TARGET MARKETS RIPE FOR DISCOVERY NETWORK’S ADOPTION
Combining the power of IoT and blockchain, Discovery’s solution for a smart supply chain allows for a twofold business strategy to monetize its innovative network. The initial strategy is to limit the focus to become a complete supply chain solutions provider. Utilizing IoT hardware, blockchain network and data analytics, Discovery can completely disrupt the traditional supply chain that is estimated be a trillion dollar market. In this initial phase, Discovery would focus on a select few industries that rely on extensive supply chain operations to function. This would also be the phase where Discovery builds its user community to a certain threshold for an IoT communications network.
Once a significant community is built, Discovery shall expand its focus to become an IoT communications network provider. This would form the second phase of the business strategy whereby the network can be accessed on a usage fee model, priced at a reasonable rate. This would enable the users to make use of the services anywhere across the world.
Given the innovative threefold solution that Discovery is developing for the supply chain, the initial target industries would be those that have a dire need for tracking products in the channel. In particular, Discovery would target the consumer durable, FMCG and apparel industries. A closer look at each of these industries is necessary to see why they are ripe for the immediate adoption of smart supply chain.
1.CONSUMER DURABLES
Durable goods are those that do not wear out in a short time. Examples include automobiles, consumer electronics, books, hardware equipments etc. Consumer goods industry is a massive market such that the developing economies with their demographic strength are expected to lead this industry in future. For instance, India is expected to be the fifth largest consumer durable market by 2025 and is projected to be worth $20.6 billion by 2020. On the other hand, according to a research study, by 2026 the global consumer electronics market is poised to reach $3 trillion rising at CAGR 15% between 2016 and 2026. For sales, this segment primarily relies on many intermediary channels such as retailers, dealers and distributors to reach the consumer end. Therefore, there is a huge issue of lack of visibility of products in supply chain and transparency among these intermediaries. This ultimately results in inflated costs for consumers and the clients, stockouts, stock obsolescence etc. Hence, by adopting a smart supply chain solution for the existing operations, clients can drastically improve their sales and strategize businesses more effectively than ever before.
2.FAST MOVING CONSUMER GOODS (FMCG)
In contrast to durable goods, FMCG are those products that have short shelf life, are rapidly consumed and made available at low cost. Examples include toiletries, packaged foods and stationary items like paper, pen etc. Due to the high volume sales, it does not come surprising that FMCG market is projected to reach $14 trillion in 2025, up from $8 trillion in 2014 according to McKinsey. The requirement for a highly efficient supply chain is much needed in this industry than in any other. Due to short shelf lives of products and high volume sales of those, stockouts and stock obsolescence are major hurdles that enterprises in this sector have to deal with regularly. Therefore, having visibility of stock levels and replenishing it at the right time is highly critical to FMCG industry, hence the requirement for a smart supply chain solution is crucial.
3.FASHION AND APPAREL
Valued at $2.4 trillion in 2016, fashion industry is expected to have a growth rate between 1.5% and 4.5%. This industry, unlike FMCG, requires a seasonal change in its inventory to stay relevant to consumer’s interest. The industry comprises of luxury and value segment wherein luxury brands can afford to have better visibility in the supply chain process as they are not massively produced and are managed through fewer retails. Besides, most luxury brands have their retail stores located in tier one cities therefore benefitting from the connectivity which can in turn offer better logistical support. In contrast to luxury segments, value based segments are mass produced and have their sales spread across numerous cities which often poses significant supply chain challenges. Such retail segments also suffer from having poor retail sales data of all the outlets which in turn results in ineffective trade marketing at the stores. Valued at $1.2 trillion, this industry is one that experiences the highest out of stock percentage, almost 30% to 40%. Clearly, with efficient supply chain management these losses can be converted to significant revenue gains.
CONCLUSION
From the above brief up on the three industries, it is clear that, an IoT based supply chain solution is never more crucial in any other industries than those highlighted above. Essentially, Discovery is addressing a market as big as $20 trillion. To address such an enormous market, a comprehensive solution such as what Discovery provides is necessary. Therefore, with an effective and a comprehensive IoT based network in place, Discovery can help enterprises in retail segment in saving millions lost in revenue due to the inefficiencies in the existing models of supply chain management.