big bang disruption in the postal & parcel industry · big bang disruptors are everywhere...
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Big Bang Disruption in the Postal & Parcel Industry Brody Buhler, Accenture Global Managing Director – Postal & Parcel
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2
High Performance in the Postal Industry 2015 Research
Coming soon in September 2015
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2009 2010 2011 2012 2013 2006 2014 SEPT 2015
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3
Big Bang Disruption
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Innovators (2.5%)
Early Adopters (13.5%)
Early Majority (34%)
Late Majority (34%)
Laggards (16%)
BIG-BANG MARKET SEGMENTS
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4
Competitive Strategies
Strategy gurus would say you must pick one.
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Big Bang Applied
NB: Garmin and TomTom data from available 10k filings and annual reports. Garmin’s year 0 = 1998 (StreetPilot debut); TomTom’s year 0 = 2002 (Navigator debut). Both Garmin and TomTom unit sales are inclusive of all GPS products. Google data from publicly available news sources; year 0 = 2007 (debut of Maps for Mobile 2.0)
* TomTom stops reporting unit sales per year after 2009
Google Maps mobile installs
TomTom cumulative unit sales*
Garmin cumulative unit sales
Copyright © 2015 Accenture All rights reserved. 5
Years since debut of first auto-GPS offering
Est
imat
ed u
sers
(m
illio
ns)
0 2 4 6 8 10 12 14
200
180
160
140
120
100
80
60
40
20
Google navigation took only one year to disrupt the GPS industry.
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6
The Singularity
Until the right combination occurs it is a series of failed experiments.
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1993 1996 1998 1999 2003
Napster
iTunes Music Store
Internet Underground Music Archive
Ritmoteca.com, eMusic
Cductive
1992 1998 2004 2006 2007
Kindle™
Expanded books
Rocket eBook, SoftBook
Librié iLiad, Reader
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Unencumbered Development
BIG BANG DISRUPTION
Time
Mar
ket P
enet
ratio
n
TRADITIONAL TECHNOLOGY ADOPTION CURVE
Undisciplined Strategy
Unconstrained Growth
Driven By Moore’s Law
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Twice As Good
Twice as good as the flip phone was easy…
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Twice As Good
… the next iPhone is much harder.
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Big Bang Disruptors Are Everywhere
Industry Big Bang Disruptor Maps & dedicated GPS devices
Taxi services
Hospitality – Hotels
PCs and Laptops
Financial Services – Payments
Retail
Education
Travel agencies
Yellow pages
Film rentals
Low-end digital cameras
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Smartphone
Network
Cloud
Infinite Processing
Capacity
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Moore’s Law Applied
Three technologies have come together to forever, radically change the consumer landscape.
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+ + + =
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We’ve Already Seen It
Source: Global approximation based on data from USPS, “Email Volume Estimates from 1978 to 2011,” International Center for Integrative Systems
1926 1936 1946 1956
Pieces of transaction mail (billions)
Global email volume (trillions) 120
100
80
60
40
20
160
140
100
80
40
20
120
60
1966 2006 1976 1996
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Potential Big Bang Disruptors
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Drone Delivery
Analytics Driven Network Brokers
New Delivery Models
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New Models Now Possible
New entrants have an entirely different cost structure. It is no longer about density.
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Sourcing Spare Capacity
Rapid Scale (Up and Down)
Focused On Last Mile (For Now)
Technology Enabled
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Total Funding in Sharing Economy Start-ups by Year ($M)
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Significant Last Mile Investment
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Storage
Logistics
Stay
Transport
Personal Goods
Private Spaces
Food
Business Equipment
Total Sector Funding ($M) Top Funded Companies Top Investors
Source : Sharing Economy Landscape, 2015, Tracxn, Accenture Analysis
0
4
11
16
51
273
645
800 Airbnb ($776.4M), Wimdu ($90.0M)
Lyft ($333M), RelayRides($53.2M), Boatbound ($5.3M)
Chegg ($252M; IPO at $1.1B). Bag Borrow or Steal($20.0M)
LiquidSpace ($26.2M), PivotDesk ($6.7M), Storefront($8.9M)
Getable($3.2M), Yard Club($1.6M)
EatWith ($9.2M), Suppershare
Friendshippr ($1.2M), WeDeliver($0.8M)
Roost ($160k), StowThat ($50k)
Sequoia, TPG Growth
Trinity Ventures, Shasta Ventures, Google Ventures, August Capital
N/A
Shasta Ventures, Roth Capital Partners, Lucas venture Group, Spark Capital
N/A
GreyLock
N/A
N/A
60 96 283 357 116
958
2009 2010 2011 2012 2013 2014
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Variable Cost Networks Change The Game
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Variable Cost Levels – Margin Impact
Operating Margin Loss Sensitivity
Revenue Loss
1% 3% 5% 7% 10%
Variable Cost Ratio
10% 9% 27% 45% 63% 90%
20% 8% 24% 40% 56% 80%
30% 7% 21% 35% 49% 70%
40% 6% 18% 30% 42% 60%
50% 5% 15% 25% 35% 50%
60% 4% 12% 20% 28% 40%
70% 3% 9% 15% 21% 30%
80% 2% 6% 10% 14% 20%
90% 1% 3% 5% 7% 10%
Variablizing costs or being more captive in sustainable revenue streams would be important
Notes: Illustrative of a firm with a 10% operating margin in the original scenario Source: Accenture Analysis.
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Better?
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Convenience Is King
New Value Added Services
Faster Delivery
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Cheaper?
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Estimated last mile delivery costs.
$5.00+
$2.00
$1.50
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More Personal?
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When I Want It
Where I Want It
Fully Within Consumer Control
Completely Transparent
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Potential Big Bang Disruptors
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Drone Delivery
Analytics Driven Network Brokers
New Delivery Models
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Analytics Driven Network Brokers
The emergence of multi-carrier domestic fulfillment solutions is following the models developed for cross-border solutions.
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Building Blocks
Significant Scale • Large contracts directly with retailer/etailer • Founded on price negotiation power
Analytics driven • Detailed data on price and performance • Becoming predictive
Multi-carrier first/last mile
• Negotiated lanes connecting hubs • Multi-carrier last mile strategies
End-to-End Visibility • Proprietary tracking systems knit networks • Customers see single network
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Cainiao
The most advanced and aggressive of these networks is an emerging player in China called Cainiao.
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Company Details One China Network
Founded 2013
CEO Jack Ma (founder Alibaba)
Ownership
• 40% Alibaba • 30% Real Estate Dev • 1% each – SF Express,
ZTO, Shentong Express, YTO, Yundan Express
Coverage 2,000 of largest cities in China
Network 9 processing centers across China
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Cainiao
This new model may become the default shipping option for most content moving through China’s domestic networks.
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Building Blocks
Significant Scale • All Alibaba content • 96% of C2C • 45% B2B • 50% B2C
• Expanding to include other etailer/retailers
Analytics driven • Selecting on price and service responsiveness
• Detailed pricing by lane • Objective is D+1 across China
Multi-carrier first/last mile
• Sourcing network from 5 largest CEP companies in China • China Post for USO and warehousing • Large stake in KXTX logistics platform (ground transport)
End-to-End Visibility • Tracking system called Logistics Pal • Captures tracking events across networks for every delivery
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Better?
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Remote Locations
Focused on Speed
(next day everywhere)
Improved Service
Reliability
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Cheaper?
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Currently focused on speed and reliability but price is next.
Minimal network investment
required
Leveraging spare capacity
Analytics driven pricing data
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Potential Big Bang Disruptors
Copyright © 2015 Accenture All rights reserved.
Drone Delivery
Analytics Driven Network Brokers
New Delivery Models
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27
Drone Delivery
One of a few truly transformative technologies, drones will soon become part of the consumer landscape.
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Cheaper. Faster. Smaller.
Accelerometers Barometers Gyroscopes
Digital Compasses Microprocessors
WiFi Radio Bluetooth Radio Cellular Radio
Near Field Comms Batteries Displays
• Flight controllers have dropped 100x in last 8 years • Fully autonomous for $150 • Mission control: laptop, tablet or
smartphone
• Sensor costs dropping rapidly driven by smartphone investment • Cheaper, smaller and more
environment aware • Processing capacity and speed
exponential
• Hobby/consumer use becoming prevalent, cheap and easy • Even hobby models have
multiple onboard radios • Taking selfies to a new level
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Drone Delivery
Experiments are just getting started.
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But We’re Not There Yet…
Additional technology and regulatory advancement required before delivery will be a reality.
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Regulatory (not exhasutive)
Country Status Delivery Suitability
UK Clear regulations and certification
Germany Clear regulation and certification
US Draft regulations until 2016
Australia Clear regulations and certification
India No regulation – local discretion
China No regulation – local discretion
Required Technology
Collision avoidance
Battery – the universal limiter
Longer life
Autonomous swap
Autonomous package delivery/retrieval
Delivery base systems
App store model
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Better?
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Remote Locations
All Hours Faster Delivery (less than hour)
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Cheaper?
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Current experiments are too costly but models estimate delivery could be very cheap.
.24$ 2 kilograms 25 kilometers
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More Personal?
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When I Want It
Deliver To My Location
Smartphone Controlled
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We Are In The Singularity
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The Singularity The Big Bang
The Big Crunch Entropy
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What Should Companies Do About It
Copyright © 2014 Accenture All rights reserved. 34
The Singularity The Big Bang
The Big Crunch
Entropy
Foresight
Scaling Management
Asset Freedom
End Game Mastery