Getting the goods (and services) to the average consumers to meet their day to day needs would have been a fairly easy proposition to maximize in this age of Internet of Things (IOT – it’s a real term). Or so you would have thought, and you would have been wrong. The supply chains required to accomplish that task efficiently and effectively are still evolving (Costco, Amazon, traditional retailers, etc., etc.) and still leaving un-extracted value in the supply chain for other disruptors to follow and extract.
I’m sure you have giant bags of items that you bought from Costco, the quantity of which you will never ever consume, thinking you were saving money. If you compared $/unit consumed (not bought), you might be surprised at how much money you are not saving, let alone the amount of food being wasted. My daughter has a blast emptying our pantry and multiple refrigerators on her visits home of giant mustard jars, humongous ketchup bottles and boxes of crackers that even the crackers find dry and offensive by now.
The younger generation also finds these models inefficient given their life styles, smaller family units, smaller spaces, etc.
Amazon is trying to be more efficient in their supply chain but is still causing disruption by replicating and duplicating existing supply chains. They have their own warehouses and ship to the customer – not very different than Costco or other retailers in your neighborhood – other than they deliver it to your home. By the way, Google is also offering a service like that now from local suppliers.
Enter JET – a startup looking to disrupt Amazons’ business model (their CEO did it to Amazon before). Their approach is radically different. Instead of duplicating Supply Chains, they utilize existing supply chains of others, but their pricing software analyzes your entire combination or shopping cart to determine the cheapest option for your unique combination of needs. You can also lower your price further by giving up the right to return, making payments in cash, etc. – all things that add to the cost and therefore the price. All of these are examples of value trapped in the existing supply chains that Jet is clearly trying to identify, extract and monetize. At the most basic level, it’s another form of aggregation – going to the market with a unique bread basket and finding the most efficient way to fulfill it at that given time.
The notion that Amazon is the final answer for the conundrum of getting goods to the consumer is a fallacy. There are many different models that are still being tried out and perfected. What makes JET unique is the incredible amount of funding and credibility that the founder brings that significantly increases its chances. Walmart is about to enter this space in a big way too. Amazon’s Prime Day did not go un-noticed or un-challenged. And by the way, these are mostly addressing goods and more and more of our life depends on access to services as well. The next gen of these models will start combining the two pieces to make it even more of a lifestyle enhancer for the consumers – not just lower prices or faster shipping. That is the real Value Driver for most consumers – especially the ones entering the market now. If it detracts from their lifestyle, it has a lower chance of being adopted, regardless of the marginal price differential.
Latest posts by Dalip Raheja (see all)
- New Contracting Strategies for a New World? - March 16, 2017
- Globalization – Are We Headed for a Geo-Political Recession? - March 2, 2017
- Do You Know the Difference Between Strategic Sourcing and Category Management?….Risk Management - February 16, 2017