Wednesday, November 21, 2012

Packaging as a service

Last Wednesday I was at the ASSOCHAM Packaging Summit 2012 giving a talk on the new opportunities for the packaging industry.

Very wisely (as I would discover at the event), at the outset, I decided to eschew the usual Packaging related topics. i.e. innovation, new trends, numbers, stats etc.

Instead, I talked about how the Packaging Industry could look beyond the traditional confines of rigid, flexible packaging etc. and look at their business as a service.

If you rewind a little over a hundred years or so, you will see the example of Levi's. Levi's made his fortune during the original California gold rush supplying riveted jeans.

And then fast-forward a hundred years from there, you have Bill Gates, who made his fortune by providing tools for the information age. As you would have guessed from the title, the analogy I drew was that in any gold rush, people who provide infrastructure (Amazon/Microsoft Cloud anyone?) are the ones most likely to walk away with the prize,

Which brought me to my core message to the audience. Packaging as a service.

This may seem a preposterous thought. How or why will this work/not work in India? My answer to that is a service by Exide, called Exide Bat-Mobile. A pure play commodity business with dozens of competitors. Enter: Bat Mobile. This service is a battery helpline.

When your car refuses to start, these guys will reach you in 30 mins. Check your battery. Jump start your car to get you home. No matter the make of your car or the battery.

Free of charge with no obligation to purchase anything. However, if  (and only if) you want, they will also home deliver a new battery to you.

You are saying this is a consumer business and therefore it works! Here is another example.


If you think about UPS as a business, what is the first thing that comes to mind? The transport goods.

Here is another business line, you may not know about. UPS also is (was?) the first tier warranty provider to HP printers and Toshiba Laptops.

In any recall that involves a recall to service center, the time to pick up and return is a fraction of the time to repair and turn around the device. So UPS tells its customers: Give it to us. you are going to have to outsource it anyway, why not outsource it to us.

Voila! a B2B commodity service is a value added service with better margins.

Heard about readymix concrete? Cement is a commodity. Now sold as a service.

Look at the scenario in India. Dozens of companies scrambling to participate in the online retail revolution. all of them are not going to survive. Yet all of them are going to need packaging as an essential part of what they do.

Nice margin business with very little risk. Hardly anyone blames packaging as a problem area.

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