Digital wormholes accelerate
move to new markets
By Kathleen O’Reilly, Gregory K. Douglass,
James Wildenburg and Joey Hwong
Science fiction fans will remember an intrepid
crew boldly going where no man had gone
before, exploring space on a continuing odyssey.
These brave travelers knew the benefits of a
wormhole—a tunnel that connects two different
points in space-time, creating a shortcut to reduce
travel time and distance through the universe.
Companies around the globe have taken a page out of the
captain’s log, using digital wormholes to vastly compress
the time and resources required to enter new markets.
No more do the spoils of victory go solely to large
corporations with the resources to fund infrastructureintensive expansion. Case in point: Before the age of
digital wormholes, it took eBay 18 years to expand into
24 countries. Fast forward a few years, as wormholes begin
to become available—Groupon took eight years to expand
into 35 countries. Airbnb expanded into 20 countries in the
same length of time1. As wormholes grow and offer faster,
more sophisticated digital rocket fuel, companies expand
rapidly as never before.
Netflix’s international surge outpaces most, with
130 countries added in one quarter2. The company timed
its entry well, using digital wormholes simultaneously to
not just enter markets, but further growth in them. Using
a standard interface and design, but tailoring viewing
preferences based on complex digital algorithms and a web
of localized content delivery networks, the service streams
125 million hours of content every day3. Such a feat is only
possible via digital means. Netflix and many of its smaller
compadres around the globe are becoming experienced
wormhole travelers.
2 | Digital wormholes accelerate move to new markets
Through the wormhole:
David becomes a virtual Goliath
From Silicon Valley to London’s Silicon Roundabout, from a
garage-based operation in São Paulo to a loft in Mumbai,
digital wormholes are helping David beat Goliath.
A digital wormhole is underpinned by accelerants that drive
rapid scaling with minimal resources, enabling startups
to compete successfully against behemoths for new and
existing territory. It vastly compresses the cost and time to
market for companies entering new markets. Among the
most impactful accelerants we see are:
• Internet-driven market research platforms, to enable
decision makers to rapidly assess local customer
perspectives and purchasing preferences.
• Cloud-based localization platforms, to enable companies
to quickly develop an authentic, local presence with
minimal “boots on the ground”.
• Global third-party logistics players, to handle warehousing
and end-to-end shipping anywhere in the world.
• Global payments platforms, to enable acceptance
and repatriation of local payments, including
market-specific payments.
• Cloud-based customer service offerings, to enable locally
tailored customer service to be offered from afar with
minimal investment in headcount.
3 | Digital wormholes accelerate move to new markets
• 3D printing, to make it possible for start-ups with limited
resources to deliver goods anywhere in the world, in
any quantity, on demand. Using a master uploaded
design, products can be produced anywhere a 3D printer
exists at a fraction of the cost of traditional production
methods, bypassing the usual added delay of customs.
To date it is mainly the Davids, not the Goliaths, who
have taken advantage of digital wormhole acceleration.
Consumers are responding in many countries. Sixty
percent of Indian respondents feel recently launched
online companies better understood and met their needs
compared to traditional companies.
In the telecommunications industry alone, Ovum predicts
traditional giants will lose $386 billion in revenue from 2012
through 2018 to challengers Skype, WhatsApp and others4.
Others have had to adjust their business model to compete
with disruptors such as LINE, WeChat and Kakao Talk.
Wormholes, it appears, are not to be discounted lightly.
Taking digital old school
Smart companies should use a wormhole for what it offers
in speed to market—but when they arrive in that market,
digital accelerators are just a few of the varied mix of tools
they must use for ultimate success.
Ironically, even though digital wormholes foster globalizing
a business or a product offering, our research5 shows two
very old-school techniques—localization and an offline
presence—remain key to business success.
4 | Digital wormholes accelerate move to new markets
Localization
Two-thirds of online shoppers we surveyed prefer to use
local company websites because they trust them and
feel their offering is better suited to local requirements.
Tailoring to hyper-local attitudes and preferences is key to
success in any new market, whether online or offline.
Local preferences vary widely in many areas but
particularly in payments. For instance, 55 percent of Indian
respondents opt for cash on delivery as a preferred form
of online payment when dealing with new websites. In
Brazil, installments are highly popular, with 84 percent of
respondents having used this method.
Offline options
Offline options and presence are equally as important as
localization. Roughly one in five shoppers (18 percent) will
not purchase from a website if it does not offer offline
payment options. In India, shoppers like to compare
prices online but buy offline. Offline purchases are the
most frequent in Russia, with roughly 58% of Russian
respondents making them.
Offline presence, however, must extend beyond payments.
In the United States, where shoppers have shown a
preference for ecommerce, online eyeglass purveyor
Warby Parker6 was one of the pioneers in online to offline
operations, adding brick-and mortar sales outlets.
5 | Digital wormholes accelerate move to new markets
Others, like Rent the Runway and skincare specialist
Peach & Lily7 also have opened brick-and-mortar stores.
Wormhole veterans are beginning to see the benefit of mixing
online and offline options, witnessing shopper preference for
click-and-collect options or a tactile experience.
We expect many of them to utilize the full firepower of
customer analytics gleaned from online purchases in these
offline ventures. They can then provide customers with a
tactile experience—that carries the benefits of wormhole
accelerators—to speed and tailor personalization.
Today’s disruptor is
tomorrow’s disrupted
From scrappy start-ups to industry giants, today’s
competitors are realizing they can live or die by the
wormhole. Even the disruptors can be disrupted,
in short order.
In early 2014, Facebook bought startup WhatsApp, then the
world’s most popular messaging app, in a $19 billion deal.
Among the newbie’s claim to fame—processing 64 billion
messages in 24 hours, more than 10 times the amount
sent in the entire U.S. text message industry in a day8. The
wireless industry has struggled to deal with this formidable
disruptor for some time. Since its darling days, in key
parts of Asia, WhatsApp has seen heavy competition from
local messaging rivals, as they outgrew it in key markets.
6 | Digital wormholes accelerate move to new markets
These new hyper-localized disruptors, more sophisticated
messaging platforms like LINE and WeChat, offered more
than just chat. It was no surprise, then, in early 2016, when
WhatsApp founder Jan Koum announced its move to an
expanded platform-based model—beyond consumer to
consumer to include businesses. Despite the move, it is
still playing catch-up with competitors LINE, Kakao, and
WeChat who offer services such as meeting scheduling or
app building. A former disruptor is itself rapidly disrupted.
The common factor for all four companies is frequent
and sophisticated use of digital wormholes to conquer
new territory. While no one can say with certainty where
any of these companies will be in another two years, it
is indicative of the rapid rise to challenger status digital
wormholes can provide.
While wormholes quicken the pace of business, savvy
companies know they cannot rest upon reentry after they
have exploited one. They will look for the next wormhole,
one with different, newer accelerators. Again, and again,
and again. Because there will always be a smaller, nimbler
David chasing after the Goliaths—using digital wormholes
to their every advantage to level the playing field.
7 | Digital wormholes accelerate move to new markets
What is a smart space/
time traveler to do?
For large corporations, the issue is not just finding speed to
market. It usually is overcoming a corporate culture that has
settled into consensus and red tape, inhibiting innovation.
Challenge your teams to reinvent aspects of your business
in an exponentially faster timeframe. For example, if today’s
current international shipping takes five days, challenge the
team to develop a one-day solution using digital wormholes.
The drastic “challenge” will make them entertain solutions
that may have previously not seemed feasible or possible.
To combat the doldrums that lead a company to be
disrupted, ideate like a disruptor. Up the pace. Eliminate the
culture of consensus and bureaucracy that is the hallmark
of a slow Goliath.
Use an incubator model to foster faster decision making
and wormhole travel. Without an incubator, most untested
new ideas will lose the battle for allocated funding
against established revenue streams. Meanwhile, more
nimble competitors make untested ideas their mainstay—
leapfrogging ahead.
For the disruptors, the agile of the digital universe, look
to partner locally. Many small disruptors do not have the
geographic ties necessary to really succeed in a local
market, whereas their larger competitors do. Cementing
geographic partnerships aids small firms immensely
in catering to reputable local brands, and hyper-local
preferences and practices.
8 | Digital wormholes accelerate move to new markets
Smaller challengers also must prepare to establish the
physical presence necessary for success in many areas
of the world. An online presence is necessary but in
some parts of the world, companies must extend beyond
payment options to brick-and-mortar stores.
Digital wormholes have fostered an era of quicksilver
competition, which can be scary or exciting. Scary if
you are the “establishment” who suddenly finds an
alien force in your galaxy—but exciting if you are wise
and speedy enough to be the space/time traveler,
embarking on profitable adventures in new lands.
The choice is yours.
9 | Digital wormholes accelerate move to new markets
Join the conversation
@AccentureStrat
@AccentureHiTech
.com/company/accenture-strategy
Contact the authors
Kathleen O’Reilly
[email protected]
Gregory K. Douglass
[email protected]
6 http://www.wsj.com/articles/warby-parker-addsstorefronts-to-its-sales-strategy-1416251866
7 http://www.peachandlily.com/blogs/news/68399109introducing-our-first-peach-and-lily-brick-andmortar-store
8 http://singularityhub.com/2014/04/24/64-billionmessages-in-24-hours-key-takeaways-fromwhatsapps-massively-disruptive-statistics/
About Accenture
Yessica Lie
[email protected]
Accenture is a leading global professional services
company, providing a broad range of services and
solutions in strategy, consulting, digital, technology
and operations. Combining unmatched experience and
specialized skills across more than 40 industries and all
business functions—underpinned by the world’s largest
delivery network—Accenture works at the intersection
of business and technology to help clients improve
their performance and create sustainable value for
their stakeholders. With more than 375,000 people
serving clients in more than 120 countries, Accenture
drives innovation to improve the way the world works
and lives. Visit us at www.accenture.com.
Notes
About Accenture Strategy
1 Accenture analysis
Accenture Strategy operates at the intersection of
business and technology. We bring together our
capabilities in business, technology, operations and
function strategy to help our clients envision and
execute industry-specific strategies that support
enterprise wide transformation. Our focus on issues
related to digital disruption, competitiveness, global
operating models, talent and leadership help drive both
efficiencies vand growth. For more information, follow
@AccentureStrat or visit www.accenture.com/strategy.
James Wildenburg
[email protected]
Joey Hwong
[email protected]
Contributors
Kevan Yalowitz
[email protected]
2 https://media.netflix.com/en/press-releases/netflixis-now-available-around-the-world
3 Ibid.
4 http://fortune.com/2014/06/23/telecom-companiescount-386-billion-in-lost-revenue-to-skypewhatsapp-others
5 All references in this section are sourced from:
Accenture Digital Consumer Survey, 2015, unless
otherwise noted.
16-2072
Copyright © 2016 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.
This document makes descriptive reference to trademarks that
may be owned by others. The use of such trademarks herein is not
an assertion of ownership of such trademarks by Accenture and is
not intended to represent or imply the existence of an association
between Accenture and the lawful owners of such trademarks.