It’s 10 am in the morning and Ed Chan, the CEO of Walmart China, is straightening his tie on the stage of the newly built Congress centre in Tianjin. There are 95 men in black and five women in the room, waiting for Mr Zein Mahmoud Abdalla, the CEO of Pepsi Europe, to kick off a World Economic Forum panel discussion on the “emerging new consumer”. Mr Chan looks slightly uncomfortable in his chair. Beside him sits Mr Feng Dongming, the CEO of Markor Investment Group from China, and Mr Chander Prakash Gurnani, the CEO of Mahindra Satyam, from India. The overall theme of the conference is – sustainability.
Big multinational companies are on their toes, and for good reason. Up until now they have been able to control the supply of goods and services on the global market. Customer behaviour and the structure of the global market is, however, changing at a fast rate. One sign of this is the steady growth in annual online sales. Furthermore, an increasing number of customers both on the developed and the emerging markets wants to know exactly what they are buying.
“We have noticed this, and so we need to pay more attention to the transparency of our supplier networks”, says Mr Ed Chan from Walmart.
There is, however, more to this. People want to be good. Let’s imagine a small market survey that asks people “who would you like to give your money to?” Options: “A: a handful of big multinational companies” or “B: a number of smaller local companies”. A wild guess is that 40 per cent of us have never thought about it and could not tell, 25 per cent could not care less, 5 per cent would say A because of their stock portfolio, but perhaps 30 per cent would rather choose option B.
Also, let’s imagine that this Christmas, those 30 per cent would shift from buying their presents from big brands to buying from smaller local brands. From a macro-economical point of view, the consequences would be considerable. Thirty per cent of the total Christmas sales is lots of money. It means lots of losses for brands like GAP, NIKE and Pepsi, and lots of gains for individual crafters and designers on places like Etsy.
From the sustainability point of view in particular, we should be interested in who gets to offer products to the emerging consumer. This has to do with how we distribute wealth from the growth.
Setting up a presence on the global market has become ridiculously easy. Starting your online store takes five minutes. Signing up for a long tail search engine takes one email. Buying keywords, three minutes. Advertising to your friends requires one click on Facebook. Of course, if you are a one-person entrepreneur, scaling is still a problem – or is it?
On Etsy alone there are currently 6.5 million users and there seems to be no end to its growth. New search engines and shopping places for small brands and fair trade are popping up like mushrooms after rain. Can the small really beat the big? Difficult to say, but at least the long tail can put up a fight against the fat tail.
Or perhaps they don’t have to fight. Perhaps, under the pressure from consumers, multinationals are willing to consider complementing their centralized models of production and marketing with more distributed models. Would they really? I must ask.
Mr Abdalla coughs, Mr Ed Chan straightens his tie again, and Mr Dongming stares into the emptiness. “You are right”, said Mr. Gurnani finally, “the internet is coming”.