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Growing Online Basket Size in the Middle East: Opportunities for Online Coffee Roasters and Newbeans CTAPS Ecosystem (Part 2)

With Saudi Arabia’s new leadership and notable economic reforms, the outlook  for foreign ventures and investment is promising. BigOnIT and Newbeans Coffee are exploring various opportunities in Food, Healthcare and Food Security in the Middle East.

This blog series provides an update on our ventures in the region, as well as the current business landscape as I see it.

See Part 1: Food Security and Food products in Saudi Arabia

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With thousands having access to the Internet and going online every year, in addition to the boost in mobile commerce traffic, the Arab peninsula has become the fastest growing e-commerce sector in the world. According to ArabWorld’s Online Payment Report for 2014, which covers the UAE, Saudi Arabia, Egypt, and Kuwait, the following developments are taking place in the Arab e-commerce sector: [8]

There are more credit card holders, but COD is still strong.

In the UAE, 60% of the 3.65 million e-commerce customers are located in Dubai, while another 27% are in Sharjah and Abu Dhabi collectively. In Egypt, 27% of e-commerce purchases are paid for with a credit card, while cash on delivery makes up the remainder.

Average cash-on-delivery (COD) orders had a minor decrease of 0.8% in the last year, decreasing from $114 in 2013 to $113 in 2014. Credit card orders meanwhile had a 49% increase in the last year, increasing from $155 in 2013 to $168 in 2014. Overall, there was an increase in e-commerce basket size in the UAE.

 

Online basket size is growing in the Arab peninsula.

Saudi Arabia saw an overall increase in e-commerce basket size. There was an increase of 8% for cash-on-delivery orders in the last year, increasing from $143 in 2013 to $154 in 2014. Credit card orders then saw a 32% increase in the last year, increasing from $96 in 2013 to $127 in 2014.

Egypt saw the largest increase in e-commerce basket size. There was an increase of 16% cash-on-delivery orders in the last year, increasing from $83 in 2013 to $96 in 2014. Credit card orders then saw a 36% increase in the last year, increasing from $71 in 2013 to $96 in 2014.

 

Arabs use mobile commerce twice as frequent as the rest of the world.

People in the Arab World transact on mobiles more than the global average. 41% of smartphone users in the Arab World transact online, while only 21.3% of global smartphone users transact online.

18 to 26 year olds make up the largest demographic group of mobile payment users with 39% of the market. This age group is expected to reach $2.45 trillion in transactions worldwide by 2015. The next largest group is the 27 to 39 year olds with 31% of the market, followed by 40 to 61 year olds with 26%, and 62 and older with 3% of the market.

All these indicate that there is a large opportunity for online coffee roasting in Arab countries, particularly Dubai and Saudi Arabia. Not only are young consumers driving coffee consumption, they are also the leading users of e-commerce in the region, proving that online coffee ecosystems have a chance to flourish in the market. It should be emphasized that young consumers specifically look for premium coffee experience coupled with convenience, both aspects that Newbeans CTAPS system can provide.

Of importance will be the provision of COD options and mobile-responsive e-commerce pages given the habits stated above.

In my next post, I’ll be sharing with you the strategy we’ve made for BigOnIT and Newbeans Coffee’s entry to the Middle East and North Africa.

Mark Wilson, BigonIT Founder, talks about Disruptive Technology for The Lecture Club

DISRUPTIVE TECHNOLOGY - OR IS IT-

The Lecture Club, London’s longest running literary salon, will be having our CEO and Founder Mark Wilson MBA to speak on Disruptive Technology.

Through The Lecture Club, professionals with multiple interests and open minds gather and learn from experienced speakers – we are honored to invite you to our CEO’s talk:

JUNE 23, 2016  |  6:30pm – 8:30pm
9 ILCHESTER PLACE, LONDON W14 8AA
Get your tickets here.

For Disruptive Technology (or is it?) Mark discusses examples of how technology is providing more opportunities for companies, and how disruption of traditional models is becoming an every day occurrence.

Mark Wilson has worked across many different industries, with a specialisation on the impact of Technology. He started off his career working for Japanese consumer electronics companies and property development. Since then, he has used technology in various industries and many unique applications – such as the development of Property Renting, Supply Chain, and Food Distribution.

He is now also the founder of Newbeans Coffee, a pioneering online coffee roaster; and BigOnIT, a full service digital consultancy that offers strategic assistance to companies and management teams, who aim to better understand the use and development of technology.

Book your tickets to the talk here.

Food Security and Food products in Saudi Arabia (Part 1)

With Saudi Arabia’s new leadership and notable economic reforms, the outlook  for foreign ventures and investment is promising. BigOnIT and Newbeans Coffee are exploring various opportunities in Food, Healthcare and Food Security in the Middle East.

This blog series provides an update on our ventures in the region, as well as the current business landscape as I see it.

BOI_BlogPost1

Traditional Arab coffee is usually purchased in markets and souks, and what sets it apart from coffees in other nations are the addition of spices. A variety of items such as cardamom, cloves, and saffron, in addition to coarsely grounded Arabic coffee beans, are used for its making. [5]

The recent years, however, saw the increasing variety of coffee becoming available in restaurants, cafés as well as retail outlets and they are more similar to the coffees consumed in Italy or the USA.

In Saudi Arabia, specialist coffee shops have nearly doubled in value between 2008 and 2013, due to their aspirational image and innovative coffee drinks. The interest in specialist coffee shops is also influencing the retail market, as young consumers seek to replicate the trendy coffeeshop drinks at-home. [5]

And while fresh coffee is the format used to brew traditional Arabic coffee, instant coffee is the most preferred category by young consumers in Saudi, due to its convenience and variety of flavour options. In particular, young consumers are drawn to instant coffee mixes like 3-in-1’s and instant Specialty Italian coffees that aim to emulate coffee drinks like cappuccinos and lattes. Again, this is with the desire to recreate the coffee shop experience without extra effort.

Meanwhile, in Morocco, instant coffee is still the most popular type of coffee, but fresh ground coffee pods are gaining so much popularity in Morocco as coffee pod machines are becoming more available in different large retail stores, like Marjane and Carrefour. [5]

In Dubai, the center of development and trends in the region, on-trade sales are also growing strongly, boosted by the influx of business and leisure tourism. Despite the growth of coffee shops and independent roasters, instant coffee still takes the cake. [5]

In my next post, I explore trends in the e-commerce industry in Saudi Arabia. They are now the biggest  mobile users in the world, and this opens a lot of possibilities in selling specialty coffee online in Saudi Arabia and other Middle Eastern market – making it a great time for Newbeans CTAPS system to enter the market.

Blended Finance – Funding For The Internet Of Things – Unlocking the Value of Data

The Internet of Things is creating opportunities not only on how we attract resources and manage project funding – it allows us to blend various parts of the finacial system to create opportunities as well as develop opportunities  and targets them to various layers. The internet of things is bridging gaps in our financial systems and it is allowing funding to be tailored for the various layers of the Financial system. Below I describe the said layers in further detail:

Government layerBusiness Model

This is an important part of the Strategic Pipeline as well as of the ongoing product and investment pipe line. Government initiate, funding and contracts are the driving force of economic growth — this layer of the business model allows the strategic plan to be developed into an Operational Business plan to be presented to financial institutions for funding. At this layer, timing is important; this covers government plans and access to government objectives both long and short term. It is also important to be recognised within government cycles.

Funding for exits at this level to allow long term odjectives to acceved as well help establish technologies and processes that can create economic value– Grants , Subsidy and development assistance

Financial layer

This layer allows the introduction of governmental projects into the financial system at an early stage. The financial system will create funding opportunities through a mixed blend (Blended Finance). This combines different types of finance of different funding methods and developing layers of funding types – from Government Funding, International Subsidy, Bank and Private Equity, Private banking, and in some cases section funding, according to the type of the project and the financial requirements of a given project.

Firms Layer

This layer allows the operational plan to implemented – with a operational base of contractors – that can provide operational support and delivery to the business plan and the operational project as well as Joint Venture Partnership and development. This is a flexible layer that can create, develop and risk-take in projects. This layer allows commercial risk to be defined better and apportioned to various parties that make up the Financial Layer. It also introduces stronger partnership, collaboration and Joint Venture agreement to be implemented.

Prosumer Layer

This is a layer that allows extra function to be added to the model. Funding and other project resources can be packaged and distributed at this layer, such as crowd funding. This is a layer that also allows product development and distribution.

Customer Layer

Also refers to the user layer, customer layer, or the layer that consumes the products and services. This layer drives the market and it allows product and service development.

 

 

Virtual Power Plants – The Internet of Energy

 

Virtual Power Plants VPPs are formed through BOI_Header_650x150_v2the aggregation of multiple small distributed generation units (including combinations of wind, solar PV etc. systems), fixed and variable loads and energy storage systems, which are then controlled by a central Energy Management System . Through this “internet of energy” arrangement, a VPP can achieve fidelity over the supply of electricity and, through communication with consumers, demand.

The implementation of VPPs can lead to greater predictability in carbon neutral energy output; greater control over power output; better congestion management; increased ability to allocate energy to users as required; and trading of the energy generated.

Health Care Systems – The New Digital Market Place in the Middle East

Health systems consist of all the people and actions whose primary purpose is to improve health. They may be integrated and centrally directed and over time the global health care industry is going through a period of “glocalization,” through partnerships Creating flexibility in Health Care Systems,

Business Model

This Flexibility thought data and digital technology has developed new medical insights from crunching real-time activity and biometric data from millions of potential users. Allowing medical treatment to be delivered remotely, reducing the overall cost allowing more adaptive services as well as developing quality regulation and c ompliance

Saudi Arabia has developed enormously over the last two decades and are well placed to take advantage the new digital market place to create an electronic health strategy working with countries such as Scotland in the UK that are positioned to meet this challenge and are already doing so with advanced, intuitive and integrated digital health solutions.

These digital solutions are already integrated into Countries national health system as robust heath care components and are being exported all over the world including China,

These services can be better developed allowing partnership for the Saudi Arabia – with the help of an intermediary better able to bridge the understanding of supply and demand

Further  more the development of innovation from this digital market place also allow delivery of Health care systems into new emerging markets of the Middle East, North Africa and Asia both as a Service to Augment the National Services but also as a Independent Business model to be delivered under a private health care inactive into the GCC countries North Africa and Asia

Product Development – On the Internet of “Things”

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Can your data be ethical?

As more and more products are evolving from how we manage information and data – there has been growth in products in the ethical market and with more positive economic outlook and an improvement in household finances. It has served to drive sales of ethical goods and services, which are often more expensive than non-ethically produced products. According to preliminary economic estimates published by National Statistics, gross domestic product (GDP) was 3% higher in Q3 2014 compared with a year ago, while wage growth outstripped inflation for the first time in 5 years during November 2014, after rising by 1.3% in the third quarter of the year — 0.1 percent points higher than consumer price inflation during the same quarter.

  • Rainforest Alliance products have also continued to increase as a result of a growing availability within the UK, with sales of Rainforest Alliance-certified food products estimated to have risen by 47% during 2013.
  • Public scandals, such as the horsemeat debacle, as well as a growing mistrust of core bank brands following the LIBOR (London InterBank Offered Rate) scandal, the payment protection insurance (PPI) miss-selling calumny and growing outrage regarding banker bonuses following the recession, along with increased demand for transparency among big businesses, have resulted in the emergence of a much more ethically and environmentally informed consumer.
  • Sales of organic products have observed resurgence in recent years, following growing consumer demand for transparent product provenance in the light of the horsemeat scandal, as well as more flexible household budgets in line with the economic recovery.
  • Spending on micro-generation (i.e. household renewable energy systems) has increased by 50%, following the introduction of generous Government incentives, such as the Green Deal home improvement scheme and a sharp increase in solar power home installations during 2014.
  • Demand for green cars, which offer low-carbon emissions, has increased in recent years, driven by a revival in the new car market, as well as significant new product development (NPD) by several well-known car brands, such as Nissan, Toyota, Vauxhall and Renault, with the electric car market showing record growth of 143.9% up to the end of June 2014, according to figures compiled by the Society of Motor Manufacturers and Traders (SMMT).
  • The diversification and expansion of Fairtrade schemes to new product sectors, such as jewellery (in particular gold) has also helped to drive sales of ethical products in recent years, while other market sectors, such as eggs, coffee and bananas are increasingly dominated by ethical products.
  • In recent years, micro-generation (i.e. the generation of electricity or heat of a small-scale, typically for domestic or household use by methods that do not contribute to the depletion of national resources) has continued to increase, with National Grid Energy estimating micro-generation to have risen by 0.5 gigawatts (GW) during the past 3 years. Spending on micro-generation has also increased significantly across UK households, with Ethical Consumer magazine estimating expenditure on domestic renewable energy platforms to have risen by 50% during 2013 alone.
  • One of the most significant driving factors behind the trend towards more energy-efficient homes has been the UK Government’s Green Deal, which was first launched in January 2013, and offers long-term loans to homeowners to help them make energy-saving improvements to their home, such as the installation of insulation, draught-proofing and double glazing, or renewable energy systems, such as solar panels or heat pumps.
  • Other Government initiatives introduced with the aim of reducing domestic energy use in the UK include the roll out of smart meters, which allow users to more accurately monitor their energy usage and expenditure; and the Electricity and Gas (Energy Companies Obligation) Order 2012, which was introduced in 2012 and provides funding of around £1.3bn each year to support the installation of energy efficiency measures in low-income households and areas.
  • Industry analysts believe solar electricity could be cost competitive with gas by 2020, and estimate that around 10 million homes in the UK will need to install panels on their roofs over the next 6 years, if the country is to fulfil its renewable energy potential. If this aim was achieved, it would mean that a third of households in the UK would be generating energy from the sun, allowing the UK to produce around 6% of its annual electricity needs from solar power, with as much as 40% of energy being generated by such panels on sunny days during the summer, by the year 2020.
  • The drive towards energy-efficient homes is also thought to be having a knock-on effect within the property market, with research undertaken by Knight Frank, in 2014, revealing that houses which have a high Energy Performance Certificate (EPC) rating are now selling more quickly than they did in 2010.

Electric and low-emission vehicles have continued to gain popularity in recent years, following ongoing Government investment into charge points, as well as NPD from leading car brands. The latest statistics published by the SMMT show that 9,955 alternatively fuelled vehicles (AFVs) were registered in September 2014, representing a 56% rise on the number registered for the same time last year.

Solar Energy – a disruptive energy technology

The overriding problem with relying on solar PV energy is that “PV does not contribute to the reduction of the evening peak that occurs in almost all countries around Europe”. Distributed Energy Resources (DER) – such as energy storage facilities – could substantially lower demand during the evening peak by allowing PV energy to be produced and stored throughout the day and consumed during evening hours.

This would also mean that prosumers are able to self-consume during the evening, as opposed to paying for energy from the grid – which may provide a financial benefit if the cost of the storage system can be squared off against the demand for energy from the grid.

In turn, increasing self-consumption during the evening places less strain on the grid during this peak, while storing some energy during the day – as opposed to feeding it all into the grid – can reduce grid bottlenecks. Ultimately, this can lead to smoother peaks, displace excess production, and uncouple the relationship between the generation and consumption of solar power.

In the case of residential installations, using storage for short-term supply side management – shifting a part of the PV production to the evening peak or the night – could increase the percentage of self-consumed electricity from maximum 30% without storage to around 70%.”

‘Daily storage – i.e. sBOI_Plaque_v2_R2_AStorage methods that can maintain stored energy’s maximum power for periods of between 8 and 12 hours – is “well-suited” for PV, since peak generation time occurs predictably every day, and peak evening energy demand occurs less than 8 hours after.

The key message here is that daily storage complements PV, especially in summer, significantly flattening the residual load (after storage). The same effect can also be seen on a winter day. However, the flattening of the load curve is less, due to larger variations of the load and less PV production.”

Energy storage solutions are commercially available, but in most countries are yet to achieve cost-efficiency – where the price of a storage system is cheaper than simply purchasing energy from the grid during non-daylight hours – and so deployment has been minimal so far.

It is not yet clear how DSM will be successfully implemented on a large scale, from a commercial and regulatory standpoint, however, “As costs decrease, storage will become more and more a valuable alternative to grid reinforcement.”

In the way that the solar module industry has relied on government subsidies to gain market penetration, the German government has incentivised energy storage by subsidising high-quality battery costs by up to 30%[7].

Without government subsidies, however, “assuming a storage cost of 0.10 €/kWh, the combination of PV and storage could be competitive before the end of the decade in Italy, Germany and Spain. Storage costs below 0.10 €/kWh will be needed to achieve competitiveness before 2020 in France and the UK.”

The Need for a Chief Digital Officer

White-Version (2)The need for companies to consider their information in a way that assist in the creation of new business models that manifest themselves on how organisations can create services and products from how they manage information and data is becoming more apparent.

Most companies have understood the need to hire digital experts — such as Chief Digital Officer, whose job is to spot potential challenges and create revenue opportunities from the information and data of the organisation as well as protect the company from new emerging models that can ultimately disrupt traditional business models.

For when disruption occurs — the CDO can give some degree of insulation from mainstream operations to save newcomers from being swamped by short-term imperatives.

The obsession with digital disruption has reached a flashpoint with the arrival of the smartphone, which is the platform for an invasion of older companies’ hallowed grounds. The success of online lift-sharing company Uber has become an example for entrepreneurs out to attack industries once thought immune to digital upheaval.

From taxi drivers to television networks, from filmmakers to restaurants and banks, the ways in which individuals and companies do business is metamorphosing so quickly that many companies find it hard to keep pace.

For all that, the need to overhaul business processes, forge digital links with customers and, in some cases, recast entire revenue models can still be pressing. A common error is failing to pay attention to the bigger picture, says Surajit Kar, a principal at management consultancy PwC. Distracted by day-to-day events, or by minor adaptations to existing businesses, companies become stuck on the incremental instead of looking at the real game-changing forces in their markets, he says.

The ways in which digital markets tend to evolve can catch out the unwary and opportunities are often to be found between existing markets, says Mr Kar. In industries such as healthcare and financial service, for instance, digital competitors often use technology to insert
Banner1themselves as intermediaries in different ways. Start-ups such as US based Practice Fusion, for instance, have used the spread of electronic medical records and other clinical data to create markets in the healthcare field, such as selling data to insurance and pharmaceutical companies.

 

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