1

0.1 0.1 0.2 0.3 0.4 0.50.7 0.8 0.9 1 1.1

1.4 1.51.7

1.92.2

2.42.6

00.20.40.60.81

1.21.41.61.82

2.22.42.62.8

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Billion

GlobalInternetUsers1996- 2013

70 76 78 83 86 90 9466 83 104 126 156 175 189

23 25 25 27 27 28 29

5 6 8 911 13 14

0

5

10

15

20

25

30

35

020406080

100120140160180200

2007 2008 2009 2010 2011 2012 2013

Per1

00

Millions

FixedBroadbandSubscribers:ChinavsUS

USA China

E-commerceandInternetTrends

USvsChina

E-commercehasbeengrowingrapidlygloballywithannualturnoverofmorethanUSD1.3trillionbytheendof2014,up22%fromthepreviousyear.Thisrepresentsalmost6%ofglobalretailsales.1Chinaforits part has been posting figures of RMB 1.2 trillion as of September 2013 to RMB 1.8 trillion as ofSeptember2014accordingtotheNationalBureauofStatistics.TheUShassomewhatslowergrowthbutstillrepresentsthebiggestglobalmarket,with300billionUSDin2014.Needlesstosay,e-commercehasbecome a central part of our daily lives. However, if we take one step back and ask ourselves whateffectshastheonsetofe-commercehadondifferentindustries’supplychains,distributionchannelsandoveralleconomies?IsthereanymajordifferencehowthearrivalofInternetretailandInternetplatformshascomeaboutintheUSascomparedtoChina?Howdothesetwomarketsdifferatpresent?Wewilltrytosetthebasisforfurtherdiscussiononthesequestionsinthecontenttocome.Moreover,wewilltrytolookdeeperintowhatspecificproblemsdoese-commerceaddressandwhatholdsinthemediumfutureforthisimpressivephenomenoncalledInternet.

TheInternethaschangedeverything–thewaywelive,thewayweconsume,thewaywecommunicate.Assuch,theInternetcanbeviewedasthethirdindustrialrevolution.

WebbrowserstogetherwiththefirstwebpagessuchasYahooin1994representthebasisforthefirstmajorInternettrendofgainingasmuchtrafficaspossibleonaparticularonlineplatform.Thishasbeenespecially the case in theworld of e-commerce.Namely, themore traffic there is in traditional retailstores,themorechanceofhighersales,usingthesamelogicthatwasestablishedfore-commerce.Thiskind of Internet business model has been widely popular – and still is – but starting from 2007, anadditionalimportantinputarrivedintheformofsmartphones.

1https://www.internetretailer.com/2014/12/23/global-e-commerce-will-increase-22-yearhttp://www.forbes.com/sites/forrester/2014/05/12/us-e-commerce-grows-reaching-414b-by-2018-but-physical-stores-will-live-on/accessedon20.03.2015

2

53 85 107 125 136 156 177 178157

214277

332377

408441 454

50118

233303

356420

500 527

16

2329

3438

4246 47

0

10

20

30

40

50

0

100

200

300

400

500

600

700

2007 2008 2009 2010 2011 2012 2013 2014*

%

Millions

ChinaInternetUsers

Rural UrbanMobilePhoneInternet InternetPenetrationRate

0102030405060708090100

2007 2008 2009 2010 2011 2012 2013

InternetUsersper100People:ChinavsUS

USA China

Withtherapidgrowthofsmartphoneusage,wehavewitnessedsmalleronlineplatformsgainingmarketshareandobtainingfunding.Theshorteningofthesupplychainshasbeenexacerbatedbysmartphonessincecompaniesarenowabletodirectlycommunicatewiththeircustomers.

EconomyandSupplyChains

As previously stated, the Internet and the advent of e-commerce have indeed reshaped the globaleconomy.Thiscanbeseeninchangestointernationaltrade,currencyexchangesandnewperspectivesoftraderelationsbetweendevelopedanddevelopingeconomies.

Whenwelookatindividualeconomies,theintroductionofe-commercehashadtwosignificantimpacts:an increase in productivity and a decrease in inflation.2These two are related in that whenwe haveincreasedefficiency, then theendproduct is cheaperanddue to the increase incompetition, there isfurtherpotentialforpricestodecline.Thetrendisfurtherfacilitatedbynon-participatingcompanies,astheyareexpectedtoreact tothe increasedcompetitionfrome-ommerceandtherefore increasetheirownproductivitywhichfurtherdecreasespricesandinflation.Theincreaseinefficiencyisprimarilyseenin managing of the supply chains as e-commerce has profoundly changed the distribution channels.Namely, the intermediaries are skipped, or significantlyweakened,whereby e-commerce has enabledthe companies to directly reach the final consumer.More importantly, big data allow them to knowexactlywho their customers are.As in thepast, all themajor technological improvements that led toincreasedcompetitioninturnfurtherimprovedtheinnovationprocessascompaniestendtogatherpacecomparedtotheircompetitors.E-e-commerceisnoexception.

Attheinitialstageofe-commerceintheUS,therewaslowdemandforonlineshoppingasonlythetechsavvyandcuriouswouldgiveitatry.Thatiswhylargeretailerswereslowtoentere-commercein2001when 75 percent of it consisted of non-physical stores.3However,wehave sincewitnessedbrick andmortar stores entering the e-commerce sector as more consumers go online for their purchases.

2WhatImpactWillEcommerceHaveontheUSEconomybyJonathanL.Willisp53Diagrams - Global Internet Users Source: UN/International Telecommunication Union; Fixed Broadband Subscribers Source:InternationalTelecommunicationUnion,WorldBank;ChinaInternetUsersSource:ChinaInternetNetworkInformationCenter*2014asofJune;InternetUsersper100PeopleSource:InternationalTelecommunicationUnion,WorldBank

3WhatImpactWillEcommerceHaveontheUSEconomybyJonathanL.Willisp.63

3

52.0 130.0260.0

514.1

801.9

1,235.0

1,885.1

2,171.297.3

56.064.7

42.8 43.9

0102030405060708090100

0200400600800

1,0001,2001,4001,6001,8002,0002,200

2007 2008 2009 2010 2011 2012 2013 2014*

%

RMBb

n

ChinaECommerceRetailSales

RetailSales %

15.7 25.8 54.2 120.8250.0

523.1756.6

1,311.0

1,847.7

0200400600800

1,0001,2001,4001,6001,8002,000

2005 2006 2007 2008 2009 2010 2011 2012 2013

RMBbn

ChinaInternetBusinessTurnover

Furthermore,informationtechnologycostshavebeendecreasingwhichalsomotivatestraditionalstoresto go online. However, late online entry and different organizational cultures to true e-commercecompanieshavebeenprovingtobeachallengetomanyofthesuccessfultraditionalretailers.

Theintroductionofe-commercerepresentsarevolutionaryshiftindealingwiththeintermediariesinthesupply chain. The companies upstream and consumers downstream have been empowered by thelimitlessinformation.Eventhoughtheinformationisstillexpensivetobeproduced,itcanbemultipliedandissuedtoanunlimitednumberofpeoplewithinformationdistributioncostsessentiallynon-existent.The benefits achieved from intermediary weakening can be distributed between manufacturer andbuyer.4From the companies’ perspective one of the most obvious improvements introduced by e-commercehasbeenlowerlaborcost.Inaddition,thecompanieshavebeenabletoexpandthepresenceof their products internationally. With respect to manufacturing and material ordering, this has alsobeenhelpedbyaccesstocheapersuppliersthatarenowcompetingmoreactivelyduetoe-commerce.In addition, communicationwith suppliers has improved as it has become less costlywithmore highquality information being transmitted. The supply chains have seen improvements in orderingprocedures,lowercostsofcorrespondenceandfasterdocumentfillingprocedures.Suppliersreceivethedocumentsimmediately,which,inturn,leadstoadecreaseintheworkforceinthesupplymanagementarea. Those companies that havemany suppliers have particularly benefited from e-commerce as anelectronic ordering system makes it much less labor intensive. Furthermore, the adoption of e-commercehasallowedcompaniestomaintainfewerassetsintheirinventories.

Additionally, e-commerce has aided companies to have higher returns with a lower average cost ofproduction.5According to research, after the advent of e-commerce, revenues for a typical companyhavenotchangedsignificantlybutthecompany’sinputorcostsdid.6Asthisparticularsurveyhasshown,aloweringofthelaborcostshasprovedtobethemostbeneficialaspectofadoptinge-commerceinthesupplychainmanagement.Nevertheless,thelevelofbenefitslargelydependsuponthecompany’scoststructure. Narrowly concentrated e-commerce decisionswithin specific departmentswill have limited

4TheEvaluationofEcommerceImpactonBusinessEfficiencybyPetrasBarsauskas,TadasSarapovas,AurelijusCvilikasp.80Diagrams -Chinae-commerceRetailSalesSource:Chinae-businessResearchCenter (CECRC)*2014projected for thesecondhalfoftheyear;ChinaInternetBusinessTurnoverSource:ChinaInternetNetworkInformationCenter

5TheEvaluationofEcommerceImpactonBusinessEfficiencybyPetrasBarsauskas,TadasSarapovas,AurelijusCvilikasp816Ibidpp86

4

2%

25%

31%

23%

12%

5%2%

10- 10-19 20-29 30-39 40-49 50-59 60+

InternetUsersAgeinChina2014

20%18% 18% 18%

26%

15-24 25-34 35-44 45-54 55+

InternetUsersAgeinUS2014

impactontotalbusinessefficiency.7Furthermore,astheinformationfactorhasbeenthemostimportantaspect in the adoption of e-commerce, different industries have benefited variously from itsimplementation. For instance, coal mining is one of the industries that benefited the least fromintroductionofe-commerceastheindustryhaszlimitednumberofbuyersandsuppliers.8

Consumers, meanwhile, have been enjoying lower prices and easier access to a greater variety ofproducts.Theonlineshopperhasbecomesmarterwithmoreinformationattheirfingertips.Theprocessofsearching,orderingandreceivinghasbecomemucheasier.

E-commerce:USvsChina

Even though the Internet has global reach, there are many obstacles that prevent well known e-commerce web sites from successfully operating both in the US and China using the same businessmodel. In addition to regulative (political), language and technical issues, there are also the culturaldifferences. According to research done on cross-cultural differences between the US and China inadopting e-commerce, there are 3main obstacles: language, values and infrastructure.9If we look atChinese Internet surferswecan see that they tend topreferusing theirnative language to search forinformation. Therefore, a Chinese-languageweb site should also bedesignedwith a different culturalapproachandvaluessystem.Moreover,InternetusersinChinatendtobeyoungerthanintheUS.

CreditCardsvsCash

Internetshoppingpaymentmodesalsorepresentadifferencebetweenthetwomarkets.Theadoptionofe-commerceintheUShasbeenlargelydependentuponthecreditcardsystem.Ontheotherhand,thecreditcardsysteminChinaisnotaswidespreadasintheUS.GoldenCardwasthefirstcreditcardverification schemedesigned topromote theuseanddisseminationof cards.10However, inpractice itworkedmorelikeadebitcard.Anationalclearingsystem,theCentralizedNationalAutomatedPaymentsSystem (CNAPS), was also being built at the time. Nonetheless, Chinese consumers historically havepreferredtopaybyreadymoneyandthat iswhyattheverybeginningofe-commerce, Internetuserswere paying by cash on delivery. Fast forward a few decades andwe can see that today’s “online tooffline”platformsresemblesomeofthesecharacteristics.Ontheotherhand,Chinahasbeenpioneering

7Ibidpp898TheEvaluationofEcommerceImpactonBusinessEfficiencybyPetrasBarsauskas,TadasSarapovas,AurelijusCvilikaspp76-779CulturaldifferencesinE–Commerce:AcomparisonBetweentheUSandChinap49Diagrams–InternetUsersAgeinChinaSource:ChinaInternetNetworkInformationCenter;InternetUsersAgeSource:Statista10ConstraintsonEcommerceinLessDevelopedCountries:TheCaseofChinap.33

5

159

152

170

2000 2010 2014*

CreditCardHoldersinUS2000- 2014(mn)

26.029.2

12.5

20.5

25.1%

38.9%42.1%46.2%

0%

10%

20%

30%

40%

50%

0

5

10

15

20

25

30

2013 2014

10mnusers

ChinaNoUsersandUtilizationRatioofMobile/OnlinePayment

OnlinePaymentUsers MobilePaymentUsersMobilePaymentUtilization OnlinePaymentUtilization

payment applications on smartphones, which has driven the rapid development of mobile businessapplications.Thenumberofmobilepaymentusersincreasedby63%inthefirsthalfof2014toreachtheutilizationrateofalmost40%,comparedto25%in2013.11ThistrendhasbeenhavingaprofoundimpactonmobileshoppingbutalsoonthefinancialandbankingsystemofChina.ThereasonChinesehavebeenso willingly approving the payment application system is that it is one of the more secure paymentmethods.Inaninstantthebuyercanpayandthesellercanreceivethemoney,asifthetransactionhasbeenoccurringbythemostpreferableway-cash. Inthatrespect, InternetcompaniessuchasAlibabaandTencenthavebeenabletoattracttheirusers’deposits.Thisisprovingtobeasignificantcompetitiveadvantage as the two companies have diversified from social networking and e-commerce into thefinancial sector. This in turn has had a profound impact on the banking system in China. Due to themobilepaymentsystem,therehasbeenasignificantincreaseinthenumberofonlinepaymentusersinChina,reaching300millionin2014.

Infrastructure

At the start of the century, Chinese Internet companies did not have the necessary infrastructure fordeliveryandpayment transactions.12At that time, thestate-ownedPostOffice thatprovidedthemaindeliveryserviceswasnotoriouslyslow.Onecouldhaveneverhaveimaginedthate-commerceinChinawould become as efficient as it is today. One of the main drivers for the rapid improvement ininfrastructure has been the “delivery man”. The Chinese market has an abundant supply of deliveryemployees.

IndividualvsGroup

Chinese society puts more focus on social relationships, and this has also indirectly shaped theirapproachtotheInternetandtoe-commerce.ThisisverydifferenttotheindividualisticsocietyasseenintheUS.Evenwithadvancede-commerce,manyChinesepreferpersonaldealingswiththosewhomtheyhavealreadytradedratherthanunknownInternetsellers.13

11ChinaInternetNetworkInformationCenterreportp.4Diagrams–ChinaNoUsersandUtilizationRatioofMobile/OnlinePaymentsSource:ChinaInternetNetworkInformationCenter;CreditCardHoldersintheUSSource:Statista12CulturaldifferencesinE–Commerce:AcomparisonBetweentheUSandChinap.5313ConstraintsonEcommerceinLessDevelopedCountries:TheCaseofChinap.35

6

0

0.5

1

1.5

2

2.5

3

0200400600800

10001200140016001800

%

Thou

sand

s

Patents,TrademarksandR&D'63- '12:ChinavsUS

ChinaR&D(%ofGDP) USAR&D(%ofGDP) USAPatentsUSATrademarks ChinaPatents ChinaTrademarks

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

QuarterlyTotalandEcommerceRetailSales(mn)inUS2007- 2014

E-commerce Total

IntheUS,institutionssuchasresearchuniversities,government,venturecapitalistsandlawfirmshavebeenthekeytotheinnovationprocess.InSiliconValley,theleadingfiguresfromtheseinstitutionsandoperating companies know each other both formally and informally, which is very important forinnovation. On the other hand, such informal relations in China are either absent or underconstruction.14

IntellectualProperty

Trademarksand intellectualpropertyhadhistoricallybeenoneof themain ingredients for innovation.Accordingtoasocialcommunityappstart-up founder inChina,acompanymustgrowfast inorder tosurvive.IntheUS,thereisawell-establishedcopyrightsysteminplace,butinChinathereistendencytocopyideasthatareseenassuccessful.USstart-ups,ontheotherhand,aimtoofferthesamesolutionthat isupgradedtobenefitendcustomersandbemorecompetitive.Moreover,astheChinesemarketfurtherdevelops,therewillbeanincreasingfocusoncopyrightprotectionthatwillenablecompetitionbyofferingupgradedsolutions.

AggregatevsPersonalize

Ifwe lookat thetwomarkets’e-commercegiantssuchasAlibabaandAmazonweseethat theyhavebothbeenbuiltonthepremiseofaggregatetraffic.However,astheconsumerbecomesmoreinformedand gains access to limitless data through smartphones, the purely aggregate traffic business modelmightnotbeenoughtomaintainthepresentmarketshare.Asconsumersturnmoreindividualistic,thebehavioralpatternswillbecrucialforane-commercetoreachtheirusers.IntheUS,wehavewitnessedmany apps diverting traffic from bigger platforms,which has also been the case in China, albeit at aslowerpace.AsatechindustryanalystputitduringaninterviewwithBBCNews,“unlikeinotherpartsofthe world, potential entrants to the Chinese market are facing well funded aggressive home grownplayers”.

14Ibidpp40Diagrams–Patents,TrademarksandR&DChinavsUSSource:WorldBank*R&Dmeasuredfrom’96;Chinatrademarksfrom’80andpatentsfrom’85;QuarteryltotalandEcommerceRetailsSalesSource;ChinaInternetNetworkInformationCenter

7

91.30%

18.80%

32.40%

13.80% 15.40%

InternetAccessLocationsinChinaasofJune2014

Home InternetBar Workplace School PublicPlace

54

102

170

244

315

0

40

80

120

160

200

240

280

320

2009 2010 2011 2012 2013

Millions

GlobalSmartphoneShipments'09- '13

11

68

23

18

1214

1917 16

37 38

17

25

0

5

10

15

20

25

30

35

40

NorthAmercia

SouthAmerica

Europe Asia Africa Oceania Global

%ofP

ageView

sbyMob

ileDevice

s

MobileUsageas%ofWebUsage

May- 13 May- 14

0

100

200

300

400

500

Millions

China3G'10- '14

30.233.2

14.4

20.5

48.90%52.50%

28.90%

38.90%

0%

10%

20%

30%

40%

50%

60%

0

5

10

15

20

25

30

35

2013 2014

10mnusers

ChinaNoUsersandUtilizationRatioofMobile/OnlineShopers

OnlineShopers MobileOnlineShopersOnlineShopingUtilization MobileOnlineShopingUtilization

69.60%

43.70%

83.40%

0%10%20%30%40%50%60%70%80%90%

100%InternetAccessDevicesofInternetUsersinChina

June2014

Desktop Notebook MobilePhone

Mcommerce

Overtaking mobile phones as the fastest-selling devices in history, smartphones are conquering ourplanet.Developingcountries,inparticular,haveexperiencedanincreasingnumberofusers.Attheendof2013,morethan30%ofglobalphoneuserswereusingsmartphones.15Accordingtoestimates,abouthalfoftheglobaladultpopulationownsasmartphone.16Thedevice isessentiallyaportablepersonnelcomputerthatrepresentsanewcomputingcyclefollowingtheoriginalcomputers.

15KPCBInternetTrends;MorganStanleyresearch16EconomistMagazineMarch2015:PlanetofthePhonesp.7Diagrams–ChinaNoofUsersandUtilizationRatioofMobileOnlineShoppersandInternetAccessLocationinChinaSource:ChinaInternetNetworkInformationCenter;GlobalSmartphoneShipmentsSource:MorganStanley;MobileUsageas%ofWebUsageSource:StatCounter

8

188

99 43

40

3833 30 22 19 18 16 12 11 9 9

59%78%

68%49%

79%

50%

110%

57%

85%

53%54%69%

49%

94%

160%

0%20%40%60%80%100%120%140%160%180%

020406080100120140160180200

mnusers

SmartphoneMarketswith>45%Penetration

SmartphoneUsers PopulationPenetration

422

117

7248 46

2221 21 21 20 20 20 18 18 17

31%

10%

36%

19%

33%

19%25%

34%

44%

19%

12%

41%

27%22%

41%

0%5%10%15%20%25%30%35%40%45%50%

050100150200250300350400450

mnusers

SmartphoneMarketswith≤45%Penetration

SmartphoneUsers PopulationPenetration

According to the Internet trends researchdonebyKleinerPerkinsCaufieldByers (KPCB)at theendof2013,97%ofglobalsmartphoneoperatingsystemsoriginatedfromtheUScomparedtoonly5%in2005.Systems suchasAndroidand IOShavebeendominating theupstreammarket apps’platforms. This isalsothereasonwhymanyofthetechstart-upsarebasedinSiliconValley.

Chinahasbeenexperiencingamobilemiracleforanumberofyearsnowwheremobiledatausagehasbeensurpassingthewiredpersonalcomputersinsomepartsofthecountry.SmartphonesareprovingtobeacheaperalternativeforChinesetostayonlineandthatiswhym-commerceissaidtohaveanevenbrighterfutureinthiscountry.Increasingmobiledatausagefundamentallyrepresentsthemodeofhowe-commerceisbeingbroughttoChina.

Two smartphones of the same brand look the same on the outside, however they are completelydifferentinsideastheyarepersonalizedtotheneedsoftwodifferentowners.Inturn,theseneedsandhabits are digitalized and, as such, are easily accessible by the platforms holders through big datachannels.That iswhynowadaysmanyof thetechcompaniesareable toconnectand interactdirectlywiththeircustomers.

Diagrams – China 3G Source:Ministry of Industry and Information Technology; Internet Access Devices of Internet Users inChinaSource:ChinaInternetNetworkInformationCenter;SmartphoneMarketsSource:Informa

CrossCulturalDifferences

Asitwasthecasewithe-commerce,culturehasprovedtobeanimportantinputinadoptingtheideaofmobile shopping. Lee et al in 2004 introduced five cultural measures for m-commerce usage: powerdistance, uncertainty avoidance, individualism-collectivism, masculinity-femininity and long termorientation.Thestudyhasshownthattherearemajordifferences incultureofm-commerceadoption

9

between theUS andChina on uncertainty avoidance, power distance and individualism-collectivism.17Hofstede (1991) has found that societies in low uncertainty avoidance are open to embrace newtechnology such as theUSwhile consumerswith high uncertainty avoidance such as Chinese tend torefrain from such technologies. 18 Nonetheless, Chinese smartphone users have been embracinginnovation inmany of the services offered as long as it is a collective push. Furthermore, in the US,consumerswouldusemorepersonalizedplatformstoshowcasetheirindividuality,whichisoppositetoChineseconsumers,whotypicallyfeelmorecomfortableasapartofthegroup.19

GlobalMessagingEcosystem–SelectPlayers2013

The most important aspects of the above model with regards to m-commerce in China have beeninnovativeness, perceivedusefulness, perceived cost, subjective norms andperceived ease of use.Onthe other hand, for US users the most important aspects were consumer privacy, innovativeness,perceivedusefulness,enjoymentandcompatibility.20Accordingtotheresultsoftheresearch,therewasasignificantdifferenceincostperception,enjoymentandsubjectivenormsbetweenChinaandtheUS.21Moreover,thesubjectivenormsandenjoymentweremuchhigherinthelevelofimportanceintheUS,while for Chinese users the cost of usage has been the most important.22Chinese people considerexpensesandfunctionalitybeforeoptingtousem-commerce.Ontheotherhand,theUSconsumerputsmore focus on personalization and on the enjoyment aspects ofmobile shopping. The characteristicsfoundtobemoststrongonbothsideswereprivacy,innovativeness,perceivedvalueadded,usefulness,easeofuseandcompatibility.23

17MobileCommerceAdoptioninChinaandtheUnitedStates:aCross–CulturalStudyp.5218Ibidpp5719MobileCommerceAdoptioninChinaandtheUnitedStates:aCross–CulturalStudyp.5720Ibidpp5421Ibidpp5422Ibidpp56Diagrams–mCommerceAdoptionModelSource:MobilecommerceAdoptioninChinaandtheUnitedStates:CrossCulturalStudy;GlobalMessagingEcosystemSource:KPCB23MobileCommerceAdoptioninChinaandtheUnitedStates:aCross–CulturalStudyp.56

10

Summary

Global Internet users have been experiencing declining computing costs, declining storage costs anddecliningbandwidthcosts.Factorinthegrowingpopulationanddecliningaveragepriceofsmartphonesandyouhavea ripeenvironment for the rapid growthof Internetusage. In addition,wehave seenachange inbusinessmodel fromusersaccessingoneplatformtoanumberofplatformsaccessingeachuser.Namely,aftertheintroductionofsmartphones,wehaveseenadifferenttrendwhereoneInternetuserchoosesfromnumerousapps.Theseappsaredevelopedforasinglepurposeinordertoaddressaconcreteneedwiththephilosophyof“lessismore”.

The Economistmagazine came outwith an illustrative title - The dawn of the planet of smartphonescame in2007.24This latestcomputingcyclehas introducedawholenewmodeofhowconsumersandcompanies interact. Although Internet and e-commerce have shortened supply chains, smartphonetechnology has goneone step further by completely eliminating themiddleman.Drivers to purchasecertainproducts includeauthenticity,association,convenience,experience,varietyandvalue.Allthesehave been facilitated with the personal computer in our pocket. With the trend of individualconsumerismontheincrease,companiesarenowabletobecloserthanevertotheircustomers.

That the Internet isverypowerful is confirmedby the fact that lightassetcompaniesarenowable tosignificantly change their supply chains and even affect overall economies. One of the most excitingtrends is that smartphone technology has enabled people to address some of the most pressingchallengesthatweashumanbeingsarefacing.

Lookingintothefuture,wewillseemoreofdevicesthatareabletogatherdatathatisthenusedtooffercustomized services and solutions to end consumers. Themost important competitive advantage forInternetcompanieshasbeenbigdataanditsusefulnessthroughanalytics.

24EconomistMagazineMarch2015:PlanetofthePhonesp.7