Emerging Technologies

Zero Marginal Cost: Why Goods & Services Will Fall From $1T/year to $500B/year

As digitalization proceeds at unprecedented speed and scale, the marginal cost of delivering a whole range of goods and services will plummet. This opens up a huge opportunity to create affordable solutions to huge, previously overlooked market needs.

To be clear, I believe that a combination of new technologies and the availability of cheap manufacturing, coupled with a massive increase in access to capital and skills, will accelerate growth and create a new paradigm in supply chain management. The cost reductions can be achieved within the span of a few years while the business model can be easily and efficiently reconfigured to support a new ecosystem.

The value chain between companies and individuals is likely to be transformed radically as new technologies enable more efficient distribution, which drives down the cost of product and services. This will lead to significant and rapid employment opportunities in a broad range of jobs that support consumption and provide for social participation.

Future Job Creation At Stake

It is not clear just how many jobs will be created. However, it is clear that the job creation outlook that the industry is driving – an economy with a new, more flexible labor market – will create opportunities as firms are able to find the right talent without having to look any further and with a lower barrier to entry.

The shift of employment from the traditional, rigid capital/labor relationship to a more flexible labor marketplace is a good thing. In fact, it is an enormous opportunity for economies and markets to emerge, to make new products, services and markets.

However, a transition in this direction is also bound to bring significant challenges. And this is where the opportunities open for innovation firms and organizations - to innovate and to create a new, faster-growing economy.

The transition is likely to happen in a way that we are still developing, but I believe this new economy will have at its heart an underlying set of technologies and an ecosystem of smart technology-enabled practices.

So while we recognize the need to innovate and create new products in terms of quality and price and to be in a position to deliver them to people and retailers, in the digital world, we are seeing opportunities to do this in a way that is less disruptive and more consistent with the core tenets of innovation.

And in a world where supply chains – the link between individual supply chains and global supply chains – can run more efficiently and more transparently, there is an increasing opportunity in the supply chain to create and manage a new product and service ecosystem.