Industrial After-Sales is HOT: Our Investment in remberg.io
Broken attempts towards the aftermarket
In theory, the term aftermarket has gained a prominent position in most OEM’s strategic roadmap, representing an essential profit driver beyond the simple manufacturing of machinery and equipment. From that perspective, the sale of machinery is only the first-step of a long-term customer relationship that gradually moves into a goldmine of aftermarket services. This includes not only the sale of spare parts but also the delivery of repairs and maintenance services as well as in the future more and more 3rd party services that can be connected to improve service quality and customer satisfaction. After all, the aftermarket provides an opportunity of significantly higher profit margins for machinery producers, as you can see below:
So prioritizing aftermarket activities is simply the natural conclusion to come up with, as companies that prioritize service technology as a core component will be well positioned. This is because they
- Increase profit margins and make their core business more resilient
- Enable the development of new business models
- And align with the trend of clients moving from CAPEX to OPEX spendings
However, the reality looks different! The term aftermarket reflects a reality that is very different from what the plan and possibilities would be: While it indeed remains on the strategic roadmap, many OEMs offer simplistic aftermarket solutions which at best can be described as reactive fail-and-fix — but often even as a sell-and-forget strategy with a lot of frictions when communicating with their customers.
Take a detailed look at OEMs: after selling their machines for decades, countless OEMs lose transparency over their installed base, especially over distribution channels they do not control — preventing them from approaching their customers with aftermarket offerings. On average, OEMs only serve 10–25% of their sold equipment with corresponding aftermarket services (Source: VDMA). Additionally, with the lack of digitization at OEMs being an issue in general, it can be experienced all too well within the aftermarket (seriously, the reality reveals disturbing examples, ranging from sales-by-phone-only to spare part requests via fax). To be fair, it’s not solely up to the OEMs. Machine operators also have their shortcomings, lacking transparency of a supplier base that provides aftermarket services and lacking capabilities to digitize their maintenance processes.
The need for a digital approach to connect these assets and ensure a smooth communication between OEMs and operators is now higher than ever before — and will become increasingly relevant to leverage the full advantage of machine data. Taking a closer look, you can see that digitization does not only entail upside potential but instead puts OEMs under increasing pressure. Let’s consider an example around spare parts: novel solutions around condition monitoring help prolong the life of assets, ultimately reducing demand for spare parts. Another example is 3D printing. It enables various parties along the supply chain — even the operator — to build components themselves, eventually eating up some of the OEMs’ aftermarket revenue.
OEMs cannot sit on the sideline, desperately waiting for a spare part inquiry to come in via phone calls, while in reality their most profitable channel is being melted away. There is a strong need to develop a clear, digital strategy to service this space through an effective, data-driven channel for aftermarket communication and transactions. remberg.io offers precisely this.
Benefits for OEMs and Operators
remberg offers an Asset-Relationship-Management solution for manufacturers. Using remberg’s white-label solution, manufacturers gain transparency of their installed base — including assets that will be sold in the future as well as their installed base. Thereby, they gain actionable insights and move to a data-driven, proactive aftermarket. In turn, operators receive easy access to a mobile-first solution for aftermarket demands.
Machine breakdown? Questions on usage or maintenance? Handbooks or call service mechanics? Operators use their smartphone (or other preferred devices) to access relevant information on the spot. remberg optimizes customer-experience by minimizing time-to-reaction e.g. through self-help with step-by-step guides for machine-related issues. Thereby, remberg helps provide value from day 1 while ultimately building the central equipment repository in the entire aftermarket.
The right team to tackle the industrial aftermarket
Due to reasons mentioned above the market opportunity is enormous — looking at the German market alone we already estimate an annual market size north of €80bn (and more than €200bn in Europe alone) — including an initial market of more than 3.500 German Mittelstand companies.
And we strongly believe that the founders David, Julian, Cecil, and Hagen are the right team to tackle this market! Leveraging their experiences as a graduate from TUM, a researcher at MIT, a data scientist at Celonis — but most importantly — entrepreneurs at heart, each team member offers impressive value to remberg. Put simply: they combine all ingredients we could wish for at a Seed stage team in this space. An ideal combination for creating the category leader in the industrial aftermarket. We are very happy to be on board and look forward to supporting remberg together with our friends from Fly Ventures.
Let’s digitize the industrial aftermarket!