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.
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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.
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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.
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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.
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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.
A couple of weeks ago, Amazon.com Inc. announced it will be opening a grocery store. This is an unexpected move for the e-commerce giant.
Amazon Go is the name of the name program. The reveal video promises “no lines, no checkouts, no registers”. It’s about to enter the pilot phase, being limited to a single store. The only customers to test it out will be employees.
So why the hype?
More Than Meets the Eye
It might seem strange that the announcement of physical store is having such an effect on news outlets. After all, e-commerce sales continue to grow each year. The sale of groceries isn’t new for the company as its AmazonFresh program made its debut back in 2007. This being Amazon however, means the project is more nuanced then it first appear.
A 2014 patent filed by Amazon gives more insight into how the store could work. Basically it involves a whole lot of cameras, sensors and tracking. Natt Garun, from the Verge, comments:
The patent describes a system where cameras could capture you as you walk into the store, then identify who you are based on an ID card that’s associated with your Amazon client
There are cameras lined within the store as well. They’d determine if multiples of the same items are taken. So if you took several bags of chips to get to one in the back and you put the rest back, then the cameras would recognize the action and keep you from being charged.
Sensors in the shelves are another way for the store to know what you have taken. They will check to see if the weight has changed from its original state.
Why Invest in a Grocery Store?
There are some unique ways Amazon Go stands to benefit the company.
Amazon Go, even if it were expanded far and wide, would generate a shadow of the sales of the parent company. E-commerce will have the advantage over physical stores because it isn’t limited by the geography of its customers.
What Amazon Go represents for the company, is valuable information on its customer’s buying habits. Customers would be enticed by the promise of a hassle-free grocery experience, and the cameras in the store would collect information about them. Nat Garun continues:
The patent says this is used to identify the shopper’s hand to see whether they actually pick up anything off a shelf, but combine that with the fact that Amazon knows what you’re buying and who you are down to your skin colour and this is pretty next-level market data
Information gathered this way could be used to strengthen its other programs, AmazonFresh in particular. The company would be able to see what works to move a product and what doesn’t. Having physical stores would also allow Amazon to broaden its influence in the retail market.
Conclusion
Time will tell how much of a disruption Amazon Go will be on the industry. The promise of “no lines, no checkouts, no registers” sounds appealing but customers may not like being always watched.
The store will also be a model for other industries to consider. In the same way the reveal of Amazon Prime Air made waves in 2013, the same will be true for Amazon Go.
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 Port of Rotterdam tests blockchain logistics which can kickstart a revolution in the level of transparency within the industry.
The Port of Rotterdam, Europe’s largest shipping port, is taking part in a Blockchain consortium which is focusing on logistics, reported Coin Desk. The project has the support of more than fifteen public and private sector companies based in the Netherlands.
Consortium members will spend the next two years designing and developing applications for blockchain technology in the logistics sector. There have been similar efforts in the past, but according to the founders, this blockchain project is unique because of its scale in the logistics chain.
What is Blockchain Technology?
According to the Economist, a blockchain is a distributed database that maintains an ever-growing list of records called blocks. The information in a block cannot be altered retrospectively as each block contains a timestamp and a link to a previous block. The nature of blockchains makes it function like a public, digital, distributed ‘ledger’.
The technology is relatively recent having first been put into practice by Satoshi Nakamoto in 2009 as a core component for the digital currency known as bitcoins.
Since its debut, blockchain technology has had a disruptive impact on several industries. Financial technology was the first to start adopting blockchains, but its started to move into the logistics sector as well.
How Blockchain Technology Can Benefit Logistics
There have been several articles published online about the benefits blockchain technology can bring to the logistics and supply chain sector. Here are a few ways the technology can improve the industry.
- Transparency for customers. For most people, little is known about the products they use. As LetsTalkPayment.com phrases it, “an almost incomprehensible network of retailers, distributors, transporters, storage facilities and suppliers stand between us and the products we use.”
With blockchain technology, customers will be able to see every part of the journey their product took before arriving in their hands. The network behind the store shelf will no longer be hidden, allowing the customer to make better informed decisions.
- Transparency for auditors. Because the history of transactions is locked into each block, auditors will have an easier time understanding where items and resources have gone. This, as Adam Robinson of Cersasis puts it, “help[s] supply chain leadership, such as C-level executives understand how to make the supply chain more efficient and productive.”
- Greater security. The technology will enable supply chain companies to identify attempted fraud more easily.
“For example, an employee that goes into the system to change past events will alter the coding of the event” writes Robinson. “However, the altered coding appears so differently that it would be practically impossible to not notice the change. This will allow companies to recognize the fraud and who initiated the change almost immediately.”
The two-year project undertaken by Port of Rotterdam will give insight into the scope of the benefits, but the technology has already shown promise.
“With a world that is becoming more connected on a daily basis, blockchain technology will inherently develop into a symbiotic relationship with the Internet of Things and today’s advanced logistics and supply chain management systems” concludes Robinson.
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The long road to commercially available autonomous cars is almost at an end. A number of things will be changing when that happens. Chief among the changes is the way automotive manufacturers invest and sell their products.
What separates an autonomous car from a regular car is the onboard computer. Behind that technology are companies such as Intel, Qualcomm Inc. And Nvidia Corp. which provides the chips necessary for the computing power. Cars will need to be turned into essentially mobile data centers meaning that the competition for the future of autonomous cars isn’t only among car manufactures. It’ll also be with and between the world’s largest biggest tech companies.
There’s Big Business in Little Parts
As we approach the final lap on the course towards autonomous cars, automotive manufacturers have already started to change their sale tactics. Where manufacturers used to talk about horsepower, they’ve now started talking about processing power.
According to data compiled by Bloomberg, the total value of automotive supplier deals in 2015 and 2016 were $74.4 billion. For some context, each of those years far exceeded the $17.7 billion annual average of the previous 10 years.
“The number of transactions valued at $500 million or more also skyrocket to 18 last year, triple the level of the previous decade” writes Elisabeth Behrmann, Polina Noskova, and Aaron Kirchfeld from the same Bloomberg article. “There have been 11 such deals so far this year.”
An example is Intel. Its automotive business is currently involved in 30 vehicle programs on the road. By 2020, the company is set to increase that number to 49 with orders worth $1 billion according to the Wall Street Journal.
Many of the deals are still done with makers of powertrain and chassis components. However, electronics-related acquisitions are growing the fastest. Some estimates have the cost of electronics in car manufacturing growing to 50% by 2030, up from around 30% in 2015. A portion of resources have also gone into securing the proper know-how to ensure that their cars have the necessary sensors, cameras, radar, and computing power necessary to safety assess traffic conditions and see their environment as a driver would.
Phone to Pocket PC, Car to Mobile Entertainment Hub
One of the biggest innovations over the last two decades has been in finding new uses for old products. TVs grew ‘smart’, watches and shoes graduated into personal trainers, and cell phones evolved into pocket PCs. Today’s new technology is sold with the promises of greater efficiency and consolidation. Autonomous cars will be no different.
For as useful as cars are in our everyday lives, they spend close to 95% of the time unused. This means there is a big opportunity for the manufacturers of autonomous cars. Captive consumers will be surrounded by the technology for an average of at least five hours a week. The challenge will not just be how to commercially manufacture autonomous cars, but also in building a platform that connects software developers with the passengers.
As Nokia and Blackberry demonstrated in the past, consumers need more than just an effective product. They also need their devices to consolidate their consumption of media.
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.
It was just under three years ago that Amazon.com CEO Jeff Bezos revealed plans for “Amazon Prime Air,” a drone-based delivery system that would’ve been a game-changer for delivery services. At the time, there were a number of news outlets and commentators divided on the topic, with some being excited at the implication of drones that could theoretically reach you anywhere, while others had safety and privacy concerns.
This week we thought we’d focus on the impact drones are having on the future of supply chains.
The Fight For Flight: Commercial Drones May Soon Deliver Your Next Order Online
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.