Blockchain is bringing Intelligent Technologies to Micro, Small & Medium Enterprises

Chatbots

As Blockchain technology is getting into the mainstream of large enterprises, I have been contemplating on how micro, small and medium enterprises (MSME aka SMBs) can benefit from Blockchain. Let me explain below what I mean from this.

I looked into the data on Micro, Small and Medium Enterprises in United States at International Finance Corporation (World Bank Group) website (http://www.ifc.org ). As per IFC consideration Micro enterprise has <10 employees, small enterprise has 10 to 100 employees and medium enterprise has 100 to 500 employees. The latest data from IFC totals to more than 6 million MSMEs in United States. Based on the scale and size, the technology adoption in MSMEs is driven by three factors – lower costs, ease of usability of technology and more importantly demand and advantage from new-age technology to their consumers/users. I would like to describe few scenarios before landing on to Blockchain advantage for MSMEs.

  • Scenario I: Chat bots have made a progression to successful use cases at large enterprises. Look at examples of  Allstate Business Insurance Expert (ABIe), Capital One Financial’s Eno, Domino’s pizza chat bot, a real estate bot like Apartment Ocean and list goes on. But I never come across a chat bot in interacting with a local restaurant, a childcare center, a mom and pop shops to state few examples from MSMEs. The reason being an initial capital cost and annual maintenance costs difficult to break-even with MSME financial models. Adding new-age advancements in AI, NLP and Machine Learning further enriches the power of chat bots. There exists a real opportunity in bringing efficiency of chat bot to MSMEs by taking over tasks for which humans are not essential
  • Scenario II: Mobile Apps and monetization opportunities. Both Google’s android and Apple’s mobile apps got exploded in recent times (7+ Million total apps as Aug 2017). According to the Small Business Mobile Apps: 2017 Survey by Clutch, 85% of micro enterprises with fewer than 10 employees do not have a mobile app and whereas for SMEs in lowers fifties. There exists a significant business opportunity enabling MSMEs access to mobile apps.
  • Scenarios III, IV, & V: SMS/USSD messaging, ecommerce/direct-to-consumer websites, and instant messengers are other scenarios that would enhance MSMEs capability in addressing gig economy consumers. The technology is available to MSMEs in these scenarios, but development & customization needs, and costs are slowing down the adaptability.

Blockchain backed Distributed Ledger Technology (DLT) offer real opportunities enabling multiple channels like chat bots, mobile apps, SMS/USSD messaging, ecommerce/direct-to-consumer websites, and instant messaging to MSMEs and as well enable Omni channel capabilities. Blockchain decentralized autonomous platform (BDAP) can connect MSMEs, technology providers, developers, marketers, crypto ecosystem, and market place offering minimal transaction fees, competitive prices in open and transparent marketplace, ensuring secure transactions, easing the channel access and simultaneously create Omni-channel customer experience.

  • First, Blockchain (BDAP) platform takes-out the initial capital investments to access new-age technologies enabling multi-channel capabilities, establish a distributed ledger technology offering peer-to-peer financial system, smart contract to execute secure transactions and an exchange for MSME tokens, and platform that enhances exceptional customer experience.
  • There is an opportunity for sellers (tech providers/developers/marketing firms/startups) to play Business Integrator role creating MSME tokens and made available in the marketplace for MSMEs, Developers, Marketing & Content Firms, and Technology Providers.
  • MSMEs buy tokens for fiat and crypto currency. Developers, Marketing & Content Firms, and Technology Platforms decide the price of channels and determine token equivalents. This gives an opportunity for sellers to form a partner syndicate for creating Omni-channel AI Agent experience as an additional value add.
  • Once tokens are received sellers of various forms (developers, marketers, media firms, technology partners etc.), MSME channels (chat bots, mobile apps, ecommerce/direct-to-consumer websites, instant messengers etc.) gets launched per purchased token volumes.

What MSMEs get out of BDAP is an asynchronous participation of ecosystem players offering decentralized platform to access channel capabilities otherwise tied to higher capital and ongoing costs. Another key advantage to MSMEs from Blockchain enabled decentralized ledger is while MSMEs ensures their product quality building a trust/brand evaluation system, BDAP helps MSMEs scale to reputation evaluation system leveraging the platform.

You can reach me @ kishor.akshinthala@gmail.com for a deeper mindshare on this topic.

 

 

 

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Amazon Effect

Amazon EffectI am publishing this post to highlight few aspects of combined effect of Amazon’s supremacy in online retails sales and its recent acquisition of Whole Foods. Amazon is undoubtedly a retail disruptor and eying for dominant role in pretty much every consumer segment. Based on recent analyst reports, Amazon’s wallet share is about 44 cents out of every e-commerce dollar spent in the USA, followed by eBay (6.8 cents every e-commerce dollar), and Walmart & Apple each at 3.8 cents every e-commerce dollar. Highlighting below Amazon’s impact on CPGs and counter measures

Amazon E

  1. Amazon fueling CPGs Direct-to-Consumer (D to C) channels going forward: Amazon being brand agnostic, promotes them all and let consumers decide the winners and losers. What’s relevant and important, though, is to give consumers the best prices possible. Amazon looks at itself as working on behalf of the consumer. If a CPG company has the resources and patience to work through their D to C strategy integrating with Amazon (probably the largest CPGorganization in the world) it will benefit. Furthermore, if brands are willing to play ball the consumer-oriented way, they’ll win. The losers will be those that don’t know how to play D to C tactics with Amazon, or don’t have the resources.
  2. Amazon acquisition of Whole Foods impacting CPGs: High cost has been Whole Foods’ biggest obstacle to the fresh concept. With Amazon in the picture, more consumer-friendly pricing is already on the horizon. Secondly, along with entry into “fresh” play, Amazon is trying to get a “bite” out of Millennials’ shopping habits. Amazon is looking at grocery as the next step in consumer satisfaction and Whole Foods enables Amazon to have 450 brick-and-mortar locations and multiple distribution centers to enhance its online delivery to the customers who want it.
  3. Combining Amazon online supremacy with in-store experience: We can foresee that Whole Foods in-store experience will evolve as Amazon uses consumer purchase data to reduce inventory levels at Whole Foods making space for Amazon to use Whole Foods stores as showrooms for Amazon products (Books, Kindles, Alexa, etc.) and pickup locations for Prime purchases. CPGs will have to prepare for tighter inventory management, faster shipping, and possible packaging changes to adapt to the new format.
  4. Leading to “Click & Collect” dominance: Amazon can leverage Whole Foods physical stores as pick-up locations for Amazon Fresh Pick-up. CPGs will have to ensure that they achieve full distribution in Amazon Fresh and invest to ensure strong platform visibility.

Amazon’s acquisition of Whole Foods could influence consumers shift away from pre-packaged foods and center of store items so be prepared for volume declines on brands that aren’t able to be positioned as healthy and all natural. The shift towards healthier, more natural food and personal care products will accelerate. CPGs will need to shift their product portfolio accordingly.

Part II: Direct-To-Consumer Business Model Innovation and Emerging Trends

D2C

“The Best Service Is No Service” – Picked from authors Bill Price and David Jaffe, the best way to satisfy customers is eliminate the need for service altogether. The need of the day for DTC seller is to progress beyond offering personalized service to true customer excellency with “No Need for Service”.

In continuation of last series, elaborating further on business model innovation and evolving trends in direct-to-consumer marketplace that are fueling the growth. The following is summary of few of trends.

“Direct-to-Patient” Model: For example Telehealth, is likely a strong area of interest due to its potential for significant impact on care delivery. While virtual visits may have the ability to shift significant volumes of care and expand access, uncertainty remains for many institutions regarding reimbursement levels, compliance standards and best practices for planning. Very promising D2C model to keep an eye on.

“Drone-enabled” Delivery: D2C can really be fueled by drone-based delivery. The ideal candidates are replenishment products where shoppers essentially repeat-purchase, building online channels makes a lot of sense for a brand, especially in the age of 1-hour drone-enabled delivery. Repeat-purchase models also help the brand get and remain entrenched with shoppers, often opting for convenience and loyalty over price

Brand experience via “Commerce-as-as-Service”: Consumers are demanding a enriched experience. Direct-to-consumer business model combined with a distinctive, compelling and focused public-facing brand experience, lets manufacturers control and cultivate relationships with customers that transcend retail channels.

Instagram Buttons: PepsiCo is one of the classic use case of leveraging Instagram Buttons for its D2C strategy. PepsiCo succeeded selling its IZZE – a range of carbonated drinks – aimed to sell online effectively to ‘hipster millennials’ by following e-commerce trends in Instagram buttons, links to Amazon and early adoption of Amazon Dash buttons

Hybridization: The hybridization of brick-and-mortar, e-commerce and pop-up retail is creating interesting new business practices. Chacos footwear is a classic example – owns its website and sells direct-to-consumer supplemented by a series of nomadic pop-up shops in cities, at music festivals.

Uberization of Payments: Uber and Airbnb have been at the forefront of integrated commerce, a trend that many in the payments industry refer to as the ‘Uberization of payments’. In this space, mobile is key to DTC opportunities because it reduces the number of steps between browsing and buying. In the case of Uber, the mobile app turns many would-be cash or card transactions into automatic digital payments. Apps such as these have introduced many first-time mobile payment users to the concept of mobile-enabled commerce. We know how quickly this industry is evolved.

Facebook AR Model: Facebook thinks the future of smartphones lies in AR and AR enables advertising and social hellscape. Ubiquitous and free-to-use AR built right into smartphones is fast approaching. That paves the way for aggressive advertising overlaid over every inch of our line of sight, and the kinds of public ranking systems that split society into the have’s and have not’s.

Amazon Algorithm: The core of D2C strategy here is an all-out price war between Amazon and Walmart. I would like to mention about “Amazon algorithm“ – as media reports say Amazon algorithm that works to match or beat prices from other websites and stores. It finds the lowest price per unit or per ounce for a given product — even if it’s in a huge bulk-size pack at Costco — and applies it across the same type of good on Amazon, even when the pack size is much smaller.

IKEA “Co-creation Platforms”: IKEA achieved double digit growth for digital sales with a user-generated platform engaging buyers from the design stage to purchase. This platform became a gateway for social commerce showcasing the homes of IKEA’s online community and transforming them into real life product showrooms.

Google’s Zero Moment of Truth: Unlike the earlier days of mass media advertising, zero movement of truth in DTC arena is often more peer- and social media-driven. Marketing channel that arguably is poised better than any other to both create that moment of truth. The customer becomes a co-creator in the creative process and consumers are evolving into prosumers.

Let us meet in Part III of the Series ….

Direct-To-Consumer (DTC) Strategies fuelling Retail Growth – Part I

DTC

Direct-To-Consumer companies  through new retail channels are driving two fundamental changes in the business models fueling next-level growth. 1) Offer shoppers ways to cut out physical store visits avoiding traffic, 2) Enable bypassing middle-man distributors. Innovation in DTC e-commerce and Omni-channel strategies is playing a key role in retail business sustenance and growth. DTCs primarily focus on designing and selling apparel, accessories, and many more directly to consumers through their own online channels. DTCs offer a superior shopping experience, higher-quality goods, cheaper products or greater convenience overcoming the constraints of incumbents monopolistic companies. Let us examine how DTCs enabling next-level growth with few use cases below.

1) Legacy companies usually sit on large profit pool and accustomed to doing business one way being constrained to pivot and think outside the box. Take a closer look at Warby Parker from its emergence in 2010 as it redesigned customer experience featuring home try-on and dramatically reduced price points as compared to dominant industry players. Warby Parker succeeded in establishing a business model to directly reach consumers.

2) Razor market is another classic example. As Gillette having cornered the retail market and established high price points, a DTC subscription model got emerged with upstarts like Dollar Shave Club and Harry’s which succeeded in bypassing the retail channel completely, which enable them to offer hugely discounted prices. And despite Gillette trying to play catch-up with its own DTC offering, its prices are still higher as compared to new crowd favorites.

3) Dental hygiene is a tough market, with just a few familiar consumer brands from which to choose. Goby has circumvented traditional distribution channels by aligning itself with dentists who have come to recommend the product. Goby is aiming to change that paradigm, offering the first subscription-based DTC rechargeable electric toothbrush that’s simpler and half the price of retail brands

4) Fresh start of DTCs enables them with innovative B2C marketing strategies. While Huggies and Pampers have been the diaper mainstay for generations, for example, Honest has been giving them a run for their money, thanks largely to its superstar spokeswoman and brilliant marketing tactics.

5) Take a look at Wine industry. Vying for customer attention with digital-first brands in a highly fragmented industry where brand loyalty is notoriously low. Penrose Hill, which is reinventing the wine club experience through homegrown wine brands offer improved value, selection and convenient delivery formats direct to consumers.

One key take away is DTC companies are less shackled by the legacy technologies, risk-averse cultures that large companies so often are, but on the other hand established players will need to do far more to emulate their DTC counterparts if they want to tap into high-growth market opportunities.  The next post in this series focus on DTC business model innovations.