Prescriptive analytics is a decision making model that can help supply chains meet the increasing demands that have resulted from the revolution of technology.
Now more than ever, the supply chain and logistics industry is under pressure to meet the unprecedented growing demands of consumers. In addition, they also must meet demands with efficiency and immediacy, while offering competitive rates and network opportunities. The impact of emerging technologies on transportation supply chains is a point of interest to a variety of industry leaders. It requires actionable initiatives that specifically analyze innovative ways for supply chains to improve their bottom line and transform to effective digital supply networks (DSNs).
Prescriptive Analytics is a critical approach toward helping supply chains achieve this transformation. Gartner Inc.defines this technology as:
A form of advanced analytics which examines data or content to answer the question “What should be done?” or “What can we do to make _______ happen?
This form of algorithmic decision making, enables companies to visualize actions that improve operations and capitalize profits. This blog post dives deeper into understanding the function and benefits of prescriptive analytics in supply chain management.
Prescriptive Versus Predictive Analytics
Advanced analytics can be described as being either descriptive, predictive or prescriptive. Their meaning can be broken down into fundamental questions that help businesses achieve an objective.
In April, Morai Logistics discussed the imperative need for supply chains to improve transparency. We describe predictive analytics as a recommended technology that provides organizations with the technology to forecast and achieve real-time visibility. Joined by Artificial Intelligence and Machine Learning, this suite of tools help many industries such as retail, healthcare and transportation. What’s does prescriptive analytics bring to the table?
According to Digital Journal, the global prescriptive analytics market serves numerous markets including healthcare, information technology & communications, manufacturing, government and defences, and of course transportation and logistics. They share the following insight into the growth of this market:
Prescriptive analytics market accounted for USD 1.20 billion growing at a CAGR of 30.95% during the forecast period of 2017 to 2024.
In comparison to forecasting with predictive analytics, prescriptive analytics identifies how ‘business processes should evolve or be modified’. It’s an algorithmic decision making model that analyses data in order to take action. Applying this level of analysis can help any business understand how to effectively use their ‘resources, costs and capabilities’.
Benefits for Supply Chains
Transportation and logistics is a market segment that should utilize prescriptive analytics. However, their integration is comparatively slower to other industries despite feeling the pressure of consumer demand the most. Although there is a growing need for new and improved processes, many industry leaders fear the unknown of integrating a new technology tool. Supply Chain Management Review states that implementing prescriptive analytics is ‘a crucial analytics approach’. They further reinforce the following outcomes below as beneficial to improving supply chain management.
- Create ‘visibility between the supply chain and finance’.
- Provides managers with advanced platforms that help base decisions on fact-based scenarios.
- Integration of predictive benefits such as cost reductions, forecasting and end-to-end visibility.
- Create a prepared, informed and confident workforce.
Advanced analytics is a critical tool that should be integrated into any organization looking to achieve profit growth. Supply chains must continue to embrace technologies in order to meet customer demands, while creating a competitive advantage in changing markets. Predictive analytics is important because it helps supply chains understand future risks, challenges and outcomes. However, prescriptive analytics leverages data to devise action that will improve efficiency, immediacy and their bottom line.
The Canadian supply chain and logistics industry foresees a promising future integrating robotics and automation into their processes.
In 2015, the value of Canadian robotics reached $201 million in orders, with an annual growth rate of 32% between 2010 and 2015. With consumer demands for speed and efficiency increasing, the supply chain and logistics industry is seeking accelerated processes from robotics.
In the eBook, Supply Chain & Logistics: A Transforming Workforce, robotics was identified as a top technology companies should adopt to remain competitive. Companies must focus on providing consumers with individualized experiences and personalizing their product journey to provide hyper-flexibility. Statistics showed that by 2025, USD$67 Billion will be invested into robotics and automation. A value that represents the industries confidence in the benefits of this technology.
This article looks at how the robotics industry is transforming Canadian markets and how the supply chain industry can leverage this technology.
Canadian Robotics Industry
Published by Canada’s Robotics Industry, Invest in Canada discusses the global robotics market and how the country is integrating this technology into leading industries. Their research indicates that the top three industries adopting robotics include:
- Industrial Robotics
- Personal and Service Robots
- Factory Automation
The processes involved within each of the above listed industries require efficient supply chains to remain productive and effective. For instance, the manufacturing industry currently integrates robotics and automation into their warehouses. Automated handling systems contribute to reductions in operation costs and also help alleviate workers from engaging in dangerous tasks.
Canada ranks 13th globally based on “robot density”, which describes “the number of multipurpose industrial robots per 10,000 persons employed”. The value of this industry is increasing by the year, with market predictions soaring to $41 billion by 2020. However, direct investment into the industry isn’t the only way Canada is investing into the future of robotics.
Research shows that over 20 post-secondary institutions offer “advanced robotics courses and technical certifications”. The Globe and Mail has also identified the need for students to learn active listening, critical thinking and social perceptiveness. These human skills will help students excel in a future workforce of technological advancements that will surely include robotics.
Robotics and automation yield proven results that benefit many industries. However, experts believe that this technology could provide significant benefits to supply chains.
Robotics and Supply Chains in Action
The Canadian supply chain and logistics industry has been a late bloomer with the adoption of robotics and automation into their processes. The expansion of global markets is providing consumers with an instantaneous method to click and purchase. Therefore, the need for efficiency and speed is a top priority, urging the supply chain and logistics industry to get on board.
Supply Chain Digital identifies two primary benefits that robotics and automation will have on supply chains: zero-defect logistics and new levels of productivity. As stated in their article “Automation and robotics: The supply chain of the future”, it seems a target area of improvement is efficient handling. Mark Parsons states:
The new generation of collaborative robots and automated solutions with significantly improved performance and enhanced sensing capabilities, offers a genuine alternative to manual handling.
According to Supply Chain Management Review, robotics contributes significantly to order fulfillment, providing the following rewards:
- Increased productivity
- Improved efficiency
- Exceptional Customer Service
- Scale modification based on demand
The implementation of robotics, in conjunction with a cohesive working relationship with workers, moves productivity along faster and more efficiently. Although there has been speculation that robots may replace workers, the implementation of artificial intelligence and technology is working to remove that myth. The implementation of a new generation of robots, known as collaborative robots (co-bots), enable them to work side-by-side with workers. The level of intelligence and flexibility in co-bots, complement workers rather than compete with them.
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Two Norwegian companies are working together to build zero-emission, completely unmanned ships
Several companies have been very public about their race to introduce fully-automated cars to the marketplace by 2020. Did you know that two Norwegian companies have teamed up to do the same but with a fully-automated boat?
A Costly Start but Promising Future
The Yara Birkeland will be a short-range, fully electric coastal container ship. It will begin its career modestly as a “feeder” cargo ship, ferrying containers of fertilizer to and from larger ships.
It’s co-developers, Kongsberg Gruppen and Yara International, plan for the Birkeland to start operations by 2018 with a human crew aboard. Over the next two years, more of the ships’ functions will move away from human operation until its running remotely by 2020.
“At first, a single container will be used as a manned bridge on board,” Kongsberg’s chief executive Geir Haoy told the Wall Street Journal. “Then the bridge will be moved to shore and become a remote-operation centre. The ship will eventually run fully on its own, under supervision from shore, in 2020.”
The technology isn’t cheap though. The price tag for the vessel sits at $25 million, almost three times the cost of standard container ships of similar size. The cost has to do with the ship’s enhanced capabilities. It’ll be able to handle things like docking and navigation on its own (something regular container ships don’t do). Given the specialized systems onboard, the cost of on-site repairs will also be pricey further driving up the cost.
Despite the high initial investment, both companies claim that the benefits are worth it. The vessel will:
- Eliminate 40,000 diesel trucks trips annually
- Significantly reduce harmful carbon emissions
- Improve the safety of local roads
- Save up to 90% of its cost by what it reduces in crew member and fuel spending
Autonomous Vessels are the Future
The push towards autonomous sea faring vehicles isn’t being driven by Norwegian companies alone. An article in Arstechnica referencing the Wall Street Journal interview points out that Rolls-Royce Holding PLC has similar plans. Rolls Royce plans to launch robot ships by 2020, but its fleet may include tugboats, cargo ships and ferries.
SpaceX piloted a program to use uncrewed drone ships. However, their interest was in having the ship do the dangerous task of rocket landing and retrieval.
Kongsberg itself has been active with its investments in autonomous technology with its partnership with Automated Ships Ltd (ASL). They worked together in the past to develop a prototype unmanned utility ship and are now working with Bourbon Offshore to construct a robot oil rig support ship.
Autonomous vehicles are the future. Whether it be through land, air or sea, both people and cargo will soon be transported safely and efficiently to their destinations. While there are still concerns over the legal, moral and economic consequences of such technology, its benefits for supply chains and especially for the environment are too important to halt.
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E-commerce giants are turning to brick-and-mortar stores to supplement their continued growth trajectories. Could this mean the e-commerce market is too saturated?
To say that online shopping and e-commerce has boomed in the last decade would be a gross understatement. In 2014, retail e-commerce sales worldwide were 1.3 trillion U.S. dollars. That number rose by 954 billion as of this year and is estimated to hit nearly 4 trillion by 2020. However, despite the impressive numbers, there seems to be a shift in strategy amongst the titans of the booming online retailer industry.
A few weeks ago, Reuters reported that Chinese e-commerce giant Alibaba had announced plans to move into the physical realm of brick-and-mortar stores. The move is a strange one for the company given that until now, its made $392 billion through digital sales alone.
Alibaba’s American counterpart, Amazon, has made similar announcements. Its recent purchase of Whole Foods and unveiling of an automated physical store late last year indicates the company is already on a similar trajectory.
The question to ask is why is this trend happening. Reporter Robyn Mak, who broke the Alibaba story, suggests that its because the retail e-commerce market is reaching its limits for the industry titans.
Alibaba’s New Strategy—Invest in Old Models
According to the Reuter’s article, Alibaba founder and executive chairman Jack Ma, has outlined the following plan for the company:
- The company will upgrade existing physical shops in partnership with established retailers.
- The company will also build its own stores from the ground up.
- Continued support for “Hema”, Alibaba’s own supermarket chain where can customers buy and have groceries delivered. Some stores even allow customers to choose fresh produce and have cooked in-store.
- Explore a similar Hema strategies for clothing.
Hema has been especially successful for Alibaba so it makes sense for the company to increase investment. As Robyn Mak stated:
The attraction for existing retailers is a chance to boost their notoriously low margins by tapping into Alibaba’s technology and platforms to manage inventory, supply chain, and logistics. Stores can also benefit from using the tech giant’s algorithms to analyse shopping habits and by moving to cashless checkouts, powered by Alibaba’s payments affiliate […] The e-commerce group boasts that sales per unit area at Hema are up to five times higher than a traditional supermarket
e-Commerce Around the World
The potential windfall profits that could be made through e-commerce has led to many new online businesses. In fact, there was an estimated 12 to 25 million online stores worldwide according to a 2014 study.
Most of that money trades hands in North America, followed by Europe and then China.
The world of ecommerce is dynamic and has opportunities for innovative new start-ups. At this point, Amazon and Alibaba might be too big to grow further.
Currently, 85% of China’s retail spending happens in brick-and-mortar stores. So while Alibaba is starting to stagnate in its online sales, it can continue its expansion into physical markets.
As mentioned earlier, Amazon has already started on this path. They invested $13.7 billion to acquire and rebrand the Whole Foods Market chain.
Balancing the Pace of Technology and Consumer Demand
As more people go online to do their shopping, the e-commerce market will continue to grow. Alibaba and Amazon are in the process of developing developing new strategies. But because of the demand in ecommerce, new avenues need to be explored for the industry titans. This won’t mean either company will give up any ground online. Instead, each has its own plan to expand past the digital store.
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Beloved entertainment giant Nintendo has a long history of trouble getting their products to the right hands.
Almost two months ago, video game giant Nintendo released its latest console—the Switch. Although it received a lot of positive coverage, a familiar problem has been marring the consumer goodwill; extreme product scarcity.
The company’s sales forecasts were off. They were so off that additional Switch consoles had to be flown to their North American and European distributors. Although Nintendo took a drastic action and its been two months since the launch, the consoles are still hard to find. Some are even claiming that it’s a case of artificial scarcity.
Before we can begin to answer the question of Nintendo’s possible motives, there’s a few basics that need to be gone over.
Make it Rare, Make it Wanted
The scarcity of a commodity or a service is an important element of the business model. If there’s a lack of supply, the price will likely go up. If there’s overproduction, the price will start going down. While scarcity is a natural and fundamental part of a free market, artificial scarcity is not.
Artificial scarcity happens when an individual, company or organization creates a scarcity either through technology, production or law, where there would otherwise be the capacity for an abundance.
A classic example would be the Beanie Babies during the 90s. Ty Warner, the person behind the craze, “would retire specific animals at whim, creating scarcity in the market and inspiring collectors to pay up to $5,000 for a plush toy that originally retailed for $5” writes New York Post contributor, Larry Getlen:
Ty’s website further fueled the phenomenon, as the company used it to make retirement announcements and to speculate on possible retirements, dropping hints that drove collectors to buy or sell different lines. Some sellers even began changing prices throughout the day based on website updates
In the end, the Beanie Baby empire came crashing down. Collectors became overwhelmed by all the new product lines and regular customers got tired of fighting with scalpers. The rise and fall of Beanie Babies is a lesson in how even the hottest products can tank if consumers aren’t respected.
Nintendo Has a History of Underestimating Demand
While misjudging demand is something many businesses go through, Nintendo is a special case. Pretty much every piece of hardware released by the company has met with supply problems.
Just to list a few, here are some examples:
- NES Classic Mini. Retailed for $60 USD, now on Ebay for $250+ and climbing.
- Amiibos, RFID-enabled collectable gaming peripherals originally sold for $12.99. Some of harder to find ones ended up selling on the grey market for over $100 USD.
- New 3DS XLs were impossible to get a hold in NYC when they released earlier this year according to an article from The Verge.
Just from these examples (there are many more), it’s safe to say that the company has a history of seriously understating the demand for it’s products. Many potential customers are turned-off from buying Nintendo products for this very reason.
Is it a problem with Nintendo’s supply chain or management? What if the problem is intentional, the supply intentionally restricted as many consumers suspect? The answer to these questions require nuance which is why we’ll leave off answering them until the next blog post. Check back again soon for the second part of this two-part topic.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
Earlier this month, Research and Markets added to their “Third Party Logistics (3PL) Market Analysis By Service, By Transport (Roadways, Railways, Waterways, Airways), By End-Use (Manufacturing, Retail, Healthcare, Automotive), By Region, And Segment Forecasts, 2014 – 2025” report.
Experts are estimating the 3PL market to reach USD $1.24 trillion within the next decade. That’s a massive increase considering that the current market is estimated to sit at USD 721 billion according to Armstrong & Associates, Inc. There are eight reasons why this is the case. That’s why this month we thought we’d focus our infographic on the top market growth predictions for 2025 when it comes to the third-party logistics industry.
Third-Partly Logistics Market Growth Predition for 2025
As business around the globe continue to expand their operations, the 3PL market will continue to parallel its growth. The Research and Markets updates highlight how this will affect revenue and coverage. Overall, it looks like the next few years will be a good time for the 3PL market.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
On Tuesday, Denmark’s Maersk Tankers announced that it will begin testing the use of special sails, developed by Norsepower, on one of it’s oil tankers. If the technology proves promising, the company could go onto to add them to a further four dozen ships, bringing back wind power to shipping.
It isn’t just any old sails that the company will be testing. These sails are special “rotor-sails”, which measure nearly 100 feet tall and look like giant rotating cylinders.
This is the latest attempt by the shipping industry to reduce its reliance on fuel and create a sustainable alternative. What makes Maersk’s test different is that the 245—meter tanker will be the biggest object to-date moved with wind power.
Future Cost of Fuel Driving Innovation and Revisiting Wind Power
For the last few years, shipping companies have been trying to find ways to cut marine fuel use. This is because as of 2020, new pollution laws will take effect which will require the use of more expensive, lower sulfate fuel for shippers.
Cargill Inc. for example, is exploring the possibility of using a giant kite made of special fibers to tow a vessel with wind power. Solar powered sails are another avenue of renewable energy being looked into by several different companies to combine both wind and solar energy.
Technology Details
The basis for Maersk’s innovative technology isn’t new. The sails are an updated version of the rotor created by German engineer Anton Flettner, almost a hundred years ago. At the time, they were too heavy to be effective. Thankfully, these new sails are made from lightweight carbon-composite materials making them much more cost-effective.
This article by the Financial Times, quotes Norsepower’s CEO Tumoas Riski about how the sails work:
They harness the wind by using the Magnus effect, the physical force that makes a tennis ball swerve when hit with topspin. A motor sets the cylinders spinning and when wind blows, the airflow speeds up on one side of the sail and slows down on the opposite to create a pressure difference that generates lift, propelling the vessel through the water.
The sails have already been tested and installed on a Dutch shipping ferry in 2014. Bore, the company operating the ferry, reported that the results exceeded expectations with up to 6% fuel saved when there’s good wind.
What to Expect in the Future
The final decision as to whether Maesk Tankers will roll out the wind powered tankers won’t be made until 2019.
However, the company’s is very optimistic about how technology will cut fuel costs. About $2.1 billion U.S is spent annually on marine fuel. Maesk expects that price could be cut by 10% with the new sails.
Maesk is also hedging it’s bet on the sails by investing in other sustainable alternatives. This includes special paints that go on the hull of a vessel that reduces drag by resisting microorganism and ale colonization. And, specialized delivery drones to replace barges to deliver ship supplies.
It’s both strange and heartening to see wind powered propulsion make a return to shipping after its over 100-year absence. Modern innovations technological advancements have made Maesk’s sails, and similar projects possible sustainable solutions to an industry that needs them.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
Few people appreciate what goes into having an item made and delivered to their home. For most, they simply order an item, wait the estimated time and then receive the package. It might as well be magic that made the delivery possible as far as they’re concerned. We explore the complicated business of pizza delivery from a logistics and supply chain point of view.
Those of us in the logistics and supply chain industry understand the level of work and coordination that goes into each successful delivery. Giant retailers like Amazon and Wal-Mart spend millions in technology, infrastructure and personnel just so their customers can get their packages a days earlier. It’s gets even more complicated for those involved in the food delivery industry.
Getting warm food to a customer without it getting ruined, is a complicated task. Just ask the dabbawalas.
It’s no surprise then that as the number of deliveries grows, the logistical systems in place become more complex. One company stands as a shining example of food delivery logistics. Not only has it reinvented itself, but it is also pushing the envelope of innovative technology—all in the name of better customer service.
There is a Western company that has not only mastered the art of hot food deliveries, but is also pushing the envelope for what’s possible. That company—is Domino’s Pizza
Domino’s is Dominating Innovation
If you lived in the right place in New Zealand, you could have a pizza delivered to you via aerial drone.
On August of last year, Domino’s Pizza partnered with Flirtey to test the first commercial drone pizza delivery model.
Up until then, the only companies dabbling in unmanned drone delivery were e-commerce giants like Amazon and Alibaba and a few others. Having a pizza business adopt similar technology may seem like overkill. That is, until you realize that it’s only the latest effort by Domino’s to become a leading innovator. The company is even investing in artificial intelligence, autonomous vehicles, DRU and voice technology to further improve its delivery services.
The Goal—Excellent Delivery
Prior to 2010, Domino’s was just like any other pizza delivery chain. It’s one highlight being that it had particularly bad pizza.
It wasn’t until Patrick Doyle became CEO of the company that things started to change. For Doyle, it was about seeing the bigger picture. Domino’s was always a pizza company, but its also in the business of delivery. It needed to excel in both areas to be successful.
Doyle’s plan for success, was to remove customer barriers. Anything that would impede a customer’s ability to select, place and request an order needed to be removed. Thus, the entire business model and company were restructured.
Invest in Your Customers and They’ll invest in You
Almost overnight, Domino’s saw a return on their efforts after they announced their plans through a series of bold commercials. The company stock jumped 15% by the end of quarter and it continued to grow. It’s now worth 18 times what it was six years ago. Domino’s reach has also grown as its stores can be found in more than 80 countries across 12,500 locations. The company’s commitment to better customer service paid off big time as it’s now the second largest pizza chain in the world.
The lesson that Domino’s teaches us is simple, but often forgotten: invest in your customers, and they’ll invest in you.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
The direction the big logistics companies are moving towards for their R&D is split between drone delivery and autonomous technology investments. We explore how each are developing in the industry.
Earlier this week, FedEx revealed its interest in using autonomous vehicles to make deliveries. FedEx’s chief information officer Rob Carter, says the company is considering using small robot vehicles that could drive around neighbourhoods and make deliveries on their own. The company has partnered with Peloton Technology to achieve this goal, firmly believing this path will be the future of package delivery.
Competitors such as UPS and Amazon disagree. They have spent the last few years developing their own aerial delivery drone programs. Their aim is to have packages reach their destination through the air, instead of on the road.
Flying to New Heights
The idea of delivery drones was initially met with disbelief when Jeff Bezos, CEO and founder of Amazon initially unveiled the technology back in 2013. After a long approval process, Amazon finally received permission from the Federal Aviation Administration (FAA) to conduct trial runs in early 2015. The approval was likely a response to the Chinese online giant Alibaba, a major competitor, conducting its own drone delivery tests.
This event led the way for other companies to develop their own drone delivery programs, and experts weighing in on the potential benefits.
“Allowing drones to be flown for business purposes in the U.S. may produce $100 million or more in economic benefits” says Bloomberg writer Alan Levin, reporting on a FAA document. Enhanced delivery speed and eco-friendliness are other benefits expected from these programs.
Critics have been vocal about cons as well. Namely, in the areas of privacy, potential for theft of packages and the drone itself, and public safety.
Amazon conducted its first delivery through its drone program late last year. Whether the pros or cons win out is now a matter of waiting and seeing.
Driving Towards New Delivery Solutions
FedEx isn’t the first big business to invest in autonomous technology, far from it. Intel for example, is expected to have $1 billion invested in this field by 2020. Uber has jumped onboard with its acquirement of Otto, the company responsible for the successful testing of self-driving tracker trailers.
However, Carter is promising that FedEx’s program will have several distinct advantages over drones. For starters, the vans are expected to be more energy efficient than their aerial counterparts. The maximum cargo delivery limit is also greater. Finally, ground vehicles won’t have to content with the FAA for regulations and flight path approval for urban areas.
Peloton Technology’s current semi-autonomous technology isn’t far off from FedEx’s goal. It can electronically link trucks into small caravan groups called platoons. The lead truck can then control the brakes and gas of the convoy, lowering wind resistance and saving fuel.
Logistics is a multi-trillion-dollar global industry. FedEx is betting of self-driving robots as the future of cargo delivery. Given the company’s size, that’s 220 countries whose way of receiving parcels and movement of large fleets would be affected. Time will tell if FedEx’s robots will be able to streamline, automate and accelerate the supply-chain industry.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
In last week’s post, we covered the reveal of Amazon Go.
This week, we’ll cover the steps Amazon’s competitors have taken to stay competitive. We will also be going into why with just a teaser video, Amazon may have already won the war for the future of retail.
Before we begin, we need to do a recap about what we know so far.
What the Reveal Video Tells Us
Amazon Go will work like this:
- Amazon Go aims to give customers a ‘grab and go’ feeling similar to how its digital shop operates.
- You enter the store by waving your smart phone across a scanner.
- You will need an Amazon account (likely Amazon Prime) to use the store.
- If a customer changes their mind about an item, he/she just puts it back.
- The store will be using AI and facial recognition technology similar to that found in a self-driving car.
- Seattle will be the first test city which makes sense given the city is also home to Amazon’s head office.
The video is meant to cement the idea of a friction-less retail experience. Simply go in, get what you want, then leave. The video makes the idea believable, influences buyer expectation, and affects the future of the industry.
Let’s look at the strategies Amazon’s competitor’s have been testing to expand their market share.
Competitor Response
Big retail and food companies are using a number of different strategies to stay competitive. Companies such as RetailNext, Euclid, Nomi and others are part of a trend that provides brick-and-mortar stores with analytics that looks similar to website traffic reports. The aggregate data is used to project purchasing trends, decide how to build a layout, and produce more detailed reports for shareholders.
Food heavyweights such as Tyson Foods Inc., Campbell Soup Co. and Hershey are taking a page from UberEATS with their strategy. They are trying to get into the home delivery and meal kit market as Wall Street Journal correspondent Kelsey Gee explains. They are working with online couriers to challenge companies like Blue Apron and HelloFresh that have carved out a $1.5billion market delivering parcels of fresh ingredients.
Wal-Mart is also making an aggressive push into online groceries. Wal-Mart Pickup and Fuel lets customers order their items online and pick them up when they are ready.
Future of Retail—Has Amazon Already Won?
While the strategies used by Amazon’s competitors are innovative, they haven’t had the same media buzz. With just a video, Amazon has created an expectation amongst consumers. They will expect greater convenience in the way the video promised. Companies using alternative models will need to work harder to convince their consumers that their way is superior.
However, being king of retail may not be Amazon’s true goal. Amazon Go is more likely to be a proof-of-concept and a retail model it can sell to other businesses as this video speculates.
Conclusion
The reveal of Amazon Go is recent, but it’s already beginning to disrupt the retail industry. Time will tell which new retail method becomes the standard, but one thing is certain—retail will be undergoing a drastic evolution very soon.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.