When things get disrupted as they have now, the next step after dealing with the initial fear and anxiety is to ask the question, where to next?
Business models have been upended as have entire verticals and there will be those that emerge as victorious and others that will, unfortunately, end up in the dead-pool having exhausted their runway or struggling in the shifting sands of destabilized demand. Flash-in-the-pan opportunities might also arise and thrive but only for the duration of the pandemic after which markets recover with the new normal and subject them to the challenges of sustainability and growth.
The past decade has seen the adoption and emergence of the marketplace model with many startups replacing the middleman by rolling out platforms that bring transparency and added efficiency to the transaction cycle.
Middlemen are the first ones to suffer when disruptions happen on either side of the marketplace and I project that current operators and stealth newcomers will be raising funds if they have not yet already to cover this blind spot, that albeit well known has never quite put them through the wringer.
What use-cases can we look forward to?
Connecting farm to fork has been the value proposition for many Agritech companies. Figuring out the dynamics of quality standardization, farm gate logistics and pricing was only the first step. Those that have built a relationship with the end consumer, have now seen the risk in not having a guaranteed supply side, dealing with hundreds if not thousands of smallholder farmers and will move towards contract farming, where large tracts of land will be leased and the farmers essentially end up as employees with a fixed income and process to follow.
Fast Moving Consumer Goods
Retailers have moved quickly to partner with various logistics service providers to handle last-mile delivery to homes and businesses. Producers and suppliers to these retailers have also been building their direct to consumer rails, which to the best of my knowledge are limited by the fact that no one currently commands over sixty percent of SKU’s consumed by the average household, to mean that a unified single purchase experience is difficult to pull off. We will see the move towards private label FMCG producers who use the capacity of already existing manufactures to attempt to cover the average urban consumer basket with a direct to consumer model on direct from warehouse dispatch, large retail brands rolling back on expensive real estate plays to franchise kiosks closer to the consumers with centralized dispatch just in time to these collection centers, that may also carry limited always available inventory.
The market for ready to eat food in urban areas has grown, the pandemic causing consumers to test and thereafter come to rely on the ability to order from their favorite restaurants. Platform providers in this segment with enough data will open their own ‘cloud kitchens’ to meet this growing demand, with margins on a streamlined food and beverage operation much healthier than pure-play logistics, which can be run at cost as a factor of production.
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