Alexandre

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Gig economy at Uber: digitalization and data won’t be enough to make it sustainable
Alexandre
Posted on November 15, 2017 at 8:13 pm
Gig economy at Uber: digitalization and data won’t be enough to make it sustainable

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On November 28, 2017, Alexandre commented on No more Champagne? :

I believe that this new English sparkling wine will need a lot of education to be adopted. Indeed, consumers are used to Champagne / Cremant (France), Prosecco (Italy) and Cava (Spain) for sparkling wines and they might be suspicious about a new sparkling wine, especially coming from England. Moreover, I believe that this new English sparkling wine won’t be able to command a price as high as Champagne’s, which is seen as the Rolls-Royce of sparkling wine. As a result, I believe this new wine will target a different set of customers. I think Taittinger should be very careful of using its name for a sparkling wine that is not Champagne because its name is closely associated to it and some customers might be fooled.
Finally I am not very worried for French Champagne producers as I believe the Champagne region’s soil is unique [1] and it will be very difficult to reproduce a sparkling wine that will have exactly the same taste and features. Consumers tend to stick with what they are used to and unless this new sparkling wine is really exceptional in quality, they will keep trusting the Champagne brand image and its long history.

1. https://www.champagne.fr/en/terroir-appellation/champagne-terroir/limestone-subsoil

On November 28, 2017, Alexandre commented on CEDIAM: a fruit processor sees its future in banking :

Given the popularity of this topic, I thought I would get the ball rolling!
I understand CEDIAM’s incentives to help finance its mango suppliers to ensure supply and reduce price volatility, however I am not sure this is the best allocation of resources for CEDIAM, which remains a producer and exporter of mango pulp/concentrate.
First of all, CEDIAM would be exposed to credit risk from a company which main client is CEDIAM itself, creating both financial and supply risk concentration. Secondly, CEDIAM would limit its choice of suppliers and will favor suppliers that it banks, which might prevent the company from optimizing supply costs with other suppliers. Finally, I believe that the cost of capital of CEDIAM is fairly high (high cost of debt in emerging markets) and as a result, I doubt the sustainability of these loans for the suppliers and whether they could take them without putting their finances at risk.
Consequently, it might not be a great idea for companies such as CEDIAM to finance its suppliers. If CEDIAM really wants to hedge its supply, I would suggest the company to become a producer itself in order to achieve adequate risks and returns.

On November 28, 2017, Alexandre commented on H&M and digitization of supply chain trends – will the [fashion] show go on? :

I would like to emphasize your point on leveraging existing stores to provide a better client service (e.g. in-store pick-up/returns of online orders) as this is a trend that is becoming more and more dominant in the ecommerce space. Many companies are implementing online-to-offline (o2o) strategies, which are designed to bring online customers to brick and mortar stores. These strategies use online marketing and advertising methods to identify customers, create awareness of products and services, and ultimately entice the customer to visit a physical store to make a purchase.
Whereas pure online play used to be the way to go to scale aggressively at a low cost, ecommerce companies have now realized that they also need to develop an offline presence in order to provide top service quality to their customers that are more and more demanding and picky. As a result, Amazon have recently expanded its retail footprint with the acquisition of Wholefoods and is also expanding its Amazon Books library stores.
I think H&M could implement certain services that competition has adopted. For example, clothing company Bonobos offers 1-on-1 meeting with a guide who advises the client on style and places the order [1]. Obviously given its scale and positioning, H&M can’t provide that to every single client but it could do this for a few customers and create some buzz. The goal here is to provide a differentiated experience due to the deep engagement and interaction with the client. I believe that by providing new mobile services such as Image Search, H&M is heading in the right direction and is currently focused on making shopping at H&M stores more enjoyable and distinctive.

1. http://www.thinkwrap.com/blog/online-to-offline-what-we-can-learn-from-innovative-companies-china

On November 28, 2017, Alexandre commented on Can the giant Ant replicate its model worldwide? :

As you perfectly explained it in your essay, regulation is a big hurdle for Ant Financial to quickly expand. First of all, it usually takes time to comply with the different regulation requirements. Moreover some Western countries might be suspicious about having Ant Financial, a Chinese company, as a new entrant in their financial system. I believe that Ant Financial can bypass the regulation and speed up its expansion by partnering with local providers in different countries. For example, Ant Financial has recently partnered with payment processor firm First Data in the US. In this partnership, First Data allows Ant Financial’s services to be used at point-of-sales with its US retail partners [1].
Another way Ant Financial can quickly increase the adoption of its services in a new market is to partner with local telecom companies. For example, Ant Financial has recently launched a JV with Hong Kong’s largest mobile operator, CK Hutchison. The JV will leverage CK Hutchison’s extensive market presence and combine its commercial experience with Ant Financial’s technology expertise in order to bring Ant Financial’s full range of services to many customers.
In conclusion, I believe that Ant Financial should leverage partnerships in order to expand aggressively abroad instead of resorting to large scale acquisitions or starting from scratch.

1. https://techcrunch.com/2017/05/09/alipay-first-data-us-point-of-sale-expansion/
2. https://techcrunch.com/2017/09/26/ant-financial-partners-with-hutchison-alipay-hong-kong/

On November 28, 2017, Alexandre commented on Shooting Oneself in the Foot(ball) :

Football (or should I say soccer?) is a business where the strongest always prevail in the long run. It is therefore not surprising to see a strong correlation between team budget and performance. As a result, the EPL will stay at the top as long as it remains the richest league. Today the EPL generates the highest revenue (c.€5bn), well ahead of Germany and Spain (c.€3bn) because it has great appeal to foreign markets [1]. This current popularity creates a huge fan base overseas that will remain loyal to the EPL in the years to come, as demonstrated by Liverpool fans’ motto “Once a Red, always a Red!”. I believe that the EPL has created so much fan stickiness around the world that it will be difficult to displace it.
I also want to challenge your point on the success of the EPL being due to the diversity of its league. Based on figure 2 and 3, the Italian league is the second most diverse league and yet it only ranks fourth in terms of revenue generation. As a result, diversity in volume does not lead to more appeal but I believe that having the best players (whether local or foreign), even in a limited number, is the key driver to league popularity. And as we all know, best players are mostly acquired at a late age from second-tier teams and are seldom developed in-house. Consequently I believe that due to its purchasing power, the EPL will keep buying top players and maintain the virtuous circle that has allowed it to become the most popular football league.

1. https://www.economist.com/news/britain/21727929-english-clubs-are-being-trounced-their-european-rivals-yet-revenues-are-soaring-why-are-such

On November 27, 2017, Alexandre commented on Profits Starting To Wind Down: A Setback for Wind Turbines? :

I believe wind turbine manufacturers are going through the same restructuring solar panel companies experienced a few years ago due to strong Chinese competition [1]. While it is a pity to see pioneer wind turbine companies such as Vestas currently fighting for survival, I see this as a positive development because end users can benefit from cheaper energy sources. Indeed, the full transition from fossil energy to renewables can only happen with the commoditization of wind turbines and solar panels, leading to competitive renewables energy costs.

Regarding Vestas, I would challenge the view that they could strongly benefit from the Chinese market as it is mostly a captive market, dominated by local firms [2]. I agree with you that Vestas should focus on R&D and production yield improvement in order to drive down cost per MW and remain competitive. However I believe that competition, especially from Chinese companies, will eventually catch up on technology and in the long-term, Vestas will have no choice but to further consolidate in order to achieve economies of scale and survive.

1. https://www.cleanenergywire.org/news/last-major-german-solar-cell-maker-surrenders-chinese-competition
2. https://www.windpowermonthly.com/article/1424516/importing-oems-double-china-market-share