If you are not familiar with the news, Seattle-based trucking marketplace company Convoy has ceased operations, leaving a question mark on the company’s future direction. The company has been cutting jobs and shutting down offices since early this year. As I read about this, what came to my mind was the fallacy of the assumption that providing a digital version of a process is a differentiating offering.

Not anymore !

Sears responded to e-commerce by digitizing their printed catalogs. We all know how prudent that move was and how things ended up for Sears. Digitalization, in itself, is not a panacea. The reason companies work (or need to work) on a comprehensive and detailed digital transformation strategy is that you don’t want to be digitalizing catalogs, whereas the value of digitalization lies somewhere else. Maybe it is parts of your business models that need to be digitalized.

Then, there is another angel to digitalization. One that digitalizes what needs to be, eliminating manual processes. But if everyone else does that kind of digitalization, you are not creating anything differentiating. So, suppose you end up building this type of digitalization capability to help with your day-to-day operations, which is essentially automation. In that case, you must build efficiencies and improve productivity. But if you are offering this type of automation as a product, you are now one among many.

We don’t yet know what exactly is going on with Convoy, but what is clear is that it did not achieve the traction that investors believed it would. Digital freight networks obviously are the need of the hour. Convoy is a digital freight network, or essentially a marketplace, that connects shippers in the U.S., with carriers. Their offering utilizes automation for tenders, brokerage, and pricing.

Convoy may not be shutting down. Maybe it is in the process of getting acquired. We do not know yet for sure. I suspect a biggie (like Walmart of Amazon) may acquire them. However, what came to my mind when reading the news was how the digital freight marketplace is rapidly developing competition from similar new techs like Uber Freight and Transfix and from already established players like C.H Robinson. These established players have leveraged years and years of expertise to build their own digital freight marketplaces.

And as competitors crowd the space, the differentiating factors are minimal. That is why I insist that digitalization, which in most cases is plain automation, though necessary, is not a differentiating capability. No matter how many labels of “smart” or “intelligent” you put on it.

While we can not stop harping that “data is the new oil” in sales pitches, we have yet to embrace the concept. If we would, we would understand that the actual value of digitalization is that it helps capture data. That data can help generate new insights to build unique products and solutions.

To be fair, I am not profoundly familiar with the Convoy platform. But I am assuming it is like other digital freight marketplaces, which I believe are constraining their offerings by focusing on automation of crucial process elements like tendering, pricing, etc. This also makes every platform similar to the other ones.

However, the data these platforms capture can be leveraged to add to the offerings to offer capabilities that your competitors do not. Beyond the vanilla metrics that these platforms currently provide. Since you already have invested in the underlying infrastructure that captures data, investing in a small team of analytics professionals can help you provide the differentiating capability of robust consultative data-based insights to your key customers.

Considering the type of data these marketplaces capture, opportunities are many. These opportunities can help their customers save significantly more money than they would by leveraging their plain and vanilla services.