India Market Entry AS/RS

JP Tokyo assisted a major player in the heavy industries plan a strategic expansion into India's AS/RS Market

Project Overview

The client, a major heavyweight in the realm of heavy industries with a prominent global footprint, wields significant influence in Southeast Asia. However, their operational scope within India remained limited. Contemplating a strategic foray into the burgeoning Indian Automated Storage and Retrieval System (AS/RS) market, which has been poised for robust expansion, was at the forefront of their considerations. Their immediate focus centered on establishing a firm foothold within the Indian AS/RS sector, with aspirations of subsequently extending their reach to encompass the African and Middle Eastern markets. To rigorously gauge the feasibility and potential of that ambitious expansion, a comprehensive market analysis was embarked upon. This all-encompassing evaluation spanned the spectrum of market potential and projected demand across a diverse array of sectors, spanning food, pharmaceuticals, refrigeration, chemicals, and air cargo. This diverse selection of sectors was chosen based on their exceptional growth prospects within the Indian AS/RS market landscape. In addition, this multifaceted project entailed a thorough dissection of competitors, customers, and meticulously crafted entry strategies. Furthermore, a finely detailed business plan and astute balance simulation was judiciously executed, facilitating a comprehensive assessment of the advantageous facets and potential pitfalls associated with venturing into the dynamic Indian AS/RS market. The culmination of this comprehensive endeavor was poised to furnish invaluable insights, thereby empowering the client to make an astute and well-informed decision concerning their prospective penetration into the Indian AS/RS market, bolstered by their standing as a global heavy industry powerhouse.

Challenges

The project to enter the Indian AS/RS market and analyze its potential posed several notable challenges:

Market Complexity: The Indian market is vast and diverse, with intricate nuances across different industries and regions. Understanding and navigating this complexity required comprehensive research and analysis.

Competitive Landscape: Gaining a deep understanding of competitors' strategies, products, and market positioning demanded exhaustive research and data collection to accurately assess the competitive landscape.

Segmentation Precision: Accurately segmenting customers and product tiers to tailor strategies required precise data and insights to ensure effective targeting and differentiation.

Technological Evolution: Staying abreast of rapidly evolving AS/RS technologies and their applications is crucial to developing innovative and relevant product offerings.

Pricing Strategy: Determining optimal pricing that aligns with market dynamics, customer expectations, and profitability while competing with various price points posed a pricing challenge.

Distribution Complexity: Identifying and optimizing distribution channels, whether direct, indirect, or through partnerships, required a detailed understanding of market preferences and operational logistics.

Data Collection and Analysis: Gathering and analyzing a vast amount of data across industries, competitors, technologies, and market trends necessitated rigorous data management and analysis capabilities.

Integration of Insights: Synthesizing insights from various analyses—market potential, competitor strategies, technology trends, and customer preferences—into a cohesive strategy was a complex task. Uncovering White Space: Identifying true white space opportunities amid a dynamic market required a nuanced approach to avoid potential oversights or misinterpretations.

Strategic Decision-Making: Ensuring that the derived insights translate into actionable and effective strategic decisions that align with the client's goals and capabilities presented a critical challenge.

Successfully overcoming these challenges demanded a multidisciplinary approach, robust research methodologies, and a thorough analysis of each aspect. The project's ultimate success relied on the ability to navigate these complexities while formulating a well-informed, competitive, and viable market entry strategy.

The Process

  • Market Evaluation
    In close collaboration with JP Tokyo's India office, our team of experienced consultants embarked on a comprehensive market analysis, focusing on the potential and trends within the AS/RS landscape. The analysis encompassed a detailed examination of the AS/RS market across various dimensions, including regions, industries, solutions, and functions.
    • Regional Analysis: Our consultants meticulously assessed the AS/RS market across different regions, including the United States (US), European Union (EU), and Asia-Pacific (APAC). This involved a thorough examination of regional dynamics, market trends, and growth opportunities to provide a comprehensive understanding of the global AS/RS landscape.

      • Exhibit 1

      JP Tokyo analysis f 2014-2023 AS/RS Market size by Region
      *based on Material Handling Industry of America (MHIA), Industry Journals, Expert Interviews, and MarketsandMarkets report

    • Industry-Specific Analysis: We conducted a detailed analysis of the AS/RS market within specific industries, including automotive, metals and machinery, food and beverages, chemicals, healthcare, semiconductor and electronics, as well as airways and e-commerce. This granular analysis enabled us to uncover industry-specific nuances, challenges, and potential applications of AS/RS technology.
    • AS/RS Solutions Analysis: Our consultants delved into various AS/RS solutions, such as unit load systems, mini load systems, vertical lift modules (VLM), mid-load systems, and Auto Store solutions. By thoroughly examining each solution type, we aimed to identify their strengths, weaknesses, and suitability for different industries and operational requirements.
    • AS/RS Functions Analysis: We carried out a comprehensive analysis of AS/RS functions, including storage, order picking, distribution, assembly, and kitting. This entailed a detailed exploration of how AS/RS technology contributes to optimizing each function, streamlining processes, and enhancing overall operational efficiency.
  • Value chain evaluation
    We extended our exploration to encompass a thorough analysis of various pivotal stakeholders and their positions within the AS/RS market in India. This involved a comprehensive investigation into distinct categories, including Research and Development (R&D) entities, manufacturers, value-added resellers, AS/RS system integrators, distributors, providers of software solutions, end-users, and post-sales service providers.
    • R&D:Our scrutiny delved into the R&D entities that contribute to the advancement and innovation of AS/RS technology in the Indian market. This examination encompassed their contributions to enhancing system efficiency, functionality, and adaptability to evolving industry needs.
    • Manufacturers:We conducted an in-depth evaluation of manufacturers involved in producing AS/RS components and systems within the Indian market. This analysis included an assessment of their product offerings, quality standards, and manufacturing capabilities.
    • Value-Added Resellers:Our exploration encompassed value-added resellers who play a significant role in bridging the gap between manufacturers and end-users. We examined their contributions in terms of customization, integration, and localized support for AS/RS systems.
    • AS/RS System Integrators:A detailed analysis was carried out on system integrators, focusing on their expertise in configuring, installing, and optimizing AS/RS solutions to meet specific customer requirements.
    • Distributors:We examined the role of distributors in the supply chain, assessing their contributions in terms of product availability, logistics, and regional market reach.
    • Software Solutions Providers:Our investigation included an assessment of software providers who offer solutions to optimize and manage AS/RS operations, ensuring seamless integration and efficient utilization.
    • End Users:We studied the perspective of end users, evaluating their adoption of AS/RS technology, its impact on their operations, and the benefits gained from its implementation.
    • Post-Sales Service Providers:The analysis extended to post-sales service providers who offer maintenance, technical support, and upgrades to ensure the continuous operation and longevity of AS/RS systems.
  • Determining Market Competitiveness We proceeded to conduct a more detailed assessment by employing the Herfindahl-Hirschman Index (HHI) to estimate market share within the AS/RS sector in India.
    By utilizing HHI, we aimed to quantitatively assess the degree of market concentration within the Indian AS/RS sector. This approach provides a valuable quantitative measure that contributes to a comprehensive understanding of market dynamics and assists in strategic decision-making and planning for market entry and growth.
  • Competitor Distribution and promotion channels:
    We expanded our analysis to include a thorough examination of competitor distribution strategies and promotion channels within the relevant regions. This encompassed a comprehensive assessment of how competitors target different customer segments (large, mid-sized, small) and utilize various distribution methods (direct, through local distributor partners, indirect through distributors, or a combination of direct and indirect distribution).
    • Customer Segmentation:Our analysis delved into how competitors strategically target different customer segments within the relevant regions. This involved evaluating their approach towards engaging with large, mid-sized, and small customers, understanding the tailored strategies and value propositions for each segment.
    • Distribution Strategies:We closely scrutinized the distribution strategies adopted by competitors. This included a detailed exploration of whether competitors choose direct distribution, leverage local distributor partners, opt for indirect distribution through intermediaries, or employ a hybrid approach combining both direct and indirect channels.

    • Exhibit 2

    Illustration of the Channel structure by Manufacturer analysis

    By dissecting these key aspects, we aimed to uncover the intricate interplay between competitor strategies, customer segmentation, and distribution methods within the targeted regions. This comprehensive analysis contributes to a deeper understanding of the competitive landscape and provides valuable insights to inform our client's own strategic decisions regarding distribution and promotion channels in the market.
  • Competitor Product Analysis
    We extended our evaluation to encompass a thorough analysis of competitors' product offerings across different tiers: high-end, mid-range, and low-end. This involved a comprehensive examination of the distinctions in product features and the underlying technology utilized within each tier.
    • High-End Products:Our analysis focused on the premium-tier products offered by competitors. We meticulously assessed the advanced features, cutting-edge technology, and unique value propositions that set these high-end offerings apart. This included an exploration of how these products cater to specific customer needs and provide superior performance and capabilities.
    • Mid-Range Products:We conducted a detailed examination of competitors' mid-range product lines. This involved identifying the key features, functionalities, and technological aspects that characterize these offerings. By comparing mid-range products to high-end and low-end counterparts, we gained insights into the specific value proposition and market positioning of mid-range solutions.
    • Low-End Products:Our analysis also encompassed the evaluation of entry-level or budget-friendly products offered by competitors. We examined the features, technology, and cost considerations associated with these offerings. This comparison shed light on the trade-offs made in terms of features and technology to cater to cost-conscious customers.

      • By scrutinizing these different tiers of products, we aimed to uncover the nuances in product features, technological sophistication, and pricing strategies adopted by competitors. This comprehensive analysis provides valuable insights into the competitive landscape, enabling our client to strategically position their own product offerings and align their technological advancements with customer preferences across various market segments.
  • Competitor Cost analysis
    We conducted a more detailed analysis of competitors' product pricing strategies, delving into the factors that underlie their pricing decisions.
    • Pricing Structure: Our analysis involved a comprehensive examination of how competitors price their products across different tiers (high-end, mid-range, low-end). We looked at the actual selling prices of these products and identified any patterns or trends within each tier.
    • Factors Influencing Pricing: We sought to uncover the underlying reasons and considerations that drive competitors' pricing decisions. This included factors such as production costs, technological features, brand reputation, market demand, perceived value, and competitive positioning.
    • Value Proposition: We assessed how competitors position their products in terms of value for customers at different price points. This entailed understanding the unique selling points and benefits that justify the pricing of their high-end, mid-range, and low-end offerings.
    • Market Dynamics: Our analysis also considered the broader market dynamics, including competitor behavior, customer preferences, and overall market trends. We aimed to understand how competitors' pricing strategies align with prevailing market conditions.
    • Profitability and Market Share: We evaluated how competitors balance pricing to achieve a balance between profitability and market share. This included investigating whether certain pricing tiers are designed to maximize profit margins while others focus on capturing a larger market share.
    • By dissecting these aspects of competitors' pricing strategies, we aimed to gain a deeper understanding of how they position and price their products in response to various market forces. This analysis provides valuable insights that can inform our client's own pricing decisions and strategies, enabling them to effectively compete and capture value within the market.

Client Impact/Result

Through the comprehensive analysis and research detailed above, we successfully identified and delineated the white space within the Indian market. This encompassed a precise definition of untapped opportunities, including specific products, their features, associated costs, optimal partnerships, and distribution channels.

Product Identification: Our diligent assessment enabled us to pinpoint product offerings that are currently underserved or absent in the Indian market. We identified gaps where demand exists, but suitable products have yet to emerge.

Feature Specification: Through a granular evaluation of competitor offerings, we elucidated the key features and functionalities that would resonate with Indian customers, addressing their unique needs and preferences.

Cost Considerations: Our analysis provided a clear understanding of relevant costs associated with product development, manufacturing, and distribution. This allowed us to establish a pricing strategy that aligns with market dynamics and customer expectations.

Partnership Opportunities: By examining competitors' collaborations and partnerships, we identified potential allies or partners that could enhance our client's market penetration and outreach.

Distribution Channels: Our evaluation of competitors' distribution strategies shed light on the most effective and efficient channels to reach target customers. This included a mix of direct, indirect, and partner-based distribution methods.

Exhibit 3

Channel mix strategy considerations (illustrative)

Collectively, this comprehensive analysis allowed us to meticulously outline the white space within the Indian market. We have defined a clear path forward, guiding our client toward developing and launching products with the right features, pricing, partnerships, and distribution channels to seize these untapped opportunities and gain a competitive advantage.

JP Tokyo's Differentiators

Throughout the project, our team collaborated closely with JP Tokyo's India office, leveraging their local expertise and insights to ensure a holistic and accurate assessment of the AS/RS market. The culmination of our efforts resulted in a comprehensive report that provides valuable insights and recommendations to inform strategic decision-making regarding AS/RS implementation and utilization across different regions, industries, solutions, and functions. Based on the extensive project undertaken in collaboration with JP Tokyo, several differentiators emerge that set JP Tokyo apart in the context of entering the Indian AS/RS market and beyond:

Holistic Market Insight: JP Tokyo's project exhibited a thorough understanding of the market dynamics, customer preferences, and emerging trends within the Indian AS/RS landscape. This deep market insight forms the foundation for informed decision-making and strategic planning.

Global Expertise with Local Focus: Leveraging JP Tokyo's global presence and local expertise, the project was able to combine international best practices with an in-depth understanding of the Indian market. This unique blend ensures a tailored approach that resonates with local customers while drawing from global industry knowledge.

Comprehensive Competitor Analysis: JP Tokyo's project went beyond surface-level competitor research. The detailed analysis of competitors' strategies, product offerings, pricing, distribution channels, and technology sets a high standard for understanding the competitive landscape.

Segmented Strategy Development: The project's segmentation approach, including customer segmentation and tiered product analysis, demonstrates JP Tokyo's ability to fine-tune strategies for different market segments. This tailored approach enhances market penetration and customer engagement.

Sophisticated Pricing and Distribution Insights: The project's in-depth examination of pricing strategies, cost considerations, and distribution channels showcased JP Tokyo's proficiency in optimizing product pricing and distribution to maximize market share and profitability.

White Space Identification: By identifying white space opportunities, JP Tokyo demonstrated its ability to think beyond existing boundaries, innovate, and seize untapped market potential, resulting in a clear competitive edge for our client.

Strategic Partnering: The project's exploration of partnerships and collaboration opportunities underscores JP Tokyo's knack for identifying synergistic alliances that can amplify market entry and expansion efforts.

In sum, JP Tokyo's project showcases the company's ability to blend global expertise with local insights, provide comprehensive market understanding, and develop differentiated strategies that encompass technology, pricing, distribution, and partnerships. These differentiators contribute to a robust and competitive market entry strategy, setting JP Tokyo on a path to success in the Indian market and beyond

What is AS/RS?

An Automated Storage and Retrieval System (AS/RS) is a sophisticated technological solution used in warehouses and distribution centers to automate the process of storing and retrieving goods. It employs a combination of hardware, software, and controls to manage inventory in a highly efficient and organized manner.
The primary components of an AS/RS typically include:

Rack Structure: The storage area is comprised of a tall rack structure that holds shelves, bins, or pallets where goods are stored.

Automated Machinery: Automated cranes, shuttles, conveyors, or robotic systems are used to move items within the storage structure. These machines are capable of retrieving and storing items with precision and speed.

Control System: Advanced software controls the movement of the automated machinery, ensuring optimal placement and retrieval of items. It also manages inventory data, tracking the location and quantity of goods. Input and Output Stations: These are points where goods are loaded into and retrieved from the AS/RS. They can be integrated with other parts of the warehouse or distribution center's operations.

Benefits of an AS/RS include: Space Utilization: AS/RS systems make efficient use of vertical space, allowing for higher storage density compared to traditional shelving.

Accuracy: Automation reduces the likelihood of errors in item retrieval and storage, leading to improved inventory accuracy.

Efficiency: AS/RS systems can retrieve items quickly and precisely, reducing the time and labor required for manual handling.

Inventory Management: The control software provides real-time tracking of inventory levels and item locations, enhancing inventory management processes.

Safety: Automated systems can reduce the need for human interaction in potentially hazardous environments, promoting workplace safety.

AS/RS systems are commonly used in industries with high-volume storage and retrieval requirements, such as manufacturing, distribution, e-commerce, and retail. They contribute to increased operational efficiency, reduced labor costs, and improved overall warehouse management.