oculus.com/facebook-horizon/community
- Masnick’s Impossibility Theorem: Content Moderation At Scale Is Impossible To Do Well, Techdirt, https://www.techdirt.com/articles/20191111/23032743367/masnicks-impossibility-theorem-content-moderation-scale-is-impossible-to-do-well.shtml
- Founder’s Letter, 2021, Meta, https://about.fb.com/news/2021/10/founders-letter/
- Facebook Says It Expects Its Investment In The Metaverse To Reduce Its Profits By ‘Approximately $10 billion’ This Year, Insider, https://www.businessinsider.com/facebook-metaverse-investment-reduce-profits-by-10-billion-2021-10
- Investing in European Talent to Help Build the Metaverse, Facebook/Meta, https://about.fb.com/news/2021/10/creating-jobs-europe-metaverse/
- Building the Metaverse Responsibly, Facebook/Meta, https://about.fb.com/news/2021/09/building-the-metaverse-responsibly/
- Breakthrough Technology For The Brain, Neuralink, https://neuralink.com/
Elon Musk Sits Down With The Babylon Bee, The Babylon Bee (via YouTube) https://www.youtube.com/watch?v=BaRKd4U6Ixg
What’s Causing The Supply Chain Breakdown And Why eCommerce Should Care
What’s Causing The Supply Chain Breakdown And Why eCommerce Should Care
Supply chain disruptions are causing price increases and a growing shortage of goods as the global economy attempts to deal with the ongoing Coronavirus pandemic. Retailers must navigate an unprecedented set of challenges as they contend with delays, stock issues, and customer expectations.1 As lockdowns lift, extraordinary demand for goods has outpaced supply. Consumers are ready to spend money they saved during 2020 and 2021 and are accustomed to readily available goods and nearly instant gratification.2 Unfortunately, the global supply chain bottleneck has resulted in record shortages of once easily accessible products, such as household items, electronics, and automobiles.
What Caused The Supply Chain Crisis?
The pandemic disrupted nearly every aspect of the global supply chain. It placed enormous strain on the usually invisible manufacturing, transportation, and logistics pathway that delivers goods where needed. The supply chain bottleneck led to PPE shortages such as N95 respirators, gloves, cleaning supplies, and other critical care items needed in medical settings, which threatened our ability to fight the COVID-19 threat.3 The supply chain is like an ecosystem with each part playing an essential role and one unfortunate event can result in repercussions downstream. As the world closed down in response to COVID-19, consumers discovered the safest way to buy products was through eCommerce retailers. Skyrocketing demand for products combined with limited supply led to unprecedented delays worldwide.4 The shipping industry did not have the technology or processing ability to cope with the extreme shift in consumer behavior, and items became backlogged. The disruptions stemming from the pandemic combined with economic issues, such as energy shortages, production shortages and issues at key shipping ports have all contributed to the supply chain problems eCommerce businesses face today.
Chip Shortages
COVID-19 mitigation strategies reduced the production of goods and services as many factories entered lockdowns. Workplace shutdowns in chip manufacturing companies in countries like China, Japan, Taiwan, Vietnam, and South Korea have resulted in a global shortage. This shortage affects the production of electronics like laptops, phones and webcams, appliances, and new cars in which chips are vital components.5 Currently, production of these items remains severely limited, while demand remains high.
Labor Shortages
Much of the world is facing labor shortages. As companies struggle to find workers for their warehouses, production has struggled to keep up with demand. In August 2021, 4.3 million Americans quit their jobs, and the warehouse industry recorded 490,000 job openings.6 The labor shortage forces companies to go to great lengths to attract workers. Companies are increasing wages to keep up with rising prices, and in some cases offering incentives like free college tuition. Even with these attractive incentives, many potential workers have difficulty reconfiguring their post-covid work futures and are reluctant to return to work as the risk of COVID-19 infection persists.
The Energy Crisis
In countries with manufacturing economies, energy shortages and power cuts have forced productivity to slow in factories, threatening already stressed supply chains. Natural gas supply has failed to meet post-pandemic demand as the energy sector has recovered more quickly than anticipated following a year of reduced coal, oil, and gas extraction.7 Over 20 Chinese provinces are rationing electricity to meet energy efficiency and pollution reductions targets.8 However, there is insufficient renewable energy to replace natural gas, and a coal shortage worsens matters. Global prices for goods and resources produced in China, such as steel and aluminum, will significantly increase if factories contend with widespread power shortages.
Transportation and Logistics Challenges
A global shipping problem is compounding the supply chain crisis by making it difficult for sellers to obtain needed goods, even if they are available. Transportation bottlenecks at ports such as Los Angeles, Long Beach, and Oakland have increased wait times for ships to unload cargo.9 A robust trade of goods strained the available supply of shipping containers, ships, and port operations worldwide.
When the pandemic halted international trade in April 2020, empty containers were no longer collected and redirected for reuse. Over a year later, shipping companies are still trying to get containers to ports where they are needed most. In response, the cost to ship items has risen by 480%, which makes some international trade no longer profitable.10 To complicate matters, a shortage of dockworkers and truck drivers prevents goods from being offloaded and reaching their destination in a timely fashion.11 The lack of these critical components results in more scarcity in the supply chain, leading to even more shortages and price increases.
What eCommerce Retailers can do to Mitigate the Impact of the Supply Chain Crisis?
The global supply chain is a fragile and highly interconnected ecosystem. When unprecedented issues occur, they produce a ripple effect that eCommerce retailers can feel on the other side of the world. Businesses will need to be proactive in their approach to managing these effects. Optimizing operational performance and prioritizing efficiency at every leg of the supply chain is essential to ensure the best use of existing capacity. Retailers should consider implementing productivity improvements such as redesigning warehouses and investing in lean operations to increase productivity and mitigate the risk of disruptions caused by labor shortages.12 It is imperative retailers understand precisely how their supply chain functions. It can be helpful to locate and work with alternative suppliers to ensure a steady flow of necessary parts and materials.13 It is tempting for retailers to concentrate the majority of their business with one supplier in pursuit of volume discounts, but fragmenting the supplier base can help to ease capacity constraints and create new opportunities for sourcing materials as demand for products continues to fluctuate.
If a business can source more of their needs locally, that can also be helpful. Though adding new suppliers is not an easy solution and may result in a higher cost of sourcing materials, it can help a business mitigate risk and avoid disruptions to production.14 Additionally, eCommerce retailers should consider allowing double or triple the lead time for ordering stock due to potential shipping delays.15 It’s essential to stay ahead of seasonal curves when consumers are more inclined to make purchases. Finally, retailers should maintain customer expectations of quality while being honest with their customers and communicating any potential delays.16 Customer expectation management is critical when it comes to protecting brand reputation.
2)https://cnet.com/features/you-shopped-like-never-before-the-supply-chain-couldnt-handle-it/
4)https://www.bloombergquint.com/gadfly/supply-chain-disruptions-almost-too-many-reasons-to-count
5)https://www.bloombergquint.com/gadfly/supply-chain-disruptions-almost-too-many-reasons-to-count
8)https://blog.edesk.com/resources/us-supply-chain-crisis/
9)https://www.nytimes.com/2021/10/22/business/shortages-supply-chain.html
10)https://blog.edesk.com/resources/us-supply-chain-crisis/
11)https://info.waxie.com/blog/key-factors-responsible-for-supply-shortages-in-2021
12)https://www.mckinsey.com/industries/retail/our-insights/ten-steps-retailers-can-take-to-shock-proof-their-supply-chains
14)https://blog.edesk.com/resources/us-supply-chain-crisis/
NFT Artworks Find Their Place in the Metaverse
NFT Artworks Find Their Place in the Metaverse
In March of 2021, American digital artist Mike Winkelmann, otherwise known as Beeple, made history. His artwork, Everydays: the first 5000 days, was the first non-fungible token (NFT) ever to be auctioned by a major auction house1. Sold by Christie’s for a head-spinning $69,346,250, it became, to date, the fourth most expensive artwork by a living artist2. Numerous platforms such as Opensea and Rarible provide places to buy and sell NFTs costing anything from the equivalent of a few dollars to millions.
NFTs are a revolutionary new art form for artists, musicians, and makers. For the benefit of those who haven’t already fallen down the crypto-art rabbit hole, an NFT is a unique digital asset or token, a ‘proof of ownership’ on a piece of digital art. They can be bought, sold, collected, and displayed in virtual or physical galleries. Because they are recorded and stored on the blockchain, there is a permanent record of authenticity, ownership and transactions related to the asset. Just one NFT, or several, might be ‘minted’ (created) for a digital artwork, an analogy in the physical world might be a one-off painting, vs a print in a limited number of editions. NFT owners can also action fractionalized ownership, allowing a multitude of people to each own a ‘piece’ of perhaps a very valuable artwork. Art, photography, animation, video, music, cartoon cats, tweets, any of these can become the basis of an NFT, and some rapidly become highly valued. This very new market is awash with possibilities but has numerous challenges too.
A new world of opportunities for artists and creators
Creating NFTs give artists and musicians a chance to connect with a new audience, selling their work directly with no need for agents or dealers. It’s an opportunity not just for those who don’t yet have industry connections, but also for many whose lifestyles are marginalized in their own countries, allowing a freedom of expression that may not be possible or even legal at home. Artists can always see the latest value of their work, as each NFT has a public ledger of its creation and ownership history, whereas in the physical world it’s easy to lose track as art is bought and sold. Even better, creators can opt to automate a royalty paid on their work, so that every time it is sold on, a percentage of the price will come back to them.
Barriers to entry are low to moderate, though not non-existent. A digital artist won’t need to rent a studio to work in (unless their NFTs are based on physical paintings or sculpture that require space). Instead, they’ll need access to the internet and some cryptocurrency, most likely Ethereum as this is the blockchain the majority of NFTs are stored on. This is necessary to cover the costs involved in verifying and processing transactions and might work out to between $50-400 per asset or collection of them. Once armed with cryptocurrency, a would-be NFT artist just chooses which platform they want to use to mint and sell their wares.
A new means of support for museums, galleries, and charities
As well as providing a new revenue stream for artists, NFTs are raising funds for museums around the world and other non-profit organizations.
In Russia, St Petersburg’s State Heritage Museum is creating a limited edition of NFTs created from masterpieces in its own art collection, including works by Leonardo Da Vinci, Monet and Van Gogh. The project, titled ‘Your token is kept in the Hermitage’ is intended not only to raise funds but also to provide a new kind of accessibility to the museum’s collection and lend gravitas to the idea of collecting digital art3. In Italy, after months of revenue loss due to the pandemic, the Uffizi Gallery in Florence created a one-off edition of Doni Tondo by Michelangelo, selling it in May 2021 for $170,000. Hot on the heels of that success, the gallery is now minting NFTs for works including Botticelli’s The Birth of Venus4.
Meanwhile, reference book publisher Merriam-Webster minted ‘The Definition of NFT’ and raised around $48,000 for children’s education charity Teach for All5, while NSA whistleblower Edward Snowden worked with photographer Platon Antoniou on a portrait that raised $5.4 million for the Freedom of the Press Foundation6.
NFTs are not only making headlines and raising funds, in the future they may also make museum collections more accessible. Even large museums often only have the space to keep a small percentage of their works on show. Creating NFTs can open up the wider collection to people all around the world.
NFTs and their place in the Metaverse
But one of the most fascinating things about NFTs based on art and collectables is their status as elements in the ‘Metaverse’, a concept set to transform our world in the next decades just as the internet did in the last 20 years. The future Metaverse is a shared, inter-operable digital space containing all the virtual worlds we know, not only in gaming but also social media, ecommerce, education, and recreation, with its own economy and experiences. Sometimes it may be in VR, resembling a next-generation Second Life, sometimes it might be AR, where digital elements are overlaid onto our physical world. Mark Zuckerberg sees it as a means of accessing ‘presence’ in the digital realm, imagining our future Zoom calls with holograms of colleagues, or loved ones seemingly sat right next to us7. At this early stage no one, not even Zuckerberg, can be quite sure what the Metaverse is. Although it was named nearly 30 years ago in Neal Stephenson’s 1992 science fiction novel Snow Crash8, the word doesn’t even feature in the current Merriam-Webster or Cambridge dictionaries.
What we can be sure of however is that NFTs, and galleries in which to view them, will feature in the Metaverse, because they’re already here. Individual Metaverses created largely to display NFTs already exist. This year multinational auction house Sotheby’s opened a prime-location gallery within Decentraland9, the ‘virtual destination for digital assets’, while CryptoVoxels allows users to build stores, museums and galleries in a Minecraft-like environment. In both cases these spaces have their own economies: users can buy ‘land’ with cryptocurrency, ‘hire’ a digital architect to build out their spaces and sell NFTs once they’ve created them. This is a whole new world of art, enabling people all over the world to ‘teleport in’, ‘visit’ galleries and see famous artworks without having to get a visa or pay for a flight. One day the hope is that all these individual Metaverses will link up, allowing people to move seamlessly between different experiences.
The issues still to solve in the new ‘Wild West’: identity, property, and theft
The industry is in its infancy and there are a number of legal and security issues still to be ironed out. Theft is a problem; with not much to stop someone ‘stealing’ a digital artwork and minting it into an NFT. There’s plenty of reported instances of this happening, from people finding false ‘verified accounts’ offering their own work to the heart-breaking story of the Japanese artist whose work was tokenized after her death10. Platforms will take down NFTs based on stolen artwork, and once deceit is discovered an NFT is discredited, but it can be akin to fighting a forest fire, stamp out one and more pop up elsewhere.
In March 2021 hackers stole thousands of dollars’ worth of artwork from NFT marketplace NiftyGateway from users who had neglected to set up two-step authentication on their accounts11. A month later an anonymous artist known as Monsieur Personne ‘sleepminted’ a copy of Beeple’s market-busting Everydays: the first 5,000 days, creating a token that looked like it had been created by Beeple but wasn’t and proving that even NFTs can be fakes12. No doubt all NFT marketplaces are working on ways to stay one step ahead of bad actors.
In this largely unregulated space, tax evasion and money laundering are also potential problems. The IRS sees NFTs as a tax evasion risk, since in theory people using cryptocurrency to buy and sell NFTs may be liable for tax during different parts of the process. Because the ‘value’ of an NFT is subjective, it’s also not too difficult to collude with others, for instance selling an NFT for a hyped-up price to an associate, in order to collect ill-gotten crypto gains. Existing laws may cover some issues but as so often happens, the regulators need to catch up with the technology.
A greener, more sustainable future for NFTs
Like many new art forms throughout history, NFTs have caused controversy, much of it centred around environmental impact. Most are built on the Ethereum blockchain, which is ‘mined’ using the energy-heavy ‘Proof of worth’ system to ensure security. It’s hard to calculate exactly how much energy creating an NFT might use, but it’s been estimated that one Ethereum transaction consumes as much electricity as the average U.S. household uses in just under five days13. Some artists have attempted to make their NFTs carbon neutral by offsetting potential emissions caused by energy use. Opinions differ on how effective this really is.
The good news is that the Ethereum Foundation and others are already finding solutions to radically reduce the amount of energy needed by NFTs in the first place. Ethereum has been working on a move from the electricity-guzzling ‘Proof of work’ system to the far more efficient ‘Proof of stake’ for some years. A 2022 upgrade promises to cut energy use by more than 99%14. In the meantime, some artists are choosing to use Tezos, Wax and other energy-efficient blockchain alternatives to Ethereum, including the British artist Damien Hirst who is using Palm for his monumental new enterprise, The Currency Project, comprising 10,000 oil paintings on paper, each accompanied by its NFT15. In terms of both legal and environmental issues, it is of course in the interests of the entire industry to find solutions, whether through regulation or by vastly reducing its environmental impact.
Some people, particularly those who came of age before the digital revolution, struggle to get their heads around the idea of NFTs. How can anyone assess their value? If things only exist as pixels, do they really exist at all? But this exciting realm is awash with possibilities, not only putting a value on digital art, but opening up to artists and audiences who are entirely new while creating an economy and an ecosystem already worth billions of dollars. With individual Metaverses like Decentraland already offering a ‘place’ to view NFTs in the virtual world, this is no mere fad. As the Metaverse comes of age these experiences will become mainstream. So perhaps it’s time to start breeding those CryptoKitties – NFTs are here to stay.
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Footnotes
1. Beeple’s Opus: Created Over 5,000 Days By The Groundbreaking Artist, This Monumental Collage Was The First Purely Digital Artwork (NFT) Ever Offered At Christie’s, Christies, https://www.christies.com/features/Monumental-collage-by-Beeple-is-first-purely-digital-artwork-NFT-to-come-to-auction-11510-7.aspx
2. Beeple’ NFT Sold For $69 million Is The Fourth Most Expensive Artwork Sold By A Living Artist, Cryptoslate, https://cryptoslate.com/beeple-nft-sold-for-69-million-is-the-fourth-most-expensive-artwork-sold-by-a-living-artist/
3. Tokenized Art From The State Hermitage Museum, Including Leonardo Da Vinci, Will Be Featured On The Binance NFT Marketplace, The State Hermitage Museum, https://nftcalendar.io/tokenized-art-from-the-state-hermitage-museum-including-leonardo-da-vinci-will-be-featured-on-the-binance-nft-marketplace/
4. Uffizi Sells Artworks As NFTS To Recover Losses, The Art Insider, https://www.art-insider.com/uffizi-sells-artworks-as-nfts-to-recover-losses/2238
5. The Definition Of NFT, Opensea, https://opensea.io/assets/0x495f947276749ce646f68ac8c248420045cb7b5e/13014153790550692438812020292530308527796599818332639642513535596840089550849
6. Historic Snowden NFT Auction Benefits Freedom Of The Press Foundation, Freedom of the Press Foundation, https://freedom.press/news/historic-snowden-nft-auction-benefits-freedom-of-the-press-foundation/
7. Mark In The Metaverse: Facebook’s CEO On Why The Social Network Is Becoming ‘A Metaverse Company’ https://www.theverge.com/22588022/mark-zuckerberg-facebook-ceo-metaverse-interview
8. Snow Crash, Wikipedia, https://en.wikipedia.org/wiki/Snow_Crash
9. Sotheby’s Opens A Virtual Gallery In Decentraland, Decentraland, https://decentraland.org/blog/announcements/sotheby-s-opens-a-virtual-gallery-in-decentraland/
10. An Artist Died. Then Thieves Made NFTs Of Her Work, Wired, https://www.wired.co.uk/article/nft-fraud-qinni-art
11. People Are Reporting Thousands Of Dollars Worth Of Crypto Art Was Stolen On An NFT Marketplace, Business Insider, https://markets.businessinsider.com/news/currencies/stolen-nfts-on-nifty-gateway-reports-nft-art-marketplace-2021-3,
12. A New $69 Million NFT Was Sleepminted, NFTheft, https://nftheft.com/
13. Ethereum Energy Consumption Index, Digiconomist, https://digiconomist.net/ethereum-energy-consumption/
14. A Country’s Worth Of Power, No More!, Ethereum Foundation Blog, https://blog.ethereum.org/2021/05/18/country-power-no-more/
15. 1The Currency By Damien Hirst Is Now Live On HENI, Palm, https://palm.io/studio/the-currency-by-damien-hirst-is-now-live-on-heni/
