1. Analysis of competition using Porter’s 5 forces model

As with all highly successful products such as Windows, Google, Facebook, iPhone, 3M, and Coke etc.., the clones will come soon! Though at this current time there are no other products and services with features set like WDIRC series products with IOT-EC service, but the technology is easy to copy with competitors even we had got patents to protect markets around the world, whatever speed-to-market is still a key point of success. Here below we use porter five forces analysis on the competition of thEating Inc., in a smart appliance industry. Fig. 1 is the model of Porter’s 5 forces analysis we used. How to score the five forces by questionnaire? Each force includes 5 questions which related to its force domain, and depends on the answer by Yes or No to calculate the domain score. A higher score indicates MORE competitive pressures, the competition factor can range from little competitive force (-30) to high competitive force (+30).

We separately analyze the products (WDIRC and WDIRC+G) and the services (WFR transaction and IOT-Ecommerce) by porter’s five forces analysis as below; the first part is regarding to WDIRC series products.

2. Part of WDIRC and WDIRC+G

2.1 Bargaining power of suppliers:

1. Small scale production on the beginning: thEating Inc., is a startup company, its product WDIRC is initially selling to markets, so the recognition of brand and company isn’t clear to consumers. Therefore as we think on the beginning, the cost of manufacture should be not competitive till we have a large scale production.
2. No expensive parts and components be using: WDIRC is a combination of water dispenser and electrical rice cooker, which is an existed technology and a maturity product. Therefore to develop or make a WDIRC, we don’t need special or precise elements for structure or electrical circuit. In other words, the supply of parts or components should be not difficult from suppliers.
3. Implementation by ODM (original design manufacture): as we know, generally water dispenser and rice cooker are a commodity house appliance, which has existed a lot of manufactures to produce them. So to make this device we don’t need to have a production like even R&D team. In China, Taiwan, or South East country, there are existed many candidates with ODM ability, we can select a better one in product design, quality and cost control to mass produce WDIRC series products. This way is easier than making them by ourselves.
4. Mold to be new designed: mold is the key for an innovative product. Because there are no applicable molds existed, so to develop a suitable and satisfactory mold from supplier is important. However the cost is expensive for a new start company to pay at once, and could be without bargain power on this.
5. Customized firmware for applications: firmware is a program that provides the low-level control for the device's specific hardware. It can either provide a standardized operating environment for the device's more complex software (allowing more hardware-independence), or, for less complex devices, act as the device's complete operating system, performing all control, monitoring and data manipulation functions. So based on our system design, we need to build an operation program embedded in the device to support the system functions, that’s a new design which could be supported by our team.
6. To develop an App used in smart phones: App is used in a smart phone to remote control the WDIRC in houses, so whether the experiences of WDIRC operation in kitchens are good or not to consumers, App acts an important role. In general, this kind of coding for App to remote control a device isn’t difficult, so to find the suppliers are an easy way for us, even more we can design it by our programmer.
7. Summary: we used the worksheet of porter’s 5 forces (ranged from -30 to +30, more score more competitive stresses) to evaluate the bargaining power of supplier, the score is -5 points, and the result shows a little competitive stresses with our suppliers. If we can scale up the productions with mass, which we think the bargain power to supplier can be rise more.

2.2 Bargaining power of buyers:

1. A unique product to be shown in cooking markets: to survey current markets especial in smart kitchen appliances, no one can clearly solve the problem on rice cooking with automation. Here we used WFR (WFR) to save these problems on rice washing and water exhausting for automatic cooking. Moreover to combine with water dispenser for supplying drink water to cook, it’s the other key point. Consumers or buyers have no choice to buy one like this product from markets, so the bargaining power of buyers with us is low; nevertheless the clone product is made by illegal factories or producers.
2. Sale channels to be limited: this is a patented product in main markets such China, Taiwan, Japan, South Korea, US, Canada, Australia, Malaysia, Thailand, India, and Hong Kong. So the market is exclusive, consumers or buyers like to buy this, which need to purchase them from legal sale channel with authorized by us. In other words, if consumers or buyers like this product or service, they haven’t other substitutes to choice. WDIRC is the only product that can provide a fully automatic cooking device.
3. A useful commodity for everyone: a rice cooker and a water dispenser are useful for living to everyone. We frequently need to cook rice and drink water daily in houses, so this appliance is essential for us. However till now the market doesn’t has the product like us, if WDIRC series product start to sell in market, it will attract the eyes of consumers or buyers. The impact in 3C markets is huge when we unveil this product to markets.
4. Indirect sale via local distributors: as we know the bargaining power of distributors is big normally, they controlled the channels to decide which products to be sold in their market. However by this way we can save more time and cost to market our products into a local market, that’s reasons why we don’t sell WDIRC series products to consumers directly. Generally, for a new product, to deal the agent power with famous and old distributors is a difficult thing especially for a startup company, so our strategy is to raise the popularity of our products by CES or social media. When the reputation of products to be created, the distributors will expect to cooperate with us to sell WDIRC.
5. Direct sale via Ecommerce site: consumers or buyers come and direct shop from internet, we need to unveil the information of selling price and logistics flow on each EC sites. Due to the selling price listed on EC site is transparent, so the price is very competitive to each EC manager. Although we can decide the final price according to our manufacture cost, but the cost of sale platform is different between EC sites and traditional agents (distributor, wholesale, and retailer). Therefore how to solve the problem of direct or indirect sale, that’s to create two or three sub-types of WDIRC products in different channel (distributors, EC site, TV shop and Multi-level marketing) to sell, and based on their bargain power to price.
6. Summary: according to our consideration, the bargaining power of buyers is -1 point which we calculated from porter’s 5 forces analysis, the stress from buyers is not competitive. Because the features of product with unique, useful, patented, and popularity lower the bargaining power from buyers, let this product enter into the kitchen appliance market easily.

2.3 Competitive rivalry:

No similar products like our product WDIRC sold in markets, now in markets, only single function appliance such as rice cooker or water dispenser to be sold. Therefore the competitive rivalry will present after our product entering markets.

1. Counterfeit as a competitor: two types of rivalries could be presented, the one is to modify our ideal and to get the patent from IP office of government, this is a legal action for competing with us, but the possibility and probability are not so much due to our patent right which covered with large claims on product protection. The other one is an illegal action which copies our ideal and technology to do the same product without authority and sell in markets. As we know, for counterfeit, it has the advantage on price and manufacture cost, they break the market and product reputation to consumers by a low price and quality, so this counterfeit could be the competitive rivalry, we need to prevent this kind of counterfeits sold in markets especially for those countries without counterfeit check.
2. Design around to avoid patent infringement: that’s another way to competitive with us. By design around WDIRC structure to avoid patent infringement, this method could be occurred when WDIRC is best-selling in markets. How to conquer and avoid this problem, that’s a good question for us, by now we haven’t ideal for this, but we think that if we enlarge our production scale to lower the manufacture cost, that we can defeat the fake product.
3. Summary: As a rivalry that needs same features to compare and compete, but till the unveiling of WDIRC there is no product to be similar with this. Therefore we think the competitive rivalry will appear after WDIRC sale. However to have a high quality and a low cost on product are necessary for best-selling, and by this no rivalry can against WDIRC series products in markets.

2.4 Threat of substitution:

What’s a substitution that’s we need to think more when we start to sell WDIRC products, as we know the automation always be the pursuit by people applied in everywhere such as production manufacture, equipment control, flow management, and human-machine interaction. Traditionally, we use a rice cooker and water dispenser to cook rice and drink water, respectively, but it is a manual or half-automatic operation. Even now in markets there have cookers claimed to be smart or intelligent, but the truth is that didn’t have automatic water supply for rice cooking yet, it is still operating by man power to fill water in pot. So the threat of substitution isn’t real presented. However, we think that with time and technology development, many users or consumers will gradually accept this product to process their regular works on rice of food cooking. Herd behavior will also be the effect on consumers to buy this product when the occasion is coming, it like an iPhone to spark the flame of smart phone in communication markets to beat down traditional cell-phone such Blackberry, Nokia, Motorola, Panasonic etc.…

2.5 Threat of new entrants:

1. Threat from product: new entry threat is considered minimal due to the patent protection which had granted by five areas and pended six countries. However, if the market of smart appliances especial in cooking devices is redefined by WDIRC, it raises the market volume and share of smart appliances, such aspect must increase the incentive of competitors or rivalries. So the threat comes from new entry or follower, perhaps it’s not a bad news for us. When you see in markets filled many types of fully automatic rice cooker like our product, which means our product and technology had been recognized by markets.
2. Threat from capital: capital is a critical issue for a new start business generally, because for a startup business they haven’t a lot of money to support their operation and marketing of products. So since the operation error or some mistake happening, the risk tolerance to the company isn’t affordable without rich money to support. Especially to face the competition in global or international markets, the finance is important even you have an excellent product. Many aspects need money to execute such as marketing, manufacture, and management. Therefore a good finance estimation and plan is very important when we start this business and work.
3. Threat from business management: as we know the business management is the core of business for being sustenance and outstanding, to a new start business, all things need to be well planned and organized that is not easy. So we think the treat form new entry that’s not only the product or capital but also the management of business, especial for a giant business from international such us Google, Apple, Samsung, Huawei, or Sharp etc. Since those giant international company pay attention to this product, the risk of competitive within them will dramatically increase, and the threat will immediately affect our company. To recruit excellent experts and specialists, it is the key to uprising business competency, the primary of a business is the talent.

3 Regarding to WFR on IOT-EC service model:

WFR is consumables that need to fill back when you exhausted. This material is necessary for a WDIRC cooker, and it can be monitor and estimation by WDIRC. For its supply, we create an IOT-EC model to people to buy WFR from online shopping easily. Here below is five forces analysis from Porter’s model.

3.1 Bargaining power of suppliers:

1. Limited WFR suppliers: the manufacture of WFR is different from ordinary rice producing, it need to remove rice bran in making process. Generally there are four methods to make WFR in rice factories, which are rice gran method, tupiao method, washing system and grinding system. One of these methods or technologies has granted by patented in some specific manufacture, so the manufacture is limited to fewer and authorized. Based on this reason, the bargaining power of suppliers is high to us. However the use of WFR in markets that’s not popular, so the dealers of WFR they need to cooperate with us to promote this product, by this reason, we think the bargaining power of supplier isn’t too higher to us, it’s a reasonable assessment.
2. Not forming a mainstream to WFR use: WFR is another form of rice that normally to be sold in grain merchants, distributors, wholesalers or retailers etc. even in online EC sites. We consider the supplier who can be our candidate that needs to fulfil the requirements as below.
   • Is the ability to provide WFR series product into markets?
   • Is the superior supplier of grains in the local area?
   • Is the competitive of its price on providing WFR?
   • Is the EC platform to have commercial operations or sale experiences?
   • Is the will to cooperate with us?

To the bargaining power of WFR supplier, it depends on demands that how many amount of WFR needs to be sold in our EC platform or market. Currently the demand of WFR in traditional markets isn’t so much that due to the operation environment without a real automatic rice cooker like our WDIRC product. So to a small market volume, the bargaining power of supplier is high and to affect our WFR pricing.

1. Growth with WDIRC used: the use of WFR, it will follow the volume of WDIRC selling to grow up in markets, so at the initial step, we estimate the sale volume of WFR isn’t so much, with the time, the volume of WFR using will grow up gradually. When we achieve a large volume of WFR sale, the bargaining power of supplier will be not high to us.
2. Summary: based on our assumption, the sale volume at the beginning isn’t much, so the bargaining power of supplier is high. With the sale volume growth, the bargaining power will decrease gradually, and we will govern the market of WFR.

3.2 Bargaining power of buyers

1. Nonexclusive market: currently, WFR can be bought from distributors, wholesaler, or retailers that are not an exclusive market. It normally sells in a traditional channel, but the volume of market doesn’t be much more than white rice. In other words, buyers can easy shop this from markets, and the price looks not expensive.
2. Depended on WDIRC sale: buyers for WFR is based on the using of automatic rice cooker, if there doesn’t exist a device like our WDIRC that haven’t had the market of WFR. So by now that could be a risk or opportunity depends on our market strategy. Since consumers select to our product WDIRC series that must be using WFR to do automatic cooks, WFR can be shopped by our online EC system to complete directly, therefore the bargaining power of buyer as we think will be lower than present assumption.
3. IOT-EC model to sale: we hope to use WDIRC device to monitor the consumption of WFR and to provide the information to consumers for when and what to shop with a good occasion. This is an advantage to us to sell WFR by “WDIRC to EC model”, we can know the inventory and consumption of WFR in houses via WDIRC, that’s traditional channels such as distributors, wholesalers, and retailer which can’t’ be had. This information of WFR used is important for us to provide customized services for selling our WFR product, and buyers can’t get these services from other merchants.
4. Summary: for a nonexclusive market, the market share is very competitive by business. Therefore, the bargaining power from buyer is high; we can dominate the market of WFR via our EC system till we have a large volume of WFR sales in markets.

3.3 Competitive rivalry:

1. Open market in WFR transactions: grain merchants must be the competitive rivalry, they controlled traditional deal platform in markets in local areas. We need to cooperate with them for creating more business on WFR transactions at the business start. WFR transactions are open in markets; this bargaining power of competitive rivalry is high to us, who had channels and volumes of rice selling who had the market. Therefore, on the competitiveness analysis, it is a tough work to the company.
2. Be marketing decided: the competence with rivalries will be the strategy and effectiveness of marketing in social Medias, advice in TV channels, EC sites, and search engineers. Because most people they haven’t awareness or experiences on WFR use in their cooking, so how to defeat the rivalries, the marketing is a key step. The advantages of WRD used in an automatic rice cooker need to be clear presented in eyes of consumers via marketing, especially to be used in our product WDIRC series. This battle of market share is crucial, but we think we have big chances to win the share of market.
3. Summary: the bargaining power from competitive rivalries is high to us due to an open market operation; we haven’t advantages to compete with traditional grain merchants. Even we have that is based on our product WDIRC market and its EC transaction platform, as we think the competitive will be decided by our market share of WDIRD products.

3.4 Threat of substitutes

1. WFR from different brand challenges: regarding substitutes, many types of WFR sale in markets for cooking currently. That is the only way to use WFR product in an automatic rice cooker, no other proper products to substitute WFR for cooking in an automatic work flow. WFR this product it looks like coffee bean used in a coffee machine, many types and brands of coffee bean to be used, but can’t be without coffee bean in devices. So the threat of substitutes must be from different brands of WFR merchants, consumers can select one of WFR seller to be their suppliers without use our IOT-EC system, but it’s not convenience to consumers if they make these deals by themselves. Whatever if we made an easy, convenient, and competitive EC shopping site to help consumers to buy WFR, the threat of substitutes should be not a challenge to us?
2. Advantage on WDIRC: the most powerful partner of WFR is WDIRC, when we have this platform to sell WFR, with the volume to be enlarged, the consumption and sale of WFR will rise also. Since the volume of WFR sale achieves an optimized economic scale, the bargaining power that we have will increase rapidly.
3. Summary: WFR is an important material to WDIRC device when cooking, here we have the powerful and useful platform WDIRC to sell rice related foods, the substitutes from other rice merchants will not be a challenge to us if the market share of WDIRC is high.

3.5 Threat of new entrants

1. Threat from physical store around homes: New entrants come from grain merchants or distributors, now a lot of transactions are made by physical stores around homes. When we promote WDIRC to use in kitchen for rice cooking, to change the behaviors shopping from physical stores to online EC sites is a threat and challenge.
2. Threat from cross-border Ecommerce: they have many advantages competed to us such as member number, management knowhow and cost, reputation, completed service flow and system, and capital etc. So if possible to cooperate with them is the first. However those cross-border Ecommerce have large scales on members and transaction volumes, perhaps they either have interests on WFR sale or not, if they are interesting on the sale of WFR, the bargaining power of entrants (cross-border Ecommerce) is high to us, nevertheless, by our product WDIRC with IOT-EC service the outlook of market is still optimistic.
3. Limited entry by WDIRC: this is important for us to limit new entrants by WDIRC product, an IOT-Ecommerce model, we used in WFR online selling for providing a convenience to consumers to cook, no entrants have this device without our authorized, so it’s a barrier for new entrants to sell WFR product in markets.
4. Summary: regarding the business of WFR, it is an open business environment to compete with each other, which is no patent, no sophisticated technique, no regulation limited, and no high profit environment, so it totally depends on the individual business competiveness, new entrants without WDIRC product are difficult to break through the constrain of current markets in grains related product sale, even they exist some advantages presently.