Li C's Profile

That’s a great question. My understanding of what constitutes a “winner takes all” markets include the following conditions (not necessary though): first mover advantage, network effect, technological barrier of entry, and economies of scale. The important question is how to quickly scale up to achieve and maintain those advantages. I agree that due to the variable nature of services and products from Farm Friend or Airbnb, it’s much harder to speed up as Uber/Lyft does. But once those advantages are achieved, the moat might be difficult to destroy.

This is a very good example of organizations adapting to climate change. Avoiding supplying fishes that traveled on up to five flights could reduce their carbon emissions, but might also diminish customer’s selection of fishes. The question for most restaurants is how to maintain the level of customer experience while reducing carbon emissions. It might be interesting to explore the idea if both ends could be met at the same time. Bamboo Sushi’s philosophy of “sustainably caught, humanely raised, naturally grown. No compromises” is very powerful manifesto to its customers. Checking out the menu, I found the prices affordable and am curious what could happen if this restaurant charges a premium for such a seemingly awesome idea. [1]

Looking at broader context, it would also be helpful to understand what other players in this industry are doing, so as to assess the overall impact restaurant’s sustainability move has on the industry, and our climate.

http://bamboosushi.com/food/#sushi

Very interesting example to challenge the common perception that sustainable supply chain and cost advantage can’t go hand in hand. Colgate definitely nailed it. There are pull factor and push factor when it comes to organization’s response to climate change. It seems to me that Colgate is more on the pull factor side and taking initiatives as the industry leader to set up industry standards.

In answering the second lingering question, I think it’s really hard for the “first mover” to help “laggard” companies to replicate sustainability best practices while maintaining competitive advantage. First, the sustainability standard that Colgate “imposed” on its upstream suppliers came largely from its industry leader’s position. It’s a completely different story for smaller players in the industry. Second, there are a lot of PR elements in Colgate’s sustainability strategy to combat climate change, which might translate into a preferred public image amongst customers. I don’t think Colgate is willing to pass that image advantage to its competitors. Setting up industry standards seems to be a reasonable way to go – in the short term putting pressure on competitors’ supply chain, and in the long term creating a socially responsible corporate image that might become a future differentiator.

I agree it’s premature to jump into the narrative that globalization is laying off uncompetitive workers in the US before doing cost comparison analysis in a particular industry. Besides cost analysis, it’s also worth considering the demand side. If US auto manufacturers shift its production domestically (assume that the cost would increase), as other auto players in Germany and Japan are still embracing globalization, their cost advantage could translate to price advantage against US automakers.

Another reason that isolationism seems shortsighted to me is that as technologies advance and digitalization revolutionize the supply chain, there will be less need generically for low-skilled labors. Robots and machines are replacing human beings in lots of production processes. Besides standardized products being produced on those big platforms, on the other hand, customers are having more and more customized needs for various forms of products. Instead of involving in the anti-trade war which could worsen US’ international relationships, probably investigating more into how to re-empower low-skilled workers to capture the new consumer trend is more sustainable.

Thanks for the essay and nostalgic picture! While most people in the US might not understand, as a Chinese I have to say chicken feet are among my favorite snacks. The US consumed ~9 billion chickens each year, which means ~18 billion chicken feet would be wasted if not exported to countries like China at low price. Thanks to the cultural difference in food, the supply and demand imbalance passed low cost down to Chinese consumers like me to enjoy chicken feet at affordable price.

While it’s absolutely solid to look at how bilateral relationships in international trade impact a particular industry, it’s also worth investigating the broader international trade context. In fact, China imported a total of ~126,500 tons of chicken feet in 2016, of which ~84% comes from Brazil, Argentina and Chile, while the US only accounted for ~15%. In thinking about bilateral trade dynamics (or wars), it would be helpful to consider how much negotiation power the US poultry industry has on Chinese markets, and vice versa. So in that sense, it seems to me that Georgia poultry industry’s best play would be to collaborate with other states or other industries that have a higher stake in China to lobby a better position under US’ isolationism trend.

Reference:
https://www.qianzhan.com/analyst/detail/220/170824-434f65b8.html

Though the business model is not new, it’s still super interesting to get a sense of what’s behind the scene about supply chain digitalization. As we learned in the beer game and Barilla SpA case, there’s always tradeoff between inventory cost and stockout cost. The challenge for operators is to locate the optimal point of customer experience and cost control.

Reflecting the first point under its logistics digitalization – allocation, the order picking practice from Amazon might be considered to further improve efficiency. When items (either new or returned) get shipped to Amazon’s warehouse, instead of storing items into shelfs by product category, warehouse staff puts the items “randomly” based on Amazon’s algorithm that minimizes staff’s time and travel cost within the warehouse. By recording item’s exact location, Amazon will provide instructions to warehouse pickers on where the item is stored and which packing line it should be delivered to. [1] Additionally, Robot pickers are trying to replace warehouse pickers at Amazon. Robot’s cost is still a concern but let’s wait and see how Amazon could justify its cost effectiveness in the future. [2]

[1] http://www.bbc.com/future/story/20150818-how-algorithms-run-amazons-warehouses
[2] https://www.wsj.com/articles/next-leap-for-robots-picking-out-and-boxing-your-online-order-1500807601

Very interesting article! The main value propositions of M. Gemi are 1) the disintermediation approach that combines old world craftsmanship with new world technology at uncommon prices 2) weekly releases of new styles. [1]

Digging a bit deeper – for 1) since M. Gemi works directly with small Italian family-owned workshops, I wonder how to maintain fast delivery time for customers outside Italy. How do they maintain price advantage given high transportation cost when customers are located thousand miles away from the manufacturers in Italy, not to mention the customs and foreign exchange fluctuations?

For 2) I found it very interesting to build customer preferences into weekly launching new styles. One important aspect of digitalizing supply chain is to visualize the needs in each part of the network. With data collection of customer’s clicks and purchasing behaviors using the weekly “Monday Drop”, M. Gemi can better visualize customers’ need. The bigger questions are how fast M. Gemi’s design team can respond to customer’s preference before it changes, and how to measure the success/role data plays in providing insights for designing a popular product.

[1] http://www.burdaprincipalinvestments.com/investments/m-gemi/

Thanks for the comment! Your suggestion of establishing direct partnership with drone manufacturer is very interesting. Uber is also doing something similar to partner with auto manufacturers and car rental companies to provide vehicles in undersupplied markets. Borrowing from Uber’s example, it made me realize several ways of achieving that. One is via drone financing/leasing – by leasing drones (usually too expensive for farmers to own) to farmers or drone pilots, it can quickly improve market supply and further improve market liquidity. But someone has to provide collateral, be it farmer’s credit history, or other types of assets. Another way is revenue sharing – by charging commissions, both Farm Friend, drone manufacturers can achieve higher revenues. The question is how much farmers are willing to pay for the commissions.

Thanks for the comment! It’s true that DJI is now scrambling to sort out their own supply chain challenge of fulfilling the massive customer orders. They have limited capacity or interest at this stage to forward integrate into this platform business.

And I completely agree with you that Farm Friend now doesn’t have high enough technological barrier to defend itself. However as a tech player, besides building technological barriers, they might achieve competitive advantage via network effect and economies of scale. Therefore your point of deepening the relationship with farmers and drone pilots and scaling up the business to achieve higher efficiency makes tons of sense to me.