THE GROCERY INDUSTRY, REINVENTED
Decentralized Ecosystem Directly Connecting Grocery
Manufacturers and Consumers
ABSTRACT
The grocery market, one of the largest consumer markets in the world, is forecast to reach $8.5 trillion by 2020. It is reaching a digital tipping point, with much of its growth to come from online. Online grocery, being the target segment for INS, is expected to grow from $98 billion in 2015 to $290 billion in 2020, according to IDG estimates.
Despite the tremendous growth, the grocery market has two large interrelated problems — abuse by grocery retailers and ineffective trade promotions.
The grocery market dominated by retailers.
Retail chains capture a very high share of grocery revenue and have a huge influence over manufacturers, causing deep impact on consumers worldwide. Retailers dictate what food is grown and how it is processed, packaged, priced and promoted. As an example, in the UK, four retailers serve as a slim conduit for 7,000 manufactures to sell their products to 25 million households1, which demonstrates how the existence of retailer abuse in the grocery industry has not only been allowed to develop but also thrived.
Ineffective, costly and outdated trade promotions practice. Trade promotion spending represent 17% of manufacturer’s sales2. Each year, over $50 billion3 on trade promotions never reaches the consumer. Unfairness in today’s promotion-laden atmosphere go hand in hand with the rising costs of promotions and the inefficiencies they produce. 95% of manufacturers admit that trade promotions inefficiency is an extremely important issue.
INS is implementing a decentralized ecosystem enabling consumers to save up to 30% on everyday shopping buying directly from grocery manufacturers.
Direct interaction between consumers and manufacturers. Bypassing retailers and wholesalers means a more personalized and transparent grocery shopping experience at lower prices. Сonsumers will be able to decide which brands they want and goods they need. We call it “Consumption 2.0” since 21st century customers are tired from a one-way street type of communication, whereby retailers push goods onto them that maximize retailer’s profit — not what consumers really want. We also want consumers to have unimpeded access to independent and local manufacturers, including farmers, that do not fit retailer supply chain or procurement terms and can’t get their goods on retail shelves.
Enabling manufacturers to market their goods directly to the consumers.No more costly and inefficient trade promotions grabbed by retailers and wholesalers. INS will enable manufacturers to create bespoke marketing programs to reward their customers directly. These programs run on smart contracts and powered by the INS token as a means of reward. It is similar to miles-based reward programs of many airlines, but more advanced, cheaper to run and personalized thanks to smart contracts behind them. This was hardly possible before the blockchain and smart contract era.
INS has the prerequisites to perform an ambitious task of disrupting the grocery industry based on our deep industry knowledge and confirmed interest from the largest grocery manufacturers in the world.
More than 4 years of grocery industry track record. INS is founded by veterans of the onlinegrocery industry, using the knowledge and experience acquired since 2013. We have built strong relationships manufacturers and gained valuable feedback from consumers
INS received strong interest from some of the largest grocery manufacturers in the world. We signed non-binding memoranda of understanding with:
INTRODUCTION
GROCERY MARKET CHALLENGES
ABUSES OF BUYER POWER BY RETAILERS
The global grocery industry is dominated by mass-market retail chains. At the national level in many countries, a large share of the grocery market is frequently in the hands of few retailers. While some amounts of buyer power are understandable and simply desirable for competitive advantage, the high level of concentration causes a growing imbalance of buyer power within the supply chain.
Exerting buyer power is natural when not abused. It is understandable that any industry participant would seek bigger volumes as a tool for negotiating better prices. But retailers push the limits of what is fair. Grocery retailers are perpetually and aggressively extracting better terms from already squeezed manufacturers, going far beyond the benefits a player should receive for attaining economies of scale.
Large or small, no manufacturer has enough power. Global constituents, such as Procter & Gamble, Nestle, and Unilever, do play a role in the industry and have more negotiating power than small manufacturers. Still, these companies simply are no match for the extensive control retailers have on end-customers throughout the supply chain. For example, Wal-Mart’s sales are approximately 5 times greater than those of its largest supplier, Procter & Gamble Wal-Mart accounted for 16% of Procter & Gamble sales in 2016.6
Retailer buyer abuse extends beyond normal pressure . The explanation of this pressure is abuse of buyer power. Such power allows retailers to determine what will and will not be stocked, and on what terms, such as sources, quantity, quality, delivery schedules, packaging, returns policy, and above all, price and payment conditions. Indeed, a supermarket company wields an important bargaining chip, namely the threat to stop selling one or more products.
Evidence of retail power abuse — The Competition Commission in the UK, for example, did find that major retailers enjoy a price advantage that exceeds the cost difference. Additional departures from proper retail conduct included: delaying payments to manufacturers beyond the terms in the contracts; and changing quantities or product-quality specifications at less than three days’ notice, and without paying compensation to manufacturer.7 The figure below offers specific evidence of retail buyer power abuse and lack of adherence to codes of conduct, which was covered in various news outlets.
Recent evidence of retailer abuse and lack of adherence to codes of conduct
INS will help grocery manufacturers to bypass retailers and wholesalers and directly sell and promote their products to consumers.
SUPPLY CHAIN INEFFICIENCIES
High distances between manufacture and consumption . The average meal in the US travels about 1,500 miles to get from farm to plate.8 This problem is relevant for many countries and leads to acute financial and ecological consequences with significant adverse impact in the long-term. Food miles, the distance food travels from the place it has been grown to where it is ultimately consumed or purchased, increase significantly when buyers import food from other parts of the country, region or world
Waste in various areas of the supply chain. In distribution centers and on grocery store shelves, food is being wasted. Every night, some perishable items must be thrown out. According to a recent survey, 400 million pounds of food is served by supermarkets, yet nearly a third of it is wasted annually.10 Unfortunately, current retail systems are designed to reduce stock-outs rather than measure and manage food waste. Therefore, managers optimize to ensure food is left over on the shelf.
INS will decrease food miles, enabling consumers to unimpededly access local manufacturers, including farmers. INS will implement the effective “pull” system to reduce inventories and out-of-stocks that would decrease the food waste.
TRADE PROMOTIONS ARE INEFFECTIVE, COSTLY AND OUTDATED
Grocery manufacturers spend up to 17% of their sales on trade promotions. Trade promotions comprise a growing category of manufacturer expenses directed to wholesale and retail distributors rather than to consumers. Manufacturers spend more than $500 billion on trade promotions annually12, and according to some reports 66% of that spend generates negative returns and leads to higher grocery prices.
INS is targeting to replace trade promotions with a more personalized, direct and efficient marketing, thus driving grocery prices down and facilitating the effective direct interaction between manufacturers and consumers.
PLATFORM
The INS Platform is a decentralized marketplace that allows manufacturers to join, publish their products for sale, carry out promotion and loyalty campaigns, and get feedback from consumers. It enables consumers to order those products and facilitates the order fulfillment process.
INS roles include:
- INS token creation and the token launch to fund development and expansion
- Establishment of a decentralized, fair and secure model for order execution
- Development of smart contracts to run the order payment and fulfillment process
- Release of the customer website and app, fulfillment app for fulfillment center workers and couriers, and web interfaces for manufacturers and fulfillment center operators
- Creation of an effective incentive model for all parties to join the INS ecosystem
- Development of an active marketing campaigns to ignite initial traction
- Elaboration of the ecosystem’s regulatory aspects
MANUFACTURERS
Manufacturers are companies or individuals in the business of fresh produce, groceries and consumable household items. They range from local farmers to large multinationals, such as Procter & Gamble, Unilever, Coca-Cola, etc
Manufacturer roles include:
- Publish products
- Deliver products ordered by consumers to fulfillment centers
- Promote the INS ecosystem by bringing traffic via promotions of derived apps
CONSUMERS
Consumers are individuals or companies that want to buy online high-quality groceries at cheaper prices. Orders can be placed via the INS website, INS app or custom apps derived by manufacturers from the app reference implementation.
Consumer roles include:
- Search products listed by manufacturers, make orders and pay for them
- Participate in feedback requests
- Receive promotion, loyalty, referral and feedback rewards
FULFILLMENT
FULFILLMENT CENTER OPERATORS
Fulfillment center operators are owners or lessees of existing warehousing facilities and/or delivery fleet. They provide the space where workers take products delivered by manufacturers and assemble orders.
INS plans to establish a basic network of fulfillment centers in up to 10 cities across the world to accelerate adoption, establish effective business processes, and strengthen position by combining the online platform scale with the magnitude of a physical network of fulfillment centers and their associated operations. INS will seek to engage independent fulfillment center operators to join the INS ecosystem to ignite further geographical expansion.
FULFILLMENT CENTER WORKERS
Fulfillment center workers, employed by a fulfillment center operator or acting as independent contractors, will follow instructions received via the INS fulfillment app to:
- Collect products delivered by manufacturers to fulfillment centers
- Assemble products into orders
- Pass assembled orders to couriers
INS will seek to attract independent workers to join the ecosystem.
COURIERS
Couriers, employed by a courier company or acting as independent contractors, will follow instructions received via the INS fulfillment app to:
- Pick up orders from fulfillment centers
- Deliver orders to consumers
INS will seek to attract independent couriers and courier companies to join the ecosystem.
INS IS A scalable blockchain-based platform that enables consumers to buy groceries directly from manufacturers at lower prices, with convenience. The INS ecosystem is validated by consumer interest and received strong support from manufacturers.
The INS solution
The only global decentralized online manufacturer-to-consumer platform, enabling consumers to purchase directly from manufacturers without the intermediation of retailers, powered by a self-regulating community of consumers and manufacturers. Our smart contracts enable manufacturers to run bespoke loyalty programs and reward their customers in INS tokens.
How the INS ecosystem will work
All manufacturers will be able to list and sell products directly to consumers, gain customer feedback and reward loyal customers. Smart contracts power loyalty programs, blockchain makes the supply chain more efficient and trims costs. The INS ecosystem will be deployed in the largest cities around the world with all the necessary infrastructure to make it operational.
INS targets one of the largest consumer markets
The global grocery market will reach $8.5 trillion by 2020. Online sales of groceries are expected to reach $300 billion by 2020. The grocery industry is one of the largest segments in global retail and forms a large share of the consumer’s wallet.
INS token
The INS token serves as a method to power direct manufacturer to consumer loyalty programs and can be used as a means of payment.
Token Sale terms
Start: November 27, 2017
Target: 150,000 ETH
Exchange rate: 1 ETH = 300 INS
EIP-20 token
Purchase methods:
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