Very interesting essay! I agree with Student above, that UPS should be focusing on investing in the future of transportation/delivery/logistics, which will be centered around autonomous vehicles. Major players in the freight/logistics side have invested in partnerships with Volvo and Tesla who have been designing autonomous freight trucks. UPS would be smart to do the same, if they haven’t already, as a means to drive down future costs and protect future margins in light of these isolationist trends.
This is a very interesting topic, Henrique. I hadn’t spent too much time thinking about the impacts on reinsurers, and do question (to Steve’s point) whether they will feel this impact deeply given they are diversified. We struggled with this too at my prior company in looking at life insurance claims. There were some spikes in claims that seemed to take place across the industry, not just our company, and seemed to be highly correlated with changes in weather (increase in deaths from pneumonia and other pulmonary/respiratory diseases, death from weather related accidents, etc.). Big data seems to be the best investment right now.
I agree with SVT above, in that I’m not sure integrating technology in the product itself is the right move. I think LL Bean would need to first assess if making a change like this would align with its customer promise and their core strategy/target market. My sense is that the LL bean customer may value heritage of the brand and product quality above these types of innovations, and that adding this type of tech may complicate the supply chain further. But it is certainly an idea they would want to test with their customers. One idea that could help in managing customer expectations around delivery, would be to gamify the customer order process. I do think customers now are less patient, but I think one way to mitigate this is to have them feel like they are part of the process with you. Is there a way to add an element of customization to the product, such that the customer feels like they are co-creating with you, and you create a platform that allows more transparency into the product design, development, and delivery process. I think customers are more patient when it is something that is seen as less of a commodity and more of a unique product.
I think this essay raises some interesting questions. Lynn’s response above about whether Nordstrom would be alienating certain customer segments if they move towards more VR or online experience models should be an important consideration. I think the future of retail should always include a combination of bricks and clicks, its just more about what the weighting of each should be. I think about smaller retail services like Rent the Runway for example. 90% of the experience is enabled through their digital platform. Even without VR, they have created an experience where I can look at reviews and customer photos to get a sense for how the dress would look on. And they have created a fairly seamless return or exchange process if something does’t fit right. They ALSO have a select number of boutique store fronts where you can actually try on the clothes and rent real time. If Nordstrom were to adopt a similar approach they may be able to move over to a more asset light model and better manage inventory.
This is a really interesting topic, and your essay was very comprehensive in breaking down the problem. One other potential solution that comes to mind in terms of being able to create more efficient supply delivery, is perhaps a food-sharing app. Similar to ride sharing apps (uber pool for example) is there a way that groups or communities can order food in advance together and buy in bulk in order to create a smoother demand curve? This could also aid towards lowering consumer food waste. Part of the value of meal prep services is that you are only receiving the exact amount of an ingredient that you will need to make a meal, so you don’t buy a head of broccoli and end up throwing away the half you didn’t use for dinner that night. If you can create a group meal/grocery planning process then you can divvy up the exact produce needed for each person in the group.