fruit logistica 2016 logistics hub session 4 lin
TRANSCRIPT
Innovative perishable logistics concepts for the emerging produce e-commerce markets
Danie Schoeman
© 2016 Danie Schoeman & Company.
Global retail e-commerce keeps on clicking …
$1.077
$1.316
$1.592
$1.888
$2.197
$2.489
25.9%
22.2%20.9% 18.6% 16.4%
13.3%
5.1% 5.9% 6.7% 7.4% 8.2% 8.8%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
$-
$0.500
$1.000
$1.500
$2.000
$2.500
2013 2014 2015 2016 2017 2018
Retail e-commerce sales worldwide, 2013-2018 (US$ trillions)
eMarketer: Retail Sales Worldwide Will Top 22 Trillion This Year, Dec 2014
© 2016 Danie Schoeman & Company.
… and clicking. Both sides of the globe
6.5% 7.2% 7.8% 8.5% 9.1% 9.8%12.4%
15.9%
19.6%
23.8%
28.6%
33.6%
2014 2015e 2016e 2017e 2018e 2019e
Share of retail sales made online expected for US and China
US China
306 349 394 443 494 548473672
911
1208
1568
1973
2014 2015e 2016e 2017e 2018e 2019e
Projected size of e-commerce markets for US and China (In US$ billions)
US China
By 2017, China's e-commerce market is expected to exceed US$ 1 Trillion and more of what people buy will be bought online.
eMarketer, 2015; Alibaba Group 2015 Annual Report
© 2016 Danie Schoeman & Company.
The consumer’s newfound power
Web (search, comparison shopping, etc.)
Social (social network, reviews, community, etc.)
Digital content (video, editorial, etc.)
Company website
Mobile (apps, mobile Web)
In-store device (kiosk, associate device, etc.)
Tablet (apps, Web)
Call centre
Branch / outlet /store
External digital
touchpoints
Branded digital
touchpoints
Traditional touchpoints
De
pth
Forrester report: Welcome To The Era Of Agile Commerce, 2014
© 2016 Danie Schoeman & Company.
Millennials and Generation Z are the most avid online grocery shoppers.
Mind the gap – the generation gap
9%
17%
22%
30%
28%
35%
48%
57%
57%
55%
a
b
c
d
e
Order online for delivery to home
Already using Willing to use
5%
6%
11%
19%
20%
21%
40%
56%
60%
55%
a
b
c
d
e
Use online automatic subscription
Already using Willing to use
Generation Z(15-20)
Millennials(21-34)
Generation X(35-49)
Baby Boomers(50-64)
Silent Generation(65+)
Nielsen: The Future of Grocery - E-Commerce, Digital Technology and Changing Shopping Preferences around the World, 2015
© 2016 Danie Schoeman & Company.
Mind the gap – the generation gap
2%
4%
10%
18%
14%
28%
46%
61%
64%
66%
a
b
c
d
e
Use virtual supermarket {white space}
Already using Willing to use
9%
17%
22%
30%
28%
35%
48%
57%
57%
55%
a
b
c
d
e
Order online and pick up inside the store
Already using Willing to use
Generation Z(15-20)
Millennials(21-34)
Generation X(35-49)
Baby Boomers(50-64)
Silent Generation(65+)
Millennials and Generation Z are the most avid online grocery shoppers.
Nielsen: The Future of Grocery - E-Commerce, Digital Technology and Changing Shopping Preferences around the World, 2015
© 2016 Danie Schoeman & Company.
Foods with benefits - who’s willing to pay more?
24%
32%
32%
33%
30%
a
b
c
d
e
Very important {with line 2 expansion}
Very important
15%
23%
26%
29%
31%
a
b
c
d
e
Very willing to pay premium {with line 2 expansion}
Very willing to pay premium
Generation Z(15-20)
Millennials(21-34)
Generation X(35-49)
Baby Boomers(50-64)
Silent Generation(65+)
Generation Z and Millennials are most willing to pay a premium for foods that contain certain health attributes.
Nielsen: Global Health & Wellness Survey, 2014
© 2016 Danie Schoeman & Company.
Touch points of the ever connected consumer on her shopping journeyThe consumer’s shopping journey is not linear anymore.
Web SocialCompany website Mobile Call centreBranch/store
Purchase
Forrester report: Welcome To The Era Of Agile Commerce, 2014
Trust
Evangelize
Friend
Discover
Search
Research
Compare
Decide
Use
Get help
Share
Personalize
© 2016 Danie Schoeman & Company.
Touch points that matter for the consumer on her shopping journeyTouch points that matter are different for different categories.
Web SocialCompany website Mobile Call centreBranch/store
Purchase
Forrester report: Welcome To The Era Of Agile Commerce, 2014, Deloitte: Navigating The New Digital Divide, 2015
Trust
Evangelize
Friend
Discover
Search
Research
Compare
Decide
Use
Get help
Share
Personalize
Apparel
ElectronicsBaby/toddlerFurniture/Home furnishings/Home improvement
Food/beverage
© 2016 Danie Schoeman & Company.
Global
Average
United
States
United
KingdomGermany Japan Brazil Russia India China
South
AfricaNigeria
Electronics 77% 83% 84% 90% 53% 86% 71% 79% 96% 60% 65%
Fashion and apparel 76% 87% 85% 88% 84% 75% 64% 84% 97% 47% 65%
Services 76% 80% 76% 77% 82% 70% 63% 82% 87% 79% 80%
Books 73% 82% 82% 80% 70% 75% 52% 70% 89% 64% 71%
Tickets 64% 74% 69% 63% 79% 65% 51% 79% 71% 69% 47%
Music and games 62% 74% 75% 66% 65% 62% 43% 65% 69% 64% 57%
Home appliances 59% 46% 65% 58% 67% 70% 62% 67% 83% 41% 52%
Beauty products 57% 50% 56% 62% 68% 59% 53% 68% 85% 41% 45%
Home furnishings 53% 56% 65% 66% 59% 48% 43% 59% 65% 34% 30%
Sports and outdoor 52% 56% 53% 66% 52% 49% 51% 52% 78% 35% 35%
Toys, kids, and babies 49% 48% 53% 49% 61% 47% 44% 61% 75% 38% 34%
Household items 45% 36% 48% 40% 60% 35% 36% 60% 84% 31% 35%
Groceries 45% 26% 60% 36% 52% 29% 31% 52% 90% 31% 30%
What do consumers buy online?
Electronic goods, apparel, and books are among the most popular online categories.
>75% have bought the category online
%respondents who say they have bought online in the past three months
50%-75% have bought the category online <50% have bought the category online
AT Kearney: Connected Consumers Are Not Created Equal: A Global Perspective
© 2016 Danie Schoeman & Company.
Online shopping baskets are changing
55%50% 49%
43% 40% 37% 35%30%
23% 21% 19% 18% 17% 15% 14% 13% 11% 11%
Global average: Percentage who have ever purchased the category online
Selected durable categories Selected consumable categories
Nielsen: Global Connected Commerce - Is e-tail therapy the new retail therapy?, 2016
Once consumers get over the trial barrier, retailers who get the assortment, convenience and online experience factors right will benefit from frequent purchasing patterns of consumables.
© 2016 Danie Schoeman & Company.
61%
31%
4% 4%
Stores Online Catalog Mobile
Consumers’ hearts still lie with the store
Consumers spend the majority of their shopping time in stores.
A.T. Kearney: Omni-channel Shopping Preferences Study, 2014.
© 2016 Danie Schoeman & Company.
Consumers still prefer buying groceries in the store
38%
48%
53%
67%
70%
73%
76%
77%
79%
79%
91%
58%
19%
46%
31%
23%
22%
18%
8%
16%
18%
8%
Books, CDs, DVDs & video games
Designer goods
Electronic items
Clothing
Footwear & accessories
Home furnishings
Furniture
Alcohol
DIY & home improvement materials
Cosmetics & toiletries
Groceries
Consumer preference where to buy goods
Buy mostly from store Buy mostly online
Don't buy these items
Displaydata: Rethinking Retail Series: Reinventing the store shelf edge in the age of omni-channel shopping, 2014; AT Kearney: Recasting the Retail Store in Today's Omnichannel World, 2013
7%
9%
13%
15%
24%
To findpromotions orspecial offers
To compareprices
To spend timewith friendsand family
To try, test ortry on products
To fill animmediate
need
Why consumers shop in physical stores
1.
2.
3.
4.
5.
© 2016 Danie Schoeman & Company.
Digital disruption has already happened
• The world’s largest taxi company owns no taxis
• Largest accommodation provider owns no real estate
• Largest phone companies owns no telecommunications infrastructure
• World’s most valuable retailer own no inventory
• Most popular media owner creates no content
• Fastest growing banks have no actual money
• World’s largest movie house own no cinemas
• Largest software vendors don’t write the apps• a
Silicon Republic: How digital disruption changed 8 industries forever, 2015
© 2016 Danie Schoeman & Company.
The digital influence factor
17%
20%
23%
30%
29%
29%
29%
35%
37%
31%
35%
39%
49%
52%
55%
55%
59%
62%
Food/Beverage
Misc. Supplies
Health/Wellness
Apparel
Baby/Toddler
Entertainment
Automotive
Home Furnishings
Electronics
Digital and mobile influence by category
Digital influence Mobile influence
Deloitte: Navigating the new digital divide - Capitalizing on digital influence in retail
The influence of digital devices on the shopping journey are shaping how customers shop and make buying decisions.
© 2016 Danie Schoeman & Company.
The influence of social media
Generation Z(16-25)
Millennials(26-35)
Generation X(36-55)
Baby Boomers(56-65)
Silent Generation(65+)
There is a clear correlation between age and social networks’ influence on buying decisions.
Adapted from AT Kearney Connected Consumers Study
5%
12%
22%
33%
32%
14%
22%
29%
32%
35%
e
d
c
b
a
abcdefghijklmnopqrstuvwxyzabcdefghijklmnopqrstuvwxyz
Yes 1 Yes 2 NoYes, but I only occasionally base my decision upon what's happening in my social network
No, I rarely or never base my decision upon what's happening in my social network
% respondents globally
Yes, I frequently base my decision upon what's happening in my social network
© 2016 Danie Schoeman & Company.
44%
35%
52%
68%
61%
22%
49%
42%
29%
33%
e
d
c
b
a
abcdefghijklmnopqrstuvwxyzabcdefghijklmnopqrstuvwxyz
Yes 1 Yes 2 No
3%
4%
6%
7%
5%
12%
19%
24%
31%
32%
e
d
c
b
a
abcdefghijklmnopqrstuvwxyzabcdefghijklmnopqrstuvwxyz
Yes 1 Yes 2 No
Regional influences of social media are vastly different
Generation Z(16-25)
Millennials(26-35)
Generation X(36-55)
Baby Boomers(56-65)
Silent Generation(65+)
US consumers are less influenced by their social networks than consumers in China.
Adapted from AT Kearney Connected Consumers Study
Yes, but I only occasionally base my decision upon what's happening in my social network
% respondents in USA % respondents in China
Yes, I frequently base my decision upon what's happening in my social network
No, I rarely or never base my decision upon what's happening in my social network
© 2016 Danie Schoeman & Company.
44%
35%
52%
68%
61%
22%
49%
42%
29%
33%
e
d
c
b
a
abcdefghijklmnopqrstuvwxyzabcdefghijklmnopqrstuvwxyz
Yes 1 Yes 2 No
3%
4%
6%
7%
5%
12%
19%
24%
31%
32%
e
d
c
b
a
abcdefghijklmnopqrstuvwxyzabcdefghijklmnopqrstuvwxyz
Yes 1 Yes 2 No
Regional influences of social media are vastly different
Generation Z(16-25)
Millennials(26-35)
Generation X(36-55)
Baby Boomers(56-65)
Silent Generation(65+)
US consumers are less influenced by their social networks than consumers in China.
Yes, but I only occasionally base my decision upon what's happening in my social network
% respondents in USA % respondents in China
Yes, I frequently base my decision upon what's happening in my social network
No, I rarely or never base my decision upon what's happening in my social network
Similar profiles:• UK• Germany• Japan• South Africa
Similar profiles:• India• Russia• Brazil• Nigeria
Adapted from AT Kearney Connected Consumers Study
© 2016 Danie Schoeman & Company.
Digitally influenced consumers spend more
Shoppers are 29 percent more likely to make a
purchase the same day when they use social media to help shop either before or during their trip (90 % vs. 70 % conversion).
Consumers who use social media during their
shopping process are ≈4x more likely than non-users to spend more or significantly more on purchases as a result of a digital shopping experience.
Respondents who consider themselves
somewhat or very influenced by social media are 6x more likely to spend significantly more than non-users (42 % vs. 7 %) due to their digital shopping experiences.
Deloitte: Navigating the new digital divide - Capitalizing on digital influence in retail
© 2016 Danie Schoeman & Company.
Creating a seamless customer experience
11%
15%
25%
26%
32%
58%
92%
Channel partners /marketplaces / affiliates
Dedicated mobile /mCommerce site
Catalog / Call Center
Social channels
Downloadable mobileapp
Online / eCommerce
Stores
Which selling channels do you offer today?
Customer service is the driving force of channel convergence towards omni-channel.
2%
4%
5%
5%
7%
10%
11%
23%
32%
Minimized backorders
Inventory allocation
Replenishment efficiency
Packing efficiency
Fill rate
Order cycle time
Freight costs
Service levels
Customer service
What is your priority in omni channel fulfillment?
RSR Research: Retail Supply Chain Execution: New Requirements To Meet New Demand Benchmark Report 2015; 2015 19th Annual Third-Party Logistics Study.
© 2016 Danie Schoeman & Company.
A brave new world
25%
27%
40%
57%
52%
43%
47%
19%
29%
48%
48%
48%
52%
55%
Digital channel growth outpaces store growth, puttingnew pressures on supply chain
Uncertainty about variable supply chain costs
Long supply chains and new product introductioncycles hamper responsiveness
Competitive pressures drive us to create shortercustomer order-to-delivery cycles
Pressure from competitors to achieve same-dayfulfilment to consumers
Consumer demand has grown more unpredictable
How we fulfil it has changed due to cross-channelshopping
Top business challenges around supply chain execution
Leaders Followers
Leaders are more focussed on a customer centric selling model than the followers.
RSR Research: Retail Supply Chain Execution: New Requirements To Meet New Demand Benchmark Report 2015
© 2016 Danie Schoeman & Company.
Sourcing flexibility – a winning trait
42%
44%
34%
49%
56%
41%
41%
51%
51%
47%
47%
41%
45%
48%
48%
52%
55%
58%
58%
61%
61%
65%
68%
68%
Ship from store DTC
Drop ship from vendor DTC
Store-to-store transfer for click & collect
In-store purchase of online inventory for shipment DTC
Online visibility into in-store inventory
Same-day delivery
In-store reservation of inventory for in-store purchase
DTC fulfilment from our DC
Same-day ship
Ship to store from "Direct" DC for click & collect
Drop ship from vendor direct to store
In-store inventory pick for click & collect
Very valuable operational opportunities in customer order fulfilment processes
Leaders Followers
Leaders see new fulfilment options such as “click & collect” and DTC* as some of their most valuable operational opportunities.
*DTC = direct-to-consumer
RSR Research: Retail Supply Chain Execution: New Requirements To Meet New Demand Benchmark Report 2015
© 2016 Danie Schoeman & Company.
Evolving supply chains
of companies had re-structured their distribution network in the last year.
of the cases the distribution re-structuring had involved relocating distribution centres to a lower cost country.
More Fewer
National DCs 49.5% 50.5%
Regional DCs 58.5% 41.5%
Global DCs 52.8% 47.2%
of respondents cited the main reasons for the distribution re-structuring were predominantly related to cost.
indicated that they were establishing more regional (multi-country) distribution hubs.
75% 20%
50%
58%
How has the structure of your distribution network changed?
European supply chains are evolving to become more product-and/or channel-specific enabling them to adapt to different customer and product service level requirements.
Transport Intelligence Global Distribution Strategies Survey 2008
© 2016 Danie Schoeman & Company.
Emergence of direct-to-store delivery aka DC bypass
DC bypass strategies• Direct shipment to
customer• More regionalized
distribution• Velocity based networks
using cross-docking
CEIBS Port of Barcelona Logistics Chair: Direct-to-store distribution impact on European Ports, 2008
Offshoring logistics• Cargo consolidation from
China and other Asian sourcing countries
• Value added logistics activities
• Multi-country distribution
© 2016 Danie Schoeman & Company.
Direct-to-store aka DC bypass – how it worksTraditional centralized European distribution
Direct-to-store distribution
Deconsolidationcentres or Regional DC
Multipleinboundflows
Suppliers
Continental DCConsolidation
platform
Suppliers
CEIBS Port of Barcelona Logistics Chair: Direct-to-store distribution impact on European Ports, 2008
© 2016 Danie Schoeman & Company.
DC Bypass at UPS
Shanghai,China
Los Angeles,CA
New York, NY
Cologne,Germany
Guadalajara, Mexico
Laredo, Texas
Direct-to-Store Illustration
Consolidated freight is broken down into individual shipments at destination port or gateway for direct-to-store delivery.
UPS, Supply Chain Digest, When Does “DC Bypass” Make Sense?, 2008
© 2016 Danie Schoeman & Company.
DC Bypass for Air/Sea Freight at Bakers Footwear Group
OverseasGoods
In-TransitAllocations Domestic
Factory CFS Facility Carriers3PL
WarehouseCorporate
OfficeRetail Stores
ARC - Bypassing the Distribution Center, 2013
Accept receiver and examine store needs
Allocations
Delivers to stores
Inventory &sales needs
Cartons delivered and received into
the system
PLD is transmitted to small package
carrier
Destination labels are printed and applied
based on allocations
Labelling is shifted to the factory
© 2016 Danie Schoeman & Company.
DC Bypass for Sea Freight Bakers Footwear Group
Factories CFS FacilityOceanVessel
3PLWarehouse
CorporateOffice
Retail Stores
Overseas FloatingWarehouse
Last MinuteAllocations
Domestic
ARC - Bypassing the Distribution Center, 2013
Serialised labels printed and applied to cartons
Container arrives and a receiver message is
sent to corporate
Cartons delivered and received into
the system
Cartons are scanned into the
containerVisibility to the container through web based tracking
Cartons are scanned and destination
labels are printed and applied
PLD is transmitted to small package
carrier
Accept receiver and examine store needs
Last minute allocations
Delivers to stores
Inventory &sales needs
© 2016 Danie Schoeman & Company.
Requirements for direct-to-store aka DC bypass
• Products need to be allocated earlier than in a traditional environment
• Sensing of products demand must be accurate and reliable
• Volume and scale to ensure full-container load (FCL) shipments
• Reliability of transit times and cargo visibility from origin to destination
• Visibility across the supply chain• Products need to be packaged “customer or store
ready” and labelled as close as possible to origin
www.inboundlogistics.com: Optimize 'Obnoxious Freight' With DC Bypass, 2006; How to Develop a Direct-to-Store Delivery Model, 2010
© 2016 Danie Schoeman & Company.
Is a direct-to-store delivery model right for you?• Time sensitive products
– Perishable products such food, flowers, etc.
– Trendy items that are fast old-fashioned such as clothes, electronics, etc.
– Promotional products for trade shows, concert events, products launch etc. and collectibles.
• Seasonal products– Heating or air conditioning units
– Snow shovels, fertilizer, and lawn mowers, etc.
– Seasonal sports products
– Items for short, high-volume periods such as Christmas decoration items, back-to-school products, Valentine’s day, etc.
• High unit value products– Jewellery, routers or other products that require security.
• Obnoxious freight – High unit volume products that do not palletize efficiently or aren’t compatible with standard storage
layouts such as furniture, outdoor equipment, automotive replacement parts, and outdoor toys.
– Heavy products such as major appliances.
– Easily damaged items such as glass.
www.inboundlogistics.com: Optimize 'Obnoxious Freight' With DC Bypass, 2006; How to Develop a Direct-to-Store Delivery Model, 2010
© 2016 Danie Schoeman & Company.
• Increased speed to market• Reduced end-to-end inventory
carrying costs and warehouse costs
• Reduced cargo damage and losses
• Reduced transportation costs• Lower per unit supply chain
cost • Increased margin• Quicker cash-to-cash cycle• Improved distribution network
efficiency• Reduced physical assets and
deferred investments
Benefits of direct-to-store aka DC bypass
© 2016 Danie Schoeman & Company.
of online shoppers in China say they are going direct to brand sites.
The myth that retailers are closest to the customer
3%
8%
12%
17%
23%
24%
29%
30%
41%
44%
Other
Better experience
Customization / personalization
Better service
Good stock availability
Better warranty / guarantee
Love of brand / loyalty
That’s all I needed - one brand
Full range or more choices
Lower price
Reasons consumers buy directly from a brand or manufacturer
35%
56%
52%
of consumers globally have already bought products directly from brands or manufacturers.
of online shoppers in the USA say they are going direct to brand sites.
Consumers are shopping directly from manufacturers and many no longer distinguish between retailers and their favourite brands.
PwC: Demystifying the online shopper 10 myths of multichannel retailing, 2013
© 2016 Danie Schoeman & Company.
From the brand owners and manufacturers point of view
5%
9%
22%
23%
41%
We compete with retailers’ private-label offerings
We battle for shelf space with other brands
We share consumer data and insights to enable betterplanning, though we act on those insights separately
We continue to work with retail partners but we arealso committed to expanding our competing direct-to-
consumer strategies
We work together to serve consumers through avariety of marketing, sales and service programmes
How do you view your relationship with retailers as it relates to consumer engagement? (% respondents)
41%
of respondents say they expect to sell products directly to consumers over the next 12 months - up from the 24% who say they currently offer direct-to-consumer sales.
Economist Intelligence Unit: New directions: Consumer goods companies hone a cross-channel approach to consumer marketing, 2012
© 2016 Danie Schoeman & Company.
Why brand owners and manufacturers want to go for direct-to-consumer
5%
8%
13%
30%
35%
36%
44%
59%
69%
70%
We have no plans to ever market or sell directly to consumers
We don’t currently market or sell directly to consumers but we may in the future
Thwart private-label sales
Use as testing ground for new products
Gather consumer insights to improve marketing programmes
Cross-sell (eg, line extensions or bundling)
Gather consumer insights to improve product
Increase interaction with brand
Increase sales
Enhance brand awareness
What are the objectives of your direct-to-consumer initiatives? (% respondents)
Economist Intelligence Unit: New directions: Consumer goods companies hone a cross-channel approach to consumer marketing, 2012
© 2016 Danie Schoeman & Company.
Brand owners and manufacturers are going for direct-to-consumer
5%
10%
21%
25%
40%
Other
Through third-party, direct-to-consumer sites (eg,
Alice.com, Amazon)
Directly to consumers (eg,through your website or
social media sites)
Through wholesaledistributors
Through retail partners
How do you see percentages of your total sales shifting over the next 3
years through the following channels? (Average % respondents)
21%
4%
22%
25%
29%
Don't know
Other
We have increased the % ofspending on trade promotion
to complement DTC…
We have shifted some tradepromotion budget to DTC
programmes
Our % of trade promotionspending has not changed
What has been the impact of your direct-to-consumer programmes on trade promotion? (% respondents)
Economist Intelligence Unit: New directions: Consumer goods companies hone a cross-channel approach to consumer marketing, 2012
© 2016 Danie Schoeman & Company.
When consumers “bypass retail”
78.4%
Amazon
36.6%
Brands
46.6%
Online retailers
is the No. 1 digital source for researching products
is the No. 1 digital shop for buying products
58.4%
22.7%
Brand website
14.9%
Digital retailer site
Brandshop: 2015 Digital Consumer Preferences Survey, September 2015
© 2016 Danie Schoeman & Company.
Not all brand categories are created equal
30.2%
36.9%
38.0%
55.9%
56.7%
Beauty & skincare
Food products
Household & consumergoods
Electronics
Clothing & apparel
Product categories that US digital buyers prefer to purchase directly from the brand, by industry (% of respondents)
Brandshop: 2015 Digital Consumer Preferences Survey, September 2015
© 2016 Danie Schoeman & Company.
Reasons to consider the move to direct-to-consumer or “retail bypass”• Loyalty of retailers to a brand based on:
– Their margins.
– How they can leverage the brand for their own purposes.
– How much marketing support/money they can acquire.
• This forces a brand in a long term mindset and model to:– Become operationally lean due to smaller margins.
– Increase profit through streamlining manufacturing by e.g. moving the factory to China.
– Develop content around the training of retailer employees and with high retailer employee churn this becomes a vicious and continuous cycle.
• This leaves the brand with little time and resources to focus on consumer needs.
• According to a IBM study: Less than a third of retailers are able to accommodate the 90% customers who want better personalisation, and “are willing to spend 20 minutes to set up their information to help the retailers give them a better experience”.
• The most effective content creator for the marketing strategy is the brand - the creator of the brand story, and the product (s). A brand's ability to effective tell stories creates stronger bonds than any retailer could - both pre and post sale.
Econsultancy: Why brands need to move to a direct to consumer model, 2014; IBM: you need a personalised customer experience to breach real and digital worlds, 2013
© 2016 Danie Schoeman & Company.
Benefits of direct-to-consumer or “retail bypass”
Strengthened brand image by telling the brand story as its intended direct to the target market
Aggregate an incredibly rich source of consumer data, which was previously controlled by retailers, delivering insights into consumer needs, and buying behaviours
Creating direct social connections builds meaningful direct conversations building a greater understanding of needs, likes, and dislikes without the 'retailer filter'
The harnessing of data provides local knowledge for global brands, allowing for the penetration into new global markets
Better experiences build brand advocates or fans
The combination of data, direct connections, and meaningful consumer conversations organically develops lifetime strategies
Econsultancy: Why brands need to move to a direct to consumer model, 2014
© 2016 Danie Schoeman & Company.
• Fresh comes first– Its about the product not the service– Make-to-order model - processing centre capable of trimming and slicing to each
customer’s order
• Product mix – Perishables 75%; packaged goods 25% vs traditional 50%/50% model
• A shorter supply chain– Cutting out the middle man and ensure quality– Vertical integration lowers inventory
What we learned from Dell – the FreshDirect case
strategy+business: What FreshDirect Learned from Dell, 2003
• Limited SKUs– Maximize volume per item
• No promised land in the “last mile”– Doesn’t offer same-day delivery - only next-
day delivery
– Controls the cost of the “necessary evil” of home delivery
• Its all about speed and cost
Dell’s edge in speed created a cost advantage that ultimately redefined
the PC industry. Its competitors, saddled with longstanding channel
relationships and make-to-stock manufacturing models, have been struggling for years to make the transition to the Dell model, but
they still remain short of the system Dell created from scratch.
© 2016 Danie Schoeman & Company.
Anticipatory shipping
US Patent Office: Patent US8615473 B2 - Method and system for anticipatory package shipping
Expeditedservice path
Non-expeditedservice path
Tender to common carrierat fulfilment centre
Tender tocommon carrierat hub
Privatecarrier
Fulfilmentcentre
Commoncarrier
© 2016 Danie Schoeman & Company.
• They are the No 1 online store in the US
• They collect data while you browse – even mouse hover!
• Big data
• Advanced data mining techniques
• Machine learning algorithms
• Predictive analytics
How do they do it?
© 2016 Danie Schoeman & Company.
“That said, everything is indeed Fresh. This'll save me a lot of time, but it means I'll never go anywhere other than work or home again. Actually, that's not true, they don't sell beer yet. :)
Amazon Fresh – from a customer
https://www.flickr.com/photos/adpowers/1280742907/in/photostream/
© 2016 Danie Schoeman & Company.
Amazon in talks to lease Boeing jets to launch its own air-cargo business The online retail giant is looking to expand its delivery operations to avoid the bottlenecks caused by overwhelmed carriers such as UPS.
Amazon.com is negotiating to lease 20 Boeing 767 jets for its own air-delivery service, cargo-industry executives have told The Seattle Times.
The online retail giant wants to build out its own cargo operations to avoid delays from carriers such as United Parcel Service, which have which have struggled to keep up with the rapid growth of e-commerce.
Own air-delivery service?
A Boeing 767 arrives at Boeing Field ferrying parcels for
UPS. Amazon is considering venturing into the same
territory as UPS and FedEx, acquiring similar freighters
for its own air cargo service.
(Dean Rutz / The Seattle Times)
http://www.seattletimes.com/business/amazon/amazon-in-talks-to-lease-20-jets-to-launch-air-cargo-business/
© 2016 Danie Schoeman & Company.
Could be a game-changer as Amazon is awarded sea freight forwarder licence by US FMCAmazon has continued its much anticipated foray into the freight and logistics sector –yesterday the US Federal Maritime Commission (FMC) awarded one of its Chinese subsidiaries an Ocean Transportation Intermediaries (OTI) licence that allows it to operate as a sea freight forwarder.
Registered in 2004 by Amazon founder Jeff Bezos as Beijing Century Joyo Courier Service Ltd, the
Sea freight forwarder!
© Frank Gartner
http://theloadstar.co.uk/game-changer-amazon-awarded-sea-freight-forwarder-licence-us-fmc/
© 2016 Danie Schoeman & Company.
Final thoughts
• Omni-channel retailing means that customers engage with the brand, rather than with the channel – all customers need to have full access to the retailer’s offer through all channels during all times of the shopping journey
• A truly omni-channel strategy requires a total overhaul of all operations
• Traditionally, supply chains were designed around a network of stores - now they need to be re-engineered around customers
• Speed and agility are key for future success• The potential for vertical and horizontal collaboration
exists e.g. the sharing of delivery networks and collection points
© 2016 Danie Schoeman & Company.
What are the three things you hope to achieve?
“Demosthenes, the greatest of Athenian orators, was asked what the three tests of a great speech were. “Action, action and action‟ was his reply.” James C. Humes
© 2016 Danie Schoeman & Company.
Danie Schoeman+27 82 940 [email protected]
There’s more to talk about, so let’s have coffee …
© 2016 Danie Schoeman & Company.
Disclaimer
This document has been prepared by Danie Schoeman and Companyto provide background information on the subjects mentioned herein,the forecasts, opinions and expectations are entirely those of DanieSchoeman and Company. This presentation was prepared with theutmost due care and consideration for accuracy and factualinformation; the forecasts, opinions and expectations are deemed tobe fair and reasonable. However there can be no assurance thatfuture results or events will be consistent with any such forecasts,opinions and expectations. Therefore the authors will not incur anyliability for any loss arising from any use of this presentation or itscontents or otherwise arising in connection herewith. Neither will thesources of information or any other related parties be held responsiblefor any form of action that is taken as a result of the proliferation ofthis document.