Entrepreneurship
Entrepreneurship
Overview
Problems
The significance of a novel environmentally friendly oil absorbent cannot be emphasized enough. While minor and major oil spills threaten the environment every year, especially the marine habitat, most are poorly managed and result in secondary pollution. Moreover, many agencies most commonly use oil absorbents made of polypropylene due to their high absorption. Despite its advantage, there is a growing concern regarding water pollution in situations when they are lost during oil spill control as well as land pollution after they are recollected. However, if Team Seoul_Korea can provide an attractive alternative for those plastic oil absorbents, we will be able to reduce the environmental pollution resulting from oil spill responses.
In addition to accidental oil spill cases at the ocean, small fishing vessels and boats that weigh under 100 tons face the struggle of treating bilge water—a liquid formed as a byproduct of engines that accumulates in the bottommost cavity of a vessel. For bilge water management, the law prevents small boats from releasing bilge water into the ocean and requires on-land waste management. However, some local fishermen use the method of spraying droplets of household dish soap into any formed oil film to avoid the inconvenience of going back to the land for treatment or getting caught releasing oil into the ocean. While this method is highly harmful to the environment, numerous boats use this technique and worsen the environmental impact of oil releasement in marine environments.
Business Idea
The PineSorb business suggests an eco-friendly sorbent as an alternative to the existing oil spill response method. It is the first oil absorbent produced from pine trees through the sophisticated process of synthetic biology. With trees as the only ingredient, its cost, absorption, and eco-friendly features give Team Seoul_Korea a substantial competitive advantage compared to other oil absorbents, even those that are eco-friendly. Having PineSorb as the basis of our business, we will then provide a service system for small ports that are scattered around the coastline of Korea. As mentioned in the section above, providing fishermen with eco-friendly oil sorbent will help them to dispose of bilge oil effectively. Our business will construct a system with governmental organizations to distribute, collect, and dispose of used oil sorbent.
Team Mission & Vision
Team Seoul_Korea aims to provide solutions to environmental problems by developing products with eco-friendly materials. We ultimately attempt to better the Earth’s environment by expanding the current oil sorbent market in an eco-friendly way. For local residents that live within the environment, such as in coastal cities, our interest in addressing underrepresented issues like oil spills will raise awareness and support their lifestyles.
Business Goals
Team Seoul_Korea aims to develop Pinesorb in various forms, including but not limited to booms, pads, and pillows. To advertise and expand the business possibly through the help of angel investors, participating in startup competitions and expos is also one of the short-term goals. Our main long-term goal is to construct an “Oil Chain”, which is a thorough eco-friendly cycle of absorbing, collecting, delivering, and treating oil waste, at local docks and harbors. Our initial approach will be located in coastal cities of Korea, but we ultimately aim to spread our business to the world and have a positive influence on the global scale,
Products & Service
Introducing PineSorb
PineSorb is a 100% eco-friendly oil absorbent made through the biochemical processing of pine tree waste. The fine powder can be used directly on spilled oil, or develop into various forms such as a boom, pad, or pellet.
Production
Team Seoul_Korea is based on a production-driven revenue model. After receiving the raw material—pine tree waste wood—and bio-chemically processing it into a powder, the product is packaged and sold on its own. In the case of the boom, pellet, and pillow types, they are processed through OEM (Original Equipment Manufacturer).
Features
PineSorb has superior performance and price compared to other eco-friendly sorbent products due to three following characteristics:
High Adsorption
High Hydrophobicity
Eco-friendliness
Price
While our prototype was in a powder form, we developed it into a boom and package to appeal to investors and companies. We aim to further transform Pinesorb into the pad, pillow, and pellet form in the future. The amount, absorption powder, and estimated price of each product are shown in the table below. In the case of boom, pad, and pillow, details may change depending on the development process.
Approach to the Market
In the threat of numerous oil spill incidents, the earth’s environment is further threatened and exposed to severe pollution and contamination. Since oil and organic chemicals are intricately linked to our lives, poor management of these hazardous chemicals can cause profound damage to human lives. In terms of oil spill treatment, polypropylene oil absorbents can be easily lost during the oil spill control and result in secondary pollution due to oil leakage after they are landfilled.
Therefore, Team Seoul_Korea can help prevent oil spill control from causing another environmental problem. Of course, it is not the world’s first ever eco-friendly oil absorbent, but Team Seoul_Korea provides a variety of advantages even compared to other eco-friendly products.
Competitive Analysis
Industry
The market for marine accidents is unlikely to fluctuate; in fact, sustainable growth is expected. There is a high rate of oil spills from accidents in chemical transport vehicles, or accidents with ordinary vehicles on land, which increases the demand for effective treatments. In these events, an oil spill will destroy the ecosystem in the long term and pose a threat to the surrounding environment. This will result in huge economic losses by losing functions such as industrial, economic, and leisure activities, compounding the cost of compensation for damages. As a result, regulations require the use of various oil spill management products, such as lubricating materials, or cleaning organizations to minimize damage from oil-related accidents. These methods can be useful in large oil spill incidents, but when it comes to smaller boats and vessels, using such services was found to be inefficient and a loss for their business.
Positioning/Niche
PineSorb’s niche appeal is focused on its eco-friendliness. There are existing products in the market that are extremely more effective in their ability to absorb oil per unit volume, which neglects many implications on the environment. Hence, it is important to promote PineSorb by emphasizing its outweighing advantage of recyclability. As existing products already have an established position in the market, it would be particularly beneficial to promote the product’s cost-effectiveness as well. Our strategy is to show that PineSorb can absorb larger amounts of oil than products of competitors when spending the same amount of money to purchase oil absorbents.
Market Research
In 2015, the global oil spill management market was worth $131.16 billion. Among them, the industrial sorbent market is growing rapidly and is expected to reach $5.69 billion by 2026. Over the past 20 years, 420 marine oil pollution accidents and 704,000 tons of spillage have taken place worldwide. Various efforts have been made in order to minimize environmental damage and water pollution. The Asia-Pacific market accounts for 24.8% of the 2018 market and is expected to show the highest growth rate by 2026 due to the large increase in awareness and regulation of oil spill response and control. Those governmental organizations will then be able to provide solutions to fishermen of small vessels to deal with bilge water and oil as well.
Key Competitors
Target Customer
As oil absorbents are mainly used to address the huge problem of oil spills, one of our main target customers would be large organizations such as the KCG(Korea Coast Guard) that require a large number of absorbents in case of those emergencies. However, these organizations will not be the only group of customers for PineSorb. Many local organizations that regulate small boats and vessels will find PineSorb a great method to support fishermen to deal with bilge water. Once we form an Oil Chain—a thorough eco-friendly cycle of absorbing, collecting, delivering, and recycling oil waste—we plan to expand our customer range to other countries as well. Lastly, we planned to produce PineSorb in small-sized bags that can be greatly accessible to smaller businesses or individuals that utilize a lot of oil. Some examples of these customers are repair shops or restaurants—especially those selling fried products.
Marketing Plan
Promotional Exhibition
In order to test out the marketability and practicality of our product, we head out to the “International Maritime Safety Exhibition (Korea Ocean Expo)”, held in Songdo, Incheon, South Korea. Communicating with professionals and members of governmental organizations helped us to devise a route for PineSorb to develop and a way to be put into practice.
At the Expo, we set up our own booth to promote and introduce our product to potential clients. In addition to the use of a brochure and a mini-tank demonstration of PineSorb, we gave out a glass bottle of PineSorb powder to every visitor to increase awareness of our product and allowed our team to receive positive criticisms and feedback. Our product surprisingly gained a lot of attention, with some representatives from the Korea Coast Guard, Korea Agency for Defense Development, KOTRA, and CEOs of fishery firms, who visited, asked many questions, and showed interest in our product. Such inquiries led us to take visits to some industry sites to research the actual practicality and applicability of PineSorb. For example, we were invited by Mr. Jung, CEO of Seabank, to visit his fishing boats. The findings of the visit are elaborated on below.
Application Site Visits & Feedback
In order to understand the actual applicability of our product in the real world, our team set out on a couple of visits to interview everyday fish farmers and marine workers.
We first visited Tongyeong, a city on the far south end of South Korea whose main industry is focused on the fishery. We visited the fishing boat of Mr. Jung, CEO of Seabank. He took us out to his own boat to show us the mechanism of a fishing boat and explained to us how this structure allows oil to leak out into the sea.
When a fishing boat gets into the sea, it must propel and move forward, which is mainly done by the propeller that is on the exterior of the boat but connected to the interior engine, which is at the inner heart of the boat. Therefore, a long rod would be connecting the outside propeller and the inside engine. Therefore, although not visibly detectable, there would be a minuscule aperture lining around where the rod penetrates into the boat.
Through this aperture, when a boat is running through water, water pushes in through this small gap, which if intrudes the inner engine would damage the mechanism of the boat. Therefore, a submersible pump constantly pushes out water from the interior of the boat. The problem is, that engine oil that seeps out from the engine of the boat gets mixed in with this intrusive water, therefore being pushed out into the ocean by the submersible water as well.
Mr. Jung explained that each boat pushes out around 1L of oil like this every month. Considering how there are around 80 thousand fishing boats (with engines) in South Korea, that makes around 80 thousand liters of oil every month going out to sea. When we showed Mr. Jung PineSorb and explained its functions, he explained how it would be immensely helpful to use PineSorb to prevent such leakage.
However, he made one suggestion to heighten the practicality of the product when using it on boats. Since PineSorb should be put into the interior barrel of the boat where water pushes into, it would not be practical to just sprinkle in the formula without any package; otherwise, the fine powder would likely just mix in with the water. Instead, he suggested that the formula should be packaged into sausage-like packaging so that it could be thrown into the barrel and then easily fished out of the barrel after use.
Based on such feedback, our team undertook the process of producing the packets. After some experiments and testing, we are expected to send some of the test packets to Mr. Jung this year.
Reflection
As many feedbacks and comments from the expo helped our business to gain a new vision, we plan on promoting the product at more competitions, seminars, expos, and online advertisements. We are eventually going to supply PineSorb to organizations like the Korea Marine Environment Management Corporation (KOEM), the Ministry of Oceans and Fisheries, and the Republic of Korea Coast Guard. These connections with local and domestic institutions will draw more public appeal and make it easier for our company to receive governmental aid. Lastly, recognizing the need for accessibility at the expo, we plan to conduct virtual sales through the website and external online shopping malls with background information on our product. As many visitors found our products appealing,
Pricing
Price is clearly a determining factor in the industry of oil sorbents because the target consumers tend to purchase the product in extremely large quantities in order to control massive oil spills. The seemingly slight change in pricing would therefore have huge effects on the consumers. We believe that our pricing well reflects the positioning of our company, as its low cost demonstrates how cost-effective our product is.
Distribution Channel
Ecommerce: We plan to utilize Ecommerce effectively: for example, options such as retail may be inappropriate for our target consumers who are most willing to purchase large quantities of PineSorb. We believe that online platforms provide us with a huge advantage of having access to consumers all over the world, who may not be able to physically visit our country to buy the product.
Direct Sales: Although our target consumers are mainly businesses or organizations that require oil absorbents as a means to control massive oil spills in water, we also could utilize PineSorb in places such as restaurants, and repair shops, where smaller spills of oil may happen frequently. Especially in coastal areas crowded with boats and vessels, direct sales to local marine institutions would be the most effective distribution channel as they encounter oil treatment problems daily.
Operation & Management
The strength of PineSorb is its originality and effectiveness as an eco-friendly oil absorbent. We, therefore, focus mainly on the development of the quality of our product and the efficient mass production of PineSorb to supply to our customers. We will also work on the service aspects of a company by identifying the regional need for our products and communicating with local institutions. Responding to the feedback from experts and businesses, we decided to develop our powder prototype into a practical form that can be put into practice.
The charts below represent the costs for specific components of our manufacturing process:
Before we reach the break-even point, Team Seoul_Korea would only focus on the development stages of the product and refining it through different prototypes. Therefore, the size of our location does not necessarily have to be large at this stage of our business (200~240m2). Our main production site will be located around the coastal areas where demand for oil absorbent is relatively high.
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