The 800lb supply chain gorilla continues to disrupt with payment services

Amazon announced today it was going to jump right into the deep end when it comes to physical, in-store payment systems. They have unveiled a mobile payment service for brick and mortar stores. Taking direct aim at other mobile POS systems – Square, Paypal as well as Google and Apple. From the reports, Amazon will look to undercut other mobile payment systems – taking 2.5% of transactions versus 2.7% for the likes of Square – to grow their market presence. They are giving merchants an introductory rate under 2% to build that beachhead (feels like a credit card invitation – 0% APR and then only a slight bump to 33%).

In the online world, Amazon already knows how to handle and secure credit cards. They are also well versed when it comes to mobile payments as their iOS and

Coming to a brick and mortar store near you...

Coming to a brick and mortar store near you…

Android apps’ success has demonstrated. The natural progression was to push into the brick and mortar space – where 90% of retail transactions live. In the near term I am not sure that Amazon will do more than offer a secondary maybe even tertiary option. Brick and mortar retailers could view the Amazon system as letting the fox into the hen house. It would be understandable if these brick and mortar players do not flock to embracing Amazon and their payment systems. But I am sure that the favorable financial set up will force a large number of players to give it some serious consideration. Whether or not Amazon is widely successful with this venture is secondary to what the eCommerce 800lb gorilla is doing with regards to their overall supply chain disruption.

A quick look at what Amazon has been doing to become the 800 lb gorilla in supply chain:

  • Acquired Kiva Systems to add sophisticated robotics and automation to their massive distribution centers.
  • Gobbled up the likes of fabric.com, CDNow, Zappos, Pets.com to constantly expand their ability to offer a wide array of inventory.
  • Pushed out a tablet and now a mobile phone under the Fire umbrella. Both of which are really hand held sales terminals for Amazon to leverage.
  • Started pushing last mile grocery delivery in certain markets with their AmazonFresh offering.
  • Even leaking that they are thinking of delivering via drones.

This is in addition to their deep experience in the online retail world. Taken together and you have the 800 lb gorilla that is disrupting the supply chain jungle. Add to this the news of them pushing into the payment space and you see Amazon gaining access to POS data from brick and mortar, coupled with all the data they have on consumer online buying. Amazon is quickly aggregating vital data sources on how consumers buy, where demand is being generated and how it impacts the retail supply chain.

So now Amazon is dabbling in last mile logistics, continually working on more efficient warehouse management, putting portable POS systems in consumers’ hands and now putting POS systems in the retailers’ hands.

That 800lb gorilla might have added another 50lbs of lean muscle.

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Filed under Current Events, Mobile payment, Retail, Supply Chain

Customer loyalty goes beyond a plastic card in your clients’ wallets.

Customer loyalty is the holy grail for retailers, consumer product companies (CPG), airlines, credit cards, media, and so on and so on. Companies across the majority of industries are striving to understand why their consumers are willing to hand over their hard earned income for goods and services. Why or will these consumers continue to purchase from the same source? And how can these companies keep these customers coming back and hopefully spending more and more.

Companies have created and leveraged many creative means to gather and nurture information from their customers – whether it be loyalty cards you have at CVS or Shaws

How many of these are in your wallet or on your key chain?

How many of these are in your wallet or on your key chain?

grocery store or Vineyard Vines or Barnes & Nobles or Starbucks. These vendors know that for the most part they need to give you something for you to give over some information – usually they give you discounts, early views of new product lines, reward points etc. Airlines, of course, were one of the first movers to give you what was a highly sought after reward for your business – miles and status. Hotel chains were quick to follow. Anyone who spends time on the road, knows how vital is it to have “status” on an airline. While it still doesn’t beat flying private…so I have been told…having that status can usually make the drag of travel a little more tolerable.

All this information has added fuel to these supply chains – an insight into the most profitable client and demand. A view into a data source that can potentially drive the most profitable and desirable side of the supply chain. But are our supply chains getting a less than complete picture of what is really happening?

Looking at our consumers’ buying patterns for just our products is far from a complete picture. Grocery chains and drug stores are very aware of this. They work with vendors like IRI, Neilson, Orchestro or RSi to get a more complete view of the consumer basket. These software vendors will aggregate data across a category or across an entire store or region. This allows a more complete view of what is truly happening. But is that enough? No. Not if our supply chains want to be even more finely tuned when it comes to servicing our clients.

The reality is that our supply chains are no linear and they do not exist in a vacuum. They are all intertwined. The way to make sure our customers stays loyal to our supply chains is to understand how the interact with all the supply chains that are connected. This type of visibility cannot occur if we are only looking at that data that comes in from the loyalty program specific to my business. I need to understand how that customer interacts with tangential goods, potential substitute goods, services and even items that might not appear to be in the same cohort.

Companies need to step away from the loyalty card table…okay they still need to take in and leverage that information. But the data that needs to be added to the supply chain is information of how consumers behave when they are not giving you their information – meaning when they are doing other things with their time and money. Credit card companies have a leg up on this, they already have all that data. Smart supply chains will find ways to get access to that information. Just think about how much wiser your supply chain could be with true demand.

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Filed under Consumer Product Goods, Marketing, Supply Chain

What the World Cup teaches us about wearable IoT

The World Cup in Brazil came to an end over a week ago…I am still going through World Cup withdrawal! For a recap on the tournament click here to read my thoughts. But the World Cup winners can teach us about the future of the Internet of Things when it comes to wearables. There is a wonderful article about how the German national team adopted some cutting edge training methods…enabled in large part by wearable technologies. The German fitness coach was able to create and adapt focused training sessions for each of the players. This ensured each player train to their optimal level. Was this an option before IoT? Of course. But with the precision of data being gathered by each player makes the task much easier to craft. The rise of wearables in sports is not a new phenomenon, I have see companies like Adidas advertise their boots with sensors for a few years already. They are even offering a ball that has sensors, allowing coaches to study the power, direct

Adidas soccer boots with connectivity

Adidas soccer boots with connectivity

and swerve players’ kicks produce.

The story of German soccer players being monitored and having their training programs closely modified and measured might appear something only professional athletes can enjoy. On the contrary it is an example of what is accessible to an ever growing number of consumers. Companies like Garmin and Fitbit are already putting sophisticated wearables for a large swath of consumers. My cousin who is an aspiring triathlete uses his Garmin and their software to constant monitor his workouts, results, targets and efficiency. Recent ads by Apple highlight the iPhone 5s and the ability to tie into some wearables that monitor your workouts. Wearables for the consumer is mimicking how we leverage the same concept for our supply chains – monitoring and adjusting actions, with targeted goals in mind. Just like we are able to monitor in real time the movement and levels of our inventory, and adjust where need be, we can now do the same with our personal efforts and inventory of energy levels.

The success of the German national team demonstrates what the power of such precise data can do for the individual athlete as well as the overall team. We have seen these types of results from IoT when it comes to our supply chains as well. But just like the example of the German team – it still takes the mind and creativity of a human coach to take full advantage of this information.

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Filed under Current Events, IOT

The IoT of your supply chain – the rise of the machines

I wrote a post a few months ago about IoT (internet of things) and how it was “big data” with a new suit. I also read a tweet that gave me pause for thought by Simon Jacobson that raised the question about IoT use cases -

how soon till we see use cases beyond remote monitoring and maintenance? asset reliability important but more uses needed

It is an interesting comment. IoT right now, much like Big Data, is all about the ability to collect data from more and more “things” in our universe. The ability to collect the data is becoming increasingly powerful. Whereas in the past you would rely on your plant supervisor to visually monitor the performance of a printing press, now you have hundreds or thousands of sensors that can communicate in real time with monitoring software to ensure the health of that machine. Companies like Caterpillar are putting sensors on a greater number of their products, allowing consumers and Caterpillar, to monitor their earth movers, trucks and other machinery.  For a more current example of how IoT is everywhere, all one has to do is look at the tragedy of Malaysia Air flight 370 – it was the GE produced engines that were constantly pinging the maintenance servers that gave investigators a better sense of the direction of the plane’s flight. But these examples reinforce with Simon was saying – these are all about remote monitoring.

When will our supply chains see IoT moving beyond “just” remote monitoring and asset management examples? That is where M2M (Machine to Machine) will begin to play a larger role. I spoke earlier this year with Toolsgroup, a supply chain solution vendor, and they spoke to me about their working with Costa coffee and their coffee distribution machines. So how does a coffee vending machine have a role in all this? Initially this story is all about improved monitoring for improved inventory management. How Costa Coffee dispensers are being “smarter” in how they communicate to ensure more efficient fulfillment. Up to this point it is really about monitoring. But let’s take it to the next level.

With greater machine learning, could the dispensers become smarter with marketing to the individual consumer? You purchase a soy milk latte from the machine. That machine can now learn your preferences if that is what you have been purchasing at other machines. Could you imagine that their is data being exchanged between other systems? Maybe where Costa coffee materials are sold or maybe partner goods are offered. Machine to machine learning, could lead to greater machine to machine communications. Now the machines could communicate and proactively push coupons or deals to your mobile device about a soy milk and coffee bean bogo offer. Yes there is some big brother aspects to this…but get used to more of that with IoT.

We are just beginning to see how IoT will impact supply chains. What we know it is doing is bringing a greater amount of information from a larger number of sources that we otherwise had access to. What we are still determining is what kind of data we will be getting and how we can use the data – for more than simply monitoring.

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Filed under IOT, Supply Chain

End of an era at JDA – Hamish Brewer leaves supply chain vendor

Today JDA announced the changing of the guard at the head of the company  with long time JDAer – Hamish Brewer moving on. Interim CEO Baljit (Bal) Dail will take over until a full time CEO is found.  From an outside perspective this is a surprising announcement. However, from a business stand point this makes sense.

Since the acquisition/merger with Red Prairie in April 2013, the dynamics for JDA has changed. What has been a strategy of acquiring new revenue streams – see Manugistics and i2 acquisition – could not be sustainable. At some point JDA will need to compete with organic development of its own and revenue if it hopes to challenge the likes of SAP and Oracle. It looks as if the board determined that Hamish was not the right person for this new challenge. Mr Brewer does deserve a lot of credit for being able to cobble together a family of supply chain vendors and not only keep the ship afloat but also continue to drive JDA forward.

Whether it is Mr Dail or a new CEO, they will face some challenges:

  • How will JDA continue to drive and grow revenue. JDA has the classic problem of a large business, the good is they have a large portfolio of products the negative they have a large portfolio of products. In such verticals as automotive they are facing challenges from the likes of Kinaxis. In the S&OP space the likes of SteelWedge offer a viable option. Of course they always have the threat from SAP and Oracle.
  • Speaking of product portfolios…JDA, like many legacy vendors, straddles the world of on premise and cloud offerings. While I think there remains room for both, I think the value that comes from being more “cloud heavy” will start to out weigh on premise. For example companies such as One Network or E2open have leaned heavily on the cloud and in doing so are able to bring added benefits of creating turn key networks. Users who need to integrate large networks of suppliers, customers and partners via their solutions into their supply chain network will lean more and more towards cloud heavy offerings.

The new CEO for JDA will face some interesting challenges. However, the company still has a number of arrows in their quiver. It will be interesting to see how the company moves forward. And what type of background the next CEO has will go a long way in determining where JDA finds itself in 5 years.

 

Disclosure: I worked at i2 Technologies for 5 years. I left i2 Technologies prior to being purchased by JDA in 2010.

 

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Filed under Current Events, Supply Chain

Bitcoin coming to an ATM by you…

Bitcoin, the leading P2P currency, is coming to an ATM near you. There is an ATM right here in Boston now! At least Boston keeps its place as a high tech center…barely. Anyways, first what really is Bitcoin, other than being linked to the infamous Winklevoss twins? Click here for a good crash video on what it is.

Coming to an ATM near you...better get your digital wallet ready

Coming to an ATM near you…better get your digital wallet ready

Basically it is an online generated form of currency, no banks, no physical currency is created. It allows the online community to have a form of money to empower eCommerce – not that your credit cards doesn’t still work. Online commerce could function and not have to pay some of the fees associated with credit cards and other forms of traditional brick and mortar payment methods. So what does it mean that you can now go to the ATM machine and “get” Bitcoins?

For the most part it feels like a marketing scheme, to make the every day user comfortable with this form of currency. Consumers are becoming more comfortable with eCommerce both via their smart phones, tablets or computers. They have become comfortable using their credit cards online. Bitcoin has to hope they start feeling comfortable seeing Bitcoin as a viable payment option. Showing consumers how to leverage Bitcoin in a format they are used to – aka the ATM machine – should allow for an ease of association with the medium. I get that the ATM gives me $20 bills (in New York sometimes $100 bills!), I get how to use my phone for more than phone calls….now I can somewhat better grasp how this all mixes together with Bitcoin. From a marketing and education perspective this makes a lot of sense. It is also interesting when it comes to the timing – with many highly publicized credit card theft issues from Target to Neiman Marcus could Bitcoin find away to offer a “safer” alternative for online commerce?

It will be interesting to see what the reaction is to these Bitcoin ATMs, will it uptick the usage of the currency? Will the curiosity fade after a few days? Regardless it will be interesting to watch and I believe the impact will reach further than we might expect today…think supply chain. A discussion for another post!

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Filed under Current Events, eCommerce, Online payment, Technology

Facebook adds to empire – final gets their communication platform in Whatsapp

Earlier today Facebook announced a massive acquisition of mobile instant messaging platform Whatsapp. The deal will be for $16billion, of which $4billion will be in cash and the remainder in equity. Regardless of how you structure it, that is a lot of money, wonder how many bitcoins that could have purchased.

From what I have been able to read, most agree, as do I, that Facebook needed to get a stronger footprint in the world of mobile communications. Yes Facebook remains one of the most used mobile apps and the growth continues on the upwards trend. Within that segment, the non – “US & Canada” are showing continued growth, while US & Canada remain steady.

Growth curve outside North America picking up steam

Growth curve outside North America picking up steam

Facebook has tried to get a foothold on the world of IM/SMS type communications on mobile devices. Anyone who is a regular Facebook user knows how they have been constantly pushing their mobile messenger app on users. I will admit I actually finally broke down and downloaded the app, only to delete it after a few days and went back to going through the regular Facebook to leverage the messaging function. Of course for Facebook they realize that not everyone has a Facebook account…gasp….and therefore might be accessible through Facebook messenger. Just like Apple knows that not everyone is on iOS…gasp…and cannot all use iMessenger the same way. For this reason 3rd party messaging platforms like Whatsapp, Viber, Snapchat or old school ones such as AIM and Yahoo! try to be device agnostic and focus just on being communications platforms. Not some uber social media community. Of course the growth shown by Whatsapp doesn’t hurt their attractiveness either!

WhatsApp-growth

So it makes perfect sense for Facebook to find in Whatsapp their potential asset in the mobile messenger world. Much like Instagram provided them with their photo-sharing platform. While Facebook has these functions in their existing platform, they just aren’t very good at differentiating them, as they are just drowned out in the overall Facebook environment. Buying Whatsapp gives Facebook a strong asset in the mobile messaging space. It gives them an asset that has done well outside the United States, an area where Facebook mobile enjoys continued upward movement – could be very complimentary in that aspect. Does it admit failure in decoupling Facebook Messenger as a stand alone? Sure. But Facebook doesn’t seem to be afraid to go out and throw around their vast cash resources to shore up a need when their own efforts fall short. Hey, if you have the cash and financial heft, use it!

Of course one has to hope that Facebook treats Whatsapp like it did Instagram, allows it to function independently. If they do so, I think that Whatsapp will continue to grow its user base and messaging position.

Wonder if Snapchat is kicking themselves today…I guess Facebook wasn’t really after the ability to send “mission impossible” type messages but just wanted a messaging platform.

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Filed under Current Events, Social media