Welcome to the Iconomy

The journey so far...

It’s been an incredible journey for Localz over the last three years. First we built out our underlying location orchestration platform (Spotz) and then found out we were a little early to market (customers knew they wanted it, but didn’t understand why they needed it). Next we demonstrated how it could be used in applications as varied as triggering payments, enabling gaming in licensed premises, location-based marketing and automatically checking employees in and out of work.

With multiple industry awards (and 3D printed plastic trophies on our shelves), we realised we had become the darling of the Innovation Departments of large companies, but weren’t getting much traction by way of getting our software used on massive scale in production. So we ruthlessly narrowed our focus, killing off some great ideas and concepts and focusing on those that were solving existing pain in the real-world now. We whittled our portfolio down to two areas where we had a good combination of solid validation and large market opportunity to grow into - health payments and last mile fulfilment.

Two is still too many opportunities to focus on, so we decided to split out our health payments platform (medipass) from Localz so that both could thrive. Fast forward a few months and massive amounts of blood, sweat, tears, fun and emojis and we find ourselves looking up at a very steep and exciting curve of growth.

One of the key factors that has helped us get where we are now is a highly engaged and active group of investors. Some have been with us from when the company was just a few months old, others are more recent. The common thread though is the discretionary effort they give us in guiding, referencing and introducing us to new thinking and opportunities.

One, among many that I will refer to another time, that helped connect us into next level thinking is one of our most recent investors - Notion Capital. Led by partner Chris Tottman and platform manager Stephen Millard, we have been overwhelmed in a very positive sense by their support since before we had got close to agreeing anything to do with investment.

We were struggling to define which category we are growing into dominating, it’s part supply chain, part fleet management, part mobile workforce, part communications platform. Notion helped identify that what we were trying to explain was a new category of pain and opportunity and introduced to Category thinking (check out the Play Bigger book if you’d like to learn more).

This has really clicked with us and we have used the framework to rapidly define the category, strategy and purpose of Localz as a result.

Introducing Iconomy Fulfilment

Much has been written about the On Demand Economy which is interpreted by most as instant, next hour or at worst same day fulfilment of an order. But what we have found through our research, working closely with our clients and their customers is that the actual customer expectation is paradoxically both easier to fulfil and more demanding. It is:

What I want, where I want and when I want it.

Customers are demanding to define the delivery time (to an ETA window level of 1 hour), but that doesn’t necessarily mean right now. It might be 4pm tomorrow after school pick up, 8am on Monday before work or 10am on Saturday.

They also want to be able to know exactly where their order or service is at right now, not where it was yesterday the last time it was scanned. And finally they want to be able to change their mind right up to 30 minutes before the allotted time because life happens and priorities change.

We call this new economic reality of heightened consumer expectation the Individual Economy - or Iconomy for short.

What’s driving the Iconomy and the consumer demands that go along with it? There are a number of macro themes and also some pioneering companies that have established what the new expectations are. Let’s look at the macro themes first.

1 - Individualism (or “I’m a unique snowflake”)

Marketing and advertising has evolved from a one to many message that broadly categorises people into groups and then provides the ‘best fit’ message to the group into a highly personalised and targeted one to one communication. Using the hints, tips and insights we leave about ourselves through our complete digital footprint, smart companies use this data to reflect back to us our unique traits and reinforce that we are indeed individual (and also that they uniquely fit with and validate us in this.

The proliferation of social media acts like an enormous mirror, reflecting back to us the things we like to see and hear, validating our individual choices with likes, hearts and emojis, filtering out the news and opinions we don’t engage with (like) and feeding us more of what we do, reinforcing our world view.

2 - Speed of expectation adoption

Humans have a marvellous ability to adapt to change, particularly where that change is perceived to make life easier. We swiftly adopt new technology and then transfer the expectations of what this tech does for us to other situations. For example, if I can self serve check in to a flight, why can’t I self check-in to a hotel? If I can nominate an hour timeslot for my supermarket order to be delivered to my house, why can’t I do the same when my boiler gets serviced/my broadband gets installed/my parcel gets delivered?

We see how quickly technology is developed and have little loyalty and patience when our new expectations are not met within weeks. We shift our buying patterns almost subconsciously to those brands that provide the experience we find most convenient and simple.

It is hugely inconvenient, but massively important for large enterprises to recognise that the expectation of their customers is not set purely by their immediate category competition, but by what the analagous customer experiences are in other industries. A better parcel delivery experience means I am less satisfied with having to wait in half the day (or worse) for a service technician to arrive. If you can’t meet this expectation and a new entrant arrives who can, they will rapidly win massive market share.

3 - Market consolidation

Amazon has rapidly grown to over 50% of eCommerce in the US and is on track to be the same in Europe in the next couple of years with a similar story in other markets. While eCommerce is still only a portion of total spend, it continues to grow rapidly and cannibalise parts of the traditional retail model forcing incumbents to adapt or die.

As we have learnt from similar historical changes in go-to-market structure (supermarkets anyone?) having one major player leads to rapid consolidation and growth underneath them to be able to compete.

This has a ripple effect into related industries too. If you’re in the business of shipping parcels for large retailers, this consolidation effect could be bad news. As the number of retailers (shippers) that control a large portion of the amount of parcels being sent contracts, their buying power grows. Logistics companies turn from price setters into price takers as the cost of what the retailer is willing to pay is dictated rather than negotiated. To maintain some sort of operating margin, the logistics companies will also be forced to either consolidate and/or be orders of magnitude more efficient, which leads us to…

4 - Enabling technology

It’s hard to fight through the noise and hype about drones, robots and underwater or flying warehouses to understand what is likely to happen and when. The pressure of massive growth in volumes of deliveries and negative margin growth means logistics companies in particular need to be at the front of adopting technology that strips costs and improves predictability and experience.

History shows us that industry most often leads the adoption of new technology before it filters to consumers, and use it to automate the simplest tasks first. A massive volume of trucks follow the same route, stops and schedule every day. Various simulations and articles suggest that owning and running an autonomous line-haul truck will be 20-50% cheaper compared to existing manned vehicles. Expect this first mile of the supply chain to be automated first as it is much simpler than the complexities of crossing crowded pavements, climbing stairs and navigating the general urban mess of last mile.

With the individual consumer driving the growth of Iconomy, we are expecting to see companies meet growing demand with new delivery models, like crowd-shipping, on-demand delivery services, evening and weekend delivery. Survive and thrive businesses are investing in last mile solutions that increase consumer choice and flexibility, whilst helping to shorten delivery times and lower delivery costs.

Iconomy Fulfilment

Companies in the retail, logistics and services industries that are being forced to adapt to the customer demands imposed on them by their customers, and the pressure of their competitors meeting these demands, are in the category of Iconomy Fulfilment.

Localz is the leading provider of software services that help enterprises in the retail, logistics and services sectors rapidly transform their businesses to thrive, not just survive in the Iconomy.

Expect to hear lots more from Localz (and me!) on this topic.

Photos in this post by Azer Ko?ulu and Bruno Gomiero on  Unsplash and Localz