After seven remarkable weeks, the Digital Business Models module is (almost) finished. It is time to draw up a reflection with what I have learned!

I think this module has helped me to become aware of how important digital scenaries are. An online master, with digital resources (iExeter, FutureLearn…), doing assignments on Blog platforms, taking references from online newspapers… Now explain that to my grandfather!

I challenge you!

Before starting I must say that the structure of the module, and especially the use we have made of the blog, seemed pleasant and original to me. Without a doubt, it has been very positive when dealing with assignments.

The content of the module has been very varied and interesting. During these weeks we have studied many subjects of vital importance and discuss them, taking as a starting point the future of business with the incidence of digital spaces. From our current situation to the assumptions about the future of companies with the presence of disruptive technologies. We have also emphasized the importance of integrating this digital change in our cities and the appearance of new business models, such as circular (Brady, 2017) and sharing (Miller, 2018) economies.

However, this is not a summary of the course, but of our blogging’s performance.

My first post was related to my professional background: journalism. It was a curious reflection, because it made me understand better the delicate situation that the profession is going through. I would like to accentuate how I highlighted the paradigm shift of the consumer’s relationship with the profession. I have no doubt that journalism has been one of the most affected careers by these disruptive digital models. In addition, it was particularly interesting to see the posts of my colleagues, whose considerations on their professional fields were very enriching.

In my second entrance I wrote about one of my favorites companies nowadays, Xiaomi. In my post I tried to do an analysis on how this company addressed the opportunities and challenges presented by operating in both digital and physical locations. The deepening on Xiaomi’s business model has been very valuable, since it has taught me a very solvent financing strategy for a start-up using digital media.

Finally, in my third entry I discussed the situation of Hawkers, and the ways in which its digital business model has contributed to its success. As with the previous post, I learnt a lot analyzing its business models and the ways in which they had interacted with digital media when developing their product. Even more knowing the fact that both companies (Xiaomi and Hawkers) would hardly have existed without the huge technological expansion.

I must say that the part I enjoyed the most was commenting on my colleagues’ articles, whose quality impressed me. It was incredible to read their points of view. God bless the collaborative intelligence (Isak, 2015). Moreover, the comments I received in my blog seemed very constructive.

Now what?

The completion of this module has given me guidelines to consider in my future career. Times are changing, and with them, business models. This will entail the need for continuous training in new subjects and challenges that we still cannot imagine. Only one thing is for sure: we must take advantage of the situation. We have to adapt to succeed.

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change”

Charles Darwin

Word Count: 543

References:

Brady, C. (2017), Running in circles: what the circular economy means for consumers. Bioregional. Retrieved from: https://www.bioregional.com/news-and-opinion/running-in-circles-what-the-circular-economy-means-for-consumers

Isak, C. (2015), What is Collaborative Intelligence? Techacute. Retrieved from: https://techacute.com/what-is-collaborative-intelligence/

Miller, D. (2018), What Is the Sharing Economy (and How Is it Changing Industries)? The Balance Small Business. Retrieved from: https://www.thebalancesmb.com/the-sharing-economy-and-how-it-changes-industries-4172234

As we all know, digital environment has penetrated so deep into our way of doing business that, recently, we have found many cases where technology underlies to the point of standing the business on its shoulders. It is a utopian fact that thirty years ago would seem to be impossible! It has become, rather than an update, a Copernican shift. A change in the way of doing business, in the client-company relationship and their behaviour. As an example, in the following article I will write about the Spanish start-up Hawkers, a company that owes its massive success to its digital business model.

So far, everything looks like a Hollywood script. A bunch of young Spaniards, in the middle of an economic crisis, making an investment of € 300 to start a business. Soon they become millionaires, having more than $60 million revenue by the end of 2017 (Berman, 2017), selling in more than 50 countries (Forbes, 2017) and competing face to face with the market giants. Do you still believe it is just luck?

In fact, it is not. The company’s success does not lie in luck. Not even in the quality of its products. The main factor of the absolute triumph of Hawkers lies in the use of digital models. However, to begin with we must know what the main objective of the company is. As they say in their KickStarter website:

“Hawkers Co. wants to disrupt the market and put an end to the monopoly by creating the most awesome quality sunglasses at a fair price”.

To carry out its mission, Hawkers has developed its business by valuing the huge importance of social networks nowadays. The company has also not been as publicized as its competitors, but it took a different approach to advertise itself: Individual targeting.

Spending time on individual people on social media sites such as Facebook, Twitter or Instagram, the company has managed to attract a loyal following and created a buzz that has ignited word-of-mouth advertising. The first company mentioned, Facebook, played a main role in the very first days. The social network created by Mark Zuckerberg allowed them to reach many people with a small budget. They started using their advertising tool (Facebook Ads) which at that time few people used. Starting with a moderate budget, they reached a point in which they were investing €10,000 per day (Doofinder). Their Facebook Ads page let them reach their target audience by showing different styles and attributes depending on the potential buyer’s characteristics.

It was also vital the use of retargeting techniques, such as promotion codes. One of the techniques that Hawkers uses is based on the insertion of a code in a website that generates a discount voucher for the user that visits the website. There is a well-known example this the Spanish Forum Forocoches, which has a partnership with the brand. They offer discounts for users of the forum, which it is semi-private (You can only access to the whole content if you are previously invited by other user). This colaboration provides a great expansion of the brand, since Forocoches has a monthly traffic of 17 million users approximately (Libre Mercado, 2017). The alliance has become that strong that Hawkers has even created a line of glasses with special Forocoches design (El Economista, 2015).

In addition to that use of Social Media and sponsorships previously mentioned, Hawkers’ marketing strategy is also to use celebrities and influencers to promote its products (Living Room 128). Thus, the company uses the impact of celebrities to achieve millions of online followers. It is necessary to think about how many million people received the influence of the brand, as the list of notorious people that work with Hawkers is not small. Some examples are Lionel Messi (Prnewswire, 2017), who has 109 Million followers on his Instagram account, or Steve Aoki (Manintown, 2016), with more than 8 Million followers on his Twitter profile.

Although these techniques are not innovative (they are not the first to do so) they have managed to obtain an excellent performance from their use. Nevertheless, it is great to see how many alternative paths to promote the brand have used, as the creation of Hawkers Parties, which took place in different Spanish locations and were broadcast via Streaming (La Razón, 2015). In spite of the fact that social networks factor exists, Hawkers also succeeds because its products are easy to understand and to buy: everyone knows what sunglasses are and how easy to adapt to trends are. Moreover, it is a product that is sold with an almost impulse price (around 20-30€), so people do not have to think much to buy them.

Its business is based on digital media, both in its distribution, production and promotion. Thinking about this company without a digital business model would be just an illusion. Therefore, and taking Hawkers as an example, I am convinced that with these disruptive models the way we do business has changed. It is not a 2.0 model, but a new way of creating business…

…and it is there, waiting for us to take advantage of it.

Word Count: 846

References:

Arce, M. (2017) Forocoches o como facturar un millón al año con un solo trabajador [Forocoches or how to bill one million a year with just one worker] Libre Mercado. Retrieved from: https://www.libremercado.com/2017-09-23/forocoches-o-como-facturar-un-millon-al-ano-con-un-solo-trabajador-1276606347/

Berman, Nat (2017). The Future is Looking Bright for Hawkers Sunglasses. Money Inc. Retrieved from: https://moneyinc.com/hawkers-sunglasses/

Doofinder. Hawkers: The E-commerce beast of Facebook Ads. Doofinder. Retrieved from: https://www.doofinder.com/en/blog/hawkers-the-e-commerce-beast-of-facebook-ads

ElEconomista.es, (2015). Hawkers se alía con ForoCoches para disparar sus ventas con promociones exclusivas para la comunidad [Hawkers teams up with ForoCoches to shoot their sales with exclusive promotions for the community]. El Economista. Retrieved from: https://www.eleconomista.es/tecnologia/noticias/6909687/07/15/Hawkers-se-alia-con-ForoCoches-para-disparar-sus-ventas-con-promociones-exclusivas-en-la-comunidad.html

Franco, A (2017). Hawkers ya es historia del comercio electrónico español [Hawkers is already history of the Spanish e-commerce]. Forbes. Retrieved from: http://forbes.es/business/11061/hawkers-ya-es-historia-del-comercio-electronico-espanol/

Hawkers´ Facebook Ads website: https://www.facebook.com/business/success/hawkers

Hawkers’ Kickstarter website https://www.kickstarter.com/projects/306180593/the-sunglasses-that-will-change-the-business-forev

Hawkers, (2017). Nothing is Impossible for Hawkers: They Reach an Agreement with LEO MESSI. Prnewswire. Retrieved from: https://www.prnewswire.com/news-releases/nothing-is-impossible-for-hawkers-they-reach-an-agreement-with-leo-messi-300502818.html

La Razón, (2015). «Hawkers» revoluciona la industria de las gafas [«Hawkers» revolutionizes the eyewear industry]. La razón. Retrieved from: https://www.larazon.es/lifestyle/tendencias/hawkers-revoluciona-la-industria-de-las-gafas-BY9427517

Living Room 128. How Hawkers Co’s business benefited from influencer marketing. Living Room 128 https://livingroom128.com/hawkers-benefited-influencer-marketing/

Manintown. Neon: sunglasses limited edition signed by Hawkers and Steve Aoki. Manintown. Retrieved from: http://www.manintown.com/neon-la-limited-edition-occhiali-sole-firmata-hawkers-steve-aoki/2016/07/22/?lang=en

Time ago the search for physical space to start a business led to certain problems: it was very expensive, it was necessary to find a privileged location… That is why online markets have proliferated so much, being key factors for the success of massive businesses such as Amazon, Rakuten or Aliexpress. However, the ease of creating an online business has made the competition greater than ever. New terms like SEO or SEM are playing a leading role the new advertising tactics of the businesses.

It is an evidence that online businesses are growing exponentially. As consumers, we are updating ourselves as technology evolves and, as a result, the proliferation of this type of business is increasing unstoppably. The reasons are obvious and varied (The Telegraph, 2016): Larger variety of products; Total availability: 24 hours a day, 7 days a week; usually lower prices; possibility of knowing the opinions of other clients…

The traditional economic model has normalized that the big brands have retail stores. With the arrival of the digital world, most of these stores have developed online platforms to sell also through e-commerce. This format is already more than a trend, as the majority of consumers in UK prefer to buy online (Empathy Broker, 2018). However, there are times when the business seems to take the opposite direction: instead of starting as a physical store, they find its origins on the internet. This is the case of my favorite brand, Xiaomi. Or almost.

Just a short introduction:

Its evolution from start-up to one of the leaders in its sector is very meritorious. It has been considered as the fastest growing smartphone company last year (IDC, 2018), it has come to overtake its competitors in important markets such as India (India today, 2019) and it is foreseen that its sales development will be put to the same level than Apple (My Online Ca, 2015). For that purpose, Xiaomi began its journey by selling in its own digital store. In fact, in 2012 it sold 72% of its mobile devices online (Tech Crunch, 2012). After drawing the attention of innovators and early adopters on Internet with undeniable success, the firm wanted to take a step forward. Therefore, since 2015 Xiaomi authorized stores have appeared, from China (Android Headlines, 2015) to United Kingdom (Xiaomi Today, 2018).

Xiaomi‘s strategy with retail stores is certainly smart. The company does not create its own spaces but gives licenses where they can sell their official products. Therefore, Xiaomi Stores (also known as Mi Stores) are places where Xiaomi products are sold, but they are not owned by the proper company. Thus, this chinese company has a system of distributors that act as a franchise (Xataka, 2018). There are some examples, like the first Mi Store in Qatar, which was launched in partnership with its local distributor: Intertec Group (Gulf Times, 2018).

This way of acting has obviously reduced the overall expenses of the company. Added to this, there is the company’s famous 5% profit margin rule (Asian Review, 2018). In this way the company tries to spread the idea that the product will have great quality for reasonable prices while saves costs in other areas (ownership of physical places, online selling, capping profit margin in favor of quality).

As I mentioned before, the innovators and early adopters provided a great reception to the brand. The expansion from digital market to physical occurred when the number of early adopters had evolved to early majority (that is, those who are predisposed to take something new when it is mature enough). With this, a community that loved the product appeared.

According to Olandres (Yugatech, 2015), there are reasons for the creation of these physical stores that consequently have received positive feedback by Xiaomi users. I would like to highlight the following ones:

Low online adoption

Consumer Confidence

Better Availability and Customer Reach

Thus, the firm faces several factors, such as provincial fulfilment (couriers do not deliver to some remote areas), low credit card penetration, and low internet penetration. In other cases, potential customers can be afraid of online transactions (SC Media, 2014) or simply want to inspect the gadgets before buying. With this strategy, Xiaomi ensures that its market also reaches the late majority and the laggards.

Even seeing how much it has expanded, Xiaomi is essentially a result of the digital age. This is demonstrated in its beginnings and in the huge amount of sales it continues to have in the digital market. It seems that with the rise of technology, the importance of the digital medium will remain outstanding. So, mixing online sales with projects to continue selling in retail spaces like IKEA (Android Pit, 2018), the future of Xiaomi is presumably fascinating.

While writing this article I have asked myself several questions. In a world vastly digitalized, large companies still find gaps where traditional media are still valid. As a conclusion, my question would be the following:

Will online commerce really destroy physical stores?

Word count: 829

References

Fedorov, A. (2014) Almost a third of online consumers don’t trust retail security. SC Media. Retrieved from: https://www.scmagazineuk.com/almost-third-online-consumers-dont-trust-retail-security/article/1480944

How Xiaomi became most valuable startup across the world in just 5 years? (2015). My Online Ca. Retrieved from: https://www.myonlineca.in/startup-blog/how-xiaomi-became-most-valuable-startup-across-the-world-in-just-5-years

Itavo (2018), Xiaomi UK arrives in London with its first Mi Store. Xiaomi Today. Retrieved from: https://www.xiaomitoday.com/xiaomi-uk-london/

Lucic, K. (2015), Xiaomi Opened Company’s First Retail Store in Beijing. Android Headlines. Retrieved from: https://www.androidheadlines.com/2015/09/xiaomi-opened-companys-first-retail-store-beijing.html

Maldonado, A. (2018), New research reveals UK consumers now prefer to shop online rather than in-store. Empathy Broker. Retrieved from: https://www.empathybroker.com/new-research-reveals-uk-consumers-now-prefer-to-shop-online-rather-than-in-store/

McCourt, D. (2018). Xiaomi and IKEA is a match made in heaven. Android Pit. Retrieved from: https://www.androidpit.com/xiaomi-and-ikea-match-made-in-heaven

Olandres, A. (2015). What Xiaomi PH’s physical stores mean for consumers. Yugatech. Retrieved from: https://www.yugatech.com/guides/what-xiaomi-phs-physical-stores-means-for-consumers/#sthash.yjARKrgG.dpbs#K48E6VBEzMaO17qX.97

Pérez, E. (2018), Tiendas Xiaomi en España: quién está detrás y cómo funciona su sistema de franquicias [Xiaomi stores in Spain: who is behind them and how their franchise system works]. Xataka. Retrieved from: https://www.xataka.com/otros-dispositivos/tiendas-xiaomi-en-espana-quien-esta-detras-y-como-funciona-su-sistema-de-franquicias

Ross, E. (2016), 12 reasons why online shopping is better than in-store. The Telegraph. Retrieved from: https://www.telegraph.co.uk/technology/connecting-britain/why-online-shopping-is-better-than-in-store/

Saha, S. (2019), Xiaomi trumps Samsung to become India’s No 1 smartphone brand in 2018. India Today. Retrieved from: https://www.indiatoday.in/technology/news/story/xiaomi-trumps-samsung-to-become-india-s-no-1-smartphone-brand-in-2018-1441540-2019-01-29

Shu, C. (2013), Xiaomi Makes $2.16B In First Half Of 2013, Beating Its Entire 2012 Revenue. Tech Crunch. Retrieved from: https://techcrunch.com/2013/07/15/xiaomi-nets-2-16b-in-first-half-of-2013-beating-its-entire-2012-revenue/

Smartphone Rankings Shaken Up Once Again as Huawei Surpasses Apple, Moving into Second Position While Overall Market Declined 1.8% in Q2 2018, According to IDC, (2018). IDC. Retrieved from: https://www.idc.com/getdoc.jsp?containerId=prUS44188018

Sun, N. (2018). China’s Xiaomi caps hardware profit margin at 5% indefinitely. Nikkei Asian Report. Retrieved from: https://asia.nikkei.com/Business/Companies/China-s-Xiaomi-caps-hardware-profit-margin-at-5-indefinitely

Xiaomi opens authorised Mi Store, (2018). Gulf Times. Retrieved from: https://www.gulf-times.com/story/598891/Xiaomi-opens-authorised-Mi-Store