This week’s podcast is about AB InBev’s rapidly rising beverage delivery service Ze Delivery. I visited the facilities and spoke with CEO Rudolfo Chung. It’s a fascinating business model.
Here is one of the dark kitchens.
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From the Concept Library, concepts for this article are:
- Linked businesses
- Geographic density
From the Company Library, companies for this article are:
- Ze Delivery
- Ab InBev
Welcome, welcome everybody. My name is Jeff Tausen, and this is the Tech Strategy Podcast, where we dissect the strategies of the best digital companies of the US, China, and Asia. And the topic for today, how AB Imbev and Zed Delivery are changing e-commerce in beverages. And I sort of just violated the title because this company is not in the US, China, or Asia. This is in Brazil right now. where I’m recording this and it’s going to be rolled out in Latin America fairly quickly, I think. I’ve been bouncing around for several weeks meeting with quite a lot of companies and keeping an eye out for digital business models that are interesting, that have lessons to learn or stuff I haven’t seen before. And I’ve got two or three that I think are really interesting that I don’t see anywhere else. And this is one of them today. This is Zed Delivery. and I think it’s gonna be widely copied. In fact, I know there’s a Harvard business case being written about it. I suspect a lot of large CPG companies are gonna copy what they’re doing, or at least pay attention to what they’re doing. So I think we’ll be a bit ahead of the curve on this one, although this company is not publicly traded, but pretty interesting. Okay, housekeeping stuff, no new books coming out anytime soon. I’ve got part six of Motes and Marathons, which is the final part. I’ll probably get that done pretty quick, starting in the next week or so. Companies I’m gonna be covering, I’m looking at sort of competitive scenarios. So today is gonna be Zed Delivery versus iFood. which are really competing business models and I think we’ll see that play out other places. Gonna talk about Mercado Libre versus Magalu. Very, very interesting stuff there. Both publicly traded, so I think that should be pretty interesting. And then probably Jumia versus Glovo, which is Africa. So, too Brazilian, too Latin American, too African. I think that’s on the schedule coming next. Okay, standard disclaimer, nothing in this podcast or in my writing on the website is investment advice. The numbers and information from me and any guests may be incorrect. The views and opinions expressed may not only be relevant or accurate. Overall, investing is risky. This is not investment advice. Do your own research. And with that, let’s get into the topic. Now, the two concepts for today, really mostly just one, is geographic density. which is a type of economies of scale, which means if you’re bigger than your competitor, this is where you can have mostly a cost advantage, although you can also get speed and time and some other advantages, where you have usually more users within a certain geographic density. So people talk about this with things like food delivery. I’m gonna talk about some of the subtleties in that because when you start thinking about Zed delivery, that becomes very interesting. as a competitive strength, but different than something I’ve really seen before. And the other concept for today is linked business model, linked businesses. If you look at my six levels, you’ll see that’s right at the top of the pyramid. I don’t usually talk about linked businesses. I talk more about complimentary platforms, which would be a type of linked business, but a really powerful one. That’s definitely something that’s going on here because Zed Delivery is part of AB InBev, right? The world’s largest. beverage company with warehouses and bottling and all, I mean, massive company. So those ties are very, very important in this case. So it’s like we have a traditional, massive incumbent CPG company linked to a new delivery service that is working with them, but I think they’re actually agnostic to who they deliver it for. Not exactly sure how the rules are. So anyways. Geographic density as a competitive advantage and linked to businesses, those are both big guns when it comes to competitive strategy. Okay, so starting at the beginning, this is pretty simple in terms of the consumer experiences. You want some beer, you want some wine, you want a bottle of, I don’t know, Johnny Walker, whatever. Well, what do you do? That’s nothing new in the world. You go down to the convenience store, you go down to the supermarket. And that’s kind of how the way it is. Now, in Brazil, there’s liquor stores, kind of a lot of them, really. Fine. And there’s not a huge number of dimensions to the experience that you’re going to differentiate on. I mean, it’s what’s the price? What’s the selection? How convenient is it? And then you buy it, and you pick it up, and there you go. OK, now against that, we could look at one digital business model, which would be iFood. dominant player in food delivery in Brazil. I mean, absolutely dominant. 80% market share supposedly of online food ordering and food delivery. They had a bunch of businesses around Latin America. They merged and sold and I haven’t really kept track. Brazil definitely, I think they’re still in Colombia, but outside of that I think they sort of partnered or whatever. So it’s mostly Brazil. that I’m looking out for them. Big company, been around since 2011. 5,000 employees as of 2021. $40 million in revenue, 2019. So OK, we know this business model. It’s a marketplace for services. We have consumers on one side. And on the other side, we mostly have restaurants and markets. So you order from the restaurant, the food gets delivered, prepared, delivered, or someone goes into the car for or the small market and runs around picking stuff up in a bag, takes it out to their scooter, brings it back. And that’s pretty much what they’re doing. And when you look at the categories they’re in, they’ve really stayed within food delivery. So restaurants, markets, pharmacies, drinks, I mean, that’s most of what they’re doing. That’s a nice business model. There’s a lot of strengths to it. But it is different than what we say with, let’s say, Grab. Grab started the same way. They do food delivery, same thing, markets, restaurants. But they also do transportation. Those are generally the two most frequently used services a consumer uses is ordering food or making a reservation and getting a ride. Those are the high frequency services, local services. And then Grab would go into something like Payment. And that was pretty similar to what Uber did. Ride sharing, Uber Eats, and then they went into Cargo, which was a bit strange. China’s a bit different. The companies that did this sort of stuff, like Meituan, well, they just kind of went gangbusters. They went into 10, 20 different services, everything you can think of, frequent, infrequent services. So there’s a couple of different variations of this play. But within all of this, the business I have always liked the most is food delivery and hotel reservations because it has the most sort of, not power, but there’s a lot of differentiation on the supplier side. It’s not a commodity service like getting a ride. Generally speaking, the more restaurants you offer a consumer in your neighborhood, the more valuable it is to them. Because this is a network effect, right? Every additional driver of a ride to the airport doesn’t necessarily add that much marginal value or utility to the consumer, but every new type of restaurant, maybe it’s Japanese food, maybe it’s tacos, I don’t know, there’s a lot more sort of marginal value or utility with each additional supplier because it’s a differentiated service. So generally, food delivery… has a lot of power on the consumer side, although the margins aren’t very good. And when you pair that with food reservations, hotel, I’m sorry, like restaurant reservations, those go together pretty good. Well, you get good margins on the reservations because there’s no cost of anyone on a scooter. But generally speaking, it’s a pretty attractive space, although it’s not always lucrative. Okay. So let’s say you want to get beer, you want to get wine. I could go on iFood and I could get wine from a whole lot of places or beer from a whole lot of places. And you know, that’s fine. A lot of it’s going to be from supermarkets, things like that. If we were to map out the competitive strengths of that business, the short list would be network effects, economies of scale and IT, fixed cost spending, and we would start talking about geographic density. which is if I’m iFood in, I don’t know, Pinero’s, Sao Paulo, which is where I am, the certain neighborhood, the more customers we have in that area, the more I’m gonna be able to extract efficiencies out of the cost and supply side. So it’s an economies of scale on the supply side, which means I could have my little writers go to three restaurants. pick up the orders and then coordinate that with delivery at three different customers. I can reroute them, I can optimize the routes, I can make sure my drivers, riders, are far more used with less slack capacity, less slack time, maybe their bags are fuller. I can extract a lot of sort of efficiencies, the greater density of either users or orders I get within an area. And it plays out in the costs, for sure. but it can also play out in the time. We have more riders there, we can deliver faster. That’s always been sort of the FedEx thing. Yes, we can be cheaper, but we’re also faster to delivery because our network is denser. So you talk about, some people call this network density. I usually refer to it as geographic density, where if I’m twice as dense as my competitor because I’m bigger, I have scale, I usually have advantages. And we do see that at companies like Meituan and others that have really gotten to scale. So if we looked at iFood, that would be kind of the short list of the competitive advantages. We could start to look at consumer habit, share of the consumer mind. There’s some aspect to that. You can do points and engagement and things like that. But I think it’s mostly the other things. That’s a digital solution. Now, let’s say we have a traditional incumbent, a supermarket, Carrefour, a beverage company, local supermarkets. Let’s say they were to digitize their operations. So I no longer have to go down the street to get my beer. I can just do it on my phone, which is what companies like Carrefour are doing. They have an app. You can order on your app. It’s not awesome. But you can have it delivered. You can grab and go, you walk in, pick it up, scan and walk up. They can do that. We still see a lot of people using the iFood versions and not, let’s say, Carrefour for their daily food deliveries. Although you can do it. In the smaller markets, let’s say you’re not as big as Carrefour, they will generally maybe work their own delivery or they will partner up with an iFood and use them. That seems to be happening more. OK, if you’re a supermarket and you’re doing some version of this digital play, you have different strengths. You do have competitive advantages. You don’t have a network effect. You don’t have a marketplace. That’s too bad, because those are pretty awesome. What you do have is purchasing costs. You have economies of scale and purchasing power. You are buying the beer yourself. you’re a huge company, you can get a lower price than a smaller market. And this is how most of these massive retailers, why they go for scale in it. It generally plays out in their purchasing economies and it plays out in various sort of fixed costs like the cost of the store, the cost of the warehouse. So they’re a big incumbent with a lot of scale in their operations and a lot of purchasing power. That’s the standard Walmart playbook. Okay, so how is Zed delivery different than those two models? Really three models. Go down in person, buy at a market, convenience store, big market, small market. Go online and go directly to a big market like a car for, or go to a marketplace like an iFood. I’ve got at least three options for the fact that it’s Friday and I want to get beers for me and my five friends because we’re watching the game. And what are the dimensions by which I choose? Well, it’s going to be price. It’s going to be convenience. Pretty much what I said, speed. And is it cold? Actually, can help too. But it’s a pretty simple user experience. OK, so how does Zed Delivery plus AV Imbev at least challenge that? Now, on Friday, which two days ago I met with Rodolfo Chung, who is the CEO of Zed Delivery. And I’ve had meetings with AB Imbev and Zed Delivery in the past year here in Brazil. But this was sort of going out to see the operations for the first time, which I hadn’t done. It was really fantastic, I’m super interesting. The story, which is, you know, it’s pretty great. It’s, you know, AB Imbev, obviously giant company. based, founded, originated out of Brazil. This is where they got Brahma Beer and then they took over Antarctica 20, 30 years ago and then they expanded from there to Europe, then to Budweiser and now everywhere. I mean, this is sort of their home turf here. They wanna be more platform-based. They wanna start moving in that direction as a massive incumbent in beer, wine, spirits, things like that. And they have a tremendous infrastructure. I mean, it’s not to be underestimated. They have massive distilleries and breweries, and they have warehouses and logistics, and they have trucks that are going out in every city every single day to thousands of bars and restaurants and supermarkets and convenience stores to deliver and restock. So tremendous operational scale with this company. And then some well-known brands on top of that, although beer doesn’t tend to have as much consumer power as say like whiskey, which people are loyal to whiskey. Most people aren’t loyal to beer. They kind of shop around. Okay. So they’ve launched multiple initiatives, sort of incubated multiple initiatives in the digital area. And Rodolfo comes out of AB InBev, so then he was sort of leading one of their initiatives, which was Zed Delivery. And it was basically a beverage delivery service. uh… launched just before cove it might really not too long before cove it took off and then it turns out one because of cove it people couldn’t go to the store anymore uh… to because people in brazil really like beer and drink a lot of beer and three it just turns out to be really cool i think that to some degree they got lightning in a bottle They offered a mobile app that lets you basically get about 500 different SKUs of beer, wine, and spirits on your phone, and you’ll get it in about 15 to 20 minutes. He said about 90% of their orders are done in under 25 minutes, 60 plus percent, 15 minutes. So this gets launched. 2019, they place 1.5 million orders in 2019, right before COVID. 2021, they hit 62 million orders. So I mean, this thing just took off like a rocket ship. And I asked, okay, but now COVID’s over. Did your numbers go down? Which is what happened to a lot of companies that kind of caught that wave. And basically said, no, stabilized. Not booming like they were before, but not dropping. Which is cool. So users and volume and… It’s really interesting, and now it looks like ABMBEV is going to replicate this model across Latin America. And I suspect a lot of CPG companies who have these major brands have major infrastructure. They’re going to pay close attention to how this happened. This is a direct-to-consumer digital service. If you’re a major brand, your weakness is often that you don’t have a direct consumer to your, I’m sorry, you don’t have a direct connection with your customer. Pepsi doesn’t actually have a direct connection with most people who drink Pepsi. They know the retailers. They know the distributors. And as things go digital, you need that direct connection because that’s where you get your data. If you don’t have a direct connection, it’s like flying blind. Makes it hard to innovate, makes it hard to track, makes it hard to personalize, makes it hard to evolve, experiment. You’ve got to have a direct connection because you need the data coming in every day. So a lot of these CPG companies are trying to build the direct to consumer service of some kind, where they’re logging in every day. Well, AB Inben has that now, at least in Brazil. Okay, so I went out and met with them and I went to a couple of their facilities around São Paulo, which was really pretty cool. For those of you who are subscribers, I sent you some pictures of this today. I’m gonna write probably a couple articles on this because there’s a lot going on. If you look up Zed Delivery, I’ll put a picture in the show notes, they have a kind of a funny logo of a, it’s a bright yellow logo with the sort of a bearded guy with glasses who is apparently Zed and of course you ask who is this based on and the answer apparently is nobody, it’s just a logo. But apparently everybody asks. Okay. So, interesting. What does that mean? Well, the first thing it means is, look, they definitely got product market fit. I mean, all of this strategy stuff is fun and cool. If you don’t get product market fit in a world of endless options, it doesn’t matter. And that’s the hardest thing to get. Now, they got COVID sort of as a, you know, a big major event, which helped them. But in addition, they clearly are tapping into something that consumers like. And… their basic value proposition right now to consumers is pretty straightforward. I mean, it’s a pretty standard e-commerce app right now because they’re only a couple years into this. But their basic pitch to consumers is cheap, fast and cold. You can get your beer, it’s gonna be a good price, it’s gonna get to you real, real quick, and it’s gonna be really cold. And it actually is, they have these major refrigeration units in their distribution hubs that keep it really cold. So when you actually like touch the bags that were going out with the motorcycle guys, and it was really cold. And that’s their pitch. And I mean, this is digital strategy 101. Consumers like cheap and convenient, right? That is, that’s ride sharing, that’s food delivery, that is Netflix, that is like, it’s really cheap, you get a lot of selection and it’s super convenient, you can sit in your bed and do it, which is easier than walking two blocks to the market. You know, that’s kind of how most… Not most, but a whole lot of digital companies, that’s their first pitch. Okay, now that’s just sort of, let’s say the basic user side, the consumer side. Now that’s cool, and I think it leverages in the A, B in-bev structure, like a company like iFood. Well, let me back it up a little bit. Okay, so let’s say they’re getting traction and consumers like them. Okay. What are their competitive strengths? I just gave you the ones for iFood, I gave you the ones for the Carrefour. Well, the first one is purchasing costs. They’re a retailer. I mean, they’re not a marketplace, there’s no network effects here, but they are moving a tremendous amount of wine and beer, so they’re gonna have the best costs in the business if they choose, because one, they’re big, but two, they’re owned by AB InBev. Nobody can beat them on beer price. Now. Do they want to sell at cost or are they having a typical markup such that I will see the same price on this app that I would at a supermarket or wherever. It doesn’t look like they are under pricing everybody. However, I haven’t checked too much, but if they choose to, by virtue of their connection with AB Imbev, nobody could match them on price if they wanted to go that route. I don’t think they are. let’s say purchasing power, yeah, they’ve got more scale than any beverage retailer on the planet, right? Because they’re ABM-ed. Okay. Geographic density is kind of the interesting one because we started talking a lot about this. This is kind of one of the areas where I think they’re really unique. Okay, when you start talking about geographic density, usually people will say something like, well, we have more customers in a geographic area. Okay, so if we were just a supermarket delivering and we had lots of customers, would we be cheaper than another supermarket who was smaller than us? Well, yeah, probably, but you’d actually probably wanna look at orders and not number of users, consumers. You’d look at order volume, you’d look at production, throughput, basically, output. And if we had more orders within an area, and we were bigger, we should be more efficient. Now this is for a one-sided business, just a retailer, not a marketplace, which is more complicated. Okay. That’s kind of true, but let’s say we’re against a supermarket. Well, the supermarket, there’s a lot of, the scooter people are going into the market and they run around and pick everything up. You know, and they pack their bags and then they go to the front and they check out and they go, that’s a delay. Turns out you don’t have to do that for beverages. You know, there’s these basically dark kitchens. I don’t know why they use the word dark kitchen or dark store. I don’t know why they use such a dour word dark. But they’re basically warehouses that are just packed with alcohol. There’s windows, the orders come in because it’s through the app. The workers in the warehouse put the orders together very, very quickly. The scooter people come up to the window, grab the order and go, it is lightning fast. There is no walking around the store looking for bananas and looking for chips, like if you’re going to Carrefour. Lightning fast, no delay of any kind. Now compare that to a restaurant. Restaurant, the big problem is always waiting for the food to be prepared, right? So you don’t have the wait time for food preparation, you don’t have the wait time. for running around the store, getting the eight different items that this particular customer wanted. No, it’s bam, bam, bam. Okay. So they’re faster. The rider goes out. The riders, when you’re doing food delivery, what tends to happen is a rider picks up from restaurant A and then will go and deliver, but then they will often find that they’re close to restaurant B, so they’ll go to restaurant B to pick up the next order, and then they will go deliver it to another customer and so on and so on. So they’re… Riders tend to migrate all over town. That doesn’t happen with beverages and alcohol in this case. It is a very dense, small radius around each particular dark kitchen where the riders go right out, two blocks away, three blocks away, deliver, come right back. Very rapid trips. And it’s pretty much the same thing. And the riders tend to stay within their own little distribution points. So there’s none of this migrating around town and there’s a very high frequency of trips per rider per day. So it’s a very… and this all follows from the fact that people buy beer in different ways than they they buy dinner or they buy groceries. It just turns out you get a much much denser geographic density effect where you can get faster and faster and then the bonus is they can pick up the bottles that they drop off and they can come right back. and you actually make money on the bottles too. So, you know, their bikes are always full. The riders are coming and going like at crazy speed. I was just watching them go in and out. It’s unbelievable. And they’re just lined up like 10 deep at the window. So this whole idea of geographic density, one, it really does depend on what kind of products you’re using. It depends on how those generate orders within an area. It depends how far the rider has to go. If a customer in my neighborhood, I’m a rider in this neighborhood, Pinero’s, let’s say, they want Japanese food and the nearest Japanese food or the one they want is five kilometers away, that impacts the time to delivery by the fact that these restaurants are different and people want different things. All these rides are short and fast. You could look at it at order, but you could also look at time to order. Their time to deliver is very, very short. What it kind of reminds me of is TikTok. Like TikTok has a lot of power because the videos were 15 seconds. Because they were 15 seconds, people would flip through them. The average person watching TikTok will flip through 200 videos in an hour. That doesn’t happen on YouTube. You get a lot of data, it’s very good for the algorithm by the way. But this is similar, the nature of the product. gets them very short delivery times, very rapid deliveries, bam, bam, bam, bam. So when you start looking at geographic density of company A, which is bigger than company B, just like network effects can be more powerful in different types, geographic density can have more power based on its type. And that’s really what we’re seeing here. I mean, 60, here I have the number, 60% of their orders are delivered in 15 minutes. the riders almost all stay in a local neighborhood. There’s virtually no preparation or wait time. Even the bathroom problem, like you know what the DD drivers have and the Uber problems, they can’t find anywhere to go to the bathroom. The riders here can just come to the distribution center because they’re coming back every 10 to 15 to 20 minutes. So anyways, it’s just a really kind of interesting model when you start taking apart that concept, geographic density, which I haven’t talked about that much. So let’s call purchasing cost, purchasing power, one of the big competitive advantages of this model by virtue of AB Imbev in particular. Geographic density, there’s a lot of interesting stuff going on with that. And then they also have the scale of their operations. And really what they’re building is dark kitchens, which are these warehouses that are, the writers pull up, there’s windows in the back. I’ll put a picture in the show notes. They’re just filled with alcohol and big refrigeration units. And those are their main hubs. And they put 26 of those in Sao Paulo. I forget the numbers for Sao Paulo, 15 million people, something like that. So they can cover most, a lot of places like that. But then what they also have is they have what they call super sellers. Now these are, oh, I’m sorry, one more point. The dark kitchen, I went to one of them. They were selling, they said, 4,000 orders per week at one of their 26 dark kitchens. That was pretty cool. They also have these urban distribution points which are really AB InBev’s facilities. You know, when AB InBev brings their big trucks from outside of town into town, they will put them in these centers and just transfer them to vans. And then the vans go to restaurants and bars, B2B. They can co-locate with them. So I went to one facility which was an urban distribution point for ABMBEV and it was a dark kitchen for Zed Delivery. And what’s quirky is most of the beer and such delivery to bars and restaurants happens during the day. So that’s ABMBEV. Most of this delivery, Zed Delivery happens at night. So it actually works out pretty good in the same location. Okay, then there’s the other bit which is super sellers. These are private businesses which Zed Delivery does not own. nothing, they’re totally private. These are, you know, they look like little convenience stores on the street. They don’t have a cash register, but most of what they’re doing is just receiving orders from Zed Delivery. They have their own stocks, they have their own refrigerators, and the people in the neighborhood can walk to the door and pick up their order, or they have drivers, you know, riders pull up there. So these are basically like extenders of the core system. And they say they do about one-tenth of the business of a dark kitchen, but they’ll have ten of those for every dark kitchen So if you’ve got 200 dark kitchens in Sao Paulo, you’ve got 200 plus Supersellers and I went and visited one of these and I didn’t quite get it until I saw it and Then you realize like what a massive city Sao Paulo is and you’re in these little neighborhoods that are sometimes pretty sketchy up in the middle of nowhere And then on the corner there’s one super seller that everyone’s coming to. So it makes a lot of sense when you’re covering. So you’ve got this operational footprint that’s at one, two, three levels, right? Dark kitchens, urban distribution, co-location, super sellers. That gets you a tremendous operational footprint for distribution and delivery. And then you compare that with the massive operational footprint of AB Imbev, bottling, production, huge warehouses, right? That is a pretty cool picture. So when I look at, you know, what are the competitive strengths, purchasing power, the geographic density question is very interesting. Then there’s just pure scale of operations, production, distribution, delivery, every single neighborhood in Brazil, which is what they’re going for. Okay, that’s pretty cool. All right, there’s one other topic I wanted to talk about because it’s… easy to get into sort of all of this operational stuff and the business models are always pretty cool but is anything they’re doing, couldn’t a supermarket do the same thing ultimately? You know okay I can understand how a digital native, you know a pure software company would have a hard time copying this because they would have to build the entire operational structure which would take a lot of time and money. I could see a company like iFood that’s already been around for 12 years, 11 years, maybe, they have beverages, they have alcohol, they have, I can go down the street and see a similar facility for all of iFood where the drivers are coming and going. Okay, let’s say that’s within striking distance for iFood. And let’s say a major supermarket here in Brazil like Pau de Zucar or something or Carrefour, they have the alcohol. They have a lot of the operational footprint already. They have the purchasing power to match price. Couldn’t they replicate a cool app and all of this? Probably, if they wanted to. So the operational supply side, it eliminates most of their competitors, the small companies, the small markets, the digital natives. It doesn’t eliminate the giant digitals or the giant supermarkets. That’s when I think you have to look at the consumer side. because thus far their value proposition, cheap, fast and cold. Okay, that sounds like a supermarket to me. That sounds like a convenience store. That sounds pretty basic as a delivery service. So one of the things we talked a lot about was going beyond that. Because one of the benefits of digital is you want a lot of dimensions to the consumer experience that you can build out. and innovate on. You want people to be happy or enjoyed it or to discover new things or just to like shopping or to like what you want. Things that you can use all these tools to keep innovating on. That’s hard to do if all you are is fast, cheap and cold. And they’re definitely doing this and AB InBev talks about this as well. They talk a lot about, you know, we look for occasions to celebrate. We look for events. because that’s when people drink beer in spirits. It’s when they get together with their families on Sunday, which is, it was funny, Rodolfo mentioned like when they get a lot of orders, like when there’s big soccer games, Christmas, New Year’s, Saturday night, obviously a lot of people going out, but he said something, he said Sunday morning orders are as big as Saturday night because everyone meets with their family. And so we started talking about, and I really don’t, I don’t have my thinking on this very clear yet, but this idea of, if you look at Coupang, South Korean Coupang, which I’ve talked about, you know, e-commerce company, they talk about our job is to create wow experiences. We have to continually create wow experiences for our customers every day. We want to thrill them. We want to surprise them. Not just be a convenience store to go to like a Walmart. So that’s the standard we put for ourselves in terms of building and continually evolving our service. Xiaomi uses similar language. They say we have to continually thrill our customers because people don’t buy phones very often. They have to keep coming back. So that’s their standard. That’s more like what a company like Zed Delivery is going for. They’re going for the fact that like, look, we are not a beverage company, not really. We are an events and occasions company, such that when you get together with all your friends on Saturday, you come to us for everything. And one of the things they’ve started selling is barbecue. Beef, the briquettes, everything you would need. Hey, let’s order some beers, let’s get some, oh, let’s get some beef and do the barbecue because everyone does that in Brazil. Like you start to build against this idea of we are in the events business, we are in the occasions business. What do people really need on a Sunday with their family? And that would be a product list. But can we move beyond the product list to the experience? We don’t wanna be a products company. We wanna be an experiences company. What can we do to make your meeting with your family better? How can we thrill you? How can we surprise you? How can we make your, you know, do we send you games you can play with your relatives? Do we send you card games? Do we send you surprises? How do we sort of… The word I’m thinking in my mind is spark. How do we spark and make your meeting with your family more fun? Well, that’s a good digital question, right? Because you can do a lot with that and that moves us far beyond, you know, hey, we’re a beverage company, we have the biggest selection, we have the lowest price, and we have a big long tail of SKUs and alcohol, which they do. But the question I liked a lot more was that sort of like. How do we thrill them? How do we stimulate, I mean isn’t that what events really are? It’s about interactions between people. It’s about interactions with you and your friends. It’s about interactions with you and your family. How do we make those interactions better? Instead of let’s wow you, let’s through. So anyways, that’s kind of, if you have any language for this, I’ve been trying to think of something. I’ve been thinking about like how do you spark interactions or how do you add happiness to interactions or something like this. I haven’t quite figured it out. Anyways, if I just look at this as like supermarkets versus iFood versus hey, we sell and deliver beverages, you sell and deliver beverages, that’s a much more limited question to build on. And that kind of speaks to the whole, or you know, dark kitchens, super sellers structure. But if we switch to the demand side and we start talking about how do we make these interactions happier and more joyful. that’s a very good digital question that you could specialize against, that will really pull you away from what CaraFour does. Right, that’s kind of, if you’re gonna differentiate, that’s the axis I’d be targeting. Anyways, that’s kind of where I am with my thinking on this. If you have any thoughts on this, let me know. I’m still sort of playing around with it in my head. But the net-net of that, the so what, I think we’re gonna see some version of this business model start to get copied. Like, why aren’t the beer companies of Thailand doing this right now? I mean, we have a clear business model that’s succeeding, at least in phase one. Why aren’t beer companies in Malaysia, Singapore, Thailand, Vietnam, moving in this direction right now? I mean, it’s kind of a new thing. I don’t see a business model like this anywhere else. And it’s a natural play if you’re a dominant beer incumbent, which most countries have a dominant beer incumbent, right? So anyways, that’s why I thought it was pretty important. I’m gonna keep an a close eye on it, I’ll be writing about it a lot. But yeah, that’s kind of, I think, the content for today. The two concepts, again, linked business, which is sort of level one, top level of my six levels, and then geographic density, where there’s a lot more subtleties in there than I’ve sort of thought before, so I’m trying to tease those apart. But those are sort of the two concepts for today. As for me, it’s been a pretty exhausting but awesome… a week or so. I mean, I love visiting companies like this and I visited, I mean, this was Friday afternoon, was at delivery. In the morning I was over at Mercado Libre talking with them. I’ve basically been doing presentations about two per day for the last two to three weeks. Pretty fantastic experience. The other company I’m going to start talking about, which I think is another one that’s off the radar. and has a really compelling digital business model as Magalu, which is Magazine Luisa, which is a Brazilian company. I spent some decent amount of time with them in the past week talking. So yeah, there’s a handful of companies here that are really different. And then you could say Newbank is the same, Stone is the same, and those are, I don’t see any of those business models anywhere else for the most part. Well, Newbank, I see some. So anyways, I’m gonna try and sort of tee those up as business models to look at. And obviously Zed delivers private, but most of the other ones are public. So these stocks are out there and I don’t think people are really paying that much attention, well, not enough attention to them in my opinion. So anyways, I’ll talk about that. And what else? Oh, I founded or incorporated a Brazilian company this week, which is, I don’t know, just for, we’re doing consulting services out here and sort of executive training with management teams and doing that. I think we’ll probably start taking groups from Brazil out to Asia and China if China opens and doing that at the start of the year. So that will be great. And so the incorporation made sense. But of course it means I have yet another country I have to file taxes in, which I believe brings the number to six. So this is I have a world of knowledge that creates no actual revenue or value. But I seem to know a lot about taxes in China. the EU and the US and Brazil and Thailand and anyways. So administratively my life took a little bit of a hit, but that’s all right. It’s not bad. Anyways, pretty good time. It’s a Sunday afternoon here. I’m gonna go to my new favorite place, which is called Coffee Lab, which is in the Pinero’s neighborhood. Best coffee I’ve like maybe ever had. It’s spectacular. That’s kind of my place for the afternoon. So that’s next. So I wanted to get this done first. But that’s it for me. I hope everyone is doing well. If I can be of help, don’t hesitate to reach out. And I will talk to you next week. Bye bye.
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