The Death of Distance Means that You are Now a Producer in a World Market

The ‘Death of Distance’ Means that You are Now a Producer in a World Market

However, what technology has done to the consumer experience is usher in the concept of the ‘compressive world geography’, in which consumers now realize that any product in the world can be found and delivered to their door. The consumer finds the appropriate channel to acquire the product, specifies a method of delivery, assesses whether the cost of the product and shipping is a valuable combination, and authorizes the transaction. Producers of goods and services now realize that the rest of the world must be considered when developing competitive strategies. Many products can now be viewed in the same light as a commodity and their customer base is no longer insulated by a foreign producer’s lack of access to a market. Hobson described the fluid nature of products that are considered commodities:

Each kind of commodity, as it passes through the many processes from the earth to the consumer, may be looked upon as a stream whose channel is broader at some points and narrower at others. Different streams of commodities narrow at different places. Some are narrowest and in fewest hands at the transport stage, others in one of the processes of manufacturing, others in the hands of the export merchants.^[98]

The description of a widening and narrowing channel identifies new market opportunities for a globally connected business. A widening channel is analogous to the demand for an ever-increasing selection of products, and the narrowing channel indicates shortages in supply or identifies the emergence of a demand for a new product. These ebbs and flows in demand reflect the changes in product value in the new interconnected world. Traditional product producers and their distribution partners need to view their customer base in new ways. Chapter 4 discusses the details of how demographic information is changing and what organizations must do to develop new market strategies.

Organizations formulating new competitive strategies must take into consideration not only market compression and channel expansion but the underlying capabilities that the technology introduces. The value proposition of the Internet to customers consists of four key attributes: convenience, savings, a broad selection, and trust. These key attributes can be translated into five distinct actions that are at the heart of the customer experience: search, price, compare, select and ship. Disintermediation occurs when an intermediary loses sight of these attributes and actions, failing to address each item with a change in technology and/or business process. As technology makes the dissemination of information easier, it presents the customer with an ever-increasing variety of products through an even larger number of new and existing distribution channels. The numerous ways in which a customer can acquire a product coupled with the technologies enabling its acquisition creates product transparency. This product transparency is a growing concern to manufacturers because of the possible loss of brand identity, which is discussed in section 4.5.

Throughout the world, product providers are witnessing a spread of the western ideology of ‘anytime, anywhere, anyhow’ consumerism, which demands better ways in which to fulfil the needs and wants of consumers. Organizations aspiring to transact business in the global markets of the future must resist the temptation to model all business transactions and products to western tastes and be mindful of the preferences for goods that are indigenous to diverse geographic locations. At the present time, the western digital nations are leading the adoption of Internet technologies and English is the most prevalent language but that is rapidly changing. As the Internet matures and becomes more a mechanism to facilitate the flow of commerce, culture, knowledge and communications between individuals will reflect greater international diversity. One could argue that the early domination of the Internet by the digital nations is in some way responsible for the rising aversion and restlessness with the proliferation of western products and lifestyles. The ubiquity of mass-marketed western products combined with the marketed perception of the lifestyle that accompanies their ownership can be perceived as an indirect cause for the erosion of local value systems and beliefs. This is not to say that the Internet can cause the erosion of local culture; but it can be perceived as being able to do so. This perception is giving rise to trends in nationalism, anti-globalization movements and isolationism which will slow down the adoption of the technology. Conversations about the End of Time (Eco et al., 2000) discusses the potential danger in following a compressive course:

The globalisation of problems, however, will necessarily require solutions at a planetary level. And yet it is precisely at this time of globalisation that we feel the need to fence off our own sphere of action, the need to narrow our focus, the temptation to cut ourselves off.^[99]

Technology can be used to combat the misunderstood side of the Internet’s compressive disintermediation and be used to emphasize the expansive aspect.

As it matures, the Internet will undergo a transformation as a medium of exchange. It will not merely be a mechanism for facilitating commerce, but it will provide avenues to connect diverse people, ideologies and cultures. This is not to say that simply connecting the people of the world will solve global problems, political unrest and socio-economic inequalities, in fact it could conceivably raise the level of disagreement between world peoples.

However, regardless of the Internet’s eventual value proposition and its effect on the people of the world, business must embrace the new medium as a mechanism to reach market segments which cannot be penetrated by traditional distribution channels. The opportunity for value creation is to facilitate customers seeking alternative access channels to products in a global marketplace. Firms will thus be more involved in eCommerce especially in market segments which cannot be penetrated by traditional distribution channels and with existing clients who are seeking alternative access channels.

^[98]J. A. Hobson, The Evolution of Modern Capitalism. (London: Walter Scott, 1926).

^[99]U. Eco, S. J. Gould, J.-C. Garri re and J. Delumeau, Conversations about the End of Time (London: Penguin, 2000) p. 144.