Web @ 30: Thank you for global connectivity

For the last three decades since its introduction, the web has informed, educated and entertained society. It has given musicians, artists and businesses of any size connectivity to a global audience. Anyone with something to say, can express themselves and publish on the web.

Sir Tim Berners-Lee could not have anticipated that his invention would have such a profound impact on society. Who would have thought in 1989 that with just a few taps on a touchscreen-enabled device or the click of a mouse, a global connected web would make it possible for someone to stream music and movies; transfer money and pay for goods instantly;order a pizza; book a foreign holiday and arrange a taxi pickup.

Online replaces high street shopping

Blockbusters, Maplins and many high street retailers have failed to capitalise on the opportunities the web offers. Instead, the likes of Spotify, Netflix, and the behemoth, Amazon, are increasingly taking a bigger and bigger share of people’s wallets. Perhaps Maplin’s next chapter, as an eclectic online bazaar for all things tech and electronic, may turnaround the business.

In the UK, department stores like Debenhams and House of Frasier have failed to stem the decline in sales. People can buy things far easier online than trying to track down something they really want to purchase in the high street. John Lewis, a company renowned for its peerless customer service, is another department store coming under the spotlight. In its financial statement, the retailer attributed the poorer than expected results partially down to Increased IT costs. “Over the last few years we have steadily increased IT investment to set ourselves up for the future. A number of those significant new systems are now operational resulting in incremental maintenance, support and depreciation costs,” the company stated.

This shows that John Lewis Partnership is looking at investing in the future. The only way it can address the online threat is to invest heavily in IT. Similarly, the recent princely sum of £750m Marks & Spencers has paid for half of Ocado, shows that investing in technology is the only sure way to keep up with the likes of Amazon, especially since the e-commerce giant acquired Whole Food in 2017 for a whopping $13.7bn – 18 times as much as what Ocado is receiving from M&S. The acquisition of Whole Foods has put Amazon in direct competition with the likes of Waitrose (part of the John Lewis Partnership) and M&S, which may be the reason behind M&S’ Ocado tie-up.

In 1994, when it was set up, Amazon was just an online bookstore. It quickly killed off Waterstones in the UK, and later music stores began to see sales plummet. Remember Tower Records, Virgin Music? HMV is struggling to remain relevant.

Connectivity creates business opportunities

Thanks to its global reach, the web has enabled companies to connect to one another, creating complex business ecosystems, where organisations can find a niche to add value. Ocado, in fact, could be regarded as Warehouse as a Service business – providing distribution and online deliveries for Waitrose, Asda and through its new business venture, M&S.

Even Royal Mail is not immune. It has finally come round to the idea that there is a business in delivering people’s Amazon purchases. It even handles Amazon returns, without the need for the customer to print out a return label. Numerous newsagents and dry cleaners are official drop-off and click and collect partners for online stores. Argos’ click and collect and drop of service for eBay buyers and sellers shows that the high street can adapt.

Changing trade connectivity

The winners on the web will be the organisations that have agile business models, that can adapt quickly to new opportunities.One can imagine that a hotel group like Hilton would never have contemplated that its business could be disrupted by a web service that owned no hotels – but this is exactly what AirBnB has done. Now thanks to the web, Alibaba can offer a global trading hub, connecting Chinese manufacturing directly to anyone who needs something made. Thanks to the global reach of the web, anyone who feels they can spot a product with potential and is prepared to take a punt can connect with supplies based anywhere in the world and become a distributor.

While bricks and mortar businesses have needed to comply with local laws, pay business rates and need to invest in buildings and hire tax-paying staff, online businesses have used global web connectivity to to flaunt local regulations, get around employee law by not having permanent staff, and relocate their head office in tax havens.

This has meant that traditional firms are at a disadvantage and today’s web appears to be owned by a few, mega businesses.

As the web turns 30, perhaps now is the time to sit back and evaluate how best to curb some of its excesses.

The House of Lords, Select Committee on Communications’ Regulating in a Digital World paper, published on March 9, warns: “The digital world has become dominated by a small number of very large companies. These companies enjoy a substantial advantage, operating with an unprecedented knowledge of users and other businesses. Without intervention the largest tech companies are likely to gain more control”.

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