Amazon penetration....

Yesterday I took delivery of a package from Amazon.

It was due between 1230 and 1330 so at 1130 I did a parcel-check to find that ‘Leo’ was currently four streets away on delivery 30, and still had 33 deliveries to make before reaching me at 1245…

Scarey….in terms of both coverage-density and numbers of their deliveries…

7-Eleven bringing real convenience to the UK?

Given the news that 7-Eleven may be re-entering the UK market, it would be unwise to assume that this will simply be a re-iteration of our UK experience in the nineties...

In fact, it could be said that the only way to anticipate their potential influence is to visit some branches in Tokyo...

My personal memories may lend some insight:

There, in the same small outlets you will find a comprehensive range of goods and services catering for every convenience need, with hyper-efficiency.

With 75% of the range permanently in stock, the remaining 25% is rotated up to three times a day, based on customer need:  milk for the school-kids in the morning, bottled water for office workers at mid-day and alcoholic beverages for tired NAMs on the way home in the evening....

A bank of ATMs and terminals for paying utility bills, a small microwave oven for heating snacks line one wall, with newspapers, magazines, books and mail-order pickup facilities lining another.

Outside a home-delivery moped is parked, ready to deliver even 1 SKU orders when required. Whilst the 3,000 SKU shop stocks a handbag-size hairspray, a nearby sub-depot stocks all sizes and variants, allowing the shop to offer a range of 60,000 SKUs to those wanting home delivery...

Oh, in terms of convenience, you will find a branch at the base of most high-rise apartment blocks, with the occupants referring to 7-Eleven as their refrigerator, as convenient to access (a lift-ride away) as the correspondingly small refrigerator in their kitchen...

Frictionless commerce - what other businesses can learn from Amazon

With the move to smoother, quicker, and easier transactions using a combination of f-commerce and mobile payments, to virtual wallet options and NFC, frictionless commerce is becoming widespread.

However, whilst retail may appear to be leading the way in many cases, it can be easy to underestimate the lead that Amazon has gained over all other players...

Using data collection and one-to-one correspondence that would be intrusive were it not the fact that it is so accurately focused on real need, Amazon has become an indispensable buying-tool for many...

Moreover, by perfecting their 1-click approach - and combining it with Prime status to eliminate delivery costs - their model optimises impulse purchase

In fact, in my own case, I have had to remove the Amazon UK icon from my home page in order to cause me to think a fraction longer about real need while I source the site via Google...

However, as online practitioners strive to emulate their rival's 1-click KPI, Amazon's real USP has to be their frictionless returns policy...

In fact, any aspiring online operation has to experience a heartbeat-missing moment when they realise that Amazon's returns process is easier than 1-click, the ultimate online standard... 

Shop where you borrow instead of buy - making do via the sharing economy...

                                                                                                                                  pic: Leila Berlin
According to The Guardian, the most popular items in Leila, Berlin's first "borrowing shop*" are the electric drills.

But it's not worth that person buying their own tools, said founder Nikolai Wolfert. "The average electric drill is used for 13 minutes in its entire lifetime – how does it make sense to buy something like that? It's much more efficient to share it."

Scarey...

Members can borrow anything from board games to wine glasses, fog machines to hiking rucksacks, juicers to unicycles. All they need to do to become members is drop off an item of their own.

Virtual tour of Leila here

Borrowing shops are under development in several Berlin districts, with similar projects being set up in Kiel and Vienna. In Berlin-Wedding, 80 artists are working with recycled materials to build Berlin's first "indoor treehouse", which will eventually serve as a "local public thinktank". In Neukölln, the Trial & Error culture lab organises swaps for artists' materials and fashion items.

At the more commercial end of the spectrum, Deutsche Telekom recently helped launch the social network wir.de, which allows neighbours to swap tools and services and sets up communal "toy boxes" in playgrounds around Berlin.

Whilst the idea of the "share-economy" is developing well elsewhere (i.e. Airbnb, which matches travellers to people with rooms to rent, and car2go and even M&S offering customers discounts in exchange for unwanted clothes, which are then donated to Oxfam) there is a sense that the shift away from ownership towards functionality is nowhere as tangible in Europe as in Berlin.

If you add share-economy drivers to consumers increasingly ‘making do’, it may begin to explain the difficulty of driving demand above flatline levels in many categories, everywhere…

And going back to drills, it is well known that drill manufacturers sell millions of ¾ inch drill-bits, not because people want drill-bits, but because they need ¾ inch holes, however produced...

In other words, the most insidious competition can be a product or service that replaces traditional ways of meeting needs. Therefore, training ourselves to focus on functionality and real need instead of want, can help us to anticipate and survive the shock of third-party innovation, hopefully….

* See video on how Leila works in practice here

'Ndrangheta mafia' made more last year than McDonald's and Deutsche Bank, combined...

Study finds crime network made €53bn (£44bn) from a combination of drug trafficking (€24.2bn), illegal rubbish disposal (€19.6bn), and other activities.

The report is based on analysis of documents from Italy's interior ministry and police, parliament's anti-mafia commission and the national anti-mafia task force. Its activities are believed to involve a workforce of as many as 60,000 people worldwide, the report said.

Extortion and usury last year brought in a substantial €2.9bn, while embezzlement earned the mafia €2.4bn and gambling €1.3bn. Arms sales, prostitution, counterfeiting goods and people-smuggling were less lucrative, bringing in less than €1bn together.

Organisationally, the 'Ndrangheta mafia' has a tight clan structure which has made it famously difficult to penetrate, or to leave?

In terms of business relationships, their negotiation flexibility appears to be limited to offers that tolerate little scope for refusal, and they appear to have very few issues with compliance...

A potential template for NAMs and KAMs everywhere?

Art and the brand - how Mondrian 'made' LEGO into a building block for modernism…

                                                                                                                            pic: Andrew Sullivan
In 1946, Lego creator Ole Kirk Christiansen became the first toymaker in Denmark to buy an injection moulding machine, and began experimenting with cellulose acetate construction blocks.

His son Godtfred Kirk simplified his father’s brick design, perfecting its signature clutch power and switching plastics to the even more durable acrylonitrile butadiene styrene. For his colour palette, he looked to Dutch modernist Piet Mondrian’s Composition series: bright yellow, red, blue, and white. He patented the brick on January 28, 1958, and from that moment only looked forward.…

Given that modernism is based on making ideas new, repeatedly, these unprecedented times provide modernist NAMs with the opportunity to renew their markets and initiatives, over and over again, while others rely on more of the approach that worked in the old days, but is now patently inappropriate…

Likewise, making it new (over and over and over again) is an inextricable part of Lego’s DNA: just six two-by-four-studded pieces can be configured in 915 million ways….

Incidentally, if you are still in doubt about Mondrian and LEGOs’ mutual debt, ask yourself if you will ever again look at a Mondrian, without seeing the LEGO studs…

More here

Saturday Night Top-up?

                                                                                                                                        pic: Brian Moore

How the 2007-08 financial crisis happened - the Minsky explanation

As we are being told, the world is recovering from the global crisis – for a contrary view, ask the consumer in the street, or better still, check their shopping lists – it is perhaps time to agree the causes in order to avoid the consequences of a repeat….

If you think this might affect you personally but not the business, why not check The Grocer’s latest Top 100 grocery brands showing that in 2013, 33 showed negative sales vs. 2012, and 21 brands showed less than 3% growth, before allowing for inflation…..i.e. the Top 100 brands!

In other words, we are ‘deep’ in flatline, where any growth will be at the expense of competitors, by those players that are prepared to confront reality and act while others await a return to normal…

Opportunities await those that understand how we got here, recognise the symptoms as future warnings and get on with optimising our strengths, now.

American economist Hyman Minsky, who died in 1996, grew up during the Great Depression, an event which shaped his views and set him on a crusade to explain how it happened and how a repeat could be prevented, writes Duncan Weldon for the BBC. 

Minsky’s key ideas:

Stability is destabilising: Banks and firms assume that the good times will keep on going and begin to take ever greater risks in pursuit of profit. So the seeds of the next crisis are sown in the good time.

Three stages of Debt, as indicators
- Hedge stage:
Soon after a crisis, banks and borrowers are cautious. Loans are made in modest amounts and the borrower can afford to repay both the initial principal and the interest.
- Speculative stage:
As confidence rises banks begin to make loans in which the borrower can only afford to pay the interest.
- Ponzi stage: 
At this point banks make loans to firms and households that can afford to pay neither the interest nor the principal. Again this is underpinned by a belief that asset prices will rise.

Therefore financial crisis, again and again and again…

Armed with this insight, and using their own judgement coupled with a basic knowledge of retail finance, the business manager NAM can treat the economy as simply part of a ‘predictable’ business context, and get on with the opportunity, leaving doom and gloom for others…

Analysis: Why Minsky Matters is broadcast on BBC Radio 4 at 20:30 GMT, 24 March 2014.  Or catch up on BBC iPlayer