Ecommerce continues to grow by double digits but still does not take off, in Italy especially, in the food sector. A matter of trust, to be consolidated on the supply side
Big Data and 5G, the upcoming scenario
Amazon is unveiling the omni-pervasive firepower we anticipated a couple of years ago. Highlighting the assets on which physical retail cannot compete, Big Data and AI(Artificial Intelligence), Cloud, Prime. Control of 5G infrastructure for Big Data collection is at the center of the trade battle triggered by the U.S. against China. (1) Battle culminated, on 5/15/19, with Donald Trump banning Huawei and Chinese technologies. (2)
‘The leading [nella tecnologia] of 5G will reap hundreds of billions of dollars in revenue over the next decade, with widespread job creation in the wireless technology sector‘ (Defense Innovation Board, Department of Defense, U.S.)
‘Data is king‘. Data collected through digitization of processes and transactions constitute the essential raw material to the development of the so-called ‘Internet of Things‘ (IoT). And their value will grow by leaps and bounds with the totalizing connectivity offered by 5G networks. (3) An increasing number of devices of current use and consumption-from vehicles to smartphones, televisions and ‘smart speakers’ such as ‘Google Home’ and ‘Echo’ (Amazon)-will be interconnected in a continuous stream of data. At the disposal of the few giants who can stow them in their entirety, to extract them according to commercial (and other) strategies. In a dystopian scenario of technocratic influence of thoughts and behaviors, foreshadowed decades ago by Authors such as Ray Bradley, William Gibson and others. (4)
Amazon and Alibaba, the Achilles’ heels
The perfect storm, in agribusiness distribution, matures in the Cloud. The first obstacle in Europe, logistics, is being resolved. On 5/17/19 Amazon (whose market value is estimated at about US$920 billion) announced a US$575 million investment in London-based Deliveroo, which already now operates in 14 countries-including Germany, France, Italy, the United Kingdom, and Spain (European leaders in food production), as well as the United Arab Emirates, Singapore, Taiwan, and Australia. There where Alibaba, whose organization on the Chinese mainland is already widespread, does not reach. (5)
Supply chain integrity remains the biggest obstacle. The flaws and malfeasance in consumer information on food products-which our GIFT site has repeatedly exposed on Amazon-are only the top of the iceberg. Where, as has been shown, the procedures adopted by Jeff Bezos’ giant are wholly unsuitable to address the responsibilities of ecommerce operators.
Who controls the companies featured on Amazon? Who checks that products actually meet the promises of authenticity, origin, safety, and quality throughout the supply chain (not to mention the logistical phase, which can also be critical in hypothetical ‘triangulation’ and parallel trade)? What safeguards against the risks of counterfeiting, fraud,
tampering
? The risks increase in proportion to the growth and popularity of the ‘megastore,’ which offers more and more third parties access to its global store. (6)
The business of fake reviews-positive, to deceive customers, and negative to harm the competition-in turn contributes to undermining ConsumAtors’ trust in the colossal ‘marketplace. (7) And the problem is getting worse, to the point that 58 percent of the 5.8 million reviews entered in the first three months of 2019, following independent site analysis, were found to be from ‘unverified purchasers‘ (they were 9 percent in the first quarter of 2018). That is, from individuals (or ‘bots’, robots) who did not proceed to purchase under the conditions indicated. (8)
Alibaba in turn is coming to terms with customer concerns about origin and counterfeiting of branded products. In 2015 Gucci and Yves Saint Laurent had taken legal action against the Chinese giant. And in 2018, following the publication in China of a critical investigative report on counterfeit goods available on Alibaba’s sites, there was even speculation that it is the search algorithms themselves that steer customers toward counterfeit products.
There are no miracle remedies. One must build and maintain trust.
Ecommerce, the trust that’s missing
Trust is the basis of the social pact in any economic relationship and is crucial when referring to food. And trust in the products that appear on the screen presupposes reliance on the producer (when identified) and/or seller (physical or digital), raw materials and processes, logistics, controllers and controls. The entire supply chain and the ecosystem in which it operates must be guaranteed and communicated with transparency, through objective and reliable (i.e., verifiable) data. If and when the data match, trust can be formed and solidified in purchase choices that tend to be repeated. But the hesitation of even compulsive online shoppers toward food products shows how the assumption of reliance does not easily occur in the state of the art. What is missing?
Knowledge and experience, ethics and credibility. In a word, integrity. What is encountered in fair and sustainable supply chains, in direct relationships withpeasant agriculture. And also-for those who are not so lucky-in the most responsible retail establishments. Like Coop Italy, always at the forefront of various sustainability fronts. The overwhelming power of global giants in an unregulated Web is not enough to guarantee either producers or consumers.
Authentic and sustainable ‘Made in Italy‘ food then needs ecommerce platforms capable of transferring to digital the physical reality of a supply chain that cooperates and is able to guarantee total quality. Careful selection of agricultural and processing enterprises, continuous checks in the countryside and on production sites, transparent labels. The use of innovative technologies, including blockchain, can increase consumer confidence provided its premises are effectively guaranteed. As data entered into the most advanced platforms ensure immutability and immediate access to information, but cannot attest to its veracity. One cannot believe that the IoT (Internet of Things) can take the place of operators, nor can one engrave a unique code on every grain of rice (or apply RFID to bunches of grapes). Instead, one must build trust ‘from seed & feed to phone‘.
Dario Dongo
Notes
(1) See Zen Soo, ‘With the power to change the world, here’s why the US and China are fighting over our 5G future‘. South China Morning Post, 4/18/19, https://www.scmp.com/tech/big-tech/article/3006582/power-change-world-heres-why-us-and-china-are-fighting-over-our-5g
(2) Jonatan Shieber, ‘Trump’s Huawei ban ‘wins’ one trade battle, but the US may lose the networking war‘. Tech Crunch, 5/17/19, https://techcrunch.com/2019/05/17/trump-huawei-networking-war/
(3) The impact on human health of electromagnetic pollution caused new networks, among others, is still underestimated. See Kelley, Elizabeth & Blank, Martin & Lai, Henry & Moskowitz, Joel & Havas, Magda. (2015). ‘International Appeal: Scientists call for protection from non-ionizing electromagnetic field exposure‘. European Journal of Oncology. Volume 20. pp. 180-182
(4) We recommend reading Ray Bradbury’s short story ‘ThePedestrian,’ 1951
(5) Deliveroo claims to operate 80,000 restaurants, with a fleet of 60,000 delivery workers and 2,500 employees
(6) A widespread and uncontrolled pattern of fraud is carried out by offering counterfeit branded products with slight variations (e.g., different packaging or color), which obtain from Amazon a positioning close to that of authentic products
(7) Cf. Zachary Crockett, ‘5-star phonies: Inside the fake Amazon review complex‘. The Hustle, 4/13/19, https://thehustle.co/amazon-fake-reviews
(8) ‘Amazon Flooded with Millions of Fake Reviews in 2019‘, Review Meta, 28.3.19, https://reviewmeta.com/blog/amazon-flooded-with-millions-of-fake-reviews-in-2019/
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.