Clusters are groups of interconnected businesses, suppliers and associated institutions that collaborate to solve common problems and benefit from scale.
A digital cluster is what we will create through this initiative, by putting digital tools - in the form of ecommerce, a centralised digital marketplace, and digital marketing - at the heart of an existing business group. Our aim is to enable digital transformation for the group as a whole, and to propel the cluster into new and bigger markets.
Digital transformation is the process of adopting digital tools to improve your business processes and increase revenue.
Through this initiative, we will place digital tools - in the form of ecommerce, a centralised digital marketplace, and digital marketing - at the heart of an existing business group. Our aim is to enable digital transformation for the group as a whole, and to propel the clusters and business networks into new and bigger markets.
The Digital Cluster Initiative comes from a true 'meeting of the minds'. When Paul Conway (then BNZ) and David Kelly (Zeald) were connected through the Digital Boost Alliance, they quickly realised the potential to create something transformative, practical, and productive for New Zealand, together. Read more about the origins of the initiative here.
Formally, the initiative is a joint Commitment made by BNZ and Zeald as members of the Digital Boost Alliance, and aligns with the Alliance's vision to help small businesses and communities to lift their use of digital technologies in Aotearoa.
Zeald is New Zealand's most established website design and digital transformation agency for Kiwi small to medium businesses. For 20 years, Zeald has worked at the forefront of digital technology in New Zealand, specialising in ecommerce and web development. Since 2001, Zeald has worked with more than 15,000 small to medium businesses to digitally transform, processed more than $2billion in ecommerce transactions locally, and upskilled more than 50,000 people through its education programmes including seminars, webinars, workshops, digital skills training and internships. Find out more about Zeald here.
Digital Boost Alliance is a group of key players in our digital economy who want Aotearoa to become a high-performing digital nation, faster. Members include organisations, companies, corporates and businesses, who are committed to helping accelerate the use of digital technologies across New Zealand. BNZ and Zeald are two founding members of the Digital Boost Alliance. Visit https://digitalboostalliance.nz/ for more information.
Digital capability can offer so much to a business in terms of improved productivity, efficiency and profitability through things like automation and more streamlined processes - and as the world is becoming increasingly and rapidly more digital, adoption of digital technologies is crucial to staying competitive. A digital platform also sets businesses up with a foundation to adopt new, digital opportunities in the future.
The Digital Cluster Initiative is different to anything that's been done in New Zealand, and the potential benefit for businesses, communities and the economy is enormous.
We will work with three existing business groups to build them into digitally-advanced clusters. Using a "cluster" framework, each pilot group will be set up with ecommerce, a centralised digital marketplace, and tailored digital marketing support, to create an ecosystem that's grounded in economic modelling and empowered through digital.
The model aims to help overcome common obstacles that Kiwi businesses often face - such as size, geography and restricted market access. Building scale through clustering has the potential to lift group performance. Adding digital tools into the mix will enable regional businesses who often work in insular markets, to expand into online markets, and position themselves for possible export markets over time. Digital technologies will also enhance the ability of businesses to collaborate within the cluster, for amplified effect and benefits.
So the initiative has a lot to offer an established business group, and can take them on an innovative, transformative journey beyond what's otherwise possible on their own.
This initiative has been designed to allow a group of businesses to join together, collectively market and work together to attract and engage new customers. Even businesses that are well established could benefit from this collaborative approach as it allows them to enhance their value proposition and project their products into new markets.
BNZ and Zeald share a vision to close the digital divide and improve wellbeing in New Zealand by investing into local communities and businesses - creating a healthy and inclusive business ecosystem benefits everyone. Paul Conway, chief economist at Bank of New Zealand, has for a long time seen and spoken about the potential for new technologies to lift economic performance and wellbeing in New Zealand. He sees this project as a real-world application of that potential. David Kelly, co-founder and chairman of Zeald, has specialised in ecommerce and digital tech for more than 20 years, helping thousands of Kiwi SMEs to transform digitally - and he wants to keep giving back. Putting it all together, BNZ and Zeald have gathered the necessary parts to deliver something practical, inclusive and significant for businesses and communities in Aotearoa.
And with Covid having accelerated the pace of digital adoption and change, now is the time to equip New Zealanders with digital tools so that everyone has the opportunity to adapt, grow and prosper in a radically more digital world. Read more about the vision of the initiative here.
This initiative has been designed so that it can equip B2B operators with an online sales channel. Product pricing can be tiered and tied to customer groups allowing business customers to login to individual sites, or the marketplace, to access their specific pricing, then order online.
The digital cluster initiative was conceived to allow businesses to work collaboratively to attract, engage and convert customers. In the B2C context this is incredibly powerful as the digital marketplace technology will be able to attract far more online consumers than individual websites, creating more opportunities to generate sales.
A digital marketplace is an ecommerce platform that allows multiple businesses to showcase their products and it provides a consolidated site that a digital cluster can use to promote and market the members' products.
Yes you can. The intention with this initiative is to provide every business within the cluster their own Ecommerce site which syncs to the digital cluster marketplace. Promoting products outside of this ecosystem is encouraged as it extends the reach of the businesses involved.
Even though New Zealand already has many business networks - naturally occurring - ecosystems of related companies that are co-located within a specific geography - few of these networks have developed into more formal clusters that are common in Europe and other parts of the world. And digital clusters, in the framework of the Digital Cluster Initiative, do not currently exist in New Zealand.
This initiative aims to strengthen regional economies by building scale and collaboration through clustering. We will use digital tools to formalise the clusters and support them to broaden their markets and lift performance.
The pilot groups will become strong case studies that show what digital clustering can achieve - and to show other businesses how it's done. Ultimately, the pilot will help to create a digital cluster blueprint that can be applied to other business groups across the regions, to support greater economic development through digital transformation in Aotearoa at scale.
There are many successful clusters overseas. Two well-known examples are Hollywood and Silicon Valley in California. Clusters encompass many sectors, and regional examples of cluster development initiatives include:
This is the difference between the formalised clusters seen overseas and the more informal, though naturally occurring, clusters and networks of related companies that we see in New Zealand.
Clustering models provide a structure for coordination, collaboration and inclusive growth among the members of the cluster. Through shared improvements, they lift productivity and upgrade competitiveness, as a whole.
We are receiving applications now - you can complete an application form here.
Applications close on 17 February 2022. Find out more about applying here.
If you have any questions about your application or the initiative you can get in touch with us here.
Follow the flow chart on this page to quickly identify your cluster type.
Further explanation as to how your information will be used by the Digital Cluster Initiative team, for the purposes of processing and assessing your application, and for communicating with you, is detailed at the bottom of the Application Form - which you will be asked to read and agree to by checking a box.
We're looking for groups of about 10-30 businesses for Traditional and Local Clusters. For Virtual Clusters we're looking for groups with more than 10 businesses.
We are in the pilot stage of this initiative so we have not set a specific restriction around geographical areas. The local cluster is ideally town- or suburb-sized, and the traditional cluster should be based around a region or city.
If you meet the majority of the criteria and your group is passionate about digital transformation then please do apply.
If your group does not make the shortlist, we will hold onto your contact details for possible future intakes or to update you about initiative developments. If you make the shortlist, but are not given one of the three pilot spots, we will hold onto your contact details in case a possible partnership becomes available (for example, if one of the three pilot clusters do not proceed beyond the provisional 3-4 months).
No, you do not need to bank with BNZ. For further information on the application criteria you can find the application questions here.
This could for example be an industry or trade body, Iwi- or hapū-based group, council, trust or artist collective.
This could be a trade body, an Iwi- or hapū-based group, a network of businesses, an association or an industry like for example craft beer, honey, fruit or fashion.
This could be an Iwi- or hapū-based group, a council, trust, or marae, a business association or farmers market. A Local Cluster could also be formed around a Chamber of Commerce.
Yes it is. Along with, business associations, industry and grower associations, Iwi- and hapū-based groups, artist collectives, farmers markets, council groups, trusts and the like... Read more about applying here.
We are looking for three highly-motivated and committed business community groups to partner with for this pilot. This initiative has the potential to make a significant contribution to New Zealand's economic and social landscapes. We're looking for participants who support this vision, who we can work with collaboratively during the pilot. We want to not only support each business cluster to succeed, but to work together to refine the initiative too - so that we can develop a digital cluster blueprint that can be applied to other business groups across New Zealand, beyond the pilot. For more information visit the How to Apply Page or view the questions on the application form here. You can also view the assessment criteria we will use, which are in the Annex of our Commitment Document here.
For this pilot we are only looking for New Zealand-based business groups, networks or communities.
Yes, all businesses within your cluster need to be located in New Zealand.
We are looking for highly-motivated and committed partners for this pilot. Markers of a successful cluster often point to a collaborative and motivated group of businesses who work together to achieve a common purpose. Therefore, the higher the buy-in within your group, the higher your chances are of being selected for the pilot.
There will be a front-load requirement of time at the beginning of the pilot. Time and commitment will be needed to onboard the cluster group to the initiative, to workshop with the cluster to create a brand identity and develop a tailored marketing programme, to work with the individual businesses to get their information for building and loading their ecommerce websites, and then to develop the cluster's digital marketplace.
As part of the onboarding process we will help each group to appoint a "cluster manager" who will lead the group and be the point person for the Digital Cluster Initiative team; and we will also help to set up an internal steering group comprising core businesses within the group who will be key to driving the group forward. Extra time will be required from the individuals involved in these roles.
For this pilot we are only looking for existing clusters to work with and develop, at this point.
We intend to provide marketing support for up to two years, this will commence once the cluster is able to launch online.
Over this period, we will work alongside the cluster to equip, empower and upskill members, to be able to market and manage their cluster, beyond the pilot. While we aim to develop this capability within the group, a cluster may still choose to outsource these roles to a third party, or bring in additional resource, if that is their preference.
Yes, we can work with your existing website. We will consult with each business in the cluster to determine the best option and fit for them. If the preference is to continue using an existing website, we'll explore the best method for interacting with the digital marketplace. This might include manually loading products and managing orders directly on the marketplace, or importing products to the marketplace via spreadsheet. We're also developing marketplace integration capability with platforms such as Shopify and WooCommerce, two of the most widely-used ecommerce platforms in New Zealand.
Results are impossible to predict and we are unable to guarantee what will happen, however, we would expect the three pilot groups to start seeing increased engagement and customer acquisition over the first 6-12 months.
At the conclusion of the pilot the cluster will be able to continue to use the marketplace and individual ecommerce websites for as long as they like, they will need to cover the hosting costs for the technology which will be based on the volume of traffic the site attracts.
If successful we anticipate the cluster will be generating enough revenue to cover simple hosting costs and be able to self-fund any marketing programmes required.
The software that powers the individual ecommerce stores and the digital marketplace belongs to Zeald. The cluster owns the marketplace content, domain name and other information included on the site such as the history of orders and customer information.
From an ownership perspective, the Zeald system works very similar to how Xero works. Xero owns its accounting system. You own your information that is within their system - but you don't ever own Xero itself (or a copy of Xero). You pay a monthly fee to Xero to use their system. And beyond the initial 12 months, you pay a monthly fee to Zeald to use its website hosting system.
At the conclusion of the pilot the cluster is able to continue using the marketplace, there will just be a standard monthly hosting fee that will need to be covered by the cluster. The exact hosting fee will be based on the amount of traffic the site gets on a monthly basis.
If successful the group will need to commit to providing resources to get the initiative up and running - this will need to be arranged by the group and may require resourcing from within the group i.e. by members themselves.
The focus of the marketing programme will be on sustainable, no- to low-cost tools and services, and where possible we will explore support via media partners. However, if the cluster is keen to invest additional funds into marketing activity, media spend, or to scale further, we are happy to incorporate extra budget into their tailored programme.
At the conclusion of the pilot, hosting costs will need to be paid for by the group for the Marketplace and ecommerce sites. The ecommerce website hosting fees for each vendor will be 2% of transactions per month up to a capped amount of $99 + gst p/m. The Marketplace hosting fees for the group will be variable based on traffic volumes, we estimate this to be between $175-$499 + gst p/m.
Beyond the pilot, a cluster should also expect to pick up its own running costs. These might include costs associated with paid marketing activity and any additional resources required to manage the ongoing running and marketing of the cluster if this can't be done internally. This might look like anything from 1 PTE for 1-2 days per week, for a marketing and/or admin role, to 1-2 FTEs for each role, depending on scale and volume.
We believe the Digital Cluster framework will deliver enough value to justify investment into these sorts of roles, to support the ongoing running and success of the group.
Funding these costs could come from a range of sources, including revenue from the digital marketplace itself. Successful clusters will be more productive and more profitable, and we anticipate being able to cover their own costs.
We can work through the options with the cluster as we near the end of the pilot, to help set in place cost/resourcing arrangements suitable for the group.
Neither Zeald or BNZ are clipping the ticket on any sales for this initiative. There is no cost to the businesses for website hosting or website support (either for individual ecommerce sites or the digital marketplace) during the pilot. At the conclusion of the pilot the vendors can choose a performance-based hosting charge for their ecommerce sites, as outlined in the answer above (2% of transactions capped at a standard hosting fee of $99 + gst p/m), and the cost for Marketplace hosting will vary depending on performance or traffic through the platform.
If you have any questions about your application or the initiative you can get in touch with us here.
For enquiries about getting started with ecommerce for your business or your group, you can contact Zeald. Their Get Ecommerce Movement, also called the GEM initiative, offers free ecommerce solutions to help small Kiwi businesses get trading online and start their digital journey. Look up GEM, or email email@example.com.