My gosh, how quickly these seven weeks have gone. And we only just scratched the surface.

Source: Giphy.com

Without a doubt, this module has been eye-opening for me. Not only have I learnt that my current career path is a job most prone to automation according to a report titled ‘The Future of Employment’ from the University of Oxford (1) but digitalisation is transforming our world.

Seeing how the move toward smart cities, becoming digital nomads and the desire for flexible workspaces are changing our physical landscapes, mindsets and needs. As we move toward more flexibility and mobility (a necessity for job fluidity) our economy is also progressing. As Rachel Botsman (2) talked about in her Ted Talk, institutional trust is just not working, we are fed up with the audacity of dishonest elites. What is happening now, we are starting to realise that institutional trust was not designed for the digital age. In the digital age ratings and online trust impact on abilities to transact (E.g Airbnb ratings) in the future and therefore make us more accountable in ways, we cannot imagine. In addition to this, we are moving away from an industrial economy toward a circular economy. “Digital technologies, and in particular internet-connected devices, are key enablers of circular economy initiatives. A report by McKinsey in 2015 estimated that 30 billion devices will be connected through the web by 2020, providing entirely new business opportunities.” (3)

We are moving towards a society that holds individuals and companies more accountable while providing consumers with flexibility never seen before. 

But beyond what we learnt in the classroom (or in our case via the Exeter website) what I have found invaluable over the past 7 weeks was gaining the perspective of my fellow classmates on topics and companies that I would not have necessarily thought of. Week 4 found me commenting on Julia’s post about retail and challenges faced by both online marketplaces and brick and mortar stores. The content of this blog was, without a doubt, the inspiration for my post week 6. The seemingly necessary overlap of physical and online accessibility is something that I would not have deemed necessary prior to this course, just check out my first blog post week 2. But now I know that in order to create and sustain a successful business, one needs to have a strong presence in both worlds. So even if I ultimately stay in real estate, I know it is imperative to create some sort of hybrid concept. Reading of Isil’s personal experience with e-commerce and her first-hand knowledge of how these online marketplaces work was a perspective I would have otherwise never gained. Week 6 I had the opportunity to read Caroline’s post on Amazon, which coupled with Isil’s post a few weeks prior gave me an even greater perspective on the company. While we all think we know Amazon because we’re all consumers in one form or another, the level of detail these posts went into giving me a depth of knowledge on aspects I never knew. As one of the worlds largest companies, reading about their trends and challenges moving into 2019, I have a better understanding of where digitalisation and e-commerce will be moving over the coming years. And lastly, Stacey’s post on Airbnb, as I wrote in my comment, I am eager to watch this company over the coming years to see how it evolves and remains relevant in a fast-paced and ever-evolving economy. There is no doubt Airbnb has been a disruptive business model that has thrived in the digital age, but how it maintains that market edge is still to be seen. 

Source: giphy.com

Student posts:

Julia – https://wordpress.com/read/feeds/84469613/posts/2159708173

Isil – https://wordpress.com/read/feeds/84077893/posts/2159531721

Caroline – https://wordpress.com/read/feeds/84154059/posts/2176460670

Stacey – https://lifewithahearingloss.wordpress.com/2019/02/15/airbnbs-digital-success/

References:

(1) The Circular Economy. Week 4 course content on the Circular and Sharing Economies. https://vle.exeter.ac.uk/mod/page/view.php?id=840305

(2) Rachel Botsman, November 7, 2016. We’ve stopped trusting institutions and started trusting strangers, Youtube  https://www.youtube.com/watch?v=GqGksNRYu8s

(3) Digital Disruption. Week 4 course content on the Circular and Sharing Economies. https://vle.exeter.ac.uk/mod/page/view.php?id=840306

Established in 1971, Starbucks with one store in Seattle’s Pike Place Market, grew to 116 stores by 1991 and as of 2015 has a total 22,519 stores worldwide. (1) Needless to say, Starbucks knows its coffee, so why is this coffee giant investing so heavily in digital innovation? According to Starbucks CEO Kevin Johnson, “No traditional brick-and-mortar retailer is better positioned to navigate and flourish in the global retail industry of today or better positioned to lead in the digital retail world of tomorrow.” So how are they adapting? Welcome to the Starbucks app. Or as Starbucks say, their Digital Flywheel, focused on four pillars: rewards, personalisation, payment and ordering. (2) Rolling out their digital ordering system in the US in September 2015, Starbucks’ mobile order-and-pay feature has become a major hit for the company. In Q3 2017, 9% of Starbucks’ U.S orders were placed in advance with nearly a third of all Starbucks’ orders paid for via the company’s phone app. 

“Our digital flywheel is a powerful proprietary asset that is driving deep customer engagement, revenue, and profit growth around the world” Kevin Johnson, Starbucks CEO.

Source: TechInsight via Starbucks

It is no shock that apps are revolutionising the food and restaurant industry, from Uber Eats, to Postmates and Eat24 we all have our go-to app for ordering take-out and delivery. A recent study carried out by Manifest of more than 500 smartphone users found that almost 50% of those who regularly use restaurant loyalty apps use the Starbucks app. (3) Starbucks payment system is in fact so powerful it actually outpaces Apple Pay and Samsung Pay in the US. I mean how crazy is that! In fact, a study carried out by eMarketer predicts Starbucks will continue to be the market leader through 2022. (4)

Source: AppSamurai

“Starbucks identified the smartphone revolution years before most bricks-and-mortar firms, and the technology still holds big promise in boosting sales over the long term. “The kind of growth and financial performance we are seeing out of customers with whom we have digital relationships blows the socks off of anything Wall Street would possibly want to see,” Matthew Ryan, Starbucks’ global chief strategy officer, tells Barron’s.” (5)

Source: The Manifest

So why is the app so popular? In short, digital engagement. Starbucks has found a way to meaningfully connect with consumers in a way that has revolutionised consumers’ paying and ordering habits. With a strong rewards program, ease of ordering (I mean who doesn’t like to skip the line?) and Spotify integrated into the app, what’s not to love? Seriously though, when you can order your coffee via Amazon’s Alexa, through integration with Ford vehicles and boasting a voice command AI feature within the app to boost speed and convenience (6). Starbucks is certainly keeping digital innovation at the heart of its business model. App personalisation and pushing new products to upsell customers on more expensive or additional items, Starbucks has found a way to draw more value from its customers while keeping them engaged and appreciated. Starbucks also utilizes iBeacon technology to enhance customer engagement. From pop up messages on screen alerting you to nearby a Starbucks or discounts on your usual order, this engagement alerts you to the presence of a Starbucks, making you more likely to go to one.

And according to Starbucks CFO Scott Maw, that digital engagement has paid tremendous dividends for the company. In March 2018 at a JP Morgan forum, Maw attested that almost all of the company’s same-store sales growth has come from customers that have digital relationships with the company (7). In Q3 2017 spending per member via the app increased 8% which was double the rate of the company’s same-store sales(2).

At the heart of any successful business, is their ability to adapt, it is this digital transformation that has ensured Starbucks retain investor trust. According to Starbucks CEO, Johnson “there is a seismic shift in the behaviour of the customer, changing to digital platform and retailers must be agile.” (8) Johnson expands further on this by noting parallels between their company and Amazon’s acquisition of Whole Foods. “The evidence is clear that the pace of retail transformation is accelerating with a common theme: extending the in-store experiences to include relevant digital scenarios,” said Johnson, a long-time tech executive who became CEO earlier this year. “It is the driving force behind combinations including Walmart’s acquisition of Jet.com, the combination of PetSmart and Chewy.com, and last month’s announcement of Amazon’s intent to acquire Whole Foods. Each of these combinations demonstrates that pursuit of enhancing the physical retail experience with a relevant and complementary digital experience.” Starbucks sits in a unique position in the ever-changing retail world, as it has a huge physical retail footprint — 27,000 stores in 75 countries serving roughly 90 million customer visits each week — with a robust digital platform.” (9) 

Word Count: 818

References:

1. Starbucks Company Timeline, Starbucks https://www.starbucks.com/about-us/company-information/starbucks-company-timeline
2. Starbucks: a tech company or your neighbourhood coffee shop? Kat Franklin, January 29, 2018. Harvard Business School. https://digit.hbs.org/submission/starbucks-a-tech-company-or-your-neighborhood-coffee-shop/
3. How Customers Use Food Delivery and Restaurant Loyalty Apps. The Manifest. https://themanifest.com/app-development/how-customers-use-food-delivery-and-restaurant-loyalty-apps
4. App Success Story: Starbucks App. Felicia, June 19, 2017. App Samurai. https://appsamurai.com/mobile-app-success-story-starbucks-app/
5. Starbucks Teaches Silicon Valley a Lesson in Tech, Barron’s. August 19th 2017. https://www.barrons.com/articles/starbucks-teaches-silicon-valley-a-lesson-in-tech-1503115292
6. The Success of Starbucks App: A Case Study. Medium. https://medium.com/@the_manifest/the-success-of-starbucks-app-a-case-study-f0af6709004d
7. Starbucks Corporation. JP Morgan Forum Transcript. March 9, 2018. https://s22.q4cdn.com/869488222/files/doc_downloads/doc_events_attach/2018/03/JPM_SM_3-9_Transcript.pdf
8. Digital Transformation in Starbucks. Hoang Nam Le, May 16, 2018. Tech Insight. https://techinsight.com.vn/language/en/digital-transformation-in-starbucks/
9. Starbucks is a tech company: why the coffee giant is investing heavily in digital innovation. Taylor Soper, July 31, 2017. Geek Wire. https://www.geekwire.com/2017/starbucks-tech-company-coffee-giant-investing-heavily-digital-innovation/

Overview:

In the real estate market, the need to operate in a digital location trumps that of a physical location. So what are opportunities and challenges each location faces and what are the benefits to operating in both?

Expanded reading on the opportunities of operating in a digital location:

(1) One of the most visited sites in the UK, Rightmove dominates the UK property portal industry, attracting 139m visits per month and featuring more than 20,000 advertisers (estate agents) displaying 1.2 million properties. While by no means do estate agents HAVE to be on this platform, not being a part of this digital location is, quite simply, commercial suicide.

“If you’re not on Rightmove, you’re not on the market.”

Further reading on the juggernaut that is Rightmove can be found here.

(2) Because the digital location has no borders (even advertising and selling properties overseas), estate agents utilising digital locations such as Rightmove, OnTheMarket and Zoopla are able to help clients and field referrals in areas beyond their physical offices. For example, my father lives within the local area for Paisley Properties but has investment properties in the city of Leeds. Because of digital locations, he is able to list his properties for sale some 20+ miles away, knowing his properties will be viewed by the same potential buyers, regardless of where the estate agent is based.

(3/4) While Rightmove, Zoopla and OnTheMarket may be the digital property portals for property listings, Facebook Business allows businesses to engage with consumers, creating a community and target potential new customers and homebuyers through targeted advertising not possible with just a physical location. “Facebook’s approach to ads has been transformative for businesses, letting them expand their advertising options significantly. Just as the internet helped millions of people find others who shared their interests and hobbies all around the world, Facebook made it easy for businesses to advertise to large numbers of very specialized audiences. That power has created many new opportunities for businesses.” – The Conversation

Expanded reading on the challenges of operating in a digital location:

(5)  As seen from the screengrabs below, the average fee for selling your home with an online agent is below £1000. A more detailed breakdown of the UK’s largest online estate agents can be found at which.co.uk. “A new report forecasts that the growth of no-branch agents over the next five years really will prove deeply disruptive for the industry as a whole.” – Property Industry Eye

Property portals such as Rightmove and Zoopla have paved the way for online estate agents which in turn has had a huge impact on the fees hight street agents are able to charge. For example, Paisley Properties has had to introduce a third fee option, designed to match those offered by online agents.

Below is a breakdown of the three fee options provided by Paisley Properties. While they clearly benefit from the additional exposure digital locations offer, it is clear the increased competition from online competitors has impacted their business model.

Source: Paisley Properties

(6) A great article on demand for 24/7 access of consumers can be found here.

“The rise of millennials and globalisation means businesses need to operate 24-hour globally, in order to remain competitive.”

(7) Below is a screengrab from Rightmove where information is listed for Paisley Properties. Other than a company logo there is no personalisation, nor company contact information. The phone numbers listed on Rightmove are not even the company phone numbers, ensuring every phone call made through the portal is directed through Rightmove and consumers found via the site remain connected to the website.

(8) With the average Rightmove fee to Estate Agents having risen by 397% in the last 11 years … are they worth the money?

Expanded reading on the opportunities of operating in a physical location:

(1.1) By operating from a physical location, the opportunities to provide services and advice to the local community are endless. Hosting Q&A’s with mortgage brokers for clients, organizing events around home staging and the top 10 tips to selling quickly, as well as meet and greets for buyers who have moved into the local area. With a physical space within a community, there are many options available to estate agents to maximize on their location and standing within a community.

(2.2) Estate agents operating from physical stores, rightly or wrongly are still perceived as having an in-depth local knowledge which online competitors struggle to match.

“To start with, their so called Local Property Expert was neither “local” nor an “expert”. So far as Purplebricks claiming that they have “local property experts” in your area who know your market because they have lived and sold homes their for years, that is not the case in many areas.”

Expanded reading on the challenges of operating in a physical location:

(3.3) The costs involved with leasing or buying a retail space, personalising, decorating, staffing and maintaining high street store is exponentially higher than simply running in a digital location alone. An article in The Guardian last summer quoted a study by accountants Moore Stephens that found “more than 150 estate agency firms went insolvent last year and as many as 7,000 are at risk as high street operators face the triple whammy of online competition, a sagging property market and cuts to letting fees.” You can read the full article here.

To summarize, while it may not be essential for estate agents to operate in both digital and physical locations, those agents who can absorb the costs of operating from a physical location in addition to digital locations, if utilized well, can benefit from the additional exposure. That is until the real estate market as a whole becomes more technologically advanced and then we will see more high street agents shutting their doors. For more information on my predictions for the future of real estate in the UK please check out this blog post.

A property tycoon for the last 7 years… yeah I know, I wish, but we can all dream can’t we? But I have had the pleasure of helping homeowners and buyers find and sell their dream homes, in addition to working with investors and renovating properties for the last 7 years, so this industry is quite literally what I eat, breath and sleep. Technological innovation has dramatically influenced the real estate landscape, changing how we find properties, market homes, who we employ to sell them and what fees we are willing to pay.

Vastly different to the US way of home buying/selling, below is a brief overview of the traditional home selling experience in the UK:

Source: Flying Homes, 4 Ways to Sell a House (4)

How selling a home has already changed:

Where I see the home selling process in 10-20 years:

Thanks for joining me!

Here I will be documenting my experiences, reactions and knowledge learnt from my Master’s class Digital Business Models at the University of Exeter.

Good company in a journey makes the way seem shorter. — Izaak Walton