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The Alexa Effect: How the internet of things (IoT) is increasing retail sales

Imagine this scenario. You’re out of coffee but with the click of a button or a simple voice command, you reorder a two months’ supply that will arrive the same day. And that almond milk you like? Well, imagine your fridge already knew you were running low on supplies and independently sent the order to restock before you ran out. The stuff of science-fiction until only recently, internet of things (IoT) technology is beginning to change the way we live and work. Simply put, IoT is a system of interrelated devices—things that can include gadgets, digital objects, or machines, wearables and so on—which have the capacity to send and receive data over a network without human agency or human interaction. As a technology, IoT is novel, and it’s poised to reconfigure a range of sectors and industries—among them, the world of retail. Amazon is a leader in the consumer-facing space with an ecosystem of apps like Alexa, Fire TV, and the now-defunct Dash Button. Meanwhile, tech-savvy retailers are using IoT to facilitate operations. Smart shelves in stores can detect the status of perishable goods or inventory requirements; radio frequency identification (RFID) sensors can actively track the progress of produce through the supply chain. Retailers can even use IoT to send customers personalized digital coupons when they walk into the store. As IoT continues to gain traction around the globe, the potential for efficiency-boosting innovation in retail is clear. Less clear, however, is its actual impact on consumer choices and behaviors. Sure, IoT can save time and mental effort, but how does that translate into real-world business outcomes? This is the question that underscores new research by Vilma Todri and Panagiotis Adamopoulos, both assistant professors of information systems and operations management at Emory’s Goizueta Business School. They were keen to understand whether consumer behavior is significantly changed under the regime of this new technology as it continues its roll out across the world. Specifically, they wanted to know if IoT technology actually increases demand for products. And it turns out that it does. “IoT technology in retail is really in its infancy, so understanding its impact on users and business is key,” Adamopoulos said. “We wanted to shed light on these dynamics at this early point to spark interest and generate more debate around how retailers can leverage this technology.” Together with Stern’s Anindya Ghose, he and Todri put together a large data-set with information about sales of certain products in countries with existing IoT retail markets and in others where the technology has not yet been introduced. “We needed to take into account these sorts of variables to really understand the effect,” Todri said. “So, we had our control group of non-IoT retail markets, and we were able to compare sales data for the same products in countries where the technology has been adopted.” The researchers also controlled for time trends, looking at the impact on sale prior to and post IoT adoption. “Looking at the data over time and pinpointing the exact moment when a product has been made available for sale via IoT sales channels across different countries and at different moments, we were able to infer the effect of the technology on product sales,” Todri said. In total, they looked at sales for the same or similar products in six countries between 2015 and 2017. They also compared sales across different retailers. “By analyzing the same sales information for different products in different markets using different channels across the world, we can see differences in the data that can only be attributable to this new technological feature,” Adamopoulos said. And the differences are significant. The concept is fascinating, and if you are interested in learning more, a complete article about this topic is attached: If you are a journalist or looking to learn more about IoT, our experts can help. Vilma Todri and Panagiotis Adamopoulos, both assistant professors of information systems and operations management at Emory’s Goizueta Business School. Both experts are available to speak with media; simply click on either expert's icon to arrange an interview today.

Is hospital advertising actually good for our health?

Hospitals and healthcare organizations in the U.S. spend $1.5 billion on advertising every year. It’s a topic that provokes lively debate and a certain amount of controversy. Medical bodies, policy makers, and scholars alike question the ethics and efficacy of using (constrained) budgets to promote hospitals to patients. Diwas KC, professor of information systems & operations management at Emory University’s Goizueta Business School, and Tongil Kim, an assistant professor of management at Naveen Jindal School of Management in Texas, conducted a large-scale study of hospitals and patients in the state of Massachusetts to better understand the impact of hospital advertising. What they found is striking: Not only does television advertising work, it significantly drives demand, attracting patients living far from the hospital and beyond its regular area. And that’s not all. KC and Kim discovered that limiting hospital advertising or imposing an outright ban, as some groups have called for, might actually have serious negative effects on patient healthcare. “There has been a lot of discussion about banning advertising over recent years because of uncertainties around wasting money and resources,” KC said. In the paper “Impact of hospital advertising on patient demand and outcomes,” KC shows that there is a correlation between the amount spent on TV advertising and the quality of the hospital in question. Healthcare facilities that invest more in advertising tend to be “better” hospitals, he adds; they offer higher caliber care and services and, as such, they see much lower patient readmission rates—a key quality metric in healthcare. To get to these insights, KC and Kim looked at more than 220,000 individual patient visits to hospitals in the state of Massachusetts over a 24-month period. Among the data they collected were things like hospital type, location, and dollars spent on advertising. Patients were documented in terms of medical conditions, insurance, zip codes (to determine residence), and median household income. They were able to contrast those hospitals that invested in television advertising and those that did not. With the former, they uncovered a significant uptick in patient visits, with people coming from far further afield. This was particularly true of wealthier patients. Then there’s the question of patient outcomes. Here the data showed unequivocally that it’s the high-quality, low-readmission hospitals that advertise more—something that KC attributes to the natural tendency to get “more bang for the advertising buck when the quality of your product or service is better.” As for banning advertising, this would negatively impact these hospitals, he argues, limiting their ability to attract patients. It could also lead to an increase in population-level readmission rates. “Patient readmission rates are one of the key metrics along with mortality rates that tell us how well a healthcare facility is working,” said KC. “If a patient gets discharged but has to come back to a hospital in, say, 30 days, unless it’s a chronic condition or ongoing treatment, it’s a good indication that the patient didn’t get the level of care they should have the first time.” Indeed, “when we looked at all of the data, we found that the hospitals where there were fewest revisit rates were those that advertised more,” he said. KC finds that a blanket ban on hospital advertising could lead to an extra 1.2 readmissions for every 100 patients discharged. It’s a significant and “surprising” finding. And one that should inform the debate around healthcare advertising spend in the U.S. “There’s also the idea that this is a zero-sum game because if a patient doesn’t go to hospital A, they’re just going to go to hospital B—the one that advertises more—splitting the pie in different ways but not increasing that pie,” KC said. “What our study finds is that yes, advertising does draw patients away from one facility and towards another, but that the latter generally delivers better patient outcomes,” he said. “So, there is a social welfare benefit right there that suggests that you should not ban hospital advertising. There are real health benefits in allowing [advertising] to happen.” If you are a journalist looking to cover this topic - then let our experts help. Diwas KC is a Professor of Information Systems & Operations Management at Emory University’s Goizueta Business School. He is an expert in the areas of  Data Analytics, Operations, and Healthcare. If you are interesting in arranging an interview - simply click on his icon to set up a time today.

Exploring the direct link between drug abuse and the internet

Drug overdoses account for a staggering number of deaths in the United States. In 2017 alone, more than 70,000 U.S. citizens died from opioid overdoses, a number that eclipses the death toll due to traffic accidents, gun violence, or HIV in the same year. Among the academic community, media and national organizations such as the Drug Enforcement Agency (DEA) and the Food and Drug Administration (FDA), there is a growing consensus that the internet plays a key role in enabling access to illicit drugs in America. As far back as 2005, the DEA referred to the internet as an “open medicine cabinet; a help-yourself pill bazaar to help you feel good.” But until now, the jury has been out about whether online platforms actually drive substance abuse among internet users. Research by Anandhi Bharadwaj, vice dean for faculty and research and Roberto C. Goizueta Endowed Chair in Electronic Commerce, along with doctoral candidate Jiayi Liu 22PhD, casts compelling new light on this issue. Their paper, Drug Abuse and the Internet: Evidence from Craigslist, was published in March 2020. By using data from Craigslist, one of the largest online platforms for classified advertisements, the researchers found a significant uptick in drug abuse in areas where Craigslist had become active in the last decade or so. Launched in San Francisco in 1995, Craigslist is a location-specific site that has been spreading to different U.S. cities in a staggered fashion since 2000. As the site has grown, so too have the number of illicit, user behaviors that exist in tandem with the many positive services it offers. Among these are prostitution and the sale of controlled or illicit drugs. The internet: a pipeline for narcotics Historically the sale and purchase of illegal drugs has happened in physical spaces—streets and urban areas prone to certain boundaries and limitations, not to mention the risk of arrest or potential violence. The internet has changed the game in two key ways. First, there is the simple mechanism of buyer-seller matching. Dealers and buyers transact online, which is more straightforward, faster and cuts through many of the risks associated with physical interaction. Simply put, it’s easy to buy drugs online. Second, there is the issue of anonymity. Research has documented how human beings behave differently when we believe our identity is shielded from others. We are prone to take more risks under the cloak of anonymity. Working off these two premises, Bharadwaj and Liu hypothesized that the internet not only facilitates the sale and purchase of drugs—it must also proactively spur supply and demand. To put this to the test, they documented the U.S. cities and counties where Craigslist has become operational since 2000 and then analyzed three other key variables: total number of people admitted into drug treatment facilities in different counties between 1997 and 2008, county-level drug abuse violations, and number of deaths caused by overdose per county. Eager to understand how this new access to drugs online might also be impacting people at a demographic and socioeconomic level, the researchers merged this data with statistics on age, ethnicity and poverty from the U.S. Census Bureau. Additionally, the authors compiled information about income and unemployment, crime and arrests from the Bureau of Labor Statistics and the FBI respectively. What they found was stunning. Not only is there a marked increase in drug-related treatments (14.9 percent), violations (5.7 percent) and deaths (6.0 percent) wherever Craigslist becomes operational in a city or county; the momentum of increasing drug abuse also continues to grow over time in that area. And that’s not all. Economic disadvantages—poverty, unemployment and lower standards of education—are typically associated with a higher risk of substance abuse. But the findings suggest that in fact it’s the wealthier, higher-educated groups—especially among whites, Asians, and women—that are more likely than others to engage in drug abuse once Craigslist starts operating in an area. In fact, they conclusively found an uptick in this kind of behavior where crime and drug abuse had been less prevalent previously. In other words, where drugs are becoming readily available online, there is a dramatic increase in new and first-time users. If you are interested in learning more or if you are a journalist looking to cover this research – then let our experts help. Professor Anandhi Bharadwaj is the Vice Dean for Faculty and Research and the Goizueta Endowed Chair in Electronic Commerce and Professor of Information Systems, Operations Management. To arrange an interview with – simply click on her icon today.

Governing for Resilience

COVID-19 has raised the stakes for boards, argues Brunswick’s Paddy McGuinness, former UK Deputy National Security Adviser. We now live with COVID-19. Fewer business leaders are making the mistake of talking about “post-COVID” or “when this is over.” The better of them have factored in COVID-19 related constraints to their medium-term plans and are even thinking about how the world may change in the long-term. They are building capacity to take advantage of an early recovery within months, yet they are modeling and encouraging grit for current and indeed harder conditions to last much longer. In the past, when health emergencies—say the Spanish Flu pandemic of a century ago—subsided, there was a greater return to economic normality than had been expected during the crisis. Extreme events often heighten or even distort our perception of wider risks. That old journalistic cliché “one thing is certain, nothing will be the same again” is rarely true. But the pandemic has created the expectation that businesses will be resilient—that they will be able to respond to an event and recover to the state prior to the event, incorporating the lessons learned into business practice. Many business leaders feel they have not done too badly responding to a once-in-a-hundred-years event. Business Continuity Plans (BCPs), which were understandably sketchy for pandemics, were pulled out of second-line risk management and owned and improved in real-time by executive committees. The transition to remote working and, at least in Asia and some of Europe, the gradual return to offices again, has been managed. Services and even vital production have been maintained. Leaders have absorbed the personal and collective strain of this. Good reason then for some satisfaction as they delegate certain COVID-19 responses and focus on the economic tsunami that follows the pandemic. The public seems to largely agree with business leaders’ assessments. While many national and scientific leaders find themselves beset by “blamestorming,” corporate executives have been given more slack. They weren’t expected to have foreseen a pandemic. Their sometimes scrabbling responses are understood. However, behind this lucky pass lurks an expectation that businesses will now be more prepared for crises and foreseeable risks. Resilience cannot be relegated to BCPs and traditional risk-management structures. It is categorically a board issue—regulators, lawyers, politicians and the public say so. The reputations of individual board members and the collective are at stake. Think how fast leaders have been expected to respond to the issues raised by the Black Lives Matter movement. Alacrity will be required. The speed and scale of decisions in response to the pandemic leaves board committees playing catch up to assure themselves that risks have been managed. The move to working from home has been rapid, so too the digitization of the business. Some see these as new, streamlined ways of working, yet the negative consequences are not yet fully apparent. Working from home, for instance, is attractive to some employees as well as chief financial officers, who may relish the chance to reduce fixed costs. Concerns about the impact on the coherence of the business’s culture, its productivity and innovation, the security of data held at home, hardships for those in difficult home conditions, and, indeed, the needs of the younger demographic who seem to favor a return to the office, need to be given due consideration. It may be a case of “decide in haste, repent at leisure.” Resilience is categorically a board issue—regulators, lawyers, politicians and the public say so. The reputations of individual board members and the collective are at stake. Boards also need assurance that the business has regained its balance and can manage parallel or interrelated crises. In recent weeks we have been helping several clients respond to major cyber events unrelated to the COVID-19 outbreak. They have probably needed more external support than otherwise because their leadership capacity was inevitably denuded by pandemic response. And they have benefitted from us already knowing each other and having experience of how to work together in crisis. After the Great Financial Crash there was a heavy focus on balance-sheet resilience and having the requisite finance skills on boards. Business leaders are now beset by advice on the heightened obligation to be resilient in much a broader sense of the word. Regulators, lawyers and risk consultants are sharing checklists of factors for executive committees to take into account when managing risks and for boards to oversee. The challenge here is defining what changes your specific business needs and how to actually bring those about. Shareholders will be expecting a judicious move away from “just in time” systems to ones that can endure foreseeable risks. This isn’t just about potential legal liability or reputational risk. This is about setting your business culture for success. Undermanage risks and the business is wide open to damage from foreseeable shocks with all the loss of confidence and capability that follows. Overmanage and the business losses its competitive edge just when there is opportunity in the recovery. In order to track broader resilience, boards and their committees will need access to a wider set of skills and insight. Board membership emerges as an obvious area of focus. Yet each board will take more time and belonging to too many—“over boarding”—may well be unacceptable. Risk methodology and information flows will also have to be reviewed, alongside how to strengthen board members’ awareness and skills. Before the pandemic, chairs and CEOs were already wrestling with this for their difficult-to-price risks, such as data, technology risks and cyber. Individual experts on boards created siloed responsibility for what should have been a shared risk. A focus on process and method often led to a focus on the management, rather than genuine oversight of, risks. External advice didn’t always help (as we have learned from the plethora of competing advice around COVID-19). No single intervention will meet the new standard for resilience. Nor will simple prescription. A broader and more articulated approach is required if governance is to maintain stakeholder confidence and corporate reputation.

Hackers Exploit the Pandemic

Criminals are opportunists, and the COVID-19 global onslaught has brought with it not just health threats but cybersecurity risks, too. Within weeks of the COVID-19 outbreak, hackers have already commandeered the virus to unleash cyberattacks, sending emails purporting to provide coronavirus guidance laced with cyberattack software. In one more alarming case, they appear to have attacked a hospital and forced it to cancel operations and take key systems offline. As the outbreak continues to intensify, the UK National Cyber Security Centre (NCSC) warned that the volume of these attacks will likely increase, pointing to the increased registration of coronavirus-related webpages. Criminals are opportunists, and the COVID-19 global onslaught has brought with it not just health threats but cybersecurity risks, too. As companies move to protect the health of their workforce, it’s also important to protect the systems they’re using to run their businesses. It’s especially important for hospitals to shore-up their cyber defenses. If they don’t, just as they are racing to respond to COVID-19, they could face situations like University Hospital Brno in the Czech Republic, which earlier this month was forced to divert patients and cancel planned operations while it worked to address an attack. The most likely cyber threats are email “phishing” campaigns that use the coronavirus as a lure to get the recipient to open an attachment that contains malware. According to the NCSC, such “phishing” attempts are happening on a global scale in multiple countries, which has led to both a theft of money and sensitive data. Similarly, known hacker groups have been launching websites purporting to sell masks or other safety-related measures for coronavirus, possibly to use them as another vector for cyberattacks. The NCSC has also cautioned that these attacks are “versatile and can be conducted through various media, adapted to different sectors and monetized via multiple means, including ransomware, credential theft, bitcoin or fraud.” The cybersecurity firm ProofPoint has seen a rise in these cyberattack emails with COVID-19 themes since January. Both ProofPoint and IBM’s X-Force cybersecurity unit identified a campaign that targeted users in Japan with an email masquerading as a coronavirus information email that carries with it a potent type of cybercrime software. In the US, the Secret Service recently warned of scams from online criminals posing as sellers of high-demand medical supplies to prevent coronavirus. They’ll require payment upfront and not send the products. Cyber criminals have also been posing as the World Health Organization and the US Centers for Disease Control and Prevention (CDC), sending fraudulent emails from the former and “creating domain names similar to the CDC’s web address to request passwords and even bitcoin donations to fund a vaccine” for the latter. In addition to the use of the coronavirus as a cyberattack vector, the growing need for working remotely to mitigate the spread of COVID-19 has increased companies’ exposure to cyber threats. The increase in remote work creates more opportunities for hackers to make inroads from less secure locations. Companies should also ensure they can provide adequate security when their whole workforce is remote. They should quickly work through the security implications of workers choosing to switch to insecure personal devices. With national-level pressures on home broadband, staff will also resort to mobile hotspots, which are often less secure. And enabling remote connectivity at scale, with the right security configurations, can be a challenge even with months of preparation time. A recent US Department of Homeland Security COVID-19 cybersecurity notice pointed to the importance of making sure that security measures are up to date for companies’ remote access systems. Additional measures to consider include enabling multifactor authentication—which can require two or more steps to verify a user’s identity before granting access to corporate networks. The NCSC is also working to identify malicious sites responsible for phishing and cyberattack software. A final looming cyberthreat related to Covid-19 is disinformation. The World Health Organization and other agencies have for months been combatting disinformation campaigns spreading false information about the origins of and treatments for COVID-19—reports that seed more confusion and increase risks to society. All of that means that computer virus risks are emerging as the biological virus spreads—and both are a threat to business. Cyber risk mitigation efforts should account for the different ways that a company can be affected, including impacts on the technical, operational, legal and reputational aspects of a business. Often, the reputational effects of a cyberattack are more significant than direct the business or technical impact. To mitigate all of the potential impacts of cyberattacks taking advantage of the Covid-19 outbreak, companies should: Review and update crisis and cybersecurity response plans, and ensure internal and external communications response plans are robust. Confirm that members of the crisis management team understand their roles and responsibilities. Make sure all communications channels have the latest security patches. Review and update access controls, particularly when remote access is used heavily, to make sure that only those who require access to sensitive systems to do their jobs have it. Take extra care when handling medical information. For companies managing employees who have contracted Covid-19, it’s important that personal health information is handled with strong security measures, including encryption. Educate employees about the cyber risks that may attempt to capitalize on fear of the Covid-19 virus—whether it be phishing email or disinformation. Covid-19 poses a number of short- and long-term challenges to business resilience, and the virus’s trajectory is quick and unpredictable. But it’s possible to anticipate and mitigate a number of the cyber threats that will try to ride the virus’s coattails. The companies that do will be more resilient and better positioned to withstand the direct health and operational effects of the virus.

Why posting to multiple channels drives virality of online videos

Back in the summer of 2012, South Korean pop star Psy released a music video on YouTube. Running at just under four minutes, “Gangnam Style” rapidly became a global sensation. Within just two months of its release, the video was attracting a daily average of nine million viewers. In late September, Guinness World Records confirmed it to be the “most liked” video on YouTube. By December it had become the first piece of content on the platform to garner more than one billion views. As of 2020, the Gangnam Style video has been seen by more than 3.7 billion people around the world. Pys’s official YouTube channel has around 14.1 million followers—a significant user base. But even assuming that each one of these followers had watched the video several times and shared it with others, it still doesn’t account for the sheer volume of views the video has racked up over time. So what’s going on? What is behind the super virality of Gangnam Style and other pieces of content that, like it, appear to defy the rules of probability on the social web? Rajiv Garg, associate professor of information systems & operations management at Emory’s Goizueta Business School, has put a new hypothesis to the test. And he’s found that there’s a clear link between virality and what he calls the “spillover effect” of posting content onto multiple platforms at specific times. “We know that when celebrities and popular figures post videos, there’s likely to be a strong response from their follower base, depending on the content. But over time, user consumption reaches a saturation point—the novelty simply wears off. And this happens around 10 days after a video is posted,” Garg said. “Yet some videos just keep on going, getting successive waves of views on the same platform in quantities that eclipse the follower base. We hypothesized that this is affected by launching on different sites and platforms, but we really wanted to understand the mechanisms behind this and figure out why this activity was occurring on the original platform as well as others—as in the Gangnam case.” Together with Vijay Mahajan (McCombs, UT Austin) and Haris Krijestorac (HEC Paris), Garg looked at the diffusion patterns for viral content on the social web. First analysis confirmed that content sharing by users was the chief primary driver of virality; indeed, views typically increased after a video would appear on a second or third platform. But this didn’t explain why those views were growing back on the original platform too. In fact, the finding ran contrary to the established view that platforms compete for content—that posting to one platform leeches user views from another. “The reasoning until now has been that social platforms cannibalize content. In other words, when you post Gangnam Style onto Vimeo, you’ll get fewer views on YouTube as a result,” Garg said. “Users will move to the other platform and watch it there instead.” But in fact, the opposite was happening. Intrigued, Garg and his coauthors deployed synthetic control—a comparative statistics methodology—to test the causal effects of sharing content to one platform versus posting it to multiple sites. This methodology involved posting 381 viral videos on 26 video-hosting sites. In addition, they ran a randomized field experiment with 30 videos that were randomly seeded onto new platforms at random times. The results across both methods were consistent. Users who were finding the videos once they had been posted to a second (or third, or fourth) platform were still sending viewers to the original platform to view the content. And viewers were coming in droves. “What seems to be happening is that content is going viral as it’s consumed on the original platform—YouTube, say—and then shared to other channels. Here, on the second channel—Vimeo, Daily Motion or others—these videos reach new audiences,” explained Garg. “But for whatever reason, once they’ve discovered the video, many of these new users prefer to go to the original channel and watch it there. And this is happening consistently and in highly significant numbers of users.” This spillover effect could be due to a number of things, says Garg. It could be that for certain audiences, content is simply more readily discoverable on certain platforms—but that these platforms are not the first choice in viewing preferences. It could also be that the content is visible to users but not viewable on the second platform. “Say Gangnam Style is seen on YouTube by a viewer and shared. It then appears on Vimeo, and a second user discovers it; but maybe this user doesn’t like Vimeo or perhaps Vimeo isn’t available in their region or country. What happens then?” noted Garg. “The simple answer is that these new users end up Googling Gangnam Style and find it on YouTube—the original platform. The novelty and virality of the first wave of users has died down, but this new wave of users comes in, creating a spillover effect that boosts the popularity of the video all over again.” Looking again at the results of their analyses, Garg and his colleagues were able to determine that the spillover effect is strongest immediately after a video is introduced onto a secondary platform, as well as at the 18- and 42-day marks. “We analyzed the effect of introducing a video onto a new platform on the increase in views it generates on the original platform over time,” said Garg. “It appears the spillover mechanism is strongest during the first week but experiences spikes later on. In the long-run, we were able to generate twice as many views back on the original platform as we would otherwise have expected. So the effect really is huge.” It is also limited, however. The researchers found diminishing impact in posting content to a succession of different platforms. By the time the video is shared to a fourth or fifth platform, Garg and his coauthors saw no returns. The findings are nonetheless hugely significant for content creators, he says. “We’ve seen that content shared on different platforms sends users back to the original, and that debunks the idea that online channels cannibalize each other’s content,” Garg noted. “And we’re able to say with precision that this effect is strongest during the first week with later spikes, suggesting these may be the best times to introduce content onto new platforms.” Content creators looking to ‘viralize’ their material would do well to take a strategic, omni-channel approach based on these insights, says Garg. Multi-platform sharing is an effective way of spreading word of mouth content and reaching new audience bases—and not just nationally, he stresses. “The effect is not limited to borders or languages. Savvy content creators can create their first ripple on a YouTube or Vimeo and, as the views start falling off, go on to propagate to a second or third channel, including foreign ones,” he said. “The spillover effect is just the same. Staging and staggering your content this way, you reach completely new audiences, many of whom will spill over onto your original platform.” If you are a journalist looking to cover this topic – then let our experts help with your story. Rajiv Garg from Emory’s Goizueta Business School is available to speak with media – simply click on his icon now to arrange an interview today.

Optimizing the delivery speed promise can boost sales

After the coronavirus pandemic forced most of the country into lockdown, online shopping soared. According to CCInsights.org, by the end of April 2020 there was a 146% year-over-year increase in U.S. and Canadian online retail orders. Amazon was so overwhelmed by the combination of increased demand, logistical nightmares, and warehouse worker safety issues that the company announced significant delays in its Amazon Prime shipping speeds. When the company announced it would prioritize the shipping of essential items, the online retailer’s third-party sellers were left to manage their own shipping — something Amazon usually did for them. Shoppers who placed orders for non-essential products at the end of March sometimes received estimated delivery dates of more than a month away. While consumers often received their orders sooner than the 30-day estimate, for Prime shoppers used to getting their items delivered for free the next day, the change in delivery speed was a shock. Amazon shoppers turned to alternative outlets that promised much quicker delivery speeds. Companies with strong e-commerce positions and supply chains, such as Walmart, took advantage of Amazon’s situation. “People are very sensitive to delivery and how fast they can get products,” said Ruomeng Cui, assistant professor in information systems & operations management. “Maybe, just maybe, Amazon would be able to deliver faster than one month, but they chose to promise customers one month — that was their choice.” Unfortunately for Amazon, by setting conservative delivery speed promises, they exacerbated an already bad situation. According to Cui’s paper “Sooner or Later? Promising Delivery Speed in Online Retail” (Ruomeng Cui, Tianshu Sun, Zhikun Lu and Joseph M. Golden), optimizing delivery speed promise can have a substantial effect on a company’s sales. How substantial? Without changing the actual delivery speed itself — only the delivery speed promise — Cui’s research showed that when the retailer promised customers one day faster shipping, sales increased, profits increased, and customers spent more on each order. “It’s a very critical decision for retailers to try to determine how to manage delivery and how to manage the information aspect of delivery,” added Cui. The study is attached and found two key findings: The value of communicating delivery times From a customer satisfaction standpoint, the conservative disclosure lowered customer satisfaction while the aggressive disclosure didn’t affect the company’s satisfaction score, although it did increase product returns when shipping speed was overly aggressive and products were delivered late. “These results indicate that in our research context, promising customers a faster delivery speed can boost sales and profitability but at the cost of a higher product return rate,” the researchers wrote. They go on to caution retailers that promising a conservative shipping speed can be costly. “It’s a careful balance that companies need to think about — how to manage customers’ expectations properly,” explained Cui. Crafting the delivery promise Given online retailers’ adoption of machine learning, Cui believes companies could tweak their algorithms to explore what products and which types of customers are more tolerant to over-promising as it relates to the delivery speed promise. “Companies can then use the analysis to customize and differentiate the types of products that adopt different types of information strategies,” Cui said. “Just change your algorithm, learn and incorporate some of the data-driven decisions and methods.” Going forward, Cui hopes to customize algorithms for companies in an effort to help them dynamically optimize how to promise the correct delivery speed to customers. While many companies, like Collage.com, don’t own their own delivery function and can’t change the actual delivery speed by changing infrastructure, these companies can “manage the information,” said Cui. “It’s easy, and I think it should be the retailer’s responsibility and job to optimize.” “I want to advocate for all retailers to think strategically in their information aspect,” said Cui. “Don’t let such an easily fixed lever just sit there at almost zero cost.” If you are a journalist looking to cover this study or speak with Professor Ciu about subjects like online shopping and operations management, simply click on her icon now to arrange an interview today.

The tug between protecting privacy and building brand loyalty

The coronavirus pandemic has put much of normal life on hold, but it hasn’t stopped hackers. According to Securityboulevard.com, in the first quarter of 2020, more than 8.4 billion records from healthcare institutions, technology, software, social media, and meal delivery companies were exposed — a 273 percent increase from Q1 2019. While data breaches are costly to companies — a recent Ponemon Institute data breach report found that data breaches cost organizations an average of $7 million in the U.S. — their frequency is enough to cause some consumers to wonder if their private information is safe with their favorite brands. The increase in data breaches is concerning, noted Jesse Bockstedt, associate professor of information systems & operations management, but several studies have found that the out-of-pocket expense to consumers due to identity theft is less than $1,000. “Which isn’t zero, but it’s not like a few years ago when [identity theft] ruined your life and destroyed your credit,” Bockstedt said. As for the companies, he added, “It’s not a brand killer anymore.” Yet despite consumers’ growing unease, Goizueta faculty say the relationship between privacy and brand loyalty is a bit more intricate. While a data breach can nick a firm’s reputation, it’s the data that is purposely collected beyond the name and vital statistics that worry consumers more. Our experts found the following key points were necessary when it comes to finding the safe ground between privacy and brand loyalty. In fact, we have an expert from Goizueta who can explain each one: Building digital trust “Companies are increasingly worried that people will buy less from their brand if they’re perceived to be fast and loose with customer data,” said Daniel McCarthy, assistant professor of marketing. For instance, after political data-analytics firm Cambridge Analytica secretly collected data on roughly 87 million Facebook users, back-lash followed. In an effort to regain users’ trust, Facebook founder and CEO Mark Zuckerberg laid out a “privacy-focused vision” for Facebook, but those efforts were widely criticized as not going far enough. Advertising boycotts followed. Trust: the key to customer loyalty Minus regulatory guardrails, the differentiating factor is trust, explained Jagdish Sheth, the Charles H. Kellstadt Chair in Marketing. “Trust is built over time by doing what you promise to do and by company behavior that is considered appropriate or right,” Sheth said. Loyalty programs such as those with airlines, hospitality companies and grocery stores are founded on a relationship between a consumer and a brand. “Loyalty programs mean relationships, and in all relationships, trust and commitment are key,” he added. Let’s make a deal “Brands that are able to deliver a personalized experience in a privacy-friendly manner will have a competitive advantage,” explained David Schweidel, professor of marketing, in a recent “Goizueta Effect” podcast. “Putting a premium on privacy means forgoing the benefits that come from allowing organizations to collect data they use to deliver a better experience. From a commercial standpoint, the onus is on the marketers to make the case that the benefits outweigh privacy concerns.” We’ve attached a full article with even more advice and helpful information from our experts – but if you are looking to learn more or cover this topic, we can help. All of our faculty are available to speak with media, simply click on either expert’s icon now – to book an interview today.

Want to save on home loans? Just talk to your peers!

For most of us, finance is complex. Yet making financial decisions is part of day-to-day life. Take mortgages. Around 60 percent of U.S. households have a home mortgage, but how many actually understand its real value? Calculating things like interest rate trade-offs or closing costs is not easy, and research finds that a majority of families make financial mistakes because they fail to understand benefits or savings that might be open to them in refinancing. There are ways to overcome this kind of “information friction”—the obstacles to understanding that make it hard for people to process complex financial ideas and concepts. One of these is education. Ensuring that people have direct access to clear information can help inform household decisions. That seems pretty basic. Another, perhaps less understood, mechanism is the “peer effect”—the way we learn from and are influenced by what our peers or colleagues say or do. A new paper published in the Review of Financial Studies by Gonzalo Maturana, associate professor of finance, takes a fresh look at how the peer effect can help households make better decisions about their mortgages. And he finds that work colleagues and associates can actually have a far greater positive impact on our financial outcomes than we might expect. Together with Jordan Nickerson from MIT’s Sloan School of Management, Maturana ran a large-scale study of a particular U.S. peer group: public school teachers employed by the state of Texas. Here’s what the study found: Where there was a lot of mortgage refinancing going on among teachers in a particular school, individuals were a stunning 20.7 percent more likely to refinance their own mortgage. In other words, they were far more disposed to investigate alternatives and take advantage of the better deals on offer. The peer effect was also a critical factor in their subsequent choice of mortgage lender. Maturana and Nickerson also found that the more savings a particular peer group was making in mortgage repayments, the more refinancing activity there was in that school or teacher network. It is clear. With financial decisions, the network effect can create a positive feedback loop, said Maturana. Household finance and mortgages are top of mind and play a part in most American families – and if you are a journalist looking to cover this topic – then let our experts help. Gonzalo Maturana is an Associate Professor of Finance at the Goizueta Business School. He is an expert in the areas of corporate, household and real estate finance. Gonzalo is available to speak to media regarding this topic – simply click on his icon now to arrange an interview today.

Innovation: Should it always be a team sport?

Conventional wisdom has it that innovation is very much a team sport. To create a breakthrough innovation that is vastly more successful than its predecessors, you need to prioritize teams over the individual. That's not always the case, according to Tian Heong Chan, assistant professor of information systems & operations management at Emory’s Goizueta Business School. It depends very much on the degree to which the invention can be broken down into discrete chunks of work. Chan and colleagues from INSEAD published a paper, “Revisiting the Role of Collaboration in Creating Breakthrough Inventions,” in the Manufacturing and Service Operations Management journal in 2020. In it, they look at more than one million U.S. patents for new products filed between 1985 and 2009. The majority of these patents were awarded for innovations in function—machines, processes or products that delivered some kind of utility. The others corresponded to design; in other words, the distinct visual form or aspect of a product, like Coca-Cola’s iconic curvy bottle or the Apple iPhone. Sifting these patents for breakthroughs (those ranked by citations as being in the top 5 percent of their product class), Chan and his colleagues were able to look at whether standout innovations were the product of teamwork or whether any of them had actually been developed by a lone innovator. And what they found sheds fascinating and useful new light on the dynamics undergirding the innovation process. As a rule, breakthrough functional products—those awarded patents for some kind of utility—do tend to be created by teams. But when it comes to inventions that are centered on breakthrough designs, it’s a whole different ball game. Here, the solo inventor is every bit as likely to create a breakthrough as an entire team. The study looks at a diverse cross-section of industries from computers to cars, Chan and his co-authors found that lone inventors do relatively better on these types of integral inventions. It’s a fascinating work of research – and if you are looking to know more, then let us help. Tian Heong Chan is an Assistant Professor of Information Systems & Operations Management at Emory’s Goizueta Business School. He is available to speak to his research and this important topic – simply click on his icon now to arrange an interview today.