He claims 90% of revenue growth in the FMCGs companies occurred in online sales last year, which ‘is a tremendous change in the structure and channel of the consumer products market’ and if you’re not selling online you’ve got negative growth.
78% US consumers switch brand loyalty
In his presentation: ‘Smart packaging and the direct-brand economy’, at the AIPIA (Active & Intelligent Packaging industry Association) Americas Summit in New Jersey (June 5) he said if we look at where the industry growth is going to come from there is an expectation by 2020 that $26bn will come from direct consumer engagement, according to NIKE.
“The environment is challenging for consumer brands and many large scale brand owners in the US have lost 78% of consumers who have been switching brand loyalty,” he said.
“There is a lot of change going on in the channels for example, Amazon own-branded products make a third of battery sales through its online channel. Ten days ago Amazon announced it was launching its own-branded pet care products.
“Coming to the rescue is digitization, a massive transition taking place with consumers. Products are the raison d'être of consumer brands and a massive data generating asset, that’s the opportunity in smart packaging.
“Once a product is digitally active it becomes a data-generating asset, the brand owner knows who has bought their product and what they are doing with them.”
Referring to a quote by Dan Burdett, global brand director, Snickers, Mars; Murphy said: ‘In the past we, along with other companies, have fallen into the trap of allowing the data and information to be held by third parties.’
Now, he added, smart packaging can transmit data throughout its lifecycle. Before it was very silo and difficult and expensive to join the data up but now with the Cloud we can collect and aggregate information about the product, applying more visibility and intelligence and insights into the end customer.
“We are heading into an environment where we are no longer reactive to finding out what is happening to our products but we can see it in real time. And relate it to services we want to provide or optimize,” he said.
According to Murphy there are two fundamental business cases for brands to consider; to digitalization; collecting data intelligence in the supply chain and connecting directly with the end customer, but the question is how do we get this to happen at scale.
“A low volume basis is easy but what is hard is to move the dial at scale, thankfully a lot is happening environmentally at scale to allow this to happen,” he said.
“How do we achieve a scalability where every product is switched on, we are working with GS1 Identifier on a One Code on One product, for multiple applications, using a one standard web address for every product.
“GS1 is the manager of the world’s standard bar coding (product coding) they deploy 4trilion bar codes a year. This is a single purpose platform used for POS (Point of Sale) right now.
“It will contain a unique product URL, which is relevant to POS, supply chain and direct to consumer apps, which means we can drive all sorts of softer intelligence to deliver greater value against a single product item.
“This means the one identity on the packaging offers a myriad of applications which can be associated with a product, which is a step forward towards scalability.”
GS1 launch impending
Murphy said EVRYTHNG has been co-chairing the One Code on One project with GS1 and it will be completed within two weeks and launched before the end of the month.
“The next challenge is how to deal with the data, which is a tremendous benefit but also a problem. With Machine Learning in the Cloud we can deal with dynamic personalization. When we want to apply dynamic pricing and incentivization towards the consumer, we need to apply automated intelligence.
“We have been experimenting with Machine Learning applying various programs finding out about the history of interaction with a consumer and the journey of that sale from an enterprise point of view.
“We have now crossed the threshold of this technology being scalable.”
In terms of how we develop trust with all this data, and have integrity with all this information at scale, Murphy said the answer is block chain technology.
“We have launched the blockchain integration hub, integrating multiple supply chain block chains, ie Tierion, Blockv, to apply that data towards personalization or business processes,” he said.
Almond fruit juice FACT
“Almond fruit juice brand will launch a product called FACT next week, a melon juice drink focused on millennials, a digitally native product meaning it provides a set of digital information and services for the consumer for transparency, i.e. it shows the origin of where the fruit was processed, how it was transported, etc.
“Consumers can earn rewards of purchase of that product. The reward mechanism is not just contained within FACT but any ethically-sourced product managed through a blockchain such as ethereum.
“Emerging brands are now digital native right out-of-the-box. This is a survival issue for brands. If you think forward three or four years from now It's hard to conceive that no brand will not connect directly with their consumers.
“We’ve moved from a walled garden to an open enterprise, managing data across more than one identity. The key is opening this space up now and capturing the data.”