CPG Blockchains

scmCPG Supply Chains are undergoing an unprecedented change looking out for new ways of improvement. I am focusing on this blog on how net-new technologies including  Blockchain is transforming the CPG supply chains.  Evaluating few real-life examples in CPG space triggering a discussion on Blockchain relevance in CPGs.

CPG sectors that benefit from Blockchain are widespread. Fashion products, which is one of the prime CPG sectors ripe for Blockchain adaption where supply chain provenance plays a significant role. The other product classes include garment or makeup products, fine wine, art, luxury items or for that matter diamonds that can benefit from Blockchain adaption. I have been evaluating on how CPG companies can promote an “ethical fashion” or “ethical products” with Blockchain based applications. Let us dive into details.

Blockchain relevance to CPGs:

Focus areas chosen are supply chain provenance, transparency, counterfeiting, and sustainability. The enterprise-wide Blockchain platform could help to increase business velocity, create new revenue streams, and reduce cost and risk by securely extending the supply chain to drive tamper-resistant transactions on a trusted business network.

Provenance & Transparency: Do you agree that the relationship between CPG supply chains Transparency (access to information) is not always linear & straightforward with Traceability (provenance)? Let us look into how to build a Blockchain based solution for CPG supply chain provenance.

Blockchain could help in improving the transparency of the fashion supply chains, promoting sustainability and addressing fashion companies’ lack of ethical supply chains that are contributing to >10% global emissions, and as well in combating to counterfeiting.

Blockchain can play a role in transparency in transforming fashion supply chains through technologies such as track and trace and inventory management. With Blockchain, it is possible to create physical – digital link between goods and their digital identifiers. Cryptographic seal or serial number can be used as a physical identifier linking back to the product’s digital-twin. An example to quote is “Better Kinds”, with a focus on decentralized manufacturing allowing everyone to know where your clothes come from.

Counterfeiting: Blockchain solution as well helps fashion CPGs in combating counterfeiting by recording on blockchain every time goods change-in hands. The chain of custody on blockchain provides a record of the last party to gain custody of the product, showing where the counterfeit product slipped in, or an authentic product got diverted. Read my blog post, Combating Counterfeiting With Blockchain Technology

Sustainability:  The promising outcomes of Blockchain in this space include, sustainability gains in the form of reduced environmental impact and better assurance of human rights and fair work practices. Having a clear record of product history helps product buyers to be confident that goods being purchased are coming only from sources that have been recognized as being ethically sound. More accurately tracking substandard products and identifying their occurrence further upstream in supply chains will help reduce the scope of rework and recalls, providing considerable greenhouse gas reductions and other resource savings. the ultimate goal of Blockchain will be improved supply chain optimization gaining access to a more complete longitudinal supply chain datasets eliminating redundancies and bottlenecks, and ultimately, decreases in resource consumption.

Blockchain implementation process for CPG Blockchains:

Blockchain solutions could help fashion CPGs in their brand positioning as environment-friendly and tech-savvy. Existing technologies like ERPs, Enterprise Data Warehouse, Integration Technologies, and existing e-commerce website can enable provenance, but with practical limitations.  That is where new technologies including Mobile App Development, Public/Private Blockchain Platform, Crypto-Fiat payment gateways & wallets, Digital-Twins, Artificial Intelligence and Advanced Analytics, IoT Sensors, Robots & New Handheld device Hardware etc.

Blockchain implementation for CPGs is an art. The new technology adaption process includes building a public or private blockchain network bringing connecting all key stakeholders using a DLT. Create a token that promotes the use of such application and potentially incentivize the users and suppliers. Create wallets to store tokens and collect incentives. Integrate with payment gateways and exchanges. This forms the Blockchain Core. Then build business and application logic with workflows that support the provenance functionality. Integrate the Blockchain core with back-end transaction systems and ensure seamless flow of information ensuring the data integrity and privacy. It may be a good idea to consider a second layer solution for improved transaction rates and at the same time confining certain confidential information, in this case, supplier data to open access to all competitors via a blockchain. Developing a mobile app and lastly, integrating UI, Application (Blockchain Core) and back-end systems. A brief description of 3 layers of foundational architecture is provided below.

  • User Interface: Customer experience plays a significant role in provenance applications. Should have access to a friendly UX that should support consumers to be able to walk into their favorite retailers, use phones and scan the tag on a garment or makeup product to be able to pull up full supply chain information.
  • Application Logic: Build business and application logic with workflows that support the provenance functionality. This is the core platforms that developed and rolls out provenance application.
  • Data and Back-end Transactions: Brands should get a better handle on what’s really happening in their production processes and chosen technology should relieve a logistical headache by streamlining the record-keeping and verification processes. Second, it requires brands to voluntarily invite their suppliers (who will need to in turn invite their own suppliers, and so on down the chain), to adopt the technology.

How to calculate ROI for CPGBlockchains?

Setting up a Blockchain based application for CPG supply chain provenance involve a capital investment for infrastructure and development costs and ongoing maintenance costs. ROI is a derivative of whether such application attracts more consumers demand and/or willingness of consumers pay additional fees for access to truth and sustainability and/or reduced costs of the current supply chain with streamlined operations. Hence ROI should be computed as “[ Increased revenues from consumer demands & adaption + Premium fees consumer willing to pay + Reduced costs of supply chain operations – Total Investments & Costs (CapEx+OpEx)]

The real ROI of Blockchains come from handling the volume of CPG products and transactions having a second layer solutions to offload/ off-chain transaction volumes from core Blockchain. Estimating components is a challenge in computing Blockchain ROI. But there exists an opportunity to estimate parameters with a degree of accuracy. Such parameters include,

  • Improving the efficiencies of running workloads. Smart contract automation can save significant time in real life transactions avoiding manual interventions
  • Cost reduction is a great value in horizontally integrated supply chains. Blockchain can easily create a global view without expensive third parties
  • Increased trust among key stakeholders that would improve supply chain performance
  • CPG/Retail plastic/waste management can be incentivized leading to a better sustainability

Let us examine use cases:

The following two case studies offer a great insight into how Blockchains can enable provenance. From these examples, taking a value chain based approach for identifying incremental benefits along various supply chains components could fairly offer potential ROI perspective from Blockchain adaption.

  1. Examining the Everledger based blockchain application for traceability of diamonds. The key challenge of the diamond industry is certification of the ethical origin of the diamond. Noticed that Everledger has been trying to create a database of diamonds registering on the blockchain to certify the final cut diamond was ethically-sourced from “conflict-free” regions. Such examples can be used to create an anti-counterfeit database for other valuable goods such as fine wine and art.
  2. Moving on to another example, Blockchain enabled traceability application for yellowfin and skipjack tuna fish. The Etherium based platform trying to track the entire supply chain from fishermen to distributors. End users could track the source of their tuna fish sandwiches via a smartphone. This platform would enable determination of information about the producers, suppliers, and procedures undergone by the end product. allow confirmation of a given fish’s origin tracking the supply chain. Such a solution would present a viable model for product certification to an end consumer.

In Summary…

The complex blockchain solutions will provide an unprecedented level of transparency and traceability, to build the highest level of trust in the sustainability of the CPG supply chains. The CPG products are able to be traced on the blockchain through their unique tracking code with the information collected from linking all information sources within the global supply chain covering from the source through the production process up to the final point of sale as described in the case examples above.

Working as a single source of truth, Blockchain can change the way business transactions take place. From a supply chain perspective, such visibility will help ensure efficient transactions, while promoting safety, efficient recalls, the elimination of counterfeits, and the assurance of ethical trading.

I continue to research further on Blockchain relevance to CPG supply chains. While the core principles of Blockchain are being established, the companies adopting the new technology progressively evolve alongside. ABC (AI+Blockchain+Crtptocurrencies) continues to significantly alter Retail / CPG business models.

Reach out to me for further discussions @ kishor.akshinthala@gmail.com.

Enhancing Gift Cards Value Proposition (Blockchain for Gift Cards – Part II)

Last week, I published a blog post titled “Blockchain Boosting Customer Loyalty Programmes”. In continuation of views on Blockchain relevance, highlighting the following 4 aspects of gift cards industry that encompasses open & closed loop cards, new age innovative cards such as gift cards for stock, lottery retail gift card, donation gift cards etc.

1) Transaction fees

2) Seamless redemption

3) Consumer wallet spends

4) Fraudulence

1) Transaction fees: Gift cards market in the USA alone is estimated >$170 billion and growing at ~20% CAGR internationally across channels of stores, web, mobile, incentives, employee engagement etc. As per GiftCardsdotcom, processing fees on various types of gift cards range from 1.4% to 3.94% and lower the value of card higher the fees even touching double digits. This as a result of cumulative effect of various stakeholders in the value chain including the issuer, distributor, reseller, buyer, & receiver. Can we bring them on DLT to checkout fees?

2) Seamless redemption: Gift card industry is set up to hide identities of unspent balances on gift cards called “breakage”, which accounts to ~20% total spend i.e. $34 billion. Combining gifts, rewards, loyalty and coupon credits in one place/platform, making them available for immediate use can be one solution to this. Such platform as well can enable auctioning, trading, regifting and donating to charity features creating value for unwanted cards that expire. Can blockchain technology be leveraged for generating net new revenues from seamless card redemption?

3) Consumer wallet spends: Lack of single source of truth and shopping data has been limiting the scope of consumer wallet spend expansion. Overspend dynamic is really an upside, and analysis shows that when consumers shop using gift cards they spend an average of 30% to 40% more than the face value of the card credit. How about combining AI+Blockchain+Cryptocurrency (ABC) to increase the effectiveness of advertising by retailers to increase consumer wallet spend?

4) Fraudulence: “Return fraud – thieves simply walk into Walmart, Target, Home Depot, Lowe’s or another big-name retailer, steal an item, return it at a different store without a receipt and receive a gift card in return, which they can then turn around and sell to a pawn shop or secondary store for a lower price” (dangerous than cyber fund) is a new form of fraud in Gift Cards environment. Retail return losses total of $9 to $15 billion per year, 2017 survey by the National Retail Federation. >50% of companies reported fraudulent gift cards or store credit in one or more locations. How about applying blockchain technology enabling people who don’t trust one another share valuable gift card data in a secure, tamperproof way making it extremely difficult for attackers to manipulate?

Blockchain technology precisely addresses these factors and fuels the growth of gift cards industry leapfrogging customer loyalty experience and enhancing gift cards value proposition.

Refer to Part I @

Boosting Customer Loyalty Programmes (Blockchain for Gift Cards – Part I)

 

Creating Business with New Reality (AR/VR) Value Chains

ar1One way to interpret AR/VR ecosystem is classifying it as a platform, what I am referring in this blog as “Platform 4.0”. Followed by personal computer, web, and mobile, AR/VR platforms fundamentally are transforming how present-day consumers interact in the physical world. One way to define AR/VR is as follows,

  • VR: Immerses users in an imagined or replicated world
  • AR: Goes closer to reality overlaying digital imagery onto the real world.

AR/VR offers significant business opportunities, but a holistically understanding on how to create a business from this very promising platforms is very critical. As per Statista, by 2021, the augmented and virtual reality market is expected to reach a size of $215 billion. For AR alone, ARtillry Intelligence projects consumer AR revenues to grow to $14 billion by 2021. The business models for capturing the market opportunity of AR/VR platforms preferably should encompass on upstream and downstream of “New Reality Value Chains”. The upstream part of value chains covers the core of AR/VR development needs and downstream part of value chains address the various channels to serving AR/VR demands.  The term ‘business model’ in this blog ties to either a segment of upstream or downstream of AR/VR value chain. While the detailed characteristics of each business model are slated for a separate blog, tried to summarize the various models with “AR/VR Business Opportunity Framework” as depicted above.

As mentioned above, while “New Reality Value Chains” offers significant business opportunity, the potential market opportunity sizes vary by business model and respective focus segment. With further market analysis, the indicative percentage market opportunity size by each of the business segment is shown in the chart “AR/VR Business Models and Market Size” below. Hardware, eCommerce, and Ads contribute to >2/3rd of market share. Another key observation is immediate whitespaces in Apps, Subscriptions etc. can be target areas to evolve innovative business models.

AR 2

The above-mentioned business models and their growth potential is estimated to be varying across verticals. The “AR/VR High Impact Sectors” with most promising opportunities are Games, Healthcare, Industrial, and Broadcasting Events. The relative opportunity size of AR/VR across various verticals and respective dominating use cases are summarized below.

  • 1/3rd of the VR/AR market opportunity comes from the Gaming industry. Leveraging VR to enrich the video gaming experience offering players with illusory environments by porting games onto playing fields offers a significant business opportunity. The recent success of “Pokemon Go” is a use case to showcase.
  • Next 1/3rd market opportunity prevails in Industrial, Healthcare, and Event Broadcasting verticals. For example, in the industrial sector, AR/VR can help engineers to test scenarios and designs allowing rapid prototyping and yield cost reductions fixing known errors before mass production.
  • Remaining 1/3rd market opportunity comes from other verticals including Retail, Real Estate, Entertainment, Education, and Military. For examples, Retailers can revolutionize the way consumers shop by elevating the shopping experience and promoting emotional connection to a brand or product

In summary, i) AR/VR Business Opportunity Framework, ii) AR/VR Business Models and Market Size, and iii) AR/VR High Impact Sectors presented above can be used as a starting point in carving out specific target business initiatives in much promising AR/VR space.

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

Pragmatic Approaches to Blockchain Adoption

Adoption

As Blockchain Technology is gaining a broader acceptance, one of the lingering problem is on mainstream adoption of new technology. Blockchain as a technology can be used as an exchange network to complete transactions, move value and assets amongst peers on the network without the need for any 3rd party intermediary to validate or maintain these movements, and presumably at a lower underlying fees.

The core principles of blockchain sound great promising the blockchain technology’s viability across many fields with an opportunity to serve part of $3 Trillion global markets as follows,

  • Address part of global remittances which are of the magnitude of $444B annually (2017 world economic forum data),
  • Online/ecommerce payments of $2.1+ Trillion (based on latest data compilation from Invesp),
  • Global micro transactions of magnitude $500B+
  • Think of transactions of 2B+ unbanked people as per World Bank statistics.

While blockchain technology has potential in shaping the various markets and industries, let us dive deeper into finding pragmatic approach to adopting this new technology, key areas of concerns and evolving solutions in an attempt to sustain the innovative edge.

Blockchain adoption approaches:

The anomalies and contraries of public vis-à-vis private blockchain plays an important role in evaluating adoption approaches. The optimal adoption approach of blockchain depends on the nuances within the context of a company or group of companies or industries. The top two characteristics that drive the adoption is utility and speculation. While utility is to do with means of enabling transaction of buying or selling products and services, speculation comes from the investment eye of user/investor in terms of returns expected from adoption of technology. We drive deeper on these characteristics in determining the pragmatic approaches in adopting blockchains.  Refer to my blog page to brush up on basics of private vs public blockchain @ https://akshinthalakk.com/blockchain/

Public blockchain:

“Public Blockchain” offers an ability in maintaining both anonymity and transactional transparency. Most popular public blockchain like Bitcoin blockchain facilitates Monet-over-Internet-Protocol (MoIP) with progressive track record of use cases in B2B payments, remittances, online payments etc. Cryptocurrencies or “Coins” such as bitcoin are just value exchange applications built on top of blockchain technology. Cryptocurrencies were instrumental in demonstrating the power of blockchains and the many applications that blockchains will support and power. Due to technical limitations of Bitcoin blockchain like lack of coding Loops that limits proliferation of distributed applications on Bitcoin and complexities of UTXOx (Unspent Transaction Outputs) that makes implementation of smart contracts tougher, led to other popular public blockchains like Ethereum blockchain. Ethereum enables ease of creation of smart contracts and democratize application on top of underlying blockchain. Similarly the race for privacy has led to other public blockchains like Monero, ZCASH and DASH.  All the above public blockchains underpins both utility and speculation. Utility by virtue of completing transactions and moving assets paying premium for utility with localized cryptocurrencies bitcoin, ether, litecoin, monero etc. and drive speculation with sheer value appreciation of cryptocurrencies over time. Collectively there are close to 900 “Coins” are available to steer the public blockchain adoption by incentivizing the utility and as well as fueling the speculation.

“Blockchain Platform” is another means of driving the public blockchain momentum. Platform allows development of various applications (a.k.a dApps) serving numerous use cases. Any of the above public blockchains can offer Platforms for the development of dApps, but the technical limitations of Bitcoin as narrated above allowing Ethereum to drive the momentum of public blockchain adoption with robust community building applications on the Ethereum platform. Alongside Ethereum, there are a variety blockchain platforms came into brining decentralized ledger technology (DLT) one step closer to the reality. As per the Coinmarketcap.com data, there are more than a dozen blockchain platforms like Counterparty, NEM, NEO, Omni, Waves etc. exists today for the user and business to choose from based on their specific needs of privacy, security, scalability and gas requirements. When adopting to these Platforms, blockchain community got another flexibility in terms of “Tokens”. Tokens differ from cryptocurrencies.  Instead of developing application leveraging native cryptocurrency based public blockchain platforms, nonnative currencies known as tokens can be used to incentivize the utility of the Platform. Such tokens are EOS, TRON which are used as an alternative to “ether” currency on Ethereum platform. Collectively there are nearly 540 tokens available across 13 Platforms as of Jan 2018 that could potentially expedite the adoption of public blockchain. By embracing the full power of tokenization and platforms lead communities to deliver on the full promise of blockchain technology and ultimately, the allure of the public network.

Let us look at potential real life use cases of public blockchains. What if a vending machine that can monitor and report its own stock, and accept bids from distributors and make payments automatically via micro transactions for delivery of new SKUs? Bitcoin acceptance for online payments at many mainstream businesses such as Microsoft, Dell, OpenBazar and Overstock are few real life examples. This is how public blockchain may drive value convergence in future endeavors.

Private blockchain:

“Private Blockchain” becomes relevant if anonymity in transactions is not the top priority for companies or group of companies. Private blockchain can be secured by the familiar model of user rights and secrets that organizations are comfortable with over a longtime while still maintaining many kinds of partial guarantees of authenticity and decentralization that blockchains provide. Another use of private blockchain is for testing and experiment purposes. Private blockchain mainly focus on utility with or in most cases without any incentives and without aiding speculation as there need not to be an underlying “Coin or Token”.

Private blockchain can be started as a first step in blockchain adoption. Enterprises with a private blockchains start operating like distributed databases and notary services, often with very specialized objectives, such as tracking product origin and status. Private blockchain ca reduce transaction costs and data redundancies and replaces legacy systems, simplifying document handling and getting rid of semi manual compliance mechanisms. While private blockchain can be a useful start, but not a permanent solution as at maximum it offers hacker-proof database, where the software replaces a central bank as the intermediary of choice. Another downside is with write permissions being kept centralized to one organization and read permissions may be public or restricted to an arbitrary extent, the owner with a master key defeats the purpose of having a blockchain database in the first place. In a way private blockchain can be compared to an intranet with private LANs or WANs instead of using the public Internet and not leveraging full potential of blockchain technology. Private blockchains typically start with a single application and progressively extended to building interfaces across multiple applications and then extending to bigger ecosystem of cross-company landscape. That being said let us examine some private blockchain examples.

MultiChain is an off-the-shelf platform for the creation and deployment of private blockchains, either within or between organizations. It aims to overcome a key obstacle to the deployment of blockchain technology in the institutional financial sector, by providing the privacy and control required in an easy-to-use package. The other one is MONAX open platform private blockchains.

Federated Blockchains or Consortium Blockchains:

A mid path to public and private blockchain is a federated Blockchain that operate under the leadership of a group or Consortium. As opposed to public Blockchains, they don’t allow any person with access to the Internet to participate in the process of verifying transactions. Federated Blockchains are faster (higher scalability) and provide more transaction privacy. Consortium blockchains are mostly used in the banking sector. The consensus process is controlled by a pre-selected set of nodes; for example, one might imagine a consortium of 15 financial institutions, each of which operates a node and of which 10 must sign every block in order for the block to be valid. The right to read the blockchain may be public, or restricted to the participants. Examples of consortium blockchains include, R3 for Banks, EWF from Energy, B3i for Insurance, Corda etc.

Vitalik Buterin, co-founder/creator of Ethereum said as follows on private/consortium blockchains:

“The consortium or company running a private blockchain can easily, if desired, change the rules of a blockchain, revert transactions, modify balances, etc. In some cases, e.g. national land registries, this functionality is necessary; there is no way a system would be allowed to exist where Dread Pirate Roberts can have legal ownership rights over a plainly visible piece of land, and so an attempt to create a government-uncontrollable land registry would in practice quickly devolve into one that is not recognized by the government itself….

Blockchain-as-a-Service (BaaS):

While blockchain adoption approaches of public vs private vs federated is an ongoing debate, leading technology providers has started offering blockchain as a service construct in setting up an environment to test and research blockchain adoption approaches leveraging their cloud offerings. Microsoft has partnered with ConsenSys to offer Ethereum Blockchain as a Service (EBaaS) on Microsoft Azure. IBM(BueMix) has partnered with Hyperledger to offer BaaS to its customers. Amazon announced they would be offering the service in collaboration with the Digital Currency Group

In summary..

As enterprises mulls on pragmatic approaches to blockchain adoption, from the above description one can draw few primary approaches to blockchain adoption as described below.

  1. Jump start with ready-to-go public blockchains”. Start developing blockchain using the tools provided by the Ethereum, Bitcoin, Ripple etc. Serves the need of trust less, anonymous, transparent system with low transaction fees.
  2. Leverage ready-to-develop private blockchain platforms”. Get on to blockchain bandwagon leveraging open development tools of MultiChain and MONAX overcoming a key obstacle to the deployment of blockchain technology in the institutional financial sector, supply chain management, asset origination & servicing, claims management etc. by providing the privacy and control required in an easy-to-use package.
  3. Adopt industry specific consortiums in building blockchains”. Leverage the vertical solutions offered by industry specific consortiums like R3 for Banks, Clearmatics for building out financial market applications to streamline payments and clearing and settlement processes etc.
  4. Build-on-demand blockchains with BaaS”. Take advantage of as-a-service models of ConsenSys to try out various scenarios and use cases to evolve the right path of adoption of blockchain technology.

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 what I mean by this.

I looked into the data on Micro, Small and Medium Enterprises in the United States at International Finance Corporation (World Bank Group) website (http://www.ifc.org ). As per IFC consideration, Microenterprise has <10 employees, the 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 the 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: Blockchain can offer a substantial value by easing and expediting SME Lending process. Blockchain (i.e. Distributed Ledger) technology based SME lending Platforms could address information asymmetries and collateral shortage in aninnovative way and is applicable to any SME digital asset transaction performed online bypassing the need of any middle-man or the risk (and cost) of enforcement.
  • Scenario II: Chatbots 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 chatbot, a real estate bot like Apartment Ocean and list goes on. But I never come across a chatbot 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 chatbots. There exists a real opportunity in bringing the efficiency of chatbot to MSMEs by taking over tasks for which humans are not essential
  • Scenario III: 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 the lower fifties. There exists a significant business opportunity enabling MSMEs access to mobile apps.
  • Scenarios IV, V, & VI: SMS/USSD messaging, e-commerce/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 chatbots, mobile apps, SMS/USSD messaging, e-commerce/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 marketplace offering minimal transaction fees, competitive prices in the open and transparent marketplace, ensuring secure transactions, easing the channel access and simultaneously create the 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 cryptocurrency. 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 (chatbots, mobile apps, e-commerce/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 a 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.

 

 

 

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.

Future of Mobile App Monetization

AP1

App monetization has created fortune for many gaining momentum over last decade and profoundly in last five years. News like “$240 million in customer purchases makes January 1, 2017 the App Store’s busiest day ever” is hitting the headlines. Apps revenues are more than doubled compared to 2014 levels, clocking $58 Billion in 2016 and estimated to reach $78B+ in 2017. In the backdrop of significant market opportunity, I would like to offer deeper insights on App marketplace, monetization business model and key trends evolving in this space.

App Market Insights

First let us look into the current App market landscape and key analytics with a deep dive into this opportunity space as presented in the info-graphic above.

App Monetization and Business Models

App developers can monetize their Apps in many ways. For example, Play Store and the App Store offer the same revenue-sharing terms to developers, ~70% of the amount paid by users goes to developers. Choosing a context specific business model plays a critical role in sustenance and growth. The following are key business models and their characteristics.

Business Model Key Characteristics
Free Model
  • Zero Price.
  • Increase User Base.
  • Generate Revenues with Ads.
Freemium Model
  • Zero Base Price.
  • Optional In-App Purchases (premium features, additional content, subscriptions, or digital goods etc.)
Paid Model
  •  Pay to Download App / But App Bundles for Discounts
  •  One Point of Monetization at the time of initial buy
  •  Outstanding design, functionality, and marketing
Paymium Model
  •  Combination of Paid & Freemium Models (Can Combine in App Bundles)
  • Pay to Download & Options to Buy Additional Features
Subscription Model
  •  Buy In-App Purchases (to access content, services, and experiences)
  •  Auto-Renewable or Now-Renewable (User Driven)
  •  Subscriptions can be offered in Freemium / Paymium models

App Trends

The following trends will continue to evolve in App development in perfect alignment with digital age.

  • Apps are becoming Artificially Intelligent
  • Embedded AR / VR technologies in Apps
  • Faster web page loading on mobile devices with Accelerated Mobile Pages (AMP)
  • Cloud enablement of Apps with an ability of fetching data & analytics from cloud
  • Business processes and workflows are getting on Apps with the help of Micro services and componentization
  • In digital driven economy, m-commerce is becoming a new standard
  • Internet of Things is exploding Apps socialization
  • Location based services are gaining more traction
  • App security is becoming paramount

There is a promising future for value adding Apps. The current and future start up communities have to focus on developing high quality and contextual rich Apps and building tailored business models to succeed in next evolution of App marketplace. Reach out to me at Kishor.akshinthala@gmail.com for a deeper discussion on App Monetization.

e-Commerce Innovations for Vitamins

ecommerce

The size of ecommerce market of vitamin and mineral and supplements (VMS) crossed $2 billion and surpassed Walmart’s vitamin sales of $1.7 billion in 2016. VMS retailers are keen developing e-commerce strategies and integrate with digital commerce platforms identifying high impact opportunities in building competitive advantage driving next level growth.

New age business models combined with e/m-commerce is empowering VMS industry get better access to consumers, exponentially improve customer experiences, prioritize and drive next-gen innovations improving the future success rates. As an enthusiast envisioning the success of vitamin & supplements e-commerce and know-how of recent developments, summarizing below few specific developments in this space.

  • Vitamins are going direct-to-consumer: As 2017 progresses, consumers are willing to spend more for items that contribute to notions of self-care and wellness. With that the vitamin and dietary supplement (VMS) market is on an upward trend, a crop of new direct-to-consumer (D2C) startups came up to capture that. D2C’s are hoping to shake up the category and appeal to consumers with transparency, simplicity and branding. Care/of and Ritual, two high-tech brands that are poised to become the Warby Parkers of the supplement world.
  • Focus on price-to-weight ratio attaining economic sustainability: As online channels ex; Amazon, surpassing the critical volumes of VMS supply, there is an increasing focus on consumer behavior of purchases of only a single SKU remedy or supplement that can present a price-to-weight challenge for the seller. For business sustenance, the profit margin on the purchased item must be greater than the shipping cost in order for the seller to make money. For example, in case of Amazon where per package shipping costs range from $4.00 to $6.00, the breakeven order price for the SKU must be at least $12.00 to $15.00 in order for the transaction to be profitable. This offer a leeway to both the OTC and vitamin/health categories as the single items often meet this type of price-to-weight requirement. When a customer buys a bottle of fish oil for $17.00 or an order of Mucinex for $23.00, the sales model is working and makes eCommerce model viable.
  • OTC extending to in-home with 3D printing: In recent times FDA has approved Spritam, an anti-seizure drug and the first 3D-printed pill. This will bring use of technology one step closer to change the way people are experiencing medicine. In the future, it may even be possible to print vitamin and supplement pills at home There are already a great number of startups focusing on personalizing healthcare (with the help of AI) and making it as easily accessible as possible- in your own home. So, if companies can look at this new channel as a potential source of revenue, it could probably disrupt OTC and healthcare itself. Augment it with telemedicine, and you really could even eliminate some/much of the retail pharmacies today, while really personalizing treatment.
  • AI and ML aided search algorithms are becoming backbone to Vitamin & supplement e-commerce success: If a remedy works for one person, it may work well for another. And vice versa. That’s why the importance of ratings and reviews may be more important in the OTC and vitamin/health categories than in any other category. A good product review is not only a persuasive endorsement that helps drive conversion, it’s also an important component in strengthening a brand’s search rankings. Hence search algorithm is not only powered by the number of reviews a product has, but also by the pace at which new reviews are being added. If a product has too few reviews or not enough positive reviews, people simply won’t buy.
  • Search is critical to success online/e-commerce channels: In gig economy to take full advantage of e-commerce, it is vital for vitamin/supplement suppliers to know precisely how people are searching for its products. What key words are they using? Are there search trends? What is the frequency of searches for “pain reliever” or “headache” or “migraine”? When suppliers are selling in-demand products, they’ve got to make sure their content is relevant to those searches, including product titles, description and bullets, that clearly communicates the benefits and features of what’s being sold. Advances of AI and Machine Learning are aiding to find the patterns and triggers of consumer purchases and behaviors.
  • Ecommerce combined with personalization will lead the vitamin / supplement market: The long-term winners in this space will leverage data and their knowledge of their consumers to proactively offer products that fit their customers’ health needs and provide a degree of personalization and intimacy that don’t exist yet on a broad scale. The levels of personalization will be necessary in upcoming fights against the biggest e-dog of all, Amazon, which also has access to an immense database of purchasing history that it can use to push personalized consumer health options. Amazon offers rush delivery for a variety of over-the-counter products and vitamins and dietary supplements through its Amazon Prime Now service that is operational in around 30 metropolitan areas. Earlier this year, Amazon also quietly expanded its private-label line Amazon Elements into a handful of clean-label vitamins and supplement categories, which perhaps is a signal of the company’s intent to fully jump into this space and opportunistically fill the potential void if GNC and the Vitamin Shoppe continue to decline. As more consumers each day are showing a declining link to physical stores, Amazon has the ability to step in and dominate the market for these products much in the way it has for so many other household staples.

Vitamin & supplements market will continue evolve leveraging e/m-commerce strategies. Constant innovations in this space are what we continue to explore into future. So VMS value chain partners have to collaborate co-innovating e/m-commerce models, offer value based services, identify future direction and collectively come up with a path to succeed.