10 disruptive digital innovators

Paul Rubens reports on a new breed of digital startups that are sending shock waves through important sectors of the UK economy. Established businesses are also adapting to the changing environment by reinventing themselves for the digital age.

DISRUPTIVE DIGITAL STARTUPS

1. Hassle: www.hassle.com

Look back two years and if you wanted your home cleaned, your options were essentially agencies with complex pricing and contracts, classified ad website Gumtree and anonymous flyers stuck to your car. Hassle disrupted the status quo by organising these scattered cleaners on to one platform. Hassle’s platform is highly scalable, and the booking and payment processes are straightforward, fast and entirely online. While humans do man the phones, the platform keeps running costs low by making booking and payment very simple, sparing the customer time and effort. Hassle also offers the cleaners industry-leading levels of payment and accountability that rewards consistently good work.

2. JobsTheWord: www.jobstheword.co.uk

Jobs The Word is disrupting the recruitment market using big data analysis. It gathers information about people from online sources, such as Facebook, LinkedIn and Twitter, and uses it to match them with job vacancy advertisements that customers post. It’s disruptive because it replaces the knowledge and networks built up by expensive head hunters and recruiters with algorithms that analyse web data, and it’s powerful because it can produce candidates who aren’t looking for a new job, as well as active job seekers. It’s also highly scalable because everything is done automatically without the need for human intervention.

3. Nutmeg: www.nutmeg.com

The investment management business is ripe for disruption because there’s little visibility into costs and it’s one that most people have little experience of. Nutmeg’s approach is to strip away many of the costs associated with a personal investment manager by offering the entire service online. Customers enter basic information about themselves and are then matched to one of ten risk-based portfolios. By interacting with customers online, Nutmeg is able to charge an annual management fee of between 0.3 per cent and 1 per cent, far less than the typical 2 per cent fee charged by many fund managers.

4. onefinestay: www.onefinestay.com

This startup is disrupting the hospitality industry by bringing on stream a new supply of luxury accommodation. Its website allows visitors to book stays in homes while the owners are away, supplying linen and toiletries to provide a hotel-like experience. This type of disruption, using the internet to create a market for unused resources that are in short supply, has been used successfully by startups in other fields, such as ParkatmyHouse.com, which offers parking places in private driveways. onefinestay’s model relies on staff visiting homes to clean and restock, which may limit the scalability of the business in the longer term.

5. Frillo: www.frillo.co.uk

The retail sector has already experienced intense digital disruption in the form of e-commerce operations that entered the market to provide stiff competition to traditional bricks-and-mortar retailers. Frillo aims to disrupt these disruptors by providing an online market for office supplies, IT equipment and office furniture with a difference. Frillo makes no mark-up on the products on its website. Instead it charges a fixed delivery and handling charge on top of the wholesale prices it pays suppliers, and goods are dispatched directly from these wholesalers. Frillo’s no-stock business model appears limited only by its suppliers’ ability to fulfil orders.

ESTABLISHED COMPANIES

1. Argos: www.argos.co.uk

Argos’s business model relied on its catalogue as the primary retail channel, with customers choosing goods from the pages, filling in paper forms and waiting for the goods at a counter. But in 2012 the company announced plans to become a digital retailer, introducing an online catalogue and introducing web browsers and free wi-fi in its stores. These have been transformed into product pick-up points for goods ordered online or through its mobile apps, with the catalogue reduced to a secondary role. The internet now accounts for almost 50 per cent of sales and argos.co.uk is the second most visited retail site in the UK.

2. Domino’s Pizza Group: www.dominos.co.uk

Domino’s has introduced a new digital ordering tools over the last few years to transform itself into a company that makes over 60 per cent of its sales online, including more than 30 per cent from mobile devices. Recent innovations include an iPad app with a 3D animated pizza builder and the ability to pay for pizza ordered on the company’s Android app using Google Wallet. The company also offers an online pizza tracker which shows orders in real-time as they progress from prep, baking, boxing and delivery. Embracing digital has increased Domino’s average order value and revenues are at their highest level ever.

3. Burberry Group: www.burberry.com

Burberry has transformed itself from traditional trench coat maker to one of the coolest brands around over the last ten years by embracing digital technology. The company has a huge following on social media sites, including Facebook, Instagram, Pinterest and YouTube. In its physical stores staff tote iPads linked to a customer relationship management system, while videos are triggered on nearby screens when customers pick up products with embedded RFID (radio-frequency identification) chips. This digital transformation contributed to the company’s first half revenues announced in September which exceeded £1 billion for the first time.

4. Netflix: www.netflix.com

Netflix is arguably the textbook example of a company that has reinvented itself digitally after starting out as a DVD rental business in the United States in 1997. The company now operates in the UK and other parts of Europe, but delivers movie titles in the region exclusively by streaming them into homes over the internet. Netflix accounts for more than 30 per cent of all internet traffic in North America at peak times, compared with less than 4 per cent in Europe, but when its streaming service is launched in France and Germany that figure is likely to grow substantially.

5. DHL MyWays: www.myways.com

The parcel delivery industry has already embraced digital technology in the form of parcel tracking platforms that allow customers to see where their parcels are in near real-time. DHL is taking this a step further by experimenting with crowdsourcing the final delivery of parcels to recipients. It’s doing this with an app that matches users willing to deliver a parcel with users who want a parcel delivered to them at a time and price acceptable to both. Using this market-based approach to pricing, customers can have parcels delivered urgently wherever they want, if they are willing to pay enough to tempt someone to deliver it.