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E-Commerce 2016 Business, Technology, Society, 12th Edition Kenneth C. Laudon Carol Traver Instructor’s Manual: Chapter 1The Revolution Is Just Beginning
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E-Commerce 2016 Business, Technology, Society, 12th Edition Kenneth C. Laudon Carol Traver Instructor’s Manual: Chapter 1The Revolution Is Just Beginning Teaching Objectives· Define e-commerce and describe how it differs from e-business.
- Identify and describe the unique features of e-commerce technology and discuss their business significance.
- Describe the major types of e-commerce.
- Understand the evolution of e-commerce from its early years to today.
- Describe the major themes underlying the study of e-commerce.
- Identify the major academic disciplines contributing to e-commerce.
Key Termse-commerce, p. 10e-business, p. 11information asymmetry, p. 12marketplace, p. 13ubiquity, p. 13marketspace, p. 13reach, p. 14universal standards, p. 14richness, p. 14interactivity, p. 15information density, p. 15personalization, p. 16customization, p. 16business-to-consumer (B2C) e-commerce, p. 17business-to-business (B2B) e-commerce, p. 18consumer-to-consumer (C2C) e-commerce, p. 18mobile e-commerce (m-commerce), p. 19social e-commerce, p. 19local e-commerce, p. 20Internet, p. 21World Wide Web (the Web), p. 22mobile platform, p. 22disintermediation, p. 29friction-free commerce, p. 29first mover, p. 29network effect, p. 29Web 2.0, p. 31
Brief Chapter OutlineOpening Case: The Uber-ization of Everything1.1 E-commerce: The Revolution Is Just Beginning The First 30 SecondsWhat Is E-commerce? The Difference between E-commerce and E-business Why Study E-commerce? Eight Unique Features of E-commerce Technology Types of E-commerce Growth of the Internet, Web, and Mobile Platform Insight on Technology: Will Apps Make the Web Irrelevant?Origins and Growth of E-commerce 1.2 E-commerce: A Brief History E-commerce 1995–2000: Invention E-commerce 2001–2006: Consolidation E-commerce 2007–Present: Reinvention Insight on Business: Start-up Boot Camp Assessing E-commerce: Successes, Surprises, and Failures 1.3 Understanding E-commerce: Organizing Themes Technology: Infrastructure Business: Basic Concepts Society: Taming the Juggernaut Insight on Society: Facebook and the Age of Privacy Academic Disciplines Concerned with E-commerce 1.4 Case Study: Pinterest: A Picture Is Worth a Thousand Words
1.5 Review Key Concepts Questions Projects References
FiguresFigure 1.1 The Difference between E-commerce and E-business, p. 11Figure 1.2 Eight Unique Features of E-commerce Technology, p. 13Figure 1.3 The Growth of B2C E-commerce in the United States, p. 19Figure 1.4 The Growth of B2B E-commerce in the United States, p. 20Figure 1.5 The Relative Size of Different Types of E-commerce, p. 21Figure 1.6 Mobile Internet Access in the United States, p. 23Figure 1.7 Room to Grow, p. 27Figure 1.8 Periods in the Development of E-commerce, p. 28Figure 1.9 The Internet and the Evolution of Corporate Computing, p. 41
TablesTable 1.1 Major Trends in E-commerce 2015–2016, p. 8Table 1.2 Eight Unique Features of E-commerce Technology, p. 17Table 1.3 Major Types of E-commerce, p. 18Table 1.4 Evolution of E-commerce, p. 34
Teaching SuggestionsOne of the biggest challenges that instructors face in teaching a course on e-commerce is helping students make sense out of what is really a very complex phenomenon that involves considerations of markets, firms, consumer behavior, and technology, among others. E-commerce is continually evolving and has become a thriving marketplace not only for products but also for services and content, such as social networks, user-generated content (video, photos, and blogs), and of course, entertainment such as movies, TV, video, music, and games. E-commerce is as much a sociological phenomenon as it is a business and technological phenomenon. In addition to the social aspect of e-commerce, two major themes in the text are the full emergence of the mobile platform, and the increasing emphasis on local e-commerce. We weave social, mobile, and local topics throughout the text into all chapters, because they are increasingly impacting all aspects of e-commerce. The opening case, The Uber-ization of Everything, captures some of these changes in the foundations of e-commerce. Uber is at the forefront of a new on-demand service business model that is increasingly being used in many different arenas, from transportation, to lodging, to personal services. The case illustrates many of the trends that will be impacting e-commerce over the new few years, including the use of smartphones and tablets for purchasing goods and services, the growth of contract employment, and the disruption of traditional business models. You can also use the case as an introduction to some of the social, legal, and ethical issues facing e-commerce companies, such as the question of whether people who work for a technology platform like Uber are really employees; whether local governments should regulate on-demand service providers in order to ensure public safety; and the implications of the on-demand business model spreading throughout the economy and labor force. As you discuss the case with your students, you could also pose the following questions to them:
- Have you used Uber or any other on-demand service companies?
- What is the appeal of these companies for users and providers?
- Are there any negative consequences to the use of on-demand services like Uber and Airbnb?
- Would they like to be a contract worker for the some part, or all, of their careers?
- What are the advantages and disadvantages of apps, compared with Web sites, for mobile users?
- What are the benefits of apps for content owners and creators?
- Will apps eventually make the Web irrelevant? Why or why not?
- Why do you think investors today are still interested in investing in start-ups?
- What are the benefits of investing in a company that is a graduate of a Y Combinator boot camp?
- Is an incubator the best solution for start-ups to find funding? Why or why not?
- Do you use Pinterest and if so, how often? What are your main interests? What has the experience been like? Have you used any other curation sites? If so, how do they compare to Pinterest?
- Have you purchased anything based on a pin or board on Pinterest or any other curation site?
- Why do you think Pinterest links drive more purchasing than Facebook links?
Case Study Questions1. Why does Pinterest view Google as its primary competitor? Pinterest now describes itself as a visual bookmarking tool for discovering and saving creative ideas (and potential purchases) with less emphasis on sharing with friends. Search has become the core part of its mission, and as such, Google, which is dominant in search, is now a primary competitor. 2. Why does Pinterest focus on the smartphone platform when it develops new features and products? Pinterest focuses on the smartphone platform when it develops new features and products because, in 2015, the vast majority (80%) of Pinterest’s traffic originates from mobile devices. 3. Why is copyright infringement a potential issue for Pinterest? Copyright infringement is a potential issue for Pinterest because the basis of Pinterest’s business model involves users potentially violating others’ copyrights by posting images without permission and/or attribution. Although Pinterest’s Terms of Service puts the onus on its users to avoid doing so, the site knowingly facilitates such actions by, for example, providing a Pin It tool embedded in the user’s browser toolbar. Much content on the site reportedly violates its Terms of Service. Pinterest has provided an opt-out code to enable other sites to bar its content from being shared on Pinterest, but some question why they should have to take action when Pinterest is creating the problem. Another thing Pinterest has done to try to ameliorate the problem is to automatically add citations (attribution) to content coming from certain specified sources, such as Flickr, YouTube, Vimeo, Etsy, Kickstarter, and SlideShare, among others. In 2013, it entered into an agreement with Getty Images in which it agreed to provide attribution for Getty content and pay Getty a fee. Pinterest says it complies with the Digital Millennium Copyright Act, which requires sites to remove images that violate copyright, but this too requires the copyright holder to be proactive and take action to demand the images be removed. Christopher Boffoli, a well-known photographer, filed a federal lawsuit against Pinterest in late 2014 alleging that Pinterest users have used his photographs without his permission, and Pinterest has failed to take adequate measures to remove them. How this issue is resolved may have a significant impact on Pinterest’s ultimate success. End of Chapter Questions1. What is e-commerce? How does it differ from e-business? Where does it intersect with e-business? E-commerce, in the popular sense, can be defined as: The use of the Internet and the Web to conduct business transactions. A more technical definition would be:E-commerce involves digitally enabled commercial transactions between and among organizations and individuals. E-commerce differs from e-business in that no commercial transaction (an exchange of value across organizational or individual boundaries) takes place in e-business. E-business is the digital enablement of transactions and processes withina firm and therefore does not include any exchange in value. E-commerce and e-business intersect at the business firm boundary at the point where internal business systems link up with suppliers. For instance, e-business turns into e-commerce when an exchange of value occurs across firm boundaries. 2. What is information asymmetry? Information asymmetry refers to any disparity in relevant market information among the parties involved in a transaction. It generally applies to information about price, cost, and hidden fees. 3. What are some of the unique features of e-commerce technology? The unique features of e-commerce technology include:· Ubiquity: It is available just about everywhere and at all times.· Global reach: The potential market size is roughly equal to the size of the online population of the world.· Universal standards: The technical standards of the Internet and therefore of conducting e-commerce are shared by all of the nations in the world.· Richness: Information that is complex and content-rich can be delivered without sacrificing reach.· Interactivity: E-commerce technologies allow two-way communication between the merchant and the consumer.· Information density: The total amount and quality of information available to all market participants is vastly increased and is cheaper to deliver.· Personalization/Customization: E-commerce technologies enable merchants to target their marketing messages to a person’s name, interests, and past purchases. They allow a merchant to change the product or service to suit the purchasing behavior and preferences of a consumer.· Social technology: User content generation and social network technologies 4. What is a marketspace? A marketspace is a marketplace that is extended beyond traditional boundaries because it is removed from the restrictions of geography and time. The ubiquity of e-commerce technologies liberates the market from these limitations. 5. What are three benefits of universal standards? · Reduced search costs for consumers· Becomes simpler, faster, with more accurate price discovery· Lower market entry costs for merchants 6. Compare online and traditional transactions in terms of richness. Traditional transactions can provide more richness in terms of face-to-face service including visual and aural cues. However, traditional transactions are limited in terms of how many people can be reached at a single time. Online transactions, which can be global in reach, can provide content that is both complex and rich, overcoming the traditional trade-off between reach and richness. 7. Name three of the business consequences that can result from growth in information density. Growth in information density can result in:· Greater price transparency: Consumers can easily find out the variety of prices in a market.· Greater cost transparency: Consumers can discover the actual costs merchants pay for products.· Greater opportunities for marketers to practice price discrimination: Because marketers are able to gather much more information about their customers, they can segment the market into groups based on willingness to pay different prices for the same or nearly the same goods. 8. What is Web 2.0? Give examples of Web 2.0 sites and explain why you included them in your list. Web 2.0 is a set of applications and technologies that enable user-generated content, such as online social networks, blogs, video and photo sharing sites, and wikis). Students may list Facebook, Pinterest, Twitter, YouTube, Instagram, Wikipedia, Tumblr, and WordPress, among others, as example sites. 9. Give examples of B2C, B2B, C2C, and social, mobile, and local e-commerce besides those listed in the chapter materials. The answers to this question will vary. Possible examples include:· B2C: E-tailers:BlueflyUncommongoods· B2C: Service Providers:ExpediaTravelocity· B2C: Portals:YahooMSN· B2C: Content Providers:WSJonlineConsumerreports· B2B:GraingerAribaAmazon Business· C2C:CraigslistEtsy· Social e-commerce:Buy buttons on Pinterest, Facebook and Twitter· Mobile e-commerceMobile retail Web sites and appsMobile banking Web sites and appsMobile travel services Web sites and appsMobile advertisingMobile contentMobile payment services· Local e-commerceLivingSocialAmazon LocalOn-demand service companies10. How are e-commerce technologies similar to or different from other technologies that have changed commerce in the past? E-commerce technologies are similar to other technologies that have changed commerce in the past in that each new technological innovation spawns explosive growth characterized by thousands of start-up companies. Many of these fail in the period of retrenchment and consolidation that follows. As with other technological revolutions, eventually it is the large, already established firms who have the resources to exploit the new technology. The growth of the Internet, when compared to other technologies such as radio and television, has been much more rapid: The Internet and Web achieved a 53% share of U.S households in only 10 years. In comparison, it took 38 years for radio and 17 years for television to achieve a 30% share. 11. Describe the three different stages in the evolution of e-commerce. The three stages in the evolution of e-commerce are innovation, consolidation, and reinvention. Invention took place from 1995–2000 and was characterized by excitement and idealistic visions of markets in which quality information was equally available to both buyers and merchants. E-commerce did not fulfill these visions during its early years, however. After 2000, e-commerce entered its second stage of development—consolidation. In this stage, more traditional firms began to use the Web to enhance their existing businesses. Less emphasis was placed on creating new brands. In 2006, though, e-commerce entered its current stage—reinvention—as social networking and Web 2.0 applications reinvigorated e-commerce and encouraged the development of new business models. 12. Define disintermediation and explain the benefits to Internet users of such a phenomenon. How does disintermediation impact friction-free commerce? Disintermediation means the removal of the market middlemen—the distributors, wholesalers, and other intermediaries—between producers and consumers. The predicted benefits to Internet users include the decline of prices for products and services as manufacturers and content originators develop a direct relationship with their customers, and the elimination of payments to these middlemen. Disintermediation of markets would create intense competition. This, along with lowered transaction costs, would eliminate product brands, eventually resulting in the elimination of unfair competitive advantages and extraordinary returns on capital—the vision of friction-free commerce. 13. What are some of the major advantages and disadvantages of being a first mover? The major advantages of being a first mover are the ability to build a brand name early on and establish a large customer base before followers enter the market, and the ability to build switching costs into the technology or services offered so that customers will find it discomfiting to change to a late entering competitor. The major disadvantage is that historically, many first movers have not succeeded and are instead replaced by the fast follower, larger firms with the financial, marketing, legal, and production assets necessary to develop mature markets. Generally, only a handful of first mover firms become successful long-term businesses as the start-up costs and time it takes to build a profitable business are often underestimated. 14. What is a network effect, and why is it valuable? A network effect occurs where all participants receive value from the fact that everyone else uses the same tool or product (for example, a common operating system, telephone system, or software application such as a proprietary instant messaging standard or an operating system such as Windows), all of which increase in value as more people adopt them. The network effect is quantified by Metcalfe’s Law, which argues that the value of a network grows by the square of the number of participants.
Covid-19 update Friday 24th April
Virus news in depth
AP Story from Tuesday 21st April: UN food agency chief: World on brink of `a hunger pandemic’ - The head of the U.N. food agency warned Tuesday that, as the world is dealing with the coronavirus pandemic, it is also “on the brink of a hunger pandemic” that could lead to “multiple famines of biblical proportions” within a few months if immediate action isn’t taken. World Food Program Executive Director David Beasley told the U.N. Security Council that even before COVID-19 became an issue, he was telling world leaders that “2020 would be facing the worst humanitarian crisis since World War II.” That’s because of wars in Syria, Yemen and elsewhere, locust swarms in Africa, frequent natural disasters and economic crises including in Lebanon, Congo, Sudan and Ethiopia, he said. Beasley said today 821 million people go to bed hungry every night all over the world, a further 135 million people are facing “crisis levels of hunger or worse,” and a new World Food Program analysis shows that as a result of COVID-19 an additional 130 million people “could be pushed to the brink of starvation by the end of 2020.” He said in the video briefing that WFP is providing food to nearly 100 million people on any given day, including “about 30 million people who literally depend on us to stay alive.”
(Cont’d) Beasley, who is recovering from COVID-19, said if those 30 million people can’t be reached, “our analysis shows that 300,000 people could starve to death every single day over a three-month period” — and that doesn’t include increased starvation due to the coronavirus. “In a worst-case scenario, we could be looking at famine in about three dozen countries, and in fact, in 10 of these countries we already have more than one million people per country who are on the verge of starvation,” he said. According to WFP, the 10 countries with the worst food crises in 2019 were Yemen, Congo, Afghanistan, Venezuela, Ethiopia, South Sudan, Syria, Sudan, Nigeria and Haiti. He pointed to a sharp drop in overseas remittances that will hurt countries such as Haiti, Nepal and Somalia; a loss of tourism revenue which, for example, will damage Ethiopia where it accounts for 47 percent of total exports; and the collapse of oil prices which will have a significant impact in lower-income countries like South Sudan where oil accounts for almost 99 percent of total exports.
The Gulf Times takes a different slant on the story: ‘Instead of coronavirus, the hunger will kill us’; COVID-19 brings fears of a global food crisis - In Kibera, the largest slum in Kenya’s capital Nairobi, people desperate to eat set off a stampede during a recent giveaway of flour and cooking oil, leaving scores injured and two people dead. The coronavirus has sometimes been called an equaliser because it has sickened both rich and poor, but when it comes to food, the commonality ends. It is poor people, including large segments of poorer nations, who are now going hungry and facing the prospect of starving. “The coronavirus has been anything but a great equaliser,” said Asha Jaffar, a volunteer who brought food to families in the Nairobi slum of Kibera after the fatal stampede. “It’s been the great revealer, pulling the curtain back on the class divide and exposing how deeply unequal this country is.” Already, 135 million people had been facing acute food shortages, but now with the pandemic, 130 million more could go hungry in 2020, said Arif Husain, chief economist at the World Food Program, a UN agency. Altogether, an estimated 265 million people could be pushed to the brink of starvation by year’s end. “We’ve never seen anything like this before,” Husain said. “It wasn’t a pretty picture to begin with, but this makes it truly unprecedented and uncharted territory.”
(Cont’d) There is no shortage of food globally, or mass starvation from the pandemic yet continues the Gulf Times article. But logistical problems in planting, harvesting and transporting food will leave poor countries exposed in the coming months, especially those reliant on imports, said Johan Swinnen, director general of the International Food Policy Research Institute in Washington. While the system of food distribution and retailing in rich nations is organised and automated, he said, systems in developing countries are “labour intensive,” making “these supply chains much more vulnerable to COVID-19 and social distancing regulations.” On a recent evening, hundreds of migrant workers, who have been stuck in New Delhi after a lockdown was imposed in March with little warning, sat under the shade of a bridge waiting for food to arrive. The Delhi government has set up soup kitchens, yet workers like Nihal Singh go hungry as the throngs at these centres have increased in recent days. “Instead of coronavirus, the hunger will kill us,” said Singh, who was hoping to eat his first meal in a day.
Coronavirus-driven CO2 shortage threatens US food, water and beer supply, officials say - The Guardian reports that there is an emerging shortage of carbon dioxide gas (CO2) according to a Washington state emergency planning document. The document, a Covid-19 situation report produced by the State Emergency Operations Center (SEOC), contains a warning from the state’s office of drinking water (ODW) about difficulties in obtaining CO2, which is essential for the process of water treatment. The document says that the ODW is “still responding to [that day’s] notification of a national shortage of CO2”. It continues: “Several [water plants] had received initial notification from their vendors that their supply would be restricted to 33% of normal.” It further warns: “So far utilities have been able to make the case that they are considered essential to critical infrastructure and have been returned to full supply. However, we want to ask if CISA [the US Cybersecurity and Infrastructure Security Agency] can assess this through their contacts, if this is sustainable given the national shortage.”
(Cont’d) Asked to clarify the nature of this problem, ODW director Mike Means said in an email that his agency had first learned of potential problems when Seattle public utilities were “contacted by their vendor Airgas who supplied a copy of a Force Majeure notice”, warning them that their CO2 order would be reduced due to pandemic-related shortages. Force majeure is a contractual defense that allows parties to escape liability for contracts in the case of events – such as a pandemic – that could not be reasonably foreseen. In this case, Means wrote, “Airgas informed in their notice that they would only be able to do 80% of their normal service but subsequent discussions said to expect more like 33%”. At this point, he added, “we reached out to understand if this was a WA specific problem or national. We quickly understood it to be a national issue.”
(Cont’d) ODW had then contacted federal agencies such as CISA, the Federal Emergency Management Agency (Fema) and industry bodies such as the Association of State Drinking Water Authorities (ASDWA). The main reason for national shortages, according to the CEO of the Compressed Gas Association (CGA), Rich Gottwald, is a ramping down of ethanol production. “Back in the summertime, the [Trump] administration exempted some gasoline manufacturers from using ethanol. Then we had Russia and Saudi Arabia flooding the market with cheap gasoline. All of that led to an oversupply of ethanol,” Gottwald said. “As ethanol manufacturers were ramping down because there wasn’t a market for their product, along comes Covid-19, which meant people weren’t driving anywhere”, he added. This led to plant closures, including among the 50 specialized plants that collect CO2 for the food and beverage market. Gottwald’s association, along with a number of associations representing food and beverage industries, which together use 77% of food-grade CO2, issued a joint warning to the federal government about the shortage. In an open letter to the vice-president, Mike Pence, the coalition warns: “Preliminary data show that production of CO2 has decreased by approximately 20%, and experts predict that CO2 production may be reduced by 50% by mid-April.” It continues: “A shortage in CO2 would impact the US availability of fresh food, preserved food and beverages, including beer production.”
The 'land army' needed to keep the UK's food supply chain going as thousands of tonnes of food risks going to waste - ITV has done a piece on the UK farming supply chain. Farmers are desperate for help. Without their usual influx of migrant workers from the EU, thousands of tonnes of food risk going to waste in fields up and down the country, just as the summer crops come into season. Every year our farming industry needs 90,000 seasonal workers. Like Robyn, many have put themselves forward - but in no way near the numbers needed. Others are finding the application process hard to navigate. Mark Thorogood, whose family have run the Essex farm for three generations, says it’s a perilous time for the food supply chain. "If we can't get the labour – it doesn’t get picked. That’s the crux of it", he said. Meanwhile, the charity The Food Foundation claims more than one and a half million Britons are going without food for at least a day because of the pandemic and three million have experienced hunger since the lockdown. On top of all that - the reality that nearly 50% of our food comes from abroad. With the numbers of ships crossing the Channel reduced and port workers hit by the virus, this is now under threat too. So could this crisis see a permanent change in how we feed our nation? The country's leading voice on food security, Professor Tim Lang gave us a grave warning: "The entire world food system is being disrupted. More disruptions are coming. Plantings not happening, food being wasted. "Britain only produces about 50% of its food - the country that can only half feed itself has got to wake up". (Personal note: this is why I’m putting effort into growing veg)
Virus news in brief
Sources: The Guardian, CNN or (to get an alternative spin) Radio New Zealand
- New Zealand: People are being urged not to relax alert level 4 restrictions over Anzac weekend. The country will move to level 3 at 11.59pm on Monday but police say they will continue to enforce the current restrictions until then. They say officers will be visible on the roads, with checkpoints operating at holiday hot spots. (Personal note: It’s the local equivalent of memorial weekend there with NZ and parts of Australia enjoying Monday as a public holiday). Level 3 restrictions mean organised sports are still not allowed outside the home bubble, including playing frisbee or kicking a rugby ball around. Playgrounds and public sports facilities are still off limits, and physical distancing is still required when exercising outside. Sports such as golf, tennis, and bowls, where two metres of distancing is possible can be played, and mountain biking on known trails is permitted for experienced bikers.
- Three southern Sydney beaches closed for a second time, only five days after being reopened, according to a statement from the Randwick City Council. The beaches of Clovelly, Coogee and Maroubra were shut at 1pm Friday after “people failed to use beaches for exercise only.” The three beaches will reopen Saturday and Sunday between 6am to 9am for exercise only, according to the council. The situation will be reassessed on Monday.
- Results of a new survey from C+R Research shows that 60 percent of American shoppers are “now fearful” to shop at grocery stores, with 73 percent saying they are shopping less at physical stores says The Spoon. Not surprisingly, C+R’s survey also found that grocery delivery has shot up 3.5x during the pandemic. Whereas consumers used to take an average of 2.3 weekly trips to the grocery store before the COVID-19 outbreak, they now average 1 trip a week.
- US Secretary of State Mike Pompeo has criticized China previously for its handling of coronavirus, but tonight he was clearer than ever, saying, "China caused an enormous amount of pain, loss of life, and now a huge challenge for the global economy and the American economy as well by not sharing the information they had." Pompeo, appearing on Sean Hannity’s show on Fox, added, "I am very confident that the Chinese Communist Party will pay a price for what they did here, certainly from the United States."
- Inevitably, left leaning media sources such as The Guardian have attacked President Trump for his suggestion yesterday of injecting disinfectant to cure the virus. At Thursday’s White House coronavirus task force briefing, the US president discussed new government research on how the virus reacts to different temperatures, climates and surfaces. “And then I see the disinfectant where it knocks it out in a minute,” Trump said. “One minute! And is there a way we can do something, by an injection inside or almost a cleaning? Because you see it gets in the lungs and it does a tremendous number on the lungs, so it’d be interesting to check that. So, that you’re going to have to use medical doctors with, but it sounds interesting to me.” Dr Deborah Birx, the task force response coordinator, remained silent. But social media erupted in hilarity and outrage at the president, who has a record of defying science and also floated the idea of treating patients’ bodies with ultraviolet (UV) light. (Personal note: already I’ve seen several memes on the topic).
- Germany’s coronavirus reproduction rate has increased to 0.9 according to the country's centre for disease and control, the Robert Koch Institute, meaning every 10 people with the virus infect an average of nine others. That’s up from a reproduction rate of 0.7 a week ago, according to the Institute’s Vice President Lars Schaade. German Chancellor Angela Merkel has previously warned that if the number -- also known as the R0 value -- rises above 1, the country’s health system would eventually be overwhelmed. Yesterday she expressed concern that some German states were moving to ease coronavirus restrictions too soon, saying it could undermine the results that have been achieved.
- The British prime minister is recovering at his countryside retreat, but there's no decision yet on when he will return to work, Health Secretary Matt Hancock told Sky News.
- It's the first day of the holy month of Ramadan for Muslims; in Indonesia, millions can't travel home as is custom due to travel bans, and in Malaysia, the national lockdown has been extended through early May. Meanwhile, Muslims in India are facing discrimination, attacks, and being blamed for spreading the virus. An infection cluster was identified at a Muslim group's event last month, heightening public fear and Islamophobia.
- Police in the United Arab Emirates are deploying smart helmets that can scan the temperatures of hundreds of people every minute in their effort to combat the new coronavirus. The helmets, which need less time and less contact than traditional thermometers, can measure temperatures from five metres (16ft) away and scan up to 200 people a minute, triggering an alert if a fever is detected. Chinese company KC Wearable says it has sold more than 1,000 of the temperature-scanning helmets and has received orders from the Middle East, Europe and Asia.
Supply chain news in depth
Hidden threat: Japan only has a 2-week stockpile of LNG (Liquid Natural Gas) - If supplies stop, it will cause major power supply problems in the country says Nikkei’s Asian review which has an article highlighting the continuing energy supply chain vulnerability in Japan ever since the Fukushima nuclear disaster. It takes about one month to ship LNG from the Middle East to Japan explains the article but if the coronavirus outbreak prevents ships from docking in Japan it could have a big impact on the country's power supply. The physical properties of LNG mean it is poorly suited for long-term storage hence the country only holding a two-week stockpile. Despite this, the country depends on the fuel for 40% of its electric power generation needs, and all of the LNG it uses is imported from the Middle East and Southeast Asia. Tokyo Bay, which stretches across the prefectures of Chiba, Tokyo and Kanagawa, is Japan's most important LNG power generation hub. JERA operates many of the power plants there, all of which run on LNG. Accounting for about 30% of Japan's total LNG power generation, these plants produce 26 million kilowatts of electricity. If, for instance, the coronavirus was to force these plants to stop, the Greater Tokyo area would immediately lose its power supply (Personal note: that’s a population of approx 38.5m people).
(Cont’d) Today, LNG is a pillar of Japan's electricity. Before the March 11, 2011, earthquake and tsunami in Japan, LNG made up 28% of the country's power generation. That increased to 40% in fiscal 2017 as the nation's nuclear power plants went off grid, one after the other, following the Fukushima nuclear crisis. While some of Japan's nuclear plants have come back online, based on the strictest standards in the world, only three of the 10 electric power companies have been able to do so. Moreover, the coronavirus is inching closer and closer to the nuclear plants. Recently, a contractor working at the Genkai Nuclear Power Plant in the southern prefecture of Saga tested positive for the virus and construction at the site was stopped temporarily. Japan has traditionally tried to maintain a diverse mixture of power sources -- including nuclear, LNG, fossil fuels and renewable energy -- due to its reliance on imports as an island nation. "It is highly unbalanced to depend close to half of our energy on LNG alone," an official at the Ministry of Economy, Trade and Industry concedes. With shipments arriving constantly, a few missed shipments will not immediately signal a crisis. But an extended cutoff will spell trouble for the country.
(Cont’d) Japan was already facing a power shortage this year, "so the timing is very bad," said a power industry source. The Sendai nuclear power plant in Kagoshima Prefecture was shut down last month because it failed to meet antiterrorism standards. The No. 3 reactor at the Ikata nuclear power plant in Ehime Prefecture is offline following a court injunction. The number of nuclear reactors in operation this year is expected to temporarily fall by half from nine, so Japan cannot rely heavily on nuclear power. Japan's energy self-sufficiency stands at about 10%, well below the 40% for food. The movement to shift away from carbon has led to a backlash against domestic coal-fired power plants, so dependence on LNG could rise further. One reason that Tokyo Electric is rushing to restart its Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture is because "heavy concentration in LNG power in Tokyo Bay is a major risk to the stable supply of power," according to an official at the utility. The coronavirus pandemic is testing whether Japan's government and utilities can diversify energy sources to prepare against the risks that threaten supplies.
USA meat packing plant Covid-19 problems worse than originally thought - A rash of coronavirus outbreaks at dozens of meatpacking plants across the nation is far more extensive than previously thought, according to an exclusive review of cases by USA TODAY and the Midwest Center for Investigative Reporting. More than 150 of America’s largest meat processing plants operate in counties where the rate of coronavirus infection is already among the nation’s highest, based on the media outlets’ analysis of slaughterhouse locations and county-level COVID-19 infection rates. These facilities represent more than 1 in 3 of the nation’s biggest beef, pork and poultry processing plants. Rates of infection around these plants are higher than those of 75% of other U.S. counties, the analysis found.
(Cont’d) While experts say the industry has thus far maintained sufficient production despite infections in at least 2,200 workers at 48 plants, there are fears that the number of cases could continue to rise and that meatpacking plants will become the next disaster zones. "Initially our concern was long-term care facilities," said Gary Anthone, Nebraska's chief medical officer, in a Facebook Live video Sunday. “If there's one thing that might keep me up at night, it's the meat processing plants and the manufacturing plants." Factory workers, unions, and even managers say the federal government – including the U.S. Centers for Disease Control and Prevention and the Occupational Safety and Health Administration – has done little more than issue non-enforceable guidance. On its website, for example, the CDC has released safety guidelines for critical workers and businesses, which primarily promote common-sense measures of sanitization and personal distancing. USA Today says that state health departments have also taken a backseat role in all but a few places. There’s more in the article here.
Supply chain news in brief
- Supply chain dive gives a glimpse into the soaring demand for PPE during the pandemic. Numbers from group purchasing organization Premier and data software company ESO show the supply chain gaps in getting needed personal protective equipment (PPE) to those on the front lines. Data on increasing orders of PPE in the hospital setting and the arc of COVID-19 calls compared to a typical flu season show the pandemic in a new light. Healthcare procurement departments and group buying organizations track purchases as part of business. When a spike in usage occurs, it helps them understand their needs and project what will happen. "Dealing with COVID, we’re using five to seven times more PPE than with the traditional patient," Michael Alkire, president of Premier (a group purchasing organisation), told Supply Chain Dive. Typically, Premier purchases 22 million to 24 million N95 respirators per year for its members, including about 4,000 hospitals and 175,000 nonacute healthcare providers and organizations. In January and February, before the virus was spreading rapidly in the U.S., Premier’s members used 56 million respirators.In late March, Premier's systems were ordering 110 million to 150 million respirators, Alkire stated in an Alliance for Health Policy webinar. According to a March Premier survey of its hospitals, 23% of respondents had less than a 10-day supply in inventory. The number of SKUs (SKU = Single Keeping Unit, think of it as a unique product code) on allocation, meaning ordering is restricted due to a shortage, has also skyrocketed. On March 23, 2,600 unique SKUs were on national allocation, Alkire said. By April 1, that number had risen to 9,200. PPE categories can have multiple SKUs. The N95 respirator could have 50 SKUs, including various sizes and colors.
- The Singapore Times reports that small businesses in Thailand’s food manufacturing and wholesale trade industries have been encouraged to buy and sell across regional borders, with the help of a new online channel. Thaitrade.com, an e-commerce portal run by the country’s Department of International Trade Promotion, teamed up with a Singapore-based firm to raise the profile of selected Thai brands. The partnership with business-to-business wholesale food platform OctoRocket, which is partly owned by Business Times publisher Singapore Press Holdings (SPH), aims to help Thai food manufacturers export their wares. Food suppliers in Thailand can also tap the new channel to connect with regional counterparts and source products from the rest of South-east Asia for Thai consumers.
- A billion kilos of French fries but nobody wants them anymore; NRC.nl reports (link, in dutch) that the demand for French fries has collapsed now that the catering industry is closed due to the coronavirus meaning growers across the Netherlands are left with full sheds. The Netherlands is one of the largest chip potato producers in Europe the article explains, clarifying that the potatoes mainly end up in restaurants, cafes, canteens and fast-food chains, but catering has been largely closed worldwide since the outbreak of the corona virus. 1.5 million tons of Dutch fries potatoes remain from the 2019 harvest. Two-thirds of this is unsaleable, the potato sector estimates. It works out at around sixty kilos per inhabitant of the Netherlands. André Hoogendijk, director of branch organization BO Akkerbouw, says that the Dutch potato sector does not quickly ask for help and until recently the sector had been buoyant but this week, the potato sector held a crisis meeting with Minister Carola Schouten of Agriculture (ChristenUnie). According to Hoogendijk, the minister accepts the severity of the problem and economic need but no concrete commitments have yet been made. "We hope for financial compensation" he says.
- The major US grocery chain Publix has committed to buying surplus milk and food that would normally go to schools, catering companies and restaurants and will donate it to America’s food banks according to Business Insider. The effort is intended to help both farmers who have had to discard unsold product and the growing number of Americans facing food insecurity. It expects to donate more than 150,000 pounds (circa 68 tonnes) of produce and 43,500 gallons of milk (approx 165,000 litres) in the first week of the initiative.
- Major US supermarket chain Krogers has told ABC that America’s food supply is stabilizing, but it will be up to consumers to keep the supply for some hot-button items in check, Kroger CEO Rodney McMullen said in an exclusive with "Good Morning America." “I was in the store last night — we had toilet paper, plenty of meat variety products: beef, pork, chicken, all those things,” McMullen, CEO of America’s second-largest general retailer, said. “As for hand sanitizer, I think it is going to take a little bit longer.” The sentiment from Kroger’s CEO has been echoed by Wegmans (another supermarket chain in the US, predominantly in the NE of the country). “While the unexpected increase in demand has challenged the supply chain, we’re seeing it start to equal out,” said Laura Camera, a Wegmans spokesperson. “We are confident it will stabilize as long as we prioritize our needs.”
- Manufacturing activity in the UK has slumped to record lows says the Chartered Institute of Procurement and Supply (link). Widespread business shutdowns at home and abroad in response to the coronavirus disease 2019 (COVID-19) pandemic unsurprisingly resulted in a rapid reduction in UK private sector output during April. The latest IHS Markit/ CIPS Flash UK Composite PMI® (Purchasing Management Index) signalled by far the fastest decline in business activity since comparable figures were first compiled over two decades ago. At 12.9 in April, down from 36.0 in March, the seasonally adjusted IHS Markit / CIPS Flash UK Composite Output Index – which is based on approximately 85% of usual monthly replies – indicated that the combined monthly decline in manufacturing and services activity exceeded the downturn seen at the height of the global financial crisis by a wide margin. Prior to March, the survey-record low was 38.1 in November 2008. (Personal note: The PMI is based on five major survey areas: new orders, inventory levels, production, supplier deliveries, and employment. The ISM weighs each of these survey areas equally. The surveys include questions about business conditions and any changes, whether it be improving, no changes, or deteriorating. The headline PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month. A PMI reading under 50 represents a contraction, and a reading at 50 indicates no change).
- Air New Zealand announced it will not resume operation of its suspended Auckland-Buenos Aires and Los Angeles-London routes due to the deep impact of Covid-19 on forward travel demand. The airline has also taken the decision to postpone the commencement of its non-stop Auckland-New York service from 29 October 2020 until late 2021 at the earliest. Along with 95 percent of its international flying, Air New Zealand's Buenos Aires and Los Angeles-London routes are currently suspended through to 30 June due to government travel bans and low demand. Last year, the airline announced its plan to exit the Los Angeles-London route in October 2020 and in March brought forward the closure of its London cabin crew base.
Meet the 12-year-old who rode 36 hours on Zwift alongside Geraint Thomas - The Tour De France winner and double Olympic gold medalist earlier this week did 3 12 hour cycling sessions to raise money for the UK’s NHS (National Health Service), eventually earning £350,000. Alongside him rode a 12 year old Mak Larkin who by the end of the 36 hours of cycling had managed to cycle 740km (460 miles). Proud mum Lynsey told Cycling Weekly: “Lockdown was really getting to Mak, being that he was so eager to race this season as it was his first year at national level road and mountain bike cross country. “He saw Geraint’s 36-hour challenge and told us he wanted to do some of it with him for something to do and to support the NHS. He then told us a few hours later that he wanted to do the full challenge and wanted to raise some money himself. At time of writing his fundraising page (also for the NHS) stands at £5,772 (approx €6,605 or $7,111 USD). Cycling weekly has more here.
A toddler has been able to hear for the first time after a groundbreaking remote switch-on of her cochlear implants - The BBC reports that audiologists in Southampton activated the devices for 18-month-old Margarida Cibrao-Roque via the internet as they are unable to see patients in person due to Covid-19 measures. Professor Helen Cullington said the procedure took "technical creativity". Margarida's father said it had "opened a big window" for his daughter. Margarida, who has been deaf since birth because she has Ushers Syndrome Type One, had received her cochlear implants in an earlier operation. Staff at the University of Southampton's Auditory Implant Service (USAIS) used specialist software and were able to monitor progress via videolink to the family's home in Camberley, Surrey. During the switch-on levels of electrical stimulation were gradually built up and Margarida's responses were constantly monitored. It is hoped her new cochlear implants will, over time, help her to hear and to communicate more easily. Margarida's mother, Joana Cibrao said the team were "just brilliant and made it happen" despite the lockdown restrictions. "The possibility of Margarida calling me mummy one day would mean the world," she said.
Several asked if they can send me $/£/€ via Patreon (in some cases because I've saved them time or money, others for no reason at all). I don't need the cash (that's lovely though) but as you may have read above, food bank charities are getting really hit hard with all this panic buying. Please consider giving whatever you'd have given me to a foodbank charity instead:
Thanks in advance for any donations you give. If there's foodbank charities in your country and it's not listed above, please suggest it and I will include it going forward.