Currently Amazon is growing at fast pace in Europe. Nevertheless, the UK and Germany entities, Amazon’s most developed markets in Europe, are still serving European markets where Amazon is not present. As the UK prepares for Brexit, there is an additional incentive for Amazon to expedite expansion towards other European markets. Developing these markets will reduce the need to ship from the UK to other European countries, thus avoiding export tariffs. Still, import taxes for products sourced from mainland Europe will be unavoidable assuming that free trade will no longer possible, and will impact Amazon’s operations and cost structure in the UK. But is this something specific to Amazon? No. All online and offline retail businesses in the UK will have to address this issue. Amazon’s scale and potential for negotiating power may even allow them to strike a favorable deal with the UK government, thus gaining an additional advantage (next to economies of scale) against smaller UK retail players.
Although I see the overall benefits of building more flexible production lines, I do not see it as a viable long-term solution to the impact of Brexit. If Nissan were to invest first in R&D and subsequently in redesigning its Sunderland factory, would it not be a more attractive option to move production to e.g. Eastern Europe? This way it can not only move production to a lower-cost country that is part of the EU, but also address the issues that arise from Brexit directly.
In my view it is critical that sustainability efforts align with a company’s business objectives in order to have long-term impact. For example, I see the use of more fuel-efficient aircrafts as a primary way to reduce operating costs, while reduction of CO2 emissions serves as a side benefit. Similarly, an optimized route network in collaboration with Virgin America can improve overall efficiency Alaska Airlines’ operations both from a top- and bottom-line perspective, which will lead to a reduction of unnecessary airmiles and subsequently CO2 emissions.
On the other hand, expanding use of biofuels as an energy source across the Alaska Airlines and Virgin America fleets does not guarantee long-term success in fighting climate change. As long as biobased jet fuels do not present a cost-competitive (without the use of subsidies) or higher-performance solution, they are not a viable long-term option. Even if biobased jet fuels become competitive from a cost or performance point of view, availability will become an issue, as more airlines turn to them as their main fuel source.
Interesting piece! To echo some of the points made above, I am also very skeptical about the future of a service like Birchbox as a standalone business.
Based on your analysis, they seem to have strong data analytics capabilities, which they use to (1) put together customized beauty boxes and (2) drive their full-size product sales. Nevertheless, they do not seem to have any advantage in point (2) compared to other retailers with an online presence. Once a customer has tried out a sample and wants to buy it again, there is nothing that stops him/her from searching for the best price online. Players like Sephora have the option to provide more competitive pricing and extensive product offering combined with a strong offline presence due to scale.
Also, as players like Sephora are moving towards offering their own sample box services, the best way forward for a service like Birchbox is to indeed build the right partnerships with manufacturers and retailers or even serve as the promotional arm of a company like Sephora by operating under the LVMH roof. This will allow LVMH to integrate the data analytics capabilities of Birchbox (e.g. customer feedback on new samples) with the product offering decisions of Sephora.
Regarding your first question, I believe that the steps for further collaboration among the major coffee roasters (such as Nestle, JDE) can be taken through their support of and active participation in independent bodies such as Rainforest alliance, Utz, Fairtrade (similar to IKEA’s involvement in founding and shaping the FSC certification).
You mention in your essay that Nespresso’s premium positioning is what enables them to drive their sustainability agenda and support their own supply chain. When reading this, another question springs to mind: are smaller players aware of the impact of climate change and, most importantly, can they afford to invest in a sustainability agenda. This is where major coffee roasters such as Nestlé and JDE need to drive their sustainability agendas in a way that not only benefits their own supply chain, but also educates coffee bean producers as well as smaller coffee roasters on sustainable practices.
Great and insightful essay! In response to the 2nd question, I believe it is to the advantage of DHL to leverage its large scale in terms of number of deliveries and the existing fleet to ensure enough deliveries to build a community and enough vehicles to fulfil delivery promise even when the unofficial network is unavailable.