Thank you for a great read! Last mile delivery is definitely a hot topic at Amazon as I have learnt through interaction with their employees during on campus recruiting! I found interesting that at Amazon, last mile delivery actually falls under the Finance team.
When I was reading the short paragraph on Amazon Flex, it reminded me of Veho – the winner of the New Venture Competition at the Rock Center this year. Veho is a start-up founded by HBS & MIT alumni about 1.5 year ago and it’s aim is to “replace large delivery trucks with a platform that enable anyone to deliver packages in his or her car.” It will be very interesting to see what will happen to this start-up now that Amazon announced its own version of this – and whether Amazon will use its platform only for their own deliveries or offer it as a service to the market. On the other hand, if Amazon succeeds but only uses Flex for its own, this might bring a lot of publicity for the start-up and hence create demand from smaller online retailers and other sources.
As I have also learn during the recruiting discussions from a person who actually led the team launching it – Amazon Europe is actually starting their own courier services in several European countries due to insufficient or inexistent existing infrastructure. I was surprised to hear that one example was of an inefficient infrastructure was the British Post Office. Amazon is planning to use both their own delivery service as well as the traditional couriers in these market for the moment – driving up competition and therefore improvements (both in quality and price) between those two.
In the Czech Republic we have a saying: “The only thing the Czechs are willing to riot about is when the beer gets more expensive.” Reading through your article I thought that we will probably have many riots coming our way in the near future.
While some of the measures you are suggesting, such as “Smart hobs” and following the example of Indigo and creating drought-resistant hops and barley, should have a long-term impact, I am not sure that the short to medium term measures (long-term contracts, regional diversification of suppliers) can really alleviate the current situations since they have probably been used by the management already in the past and therefore are unlikely to yield many additional benefits in the future. I could imagine that AB InBev might even see decreased benefits of these in the future, if other regions experience changes similar to those in Canada, which would in turn further decrease the possibility to diversify.
As to the point (4) about lobbying – I was wondering what should they actually lobby for and which region / country. Agriculture has always been extremely subsidized and protected industry – are you suggesting AB InBev should lobby for even stronger subsidies (e.g. to improve irrigation systems)? Doesn’t that create a vicious circle in the sense that if AB InBev is successful, companies dependent on other agricultural product would follow their example and demand the same – resulting in ever increasing government spending on agriculture? On top of that, would e.g. US even be open to global-warming-related subsidies, if it is, through president Trump, openly abandoning the Paris agreement and reducing focus on climate change?
This is an extremely interesting topic, especially if you combine it with increased pressure in re-shore jobs to the US that is affecting other giants of the tech industry (e.g. as Maddy wrote in her essay “Apple: a homecoming from abroad”)
As Swan mentioned in the previous comment, high quality supply of talents might be the most important part of the supply chain for Facebook type of companies. Therefore, she suggests scale up of European HQs of these companies since they already have presence in Europe and since EU has been relatively welcoming to educated immigrants. There are two questions to this approach though, keeping in mind what Maddy pointed out and also the changing dynamics in Europe, especially post-Brexit decision.
The first question really is what the current administration will do if they see increased outsourcing of jobs that are currently present in the US – will they increase pressure on these companies? However, unlike in Apple’s case, could the administration actually increase pressure on these companies given that they wouldn’t import any physical product?
Second question is related to the job market dynamics in the EU. Given the imminent Brexit and unknown conditions under which it will happen, some companies have already started to shift some of their operations to continental Europe. If we believed that we are going to see hard Brexit in the coming years, we would expect this trend only to strengthen as many companies loose tariff-free, simple access to the EU markets. However, that would increase pressures on the local job markets that are already now struggling to fill in certain roles (using the example I know the best – the Czech Republic is at natural rate of unemployment). Therefore, immigration would probably have increase to cover the new demand for labor. However, while not as strong as in the US, we can see nationalist tendencies in many European countries and hence increased immigration, even if of qualified workforce, might cause significant issues in the future for many local governments, especially since these tech companies have tendency (and ability) to tax their profit in the most convenient locations (vs. taxing profits locally).
Ron, thank you for an interesting article. I have been a fan of Innocent since it came on the shelves in the Czech Republic so it is extremely interesting to learn more about their operations. Looking back at the history of European Union and its Common Agriculture Policy (CAP), it seems likely that Innocent is going to face significant issues going forward. You suggest experimenting with new product formulations using fruits sourced within the UK – there are two questions that come to my mind with respect to this potential mitigation factor.
First of all, I would wonder how is sourcing fruits in the UK going to affect the company’s brand image since, as you mention, Innocent has committed to sourcing its fruit from areas in the world that are best suited in its efforts to ensure sustainability. However, if you are attempting to source only from UK, you will have to compromise your commitment or seriously reduce the variety of fruits that you are able to use in your products. Do you believe that Innocent sustainability measures had any impact on brand perception and hence its success over the past years?
Secondly, you mentioned that the UK fruit has a different taste profile and is not suited for smoothie making. I would be interested to learn whether it was the usage of the foreign fruits that have been the reason for Innocent’s success in the past as it (supposedly) led to superior taste of its product – and whether Innocent would be able to maintain that competitive advantage going forward, if it was to switch to UK grown fruits. Furthermore, if Innocent was to remain committed to its sustainability strategy and only source fruits that are best suited to be grown in the UK, will their product be sufficiently differentiated from the competition, both in taste and variety?
To sum up, my main concern is whether Innocent can reasonably switch sourcing to UK only / in large proportion without jeopardizing its brand image and quality / taste of its product that seemed to have been one of their keys to success.