Thank you for this interesting article! As I read, I found myself wondering if a “made in America” label actually increases a customer’s willingness to pay. If so, perhaps the higher onshore costs could be justified. However, it seems this is not the case. A recent poll found that only 31% of respondents felt that US-made cars were the best in the world, and that 37% of respondents would flat-out refuse to pay a premium for domestically produced goods . Even if Ford experienced a boost to brand equity, they would need to see a concurrent (and activated) increase to WTP.
Thanks for this article, Caue.
Other commenters have mentioned the high capital expenditures associated with 3D printing, and is an important consideration. Rather than purchasing bespoke machinery from 3rd party manufacturers, or organically building the printers in-house, a rental option has become a possibility. Several B2B 3D printing companies like Carbon utilize a subscription-based revenue model, where the major value proposition is software push-outs (similar to the Tesla model) and shipment of polymers, resins, etc.; the 3D printing company retains ownership of the equipment . I am curious to see if this model becomes commonplace for industrial-scale printing jobs, or if it is only suitable for prototyping (the current popular use case).
Thank you for this article. My initial reaction is that LVMH is better positioned than many other retailers to invest in sustainability, given that upfront and recurring costs related to these efforts can easily be passed along to customer given an ever increasing WTP. Prices have ballooned by 6-10% annually, outpacing inflation significantly (https://www.cloversac.com/louis-vuitton-price-increase-in-2017/).
Identifying less-carbon-emitting transportation methods could provide an interesting supply chain management challenge. I am more familiar with Louis Vuitton than I am with LVMH’s broader brand portfolio, so simply know that most LV handbags are made in Europe and the US. It would be interesting to learn what percentage of goods are shipped by air; for instance, are all the handbags sold in France made in France? If not, why not?
This is a great investigation into a technology with many potential applications. As Lawson and their suppliers have aligned incentives to optimize inventory management, a cost sharing arrangement could be made. Perhaps Lawson could pilot the program with a private label product, and use the resulting data to make their case to suppliers.
Another application of RFID technology, to your second question, has recently been in wearable tech. Rebecca Minkoff, a handbag designer, has started including QR codes in her bags that can be used to access special events or promotions via the company’s RFID-enabled stores (https://www.fastcodesign.com/3067791/the-new-loyalty-card-is-just-a-chip-sewn-into-your-purse). The rationale is that these benefits will increase the number of times a customer selects a Rebecca Minkoff handbag from their closet, increasing the number of impressions on the street and therefore overall brand awareness and loyalty.
Great article, Sasha! Like you, I think blockchain presents a very important opportunity to revolutionize clearing & settlement in the securities market. The industry broadly has been moving towards innovation with the goal of minimizing settlement times; when I first started working the standard was ~T+3, but many asset classes have since moved to T+1. If we move fully to T+0, i.e. instantaneous transfer, this has implications for the funding and cash management strategies of broker dealers in particular. Two considerations come to mind immediately; the need for massive credit facilities with lending institutions to cover timing differences in securities and cash flow through the trading party’s account, or an even greater reliance on margin trading.
This was a very interesting read– in particular your point about blockchain as a method for transferring ownership of digital artworks.
In regards to Sotheby’s role as a middleman as discussed in earlier comments, I’d like to draw attention the risk mitigation (financial and reputational) Sotheby’s provides. These risks are inherently present every time a major artwork or artist’s work is put to sale. Major collectors and dealers like Larry Gagosian famously purchase artworks by artists whose catalogue they own a disproportionate piece of, in order to maintain the impression of a high valuation (https://www.wsj.com/articles/SB10001424052748703712504576232791179823226). If a work fails to sell, the buyers in alternative channels (private sale, art fair, sale through gallery or broker, etc.) now have the power to demand a lower price. Sotheby’s therefore offers guarantees and other financing arrangements to mitigate these risks. The power dynamic has continued to shift towards sellers in this competitive market (effectively two-party with Christie’s), as auction houses offer slices of the buyer & seller premiums (their service commission) to sellers to secure important works for their most prominent auctions.
As a result, I don’t believe blockchain will impact the role of major auction houses in the buying and selling of important works at all. The middleman here is a necessity given the extreme illiquidity and almost total lack of pricing visibility in this marketplace.