A new disruptive platform scheduled for launch next year will, say its developers, give brands from the UK and around the world a new way to sell direct to their customers.
The INS Ecosystem is being created with the intention of replacing retailers and wholesalers with a commerce platform built on blockchain technology, and delivered using independent fulfillment in order to give manufacturers a way to reach, and get feedback from, consumers directly.
An ICO white paper from INS, The Grocery Industry Reinvented, sets out plans for a decentralised ecosystem that it envisages will create a self-regulated community offering better grocery prices for consumers.
Peter Fedchenkov, INS Ecosystem co-founder, said: “INS Ecosystem is now being developed by the founders of Instamart, the largest venture-backed online grocery delivery service in Russia with over $10m of VC funding. It’s not an enigma why we are now disrupting the largest consumer retail market in the world. In many countries, up to 80% of the market is controlled by a handful of retailers, abusing their market power, marking up manufacturers’ prices by at least 30% to 50% and using inefficient supply chains, leading to higher costs and food waste.
“In addition to that, manufacturers spend heavily on trade marketing which accounts for circa 17% of manufacturer expenses and directed not to consumers but wholesalers and retailers. Abuse by retailers and ineffective trade promotions lead to higher prices and worse choice.
“INS will enable consumers to save up to 30% on everyday shopping buying directly from grocery manufacturers. Bypassing retailers and wholesalers means a more personalised and transparent grocery shopping experience at significantly lower prices.
“INS will enable manufacturers to provide highly efficient direct marketing and promotions as well as obtain fast and detailed customer feedback.”
Fedchenkov, who lists experience with Goldman Sachs and IBM alongside a Harvard Business School MBA, co-founded INS Ecosystem with Dmitry Zhulin, a venture capital and private equity professional with a focus on retail and ecommerce and who lists experience at VTB Capital Private Equity, Rothschild and PwC. Early investors named in the white paper include the mail.ru Group, Lev Khasis, previously a senior vice-president at Wal-Mart and vice-chairman of Jet.com, Sergey Solonin, founder and chief executive of Russian payment services business Qiwi Group, and Ilya Yakubson, a former chief executive of Russian grocery chain Dixy.
So far, says INS, brand owners including Unilever, Mars and Reckitt Benckiser (RB) have all signed memoranda of understanding with the platform, understood to be set for launch in the fourth quarter of 2018 – with full development of the platform set to take place following an initial fundraising later this month.
But in a statement, RB, which owns home and hygiene brands including Dettol, Cillit Bang and Vanish, today said: “RB is aware of reports today that suggest RB has entered into an agreement with an online grocery shopping service designed by INS. These reports are not correct and no agreement has been made with such a service.”
In response, INS said that it had signed memoranda with all the producers listed on its website on country and regional levels. RB’s denial, it said, could be down to a lack of communication between marketing departments of large manfacturers in different countries.
Heather Barson, director of retail and hospitality at Fujitsu UK & Ireland, said the news had the potential to open up a new era in retailing. “If this new shopping service can truly slash grocery bills by 30%, cutting out supermarkets completely, retailers might have to rethink their entire business model, and how they fit within the supply chain altogether,” she said.
“Of course this should not be seen as an apocalyptic prediction, but rather as a challenge to be overcome. Indeed price is an important battleground, but consumers nowadays are looking beyond that: they are looking for convenience, personalisation, and ease to use, and in some instances they’re even willing to pay extra for these.
“Be it this new platform or another disruptive solution that the industry will come to face, it is imperative retailers ensure they are moving forward and adapting their offerings to match the ever-changing behaviours of consumers. By making the most of the technology available today, retailers and manufacturers equally can better themselves at meeting consumer needs and even anticipating those.”
Commenting on what the scheme might mean for customer loyalty, Rob Meakin, managing director of Loyalty Pro, said: “In being able to gather data from their customers more easily, brands are going to create recommendations, rewards and loyalty schemes based on consumer buying patterns. With consumers’ allegiance shifting more away from brands and towards service (same-day and even same-hour delivery), this is an opportunity for brands to reclaim customer loyalty and our advice to retailers is to watch this development very closely and make sure they are prepared to fight for their consumer.
“As data becomes the fuel for any business, retailers need to be actively trying to grow their customer loyalty by utilising the customer data at their fingertips to offer rewards schemes in the same way brands are now likely to. Loyalty points and rewards are a currency themselves, and with household budgets squeezed, consumers will be looking for the best possible deal. They also want to feel valued wherever they shop, rewarded for their custom and loyalty through points, offers and even charitable donations. We live in a society where loyalty can appear dead, but the truth is that it’s simply changed. Consumers still value great service and that can absolutely be delivered by anyone – from a single store high street retailer to a multinational online service. The key is to use data to understand what they want and deliver an experience using personalised and relevant communications which will encourage customer loyalty. With brands about to cut out the middle-man, no retailer can afford to rest on their laurels.”
InternetRetailing has contacted Unilever and Mars for a comment and we’ll add in any further updates when they are received.
