Technology is changing the way businesses have operated for centuries and has significantly reduced the barriers to entry in almost all the markets [1].
The problem faced by traditional Brick and Mortar stores: Traditional physical retail stores have, for long, dominated the market by attracting customers by their huge inventory. The convenience of finding everything under one roof proved to be convenient for both: customers and retailers. However, the modern trend of purchasing the goods online proved to be a game-changer in the retail industry. The increased convenience and cheaper products provided by e-retailers shifted the consumer base from retail stores to e-retail stores. Washington Post reported that more than fifteen thousand brick-and-mortar stores have closed since 2017 [2] [Figure 1].
The market disruptors: Technology platforms that serve hundreds of millions of customers on a daily basis are the market disruptors. Technology giants have not only changed the way businesses were conducted but also shifted the market valuation trends [3]. In the year 2000, there was only one technology company in the list of Top-12 companies by market valuation. In year 2018, there were six technology companies on the same list and the first six spots were occupied by technology companies [Figure 2]. The robust and scalable technology platforms owned by these companies help them reach their customers at an unprecedented speed and distinguish themselves from their competitors.
The technological upper hand: Automation, in the long run, proves to be cheaper than the cheapest human labor [Figure 3]. Technology giants, such as Alibaba and Amazon, employs thousands of robots in their warehouse to fetch the ordered items that significantly increase their turn around time, and reduces their labor cost. The scale at which e-retailers, such as Alibaba and Amazon, operate allows them to invest heavily in infrastructure and project profits in the long run. However, the cost of setting up such an infrastructure is not affordable for traditional retail stores. Automating various processes of the retail cycle, such as e-checkout and e-stores, helps keep the cost low and gives these e-retailers an upper hand over other retailers.
The modern oil: Data is considered the modern oil [3] [Figure 4] and is highly utilized by technology giants to deliver better products and, consequently, to increase their market share. Facebook and Google use user’s data to create targeted advertisements. Amazon uses user’s data to understand purchasing patterns and invest in its own brand – Amazon Basics – accordingly. Tesla uses the user’s data to understand and improve its self-driving software. Technology giants can, and have, cornered the market by monetizing huge streams of data in their possession. The well-organized data pool at technology companies distinguishes them from other companies.
[Figure 1]: https://www.citylab.com/life/
[Figure 4]: https://www.economist.com/
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