Markets in Transition: Take the Pallets for Free ó Iíll Make Money on the Other Stuff
Logistics columnist, Rick LeBlanc, muses about disruptive business methods and technologies in the pallet industry.
By Rick LeBlanc
Date Posted: 12/3/2018
It seems like a crazy proposition. As a supplier, you make a considerable investment in a product or service and then give it away. The hope is that you will generate revenue indirectly to support the enterprise.
In fact, I was first presented with such a scheme many years ago when I worked for a large grocery retailer. A plastic pallet company, part of a global multi-national, was interested in providing free pallets to us. They just wanted to sell the data generated from the RFID pallet sensors which, they suggested, would be far more valuable than the cost of providing the smart pallets and the required RFID readers at loading dock doors.
That memory came to mind this week while reading about UZE Mobility, a German startup. It wants to rent ScreetScooter electric vans to German customers free of charge. The company plans to generate revenue in two different ways. First of all, it plans to use the van panels as mobile billboards. Those billboards will be screens, with advertisements that are dynamic. They can be rotated, depending upon the area in which the van is travelling.
UZE hopes the second revenue source will come from selling data to local authorities, such as reporting on road conditions, identifying potholes or traffic bottlenecks. Beyond supplying free rental vans and generating indirect revenue, however, the company has a far more urgent goal. “Our goal is emission-free cities by 2025,” stated UZE Mobility founder Alexander Jablovski. “In this, we will only succeed if we manage to motivate people to switch to electric vehicles.”
New York-based Trendwatching, which has been following the story, commented that the UZE business plan provides three powerful learnings.
Create a Path to Disruption
First of all, when looking at the future of your business, it pays to start with a blank page rather than being shackled by existing assumptions. Trendwatching proposes thinking about how you could redesign your business model to be just as disruptive within your own space.
Not Just Customer Data
One of the surprising observations is that UZE is offering a new type of data play. Rather than harvesting customer data to sell, the company is capturing other information—in this case data about traffic and road conditions. Beyond the obvious, Trendwatching poses, “Is their other data that your company could harvest that would have value to others?”
Create an Overarching Vision
The aspirations of UZE Mobility are much greater than simply offering free van rental, suggesting it wants Germany to be free of fuel emissions by 2025. Trendwatching said the lesson here is to look beyond just selling a product or a service, and “sell a vision of a better world for everyone. What similarly inspiring vision can you present?” it asks.
The UZE story is an interesting one, demonstrating the possibility of a mobile asset being offered for free, with the idea of generating revenue in other ways. This brings us back to the mobile asset I mentioned at the top of the page—pallets and the possibility that there might be some good ideas that can be of use to industry operators.
In fact, truck side panel advertising was recently in the news, with Semi X Media and Pallet Consultants announcing a partnership that will see trailer wall advertising on more than 500 units in the southeastern United States. For Semi X Media, that fleet represents 500 mobile billboards that will provide advertising for companies looking to gain exposure within certain markets, both locally and nationally. While not as sophisticated technologically as the UZE aspiration, it will none-the-less be collecting GPS data to help it demonstrate to customers that advertising is reaching the right locations.
“It is the perfect partnership,” Pallet Consultants CEO, Gus Gutierrez said in a release. “We get to continue transporting and retrieving pallets across the country, and Semi X Media gets to take advantage of the space on our trailers while giving us a percentage of the sales. We’re able to generate additional revenue which will allow us to continue our expansion efforts.”
And the advertising program is looking to expand, Semi X CEO, Emily Johns told me. “Semi X Media is working with many independent truck owners and trucking companies to form partnerships across the country,” she said, commenting that the company has aggressive growth aspirations.
Getting back to pallets, is there a use case where it would make sense for suppliers to offer their pallets for free? It doesn’t seem obvious to me. Certainly, sellers of pallet tracking technologies and sensors have been slow to get market uptake, except in certain niches. Generally speaking, customers are not yet embracing the potential value of that data. And as for “point of sale” digital communications with customers in the supermarket, it makes more sense to have a handful of fixed devices than thousands of them affixed to all the pallets in a supply chain.
Thinking about the offer for free plastic pallets my employer received in 2006, the idea never made it very far. In that initial test, all of the pallets broke before they could even get loaded onto the truck. There was never a second trial. Twelve years later, the lesson endures: innovative new ideas offer the possibility of disruptive change but don’t forget to also cover the basics. You aren’t going anywhere if the pallets break before they leave the building.
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Giving It All Away