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.

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TED-Ed Weekend @New York

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My daughter Phanisree Akshinthala and 8th Grade Team from Community Middle School, Plainsboro, NJ are participating in TED Talks @NY tomorrow (Saturday 17th June) at 10 AM Eastern.

Live stream at rmd.me/ow1zu4e7g0k

New IT enabling Superfluid Markets

Super Fluid

 

 

Digital forces like AI, Machine Learning, IoT, Robotics, VR/AR, Blockchain etc. are reimagining business models transforming goods, services and labor markets at unprecedented pace enabling the superfluidity of the markets. Two fundamental characteristics of superfluid markets are shrinking lead times making the interactions seamless and near realtime, and second is extreme focus on cost-to-value ratio. I will discuss the evolving nature of markets with few use cases below.

1) Goods and Services in Superfluid Markets:

i) Artificial Intelligence and Machine Learning: AI combine with machine learning is paving ways to new business models for example, changing the landscape of online ads by connecting shoppers to goods using images. Take a look at an AI platform called The Discover Machine, created by the startup Z Advanced Computing (ZAC). This new machine learning backed platform is changing the landscape of online ads. ZAC claims to offer something unique by producing online ads generated through images, not text. The machine-learning platform can be applied to searches from shoppers that will lead to the product on a merchant’s website, or to serve merchants by generating targeted visual ads based on a customer’s browsing history. The intended users of the platform include shoppers, merchants, and bloggers or other publishers.

ii) Internet of Things (IoT): As the Internet of Things (IoT) continues to grow and drive a more connected world, it is changing the way we live, shop and pay by moving data and the point-of-sale to wherever the consumer wants it to be. Take a peek at Visa’s IoT platform designed to bring the point-of-sale everywhere by allowing businesses to introduce secure payment experiences quickly to any device connected to the IoT. Visa’s vision and belief is to securely embed payments and commerce into any device—from a watch to a ring to an appliance or a car. Experts estimate there will be 380 million connected cars by 2021. Visa is working with a number of car manufacturers (and other companies from across the car ecosystem) to build and test prototypes for car-based payments. By connecting the car ecosystem to the Watson IoT Platform and enabling the car with secure payment functionality, imagining the many possibilities becomes easy. Drivers could be alerted when their smog certification is about to expire or if a specific car part needs replacing, responding by either scheduling a service appointment or ordering the part that has the combined lowest cost and fastest shipping time. The range of other options is virtually limitless, extending to insurance offerings, paying for gas without a physical card or zipping through the drive-thru that much faster because the payment part of the transaction no longer exists.

iii) Robotics are emerging to pick up precision heavy activities and “bots” leveraging AI is taking customer service and experience to the next level. Take a look at inVia that is introducing “robotics-as-a-service” to the new economy with first “goods-to-box” warehouse packing system. This new robotics system that put goods directly into shipping boxes. Instead of investing in a fleet of robots, customers pay a monthly service fee.

iv) AR/VR in a classic example driving superfluidity is transforming the retail industry. Virtual reality (VR), along with its sister technology augmented reality (AR), offers retailers the opportunity to transform how people shop. One customer might try on shirts without having to travel to the store. Another might order furniture on the spot, confident that it’s right for the house. Applications using either technology stand to eliminate customer pain points, elevate customer service, and create a differentiated, personalized customer experience. The successful incorporation of VR and AR into retail models also has the potential to vastly change the way retailers are thinking about stores of the future

2) Labor Markets:
“On-demand and online talent platform” is a new labor model in the connected digital age. As per multiple surveys 1B+ people are unemployed in Developed & BRIC nations. According to McKinsey, online talent platforms serve as clearinghouses that can inject new momentum into job markets. By 2025, they could add $2.7 trillion, or 2.0 percent, to global GDP and increase employment by 72 million full-time-equivalent positions. Global companies are rethinking their talent strategies to tap Connected Transparent Talent Pool.

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 ….

NuYu 2.0: Teens Empowering the Educational Community

CMPS“Kudos to my daughter, Phanisree an 8th Grader and team for winning NJ FPS (Future Problem Solving) State Bowl First Prize” conducted today i.e. 11th-March-2017 at Keane University, NJ. The team is going to the International Competition to be held at University of Wisconsin in June 2017.

I am posting a note from her below.

NüYü 2.0

Promoting emotional wellbeing overcoming high levels of stress – how might Community Middle School (Plainsboro, NJ) 8th grade students, the NüYü 2.0 team, spreading mindful coping strategies through 2016-17 (started his last year!) and beyond?

NüYü is a community problem solving team comprised of 18, 8th grades from Community Middle School, Plainsboro, New Jersey. We have been an organization for two years now and have won first place in the FPS (Future Problem Solving) State bowl for two years now. Our goal is to promote mindfulness, the state of being aware and present, to the educational community. Although we do compete in FPS the reason we started our project was to help our community. We have presented at multiple teacher professional development days in our school, EdCampNJ/EdCamp Encore (a conference where teachers all over NJ come together to exchange ideas), hosted our 2nd annual wellness where, in which over 280 participants attended. Along with that, we ran our Pather “Pause” Challenge, a 4-week mindfulness session to the students in our school. This year, since we are old enough to have our own twitter we created an account. Through this account we have been able to create long lasting relationships with some very prominent figures in the educational community, for example, the Commissioner of Education for NJ whom we meeting with towards the end of March. We are also attending NJAGC (New Jersey Association for Gifted Children) We know we have been making a huge impact in the educational community because a school in Spain reached out to us to learn about Mindfulness, and we Skype then every week to teach them what we know. We have also been reached out to by multiple schools across NJ and many teachers across the state who have taken time out of their schedules to meet with us. We were featured in a recent Edutopia article and Dr.Dzung Vo, the author of “The Mindful Teen” (a resource for teenagers to learn and use Mindfulness) is also one of the people we are meeting via Skype call. Today, we won 1st place in the FPS NJ State bowl qualifying us for the International Competition, FPSPI in Wisconsin. At this competition there will be teams from all across the world; Singapore, Australia, China, etc just to name a few. This will our second time attending the International Competition. Being part of this team has allowed all of us to make a difference in our community and change the lives of so many people. NüYü is a team that has formed special bonds, strong lasting relationships, and has changed my team completely causing us to become the extraordinary young adults today. We have an amazing coach, Dr.Rebecca McLelland Crawley, whom we call Dr.MC affectionately, has supported us the whole way and has been there with us when we needed her the most. She has dedicated her personal time just as we have to make sure that our team is always at its best.

www.nuyuchallenge.weebly.com  (Website)

@nuyu_team (Twitter handle)

@bec_chirps (Dr.MC)

AI in Pharma

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Artificial Intelligence is leapfrogging in healthcare and pharma field with enabling technologies spanning across research and drug development, clinical trials, pharmacovigilance, supply chain, health records, compliance, data privacy and security.

AI is a study acknowledged to imitate human knowledge into PC innovation that could help both specialists and patients in the accompanying way, by giving a research facility to the examination, representation, and classification of restorative data, by concocting novel devices to bolster choice making and research, by incorporating exercises in medicinal, programming and psychological sciences lastly, by offering a substance rich order for future logical restorative group.

To convey a medication from introductory revelation to the hands of patients takes more than a decade time and billions of dollars. AI can significantly reduce the lead times, and also cut the costs significantly by 30% to 50%+. Early adopters like MedRespond is offering initial uses case by consolidating AI and streaming media showcasing how the company permits clients to sort in their inquiries, in their own words, and the framework chooses the pre-recorded video that best answers their inquiries. This process is helping MedRespond in both patient recruitment and retention.

Precision remedy is an area where AI is making inroads in getting the right treatment to the right patient at the ideal time. Examination of illness cells routinely takes years – yet the advent of AI’s fake awareness is that it works speedier than any human could. Today there are diverse associations who are leveraging AI, for example “Berg” a fast growing biotech, lies at the nexus of artificial intelligence, precision medicine and big data. Its AI-based drug discovery platform roots through reams of patient data to find and validate disease-causing biomarkers and efficiently craft therapies based on the newly found data.

In another example, AI is bolstering pharmaceutical adherence. AI Cure is a start-up that uses AI on patient’s cell phones to affirm solution ingestion support in clinical trials and high-chance populaces. AI Cure’s HIPAA-agreeable programming catches and dissects proof of drug ingestion. A cell phone’s camera is utilized to comprehend whether patients took the medicine effectively.

AI is also predicating the patience drug resistance, and enabling patients to become dynamic members of clinical trials. A year ago, IBM declared that the pharmaceutical mammoth Johnson and Johnson and contender Sanofi would participate in a joint effort with IBM Watson’s Discovery Advisor group. J&J will likely educate the supercomputer to peruse and comprehend experimental papers that contain clinical trial results, and afterward create and assess medicines and different medications. While this may not sound excessively energizing, it could have inconceivable outcomes on how pharmaceutical organizations do similar viability examines.

Moving to Healthcare, with most of today’s U.S. adolescents, adults and seniors owning a smartphone, they are likely to have access to an intelligent personal virtual assistant on their device. The likes of Cortana and Siri are backed by powerful systems with robust AI capabilities. These systems have the potential to provide tremendous value when combined with healthcare apps. Also, one of the new areas of AI that is beginning to gain adoption is in the field of customer service, and healthcare bots are likely to be available soon as part of what healthcare providers offer.

From the patient privacy and compliance perspective, the advent of AI is demanding technologists to ensure preventing cyber-security attacks, and develop advanced AI security monitoring solutions. AI could revolutionize compliance by offering software platforms that promise to automate otherwise routine tasks and improve upon fraud detection audits, anti-money laundering protocols, and know-your-customer screening. Keep in mind that tools and technologies are enablers and are not the foundation of a robust monitoring program. As pharma industry move toward the use of compliance intelligence, behavioral analytics, and Big Data, first we need to ask if more data feeds will lead to more alerts or even more noise, and whether analysts are just going to get buried in this noise. AI definitely promising a helping hand to humans to manage data noise.

Being technology watch dog closely following the progression of AI in pharma transformation, combined with experience around developments in this area, I welcome valuable inputs in collaborating and triggering thought provoking discussions to trend-spotting and lead the path to strike a common ground in crystalizing positive impacts of AI in future of pharm and healthcare.

What is the right strategy to negotiate with a powerful supplier?

negotiate

Asking the following questions probably helps in designing the right strategies.

1) Is the contract or relation helping supplier de-risk their business model?
2) What would be the supplier response if the contract is cancelled or withhold?
3) Will the contract help supplier to enter a new market or channel?
4) Are the alternative supplier(s) available and are they easily accessible?
5) Can the contract be split or is it required to buy all right now?
6) Is there a merit bundling this contract or order with other orders?
7) Is there a merit and business viability of buyer becoming their own supplier?

Doing a win-win business is an art and playing right negotiation tactics to retaining the powerful supplier is always the first best option