A lesson in explaining why you have to consider the whole chain and not just the part you control
Good morning. I hope you’re enjoying my newsletter, I would love to get your feedback as I think it would be great to continue the conversation on some points and additionally help me better align content to your desires. I’m planning to open a Slack channel in the near future — acting as a discussion forum. It will be invite-only for the moment, but if you’d like to be on this list drop me an email at thefutureisdigital@substack.com and I’ll get back to you.
On to this weeks issue, which is about the difficulties in Digital Transformation when we are only able to control or influence parts of the value chain.
Reducing waste
Paper, as we all know, is bad for the environment. Much research shows this which was a seminal idea for the application I analyse in this week’s newsletter.
For many places around the world and particularly in the Caribbean, many shops and supermarkets design, print and deliver prospectus magazines designed to inform us of special offers and incite purchases. It’s a marketing tool that has worked for decades and a practice that doesn’t show too many signs of abating in the near future. It produces much paper waste and requires physical delivery that itself has an impact on the environment via CO2 emissions.
Enter Iléco, an initiative in the French West Indies. Iléco was designed and produced through a startup incubator with the aim to reduce wastage of paper by digitalising those catalogues and making them available on mobile. An honourable and worthy cause. Only it is flawed, and it won’t make any significant difference anytime soon unless there is a fundamental change in the entire distribution process. Additionally, its format is less than optimal and prevents it from being the first block in the building of an aggregator.
Let’s take a look at the application and its components and why it is precisely these that will condemn it to failure in the long run.
The value proposition of Iléco
The application is essentially an index of catalogues, presented on your smartphone or tablet computer, whereby you choose the shop you’re interested in, to peruse the catalogue presented in a digital copy of its paper form.
We go from this — that’s 8 catalogues:
To this:
In the first image, I weighed the pile of prospectuses and measured it as 300 grams. I get a delivery like this around two times per week. That's 600 grams per week, 2.6Kg per month and startlingly, over 30 Kg per year! There are easily 100000 habitations on Martinique, so we’re talking about something like 3 million Kg per year thrown into recycling or straight to trash, 7.5 million Kg alone in the French West Indies. I dread to calculate that figure for the entire Caribbean and frankly, it’s a disgrace in 2019!
Iléco itself boasts of a 14 times reduction in CO2 usage for an A4 sized double-paged catalogue, which is impressive and definitely where things should be headed. However, I still feel as though this is more rearranging the deck chairs on the Titanic rather than addressing the fundamental issues, but we’ll get to that shortly.
One of the most frustrating aspects is a jerky interface when scrolling which is a problem I’d noticed from the very early versions released to the public. Diving further into the application, it offers other functionalities, like a shopping list (things I'd like to buy) and, bizarrely, a list of things I’ve bought. Presumably, things go from one list to the other if you manually say so. I haven’t tried it. Adding things to the buy list is also a manual affair with, as far as I can tell, no way to get from a specific item in a catalogue to the list. Although not necessarily the fault of the application, it is undoubtedly a fundamental design decision that prevents this feature from being possible.
As I mentioned earlier, the catalogue is presented as a digital facsimile of the paper catalogue received in your postbox, essentially a pdf. To open a catalogue you click on the image and a web view is opened linking you directly to the representation of the catalogue on joomag.com. As a pdf equivalent, the assets are not digital and therefore unavailable for use in another context, for example, to click on an item to add it to the shopping list or open an order page. I suppose appropriately positioned hot links could be added to what is essentially an image to allow a callback URL link to populate the buy list. It would work but would be fiddly and unwieldy for the user, who would need to constantly move context from image to list and back again. For a handful of items it is possible, even if undesirable, but for a weekly shopping list, it is untenable and unacceptable. Additionally, given that most catalogues are around A4 sized, with text and images designed for that format, squeezing this down to popular smartphone dimensions leaves usability to be desired.
Critiquing the choice to use a third party to actually stock and present the magazines, Joomag is a digital publishing platform and stores the static images on their servers, they are based in California. There is no mention of where data is stored. Presumably personally identifiable data of those who created a profile is stored somewhere too. I’m not suggesting anything untoward, just that a lack of clarity is notable. From a business perspective using another's platform introduces a risk to the core product, in that a change in policy, functionality or cost by the third party places pressure on the developer, and that is utterly out of his control. Joomag is not free either, so someone is paying for it. It’s not clear to me who is paying, although I suspect that burden is being placed on the suppliers rather than Iléco, i.e., you buy in to put your catalogue on Iléco.
Other functionalities exist, like geofencing, that allow notifications when in proximity to shops with promotions currently running, however a stark warning about battery life — even when the application is not running — is given if you wish to activate this feature. For no apparent reason, other than to provide the maker personal data about its users (yes that's what Facebook gives you back for using their login API), a login option with Facebook functionality exists. Considering Facebook's cavalier attitude to your personally identifiable data, I’d like to see this removed. The terms and conditions don’t explicitly state what Facebook will do with this information, preferring to punt you off to the Facebook privacy page, which is about as incomprehensible as can be.
An Aggregator in the making?
In essence, Iléco is trying to become an aggregator, whereby suppliers are being commoditised to provide the digital product (prospectuses and catalogues) and users being enticed to the platform because it's better or easier. Iléco is attempting to solve the distribution and discovery problem, that is fundamental to internet aggregators.
I don’t believe it will work because an aggregator needs to provide benefit and clearly demonstrated value add for both sides of the value chain. I question its long term success in its current business model for several reasons. Let me explain in a series of questions.
Why would suppliers (shops and supermarkets) choose Iléco where they essentially isolate themselves even further from the customers, particularly if they are footing the bill?
Sure, you can argue they already do by providing the catalogues, and in a way that’s true. However, the catalogue arrives directly to the consumer and the only logo and branding you see is that of the supplier, your local supermarket or car distributor. With Iléco you first see Iléco’s logo and branding, having then to pass through to get to the catalogue you’d like to browse. This adds friction to the process, notwithstanding that the startup is slow. Aggregators are all about reducing friction.
I would bet that most brands would be working nail and tooth to develop personalised relationships, direct to the customer, profiting on the infrastructure and marketing capabilities of the brand as a whole, economies of scale, etc. In fact, several high profile shops are still not present in the list. Who in that chain would have more customer data to exploit, the supermarket or Iléco?
Additionally, it appears that Joomag provides a tool to directly upload your pdf for it to be converted into the format ready for publishing. This trivial operation is well within the technical abilities of the suppliers, which begs the question, why couldn't they provide exactly the same thing as Iléco directly?
Why would users go to this application? As I’ve noted earlier, the interface adds friction to the process, making it less desirable than simply browsing the already-delivered-to-your-door catalogue. And that there is the essence of the promise not being fulfilled. Despite promising a reduction in the amount of paper, it does nothing to stop the inflow of magazines to your letterbox every few days. There is no opt-out of paper deliveries, much like most banks have offered for years for their statements.
It doesn't appear as though any of the signed up suppliers have stopped or reduced the amount of catalogues designed, printed and then hand delivered to us. Even a basic incentive to stop receiving the magazines, which, admittedly would require significant investment and have complications like GDPR adding to costs and would need agreements with delivery companies to ensure that the wishes were respected (and deal with complaints when they were not, both for missed deliveries and deliveries in error), would be difficult to implement.
It was first distributed on the App Store and Google Play Store in 2017. At the time I predicted that it would fail to reduce paper waste. It has and still is failing because it doesn’t get to the heart of the problem by solving the “jobs to be done” as defined by Theodore Levitt, who famously said:
People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!
The job to be done is to provide a better, frictionless way to discover offers at shops locally whilst reducing the paper waste generated by the system it is trying to replace. It’s a worthy attempt and despite my sceptical analyses I believe the problem can be solved, but in my view, Iléco requires revisiting its interface and it requires a change in the value chain (incentivising a reduction in production and offering opt-outs for physical delivery to users) to ultimately be successful.
I've only briefly touched on what I think is its business model. I'd like to revisit the application in the future to try to understand just that. I'll put it on the list of things to do.
Reading List
Environmental impact of paper - Wikipedia
Further reading at Wikipedia, on paper production and its impact on the environment, from; air, water and land pollution in the production and de-inking processes required for recycling, to its carbon impact in transporting atoms around the planet.
CXC To Issue E-Certificates Across Region - CARICOM
This is a good example of Digital Transformation having real impacts, reducing friction for all stakeholders. It’s an example whereby the provider controls the entire value chain and therefore has direct control over its development and usage. Glenroy Cumberbatch, the CEO of CXC, said: “From inception, our primary goal was to empower students to have ownership of their records and be able to share them in a secure way, with whomever they choose.” Other countries and regions would do well to observe how this is implemented and learn from our experience.
ECCB to pilot Blockchain-based Digital Currency - CARICOM
I have mixed feelings about cryptocurrencies, believing they are more bubble than solid. I feel they are a solution searching for a problem. Their purported security has been shown to be compromised time and again and they are clearly used to help hide nefarious activities. But blockchain, I have an entirely different viewpoint. I think that blockchain provides some very interesting use cases that could revolutionise a number of operations within companies. This pilot will be interesting to watch. Bookmarked for revisiting in a year’s time.
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