Friday, February 29, 2008

The Trend Blend Map & Social Networks


Inspired by the subway map, Nowandnext.com and Future Exploration Network have collaborated in producing a map of major trends for 2007 and beyond, across ten segments: society & culture, government & politics, work & business, media & communications, science & technology, food & drink, medicine & well-being, financial services, retail & leisure, and transport & automotive.
Each issue covers new trends, innovations and ideas, future risks and opportunities in each of these segments, as well as the key intersections between the trends.
I will see some of the more interesting trends in this landscape. You are on a little tour of 2007 with me?

I get the blue one. Let me see, it is media & communications. The first station is “Social Network”. It derives from Web.2.0. I remember.....there was a time when we had just a few channels to communicate each others, but now we have a huge choice of ways as Skype, MSN, Facebook, My Space and so on. Now the E-mail is the least popular communication. You need the time to write a long letter, to send it, and a lot of patience to receive an answer.
Now, we have social networks, private spaces where you communicate in interactive way with friends, colleagues, why not business partners. We have a space where we meet people with same interests, we discuss, and we change opinions and information, and so on... Such of ways allow us to be more socially engaged.
Many people say, that Internet make people, unsocial and uncommunicative. I don’t think so!
The social networks facilitate meetings with people who are interested in same thing like you; you are not constraint by time, space or distance. It allows us to discover more of our potential to relate to other humans by how we share and communicate on the Internet, because we all create and share in some form. The social networks help us to learn more about ourselves, more of whom we are, that it could be expressed with this new social medias.
Oh, I didn’t see!
I had arrived on the first important crossing station – “Personalisation”.
What I am crossing here? First of all, it’s the Well-being, which takes me to the “Happiness”. Yes, I’m happy because I don’t feel me lonely. It’s due to progress of Science &Technology, and thanks to
Web 2.0. I can exchange what I want with who I want, because I have free access to Society and Culture.

After I saw effects of new communication technologies in our private individual and social life, I’m asking me about the role of Social Networks in the World of Business and in organization?
Has it the future there?
So, I can take the trend of Financial Services, Retail & Leissure, or go on with Media & Communication.
Using the Mass Customisation, Digital Cash, Identity Solutions, Pop-up & speed Retail, On-line advertising and affiliation strategy you can make money with your blog or Private Space.
The Social Networks aren’t only to share information, reflexions and opinions. It could be you business.
Let’s, in first, we look at My Space.
It’s for amazing, isn’t it? You have your own Space, where you put your favourite pictures, songs, films (or all that you want depending on your interests) and your reflexions. You have an idea, you put it.
So, there are people who visit your Space, share reflexions, ideas and opinions. And naturally, there is someone, who likes your idea, he was the same ...and you have found someone to work for realisation of your idea; you have found a partner.
It’s easy, isn’t ‘it? The same thing is valuable for blogs, too.
So, I have just arrived in the station of “Globalisation”. I discover that is as Paris St.Lazare, where all of trends are crossing each others. Why is it so important, this globalisation?
Firstly, let us look what happens on the market?
The products now is launched and made instantly global, turning into global customer.
In the era of mass production, mass advertising and the online accessibility with customization, community and values, consumers wanting, demanding and expecting to play a much more active role in what was until now the producer's/brand's domain.
 Never before have had consumers enjoyed doing research and 'competitive analysis' and 'benchmarking' as much as they do now, and doing it far more diligently than most corporations do. Blame sites, blogs, forums and mags such as: Ciao, Cool Hunting...
The customers can exchange info, informing each other on the best of the best.
And as result, we find that products of companies, which are setting consumer expectations in a high level, are more fun, have better design, and are cheaper. Their customer service responds to emails, and has Skype ID. Their stuff tastes, looks, feels better. Let us gave as example Google’s way of work .
Google’s advantage resides in its democratic decision structure. It is ‘engineering-centric,’ with more than half of its total number of employees performing non-management/non-administrative tasks. Individuals with ideas for new development projects must first submit their idea to an internal mail list, where 200 of their peers provide constructive criticism before any coding takes place.
As the result Google continues to push new modules into the main lines in an attempt to occupy the centre circle and slowly becoming a metaphor of the Internet itself.
It slowly takes the role of giant, and if the bigger Microsoft being less flexible and less democratic, will not substantially change his hierarchic decision structure and open its managerial structures, he will lose a substantial market share.
It’s an example of relationship between Globalisation, Happiness, Web 2.0., Outsourcing, and Work /Life Balance.
It’s approved by what’s going on with Web & New technologies market:

Google scores against Microsoft and Yahoo due to its massive marketing data advantage
Blogs bloom, and prepare for the 2008 election
Social networks become a place where members make money
Big ad investments start streaming in
Digital ID initiates a major change that makes the web more reliable, user and investor friendly

Therefore, there is a real reason that Google, Deloitte, IBM and PricewaterhouseCoopers, Morgan Stanley and other companies actively encourage their staff to use networking sites, such as Facebook, LinkedIn, Skype.
If we take for instance Facebook, the internet portal of 2007, it is true that in many organizations Facebook is viewed as a time-waster and is often being blocked. (Assuming an employee spends an hour a day “whiling away” on Facebook, an employer would lose $6200 in productivity, according to SurfControl’s estimates. With 800,000 Australian businesses at risk, total exposure is $5 billion, the firm estimates. Australian Financial Review, “Facebook ban a little hasty”.)
The danger here is the loss of young, talented workers. (A global retail bank with 70,000 staff had received loud complaints from staff when it banned Facebook).
This was the similar story to instant messaging in financial services. (Financial market traders started using IM because it was useful, but banks were concerned about security and audit trails. Services then became available that provided secure, auditable IM).
The same thing is happening with social networks.
With the development of Internet ID and reinforce of securities, it can in fact benefit the organization from use of social networks.
So, social networking platforms such as Facebook and LinkedIn can be benefit for business, likewise there are social networking tools specifically for business.
The task is to educate the corporate sector more on the benefits of effective social networks inside and outside the organization, for the company itself and for its employees.
For instance, the Facebook’s application called Workbook, that allows employees to securely interact with their peers using Facebook . With WorkBook, employees can find and stay in touch with corporate colleagues, publish company-related news, create bookmarks to enterprise application data and securely share the bookmarks with authorized colleagues, update on status change and get general company news. Employees can freely use Facebook, with no danger of information leaking outside the organization or access being granted to unauthorized personnel.
In one step Facebook can become an enterprise application, including proprietary discussions.
The intention is to use Facebook not just internally, but also with clients and fund managers.
The use of social networks in organizations can create real competitive differentiation and profitability. Likewise as so many employees are already using online applications and web tools, the companies will prefer to offer them secure applications rather than incur the risk of things not being done well by IT. And last, but not least, using Web 2.0 tools demonstrates leadership and innovation, which attracts and retains talented staff.
Absolutely – what used to be difficult and expensive is becoming easy and inexpensive. The use of Social Networks by employees can be profitable to company.

Let us take some examples of uses of Facebook in the enterprise:

A civil engineer based in London, uses Facebook to find corporate colleagues in Asia and North America who have already solved a structural challenge she has just been assigned.
A field rep in Omaha, posts a link to an interesting article from the Wall Street Journal, so that his peers in other regions can use the information in sales presentations.
Corporate management announces a recent large deal to all employees and posts a new human resources policy to European employees.

All of that is to illustrate the deeply interconnected nature of social networks.

But, of course, there are some disadvantages:
We aware of one of the most socially transformative aspects of the web is that it not only lays everything bare, but it also has a permanent memory and what goes online lasts forever. Anyone can in a moment uncover anything that’s ever become public about you. Many employers see this is a massive boon, and scour the web for anything negative about their candidates.
So today, owing to Web 2.0 and Social Networks we become highly visible in a range of different situations, as well as expressing our opinions, open-mindedness becomes more relevant, and people can be seen more as they are rather than as the corporate persona they often assume.
It’s no wonder that many big companies use Social Networks like Second Life and recently Facebook for recruiting.
I’m looking around and I’m finding that I have just passed through the station of “Anxiety” and I go on to the next one that is “Ethics”. Here when I see the Science & technology line, which leads me to Emotionally aware machines, Biotech and Nanotech, and Web 2.0. I have good hopes that humanity will overcome difficulties with climate change, earth’s resources, poverty and famine, and diseases.
And I thank for existence of opensources concept that make possible the involvement of worldwide researchers in this process.
On the other side, I see the artificial intelligence, cloning, robotics and humans 2.0. ....and I’m afraid of the future. There is too many choices, too many information, too many discovers. Every day there is something new, I feel myself overcharged. So, I’m aware of importance of ethics and consciousness of everybody, and everyone’s capability to select the best for himself and for others.
Are we going to far and too fast? Are we will be, as in the science fictions, surrounded by clones and robots, are we will spend our time, meet our friends and loves in the virtual reality?
And in the end you have so many friends in Facebook (or in each other Social Network), but in fact, you are alone in front of a machine. You communicate, you have a contact with brains, but can you smell their parfums, can you see their eyes, can you see every little muscle’s movement and difference in their voices? Can you sense the humans in front of you?
Yes, you are more socially active, but are you more sensitive?
What we leave to next generation, are they will be so different from us, what world they live in, and so on, and so on.......
I have just arrived on the last station, “Nostalgia”, which leads me, once again, on “Anxiety”.

Ross Dawson - Improving Performance & Profitability of Social Networks and their applications in the business environment.

Wednesday, February 6, 2008

The InnoCentive's Open Market Business Model

The Concept

"Crowdsourcing” is an easy way to satisfy consumers' demands; to be heard and to get free feedback at very little expense.
The “crowd sourcing”, defined by Jeff Howe, who maintains the Crowdsourcing.com blog, is "the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call". Howe is also writing a soon-to-be-released book on the topic. Another idea is to create a private community, which you can do through platforms from companies such as Innocentive. Private social networks for customer, partner and developer relationship-building and have threaded discussion and poll functionality for information-gathering.


The Company
Developed as an e-business venture by the pharmaceutical giant Eli Lily in 2001, InnoCentive, a matchmaking system that links experts to unsolved R&D problems, allowing these companies to tap the talents of a global, scientific community and to the researchers to win bonuses. With some 125,000 scientists from 175 countries registered, the company now provides on-demand solutions to innovation-hungry titans such as Boeing, Dow, DuPont, and Novartis.
InnoCentive connects companies, academic institutions, and non-profit organizations, all hungry for breakthrough innovation, with a global network of more than 125,000 of the world's brightest minds on the world's first Open Innovation Marketplace.

The problems listed are in a broad range of domains such as Engineering, Computer Science, Math, Chemistry, Life Sciences, Physical Sciences and Business, frames them as "challenge problems", and opens them up for anyone to solve them who gives cash awards for the best solution.
InnoCentive calls the scientists who attempt the problems "solvers" and the companies these problems come from as "seekers".
In 2005 InnoCentive had 34 of these "seekers", which have posted more than 200 "challenges" in 40 scientific disciplines, of which more than 58 had been solved by over 120,000 "solvers".

Quickly, the other big companies, as Dow or Procter and Gamble, who dedicates 1,7billion dollars to the R&D, understood the interest of this shape of the world research and came to join InnoCentive.
Today, InnoCentive counts about fifty customers, such today Boeing or DuPont.

The Owner
Alph Bingham, Eli Lilly's former vice - president, one of the biggest American and world pharmaceutical companies, wondered if theycould put in thousands of researchers the problems which affected the researchers of its laboratories to finalize new medicines. The idea came to him and Aaron Schacht, who in 2001 decided to realise it by investing some million dollars in a start-up on Internet called InnoCentive (contraction of Innovation Incentive, incentive to the innovation).
Thousands of diamonds spirits were all accessible thanks to Internet, a fabulous field of grey cells was within the reach of the company.
Two other companies, Dow and Procter and Gamble, joined Eli Lilly very quickly.

How does it work?
Seekers’ organizations (corporations, government agencies, and non-profit organizations, who are looking for help with product development and other business and science problems) post their challenges on the InnoCentive web site, and offer registered Solvers significant financial awards for the best solutions.
Challenges cover a wide range of industries and disciplines including Business and Entrepreneurship, Math, Computer Science, Physical Sciences, Chemistry and Life Sciences. Each InnoCentive Challenge has a solution submission deadline and is assigned a cash award that ranges from $10,000 to $100,000.
Registered InnoCentive Solvers (engineers, scientists, inventors, and business people with expertise) can open a Project Room and begin working on any Challenge they wish. The Seeker organization reviews all submissions, and issues the award to the Solver who submits the best answer.
The Project Room is a secured on-line space,which contains details and diverse requirements bound to every problem. It is there that take place the exchanges between the researchers and the members of InnoCentive responsible for the problem posed.
Seekers' and Solvers' identities are kept completely confidential and secure, and InnoCentive manages the entire IP process.

InnoCentive provides a consultancy service to enable its clients to make the most of its "solver" network. "Science advisers" and "problem definers" help clients to identify a challenge appropriate for posting on its network. They make sure that the classic legal, scientific and commercial requirements are verified .
They then estimate an appropriate award fee by determining the complexity of the problem, the resources required find a solution, and the value transferred to the company. InnoCentive forces its "seeker" companies to agree to intellectual property audits, so that once a solution is provided to the company it can guarantee that the intellectual property is not used if the company decides not to award it.
The problems are put on-line on the site with a summary of the demand, a deadline of answer and the amount of the reward attributed to the best solution (between $2000 and 100 000).
To post a challenge, the “seeker” pays a deposit to InnoCentive, generally around $2000.

InnoCentive also provides a consultancy service to its network of "solvers". Its "science experts" provide feedback to explain the terms of the challenges as well as why submitted solutions may be deficient. It provides the logistic and legal framework for maintaining their control over the intellectual property until its sale to the seeker company.

Approximately 40 % of the problems were resolved, according to Darren Carroll, CEO d' InnoCentive. The site asserts that this formula constitutes a " very good solution for products "intermediaries" in the creation of a new product or a medicine ".

The most important Competitors offering similar services are NineSigma, Yet2.com, YourEncore, IdeaCrossing and Crowdspirits.

Today InnoCentive, concludes partnerships with numerous companies and has around thirty customers.

Seekers
The statistics show that 75% to 95% of patented technologies stay on the shelf and go to waste and 90% of all products fail. With rising technology development costs and increasingly shorter product life cycles, the risk of innovation is almost certain. In other words, the opportunity to recoup the investment got even shorter. Having own innovation business model, and community aligned is more important.
So, the solution is in a new emerging open business model. Companies big and small are learning that many of their best ideas, approaches, and solutions come from the outside.
Moreover, by adopting the open innovation model, companies can dramatically reduce the pitfalls, costs, and risks associated with closed innovation.

Tapping into the Solver community of Innocentive can generate more potential ideas and solutions, enabling companies to produce advanced products, accelerate their development cycles and stay ahead of the competition through innovation and faster time to market.
So, using the crowdsourcing approach saves both time and money. The estimates time savings are to be about 50% faster than it would be if he used internal staffers. For Eli Lilly, for example, InnoCentive makes more than its number of researchers triple without having them as employees. What offers InnoCentive, it is not the replacement of the efforts of R&D of companies, but a complement.

In short the Advantages for companies seeker are:

Speed up time to market
Reduce the risk of innovation
Less risk guessing what the market wants
Integrated community innovation
Some of the best ideas and solutions are outside of your organization
Lower the R&D and operating costs
Supplement company’s R&D
Tap into the virtual R&D community
Shared IP can create a formidable barrier to entry


Sovers
This formula allows the scientists to receive a public recognition and a financial reward to have resolved the challenges of R&D. But defy doesn’t consist in the cash awards only, because most of scientists do that for the pleasure of intellectual work they do. They make a significant impact to the global community with innovative, creative solutions to tough problems, because the solution today could contribute to the breakthrough inventions of tomorrow.
In addition, solvers enjoy the independence that comes from choosing what they want to work on, when they want to do it, and are generously rewarded for their success.

Partners
InnoCentive, concludes partnerships with numerous non-profit companies as the Rockefeller Foundation Global Giving, The Oil Spill Recovery Institute and Charley’ Fund, which will provide funding to adapt this open innovation model to change the world and influence the lives of people everywhere by applying the planet’s human creativity and intelligence to solving the most important challenges as poverty, famine and climate change.
By combining technology, economic incentives, and human ingenuity, they see the possibility to resolve these problems better, faster, and cheaper than ever before possible.

For instance, in December 2006 InnoCentive signed an agreement with the Rockefeller Foundation to add a non-profit area designed to generate science and technology solutions to pressing problems in the developing world.

Resources

Commissions of the transfer of the rights of intellectual property
Commissions of the payment [ask to the company between 60 and 100 % of the reward offered in conformance with the payment for its service].


The open innovation model is a new progressive alternative that gives many advantages for employees, investors, communities, customers and the people all around the world.
In the one hand it exemplifies a new kind of corporation where returns to its investors and employees come hand in hand with extraordinary benefits for mankind. That’s why, I think it is sustainable because the future of humanity and the planet is in a progressive evolution and to solve its problems. And the way to do it is the Research and Development.

However, I am a little reserved because there are some Limits that have to be resolved.
At first,there is a problem with possibility of verification of the real skills of solvers and their identity.

For example, Ninesigma and YourEncore check up the solvers’ CV, but it doesn’t the case for everybody.
In second, the mode of payment of contributors - solvers also asks questions. On the base, the start-up collects the reward paid by the company seeker, and then pays its solver. At InnoCentive, "solvers" touch until 50 % of the reward. But most of the start-ups do not even clarify the amount of the percentage.
And finally, the subject of the respect for the rights of intellectual property doesn’t seem very clear.
For example, at YourEncore, they are given up to the company customer. The solver even has to sign a commitment "which covers any conflict of interest, confidentiality and transfer of rights ".
Things are even vaguer at Idea Crossing, because everything depends on the good will of the company. Solvers give up their rights against "royalties, some money or an employment ". As for the site Crowdspirit, it leaves inventors and company to manage this question between them.
So, it seems to me that there are things for the model lasts in the time.

It’s true that thanks to the Net, the open innovation model revolutionized the way of leading the R&D. As the Senior Managing Director of Eli Lilly Darren Carroll said:
“There is in the world more than a million PhD in biology and in chemistry, but no company and no university can make work on its account more than 1 % of this talented base. Imagine the increase of productivity which could take place if companies were capable of emphasizing in their profit this intellectual power.”
One of the means to accomplish this is making use of an idea marketplace that connects the knowledge of over 120.000 scientists to companies in need of innovation. And it’s possible only in the virtual world.

From my point of view many company in all industries that need of novelties would be interested in this new way to innovation as engineering, biotechnology, pharmaceutics as well as the industries of automobiles and food.


Wednesday, January 23, 2008

The Social Entrepreneurship

Social Entrepreneur and Social Entrepreneurship

Today, more and more universities, public, private and nonprofits organizations and foundations promote, support and encourage social entrepreneurship initiatives all around the world. The programs focused on educating and training of social entrepreneurs enter in big number of universities and business schools.

Organizations as Ashoka (have been funded, advised, and supported to 1,400 social entrepreneurs in 46 countries during the past 20 years) look for those who can get the challenge and can make the world a better place for everyone on our planet.

Youth organizations and programs promote these efforts through a variety of incentives to young people.
For example YouthXchange is a training kit of UNEP (United Nations Environment Program) designed to reach the 15 to 25 years old global consumer class. YouthXchange attempts to make youth aware of the global imbalances in access to the basic needs and the impact of unsustainable lifestyles on economy, society and environment. It incorporates the relationship between economics, environmental fairness, and social justice so as to encourage youth to take shared responsibility for their society and participate in the creation of a better future.

Fast Company Magazine annually publishes a list of the 25 best social entrepreneurs which they define as organizations "using the disciplines of the corporate world to tackle daunting social problems."

What's the reason for all that movement?

Let's look at statistics:
Consumption of electricity from space and water heating is on the rise, as well as paper consumption and waste generation. In 40 years, global food consumption and production increased 2, 5 times. From 1960 to 2000 water use increased 2 times and wood consumption – 3 times.
Out of 4 billion people in the south, nearly 60% lack basic sanitation, almost 30% have not access to clean water and 25% do not have adequate housing. 14% of the world population goes hungry every day and malnutrition claims 10 million lives annually. 30% of the world’s population continues to lack regular access to essential drugs, with over 50% living in Africa and Asia.
Indeed, the world’s 20% richest people consume nearly 75% of natural resources. The wealth of the world’s 225 richest individuals equals the annual income of the poorest 47% of the world’s population, or 2.5 billion people.

But what is Social Entrepreneur and what he can do?
Social entrepreneur solve social problem by creating innovative solutions to change society for the better and uses entrepreneurial principles to organize, create, manage and then implements them on a large scale.
His ideas must be user-friendly, understandable, ethical, and engage widespread support in order to maximize the number of local people that will stand up. (Research in bio fuels, renewable energies, Fair Trade)

So,this is a real business because social entrepreneurs must be financially sustainable and finance themselves through revenues generated from their own activities to encompass financial and social returns which attract investors.
Examples are venture-capital firms looking for investing in portfolios of businesses that deliver commercial solutions to social problems.

So, all that makes me think that is a new business challenge that develops and gains speed and have great future.

Tuesday, January 22, 2008

What does it mean Vente-privée.com?


The Business Model of Vente-privée.com
Do you want sales of luxury brands at reduced prices all year round?
And it’s no necessary to queue up for hours in front of an overpopulated shop to benefit from bargains of the big brands were kind enough to grant to you an invitation, today some mouse clicks are enough.
Yes, it possible on the Web, sure!

The concept
The internet site Vente-privée.com is one of the rare French businesses models today copied and exported in world.

Created in 2001, it is the pioneer and the leader of sales privileged on Internet. With nearly 2 million registered voters the site is a long way ahead his principal competitor the achatvip.com which

accounts 900 000 members and 1, 8 million visitors to the first quarter 2006 ( Médiamétrie / NetRatings).

The concept is simple. It works like interactive private club which organize, for his members, sales of luxury brands with important discount (until 70%). The sales are announced 2 days in advance with average of 2 to 3 sales per day and 2 to 3 sales per brand per year. The access is accessible only by sponsorship from a member has already registered. If customers are interested, they must be registered to reach the sale which starts at 7.00 a.m. in the week and at 9.00 a.m. in the week-end and limited in time.
There are a very large variety of products put on sale, available on the Web for a very short period (24 to 36h).

Customers before hand were selected and invited for the occasion, which maintaine the private character of sells. A specific link allows them to reach the event which lasts only some hours, until drainage of the stock gives.
The consumer feels himself to be a privileged person having access to a virtual luxury showroom. In addition, they can directly, on line without moving, buy products of prestigious brands at prices which can go up to 70%. For buy a brand and to take advantage of sales it is enough to connect on the site in the daytime of the sale and to place order in some clicks.
The available quantities being limited, the customers hurl themselves on the site from the opening of the sale. On Vente- privee.com, it is necessary to connect at 7 am in the morning to buy, because in some minutes, many articles are exhausted. So, doing a good purchase and economize of hundred of euros sometimes, makes client feel lucky.
But, in addition to brand’s names and reduced price, the customers are also attracted by healthy look of articles.
Partners & Suppliers
To convince the big world brands, which are their suppliers and developping exclusive partnership with them, Vente- privée.com is improving communication around the brands, making the products more attractive and desirable. The articles are staged in real clips, allying licked photos and sophisticated soundtracks staging the available products.
In this way propose to their partners a qualitative service which respects their image and emphasizes their unsold articles.
Worry about their image, brands avoid to sale off their articles on the Internet and are attracted by innovative concept of sales in the course of which they can sell in a extremely qualitative way their unsold articles.
With 477 sales organized by Vente - privee.com in 2006 with on average, 250 000 persons join every sale and only 40 000 to buy allowed to sell 20 million details. The brands see passing by at top speed, and in an environment rather smart, the unsold articles that they have every season on arms.

For the brands, the private sales represent a distribution channel to the multiple advantages.

First of all, the practised discounts often allow touching new customers. Second, it proposes them a selective circuit : A private sale allows to associate the stocks of a brand to a targeted clientele.
And finally, the private sales represent an effective means to sell the residual stocks by keeping certain control over their future.

The Owner
In the end of 2000 Jacques-Antoine Granjon the young 44-year-old boss of Oredis Group, wholesaler at the end of series (25 million euro of turnover) for 20 years, gave the idea to sell ends of line on the Web.

So, he has created with six of his friends the modern version of the sale on invitation -
the company Vente – privee.com.
Based now 6 years ago, the company shows profits deserving of three-coloured giants of the e-business:
240 million euros turnover in 2006(the equivalent of that of NafNaf in the world) and about 50 million euros of profit, more than 3,6 million visitors in the first quarter 2006, 2.4 million members and thousands of sales a day.

How it generates such of profit?
The stocks of unsold articles of the brands spend little time in the warehouses of Vente - privée.com.

If the margin is reduced for the retailer (Vente- privée.com), expenses are it also. Ideally, products are even sold before arriving in warehouses. The generated cash is as for him lavish, the customers being collected at once, products were later delivered.

Because VP contents with blocking stocks of unsold articles at his supplier and will pay only when the goods arrive in his warehouses to be then sent to the customers. Products are directly bought with the brands from a defined well price and resold with a commercial scope.

The growth
To accompany its extraordinary growth, the society invests in his development.
In human resources, namely more than 500 very qualitative employees,120 work on development department of the brand, 45 Web-designers. In financial investments, there are more than 80.000 m² of mechanized warehouses and completely equipped offices, 200 computing servers, 18 photo studios photographs and videos.
Worried about bringing a unique service to its brands suppliers, VP invest 400 000 euros in a recording studio, to create himself the sound trailers of his sales. Also the studio will produce in its spare time some artists who would have no favours of a record company.
All of that should allow to Vente-privée to continue his growth and prepared to the European conquest. That of Spain, Great Britain and Germany started at the end of 2006. Follows……..

If that model can be applied offline?
Sure, but with little BIG difference. The profit doesn’t be the same. As we could see Oredis Group, the traditional wholesaler at the end of series, makes 25 million euros of turnover vs 240 millions euros of his virtual counterpart. Because of the frequency of the sales that is extremely high what justifies well its success. It is possible in the real world to join 250 000 persons for every sale, 40 000 purchases and 20 million details sold?
Because in the profession of traditional discount trader, where we bought physically a stock before reselling it to discount shops, everything is financed in advance which relates to important costs.

With an supply of products lower than the demand and a discount price, the business model of Vente-privée.com seems profitable and sustainable in the time because of funs of brands and eternal “fashion victims”.

It’s a great challenging for Vente-privée.com to extend his business in others countries of Europe
because that asks for many efforts, as regards the languages, the differences in cultures, the systems of customs of payment, etc. So many constraints could be faced in order to succeed in this challenging.

If I owned the business, I would prefer to improve the business at home before go to the European conquest by:
Better customers’ relation (a call centre, a quick feed-back, to speed the returns and the refunds)
Shorter delivery periods through companies as DHL.

Extend the type of products for sell (involve sell of services as voyages, hotels’ rooms of the luxury brands that insure the quality of services)

And try to increase the revenue sources by:
Make affiliations with partners’ sites
Selling web services (lease web space and theirs own servers, lease digital storage or creation of web sites)
Selling photo and video services ( creation of video, catalogues, advertising clips)
Selling of data base information
Membership for partners

I think, it’s an innovative and lucrative business model, but it will stay on the market place only the first bigest because the brands usually work with 2 or 3 sites of private sells.
As the young CEO of Vente-privée.com, Jacques-Antoine Granjon said " These competitors who bloom are all far behind, with turnovers which do not exceed 40 million euros. On 70 sites which exist, 65 will file for bankruptcy, because they have no access to the brands which we have. And while they nibble their capital to give way, we invest in our development ".

Saturday, January 12, 2008

What is the "Mashup"?

In technology, a mashup is a web application that combines data from more than one source into a single integrated tool; an example is the use of cartographic data from Google Maps to add location information to real-estate data from Craigslist, thereby creating a new and distinct web service that was not originally provided by either source.
Mashup originally referred to the practice in pop music (notably hip-hop) of producing a new song by mixing two or more existing pieces.

Thursday, January 10, 2008

The "Freemium" Business Model

The most common business model is Free Service with an up sell to paid premium subscriptions, commonly known as the "freemium" model.
Freemium (adj.) - relating to a business model that offers basic services free, but charges a premium for advanced or special features.
This free-to-premium escalation plan is being called the 'freemium' model: Attract users with free services, then charge them a premium for special features.


A venture capitalist named Fred Wilson uses the word "freemium" to describe the business model on which many Web 2.0 companies operate: "Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium-priced value-added services or an enhanced version of your service to your customer base."

Freemium business models usually involve a Free service, sometimes time limited or feature limited, supported by advertising. The ads rarely cover costs. The goal is to convert these free users to paid subscriptions. Most services start with a $10 per user per month subscription and scale up to $20 or $50 per month based on a small, medium, large usage scale. They all have slightly different measurements and cut-off points, but most have some notion of small, medium, large.


Files are stored centrally, so you will not want to use this method to transfer sensitive data. And since somebody has to pay for storage and bandwidth, you get limited capabilities for free — premium plans get you more storage, bandwidth or access to your files.

Rather than bragging about how insanely great its VoIP products are, Skype makes its users insanely productive by letting them talk with any other user worldwide for free. The company makes money by charging users for connecting to phone systems outside of its network.

Advantages
1. Possibility to attract a lot of customers very efficiently


2. It’s becoming easier and cheaper to build Web applications. The freemium services could introduce a lot of companies to technologies they might never have purchased the years ago. They are also being used by people who aren't necessarily in a traditional IT role, because they were developed with the needs of line-of-business personnel -- the managers, the admin staff and even the CEO -- in mind.

3.This is an excellent revenue stream that continues to grow every year, for companies that typically have 3 to 5 employees. And, by the 3rd or 4th year these small companies can be generating $3M to $5M a year, still with less than 10 employees.

Disadvantages
1. A challenge to get users to transition from free to paid, especially with consumer services on the Internet because there has been an attitude where consumers expect everything on the Web to be free

2. There's a lot of competition to reach the bottom of this market because if you don't offer your service for free, another imitator might come along and offer it for free.

3. It could be that a lot of Web 2.0 customers are content with the basic service and they needn’t necessarily to pay for additional products.

Wednesday, January 9, 2008

EasyGroup Business Model

This is a concept of low-cost living, turning a large array of generic goods and services on cheap prices applying principles of yield management and no-frills service for being rentable.
The inventor of this concept is Stelios Haji-Ioannou the EasyGroup owner , who founded in 1995 the low-cost airline EasyJet at the age of 28.
The EasyGroup, founded in 1998, is the holding company controlling the "easy" ventures, such as they are. The company develops all azimuths of the brand: EasyJet, EasyInternetcafe, EasyCar, EasyValue, EasyMoney, EasyCinema, EasyBus, EasyHotel, EasyJobs, EasyPizza, Easy4me, EasyMusic, EasyCruise, EasyWatch, EasyMobile, EasyVan, EasyOffice.

EasyGroup became the biggest low- cost brand in Europe, creating the first lifestyle brand for the masses that offers taste of the high life to lowbrows everywhere. It offers low-cost products to a large public, earning money by yield management and technology innovation.

The customers are people that can not or don’t want to pay a high price for a good or service and don’t care about services included in their purchases.
The owner Stelios Haji-Ioannou believes that concept can be applied "In any industry where consumers are being ripped off, if I can find a way to give them real value, I'm going to do it" because for him “it's about value for the many, not the few” .

The brand values:
1. great value
2. taking on the big boys
3. for the many not the few
4. relentless innovation
5. keep it simple
6. entrepreneurial
7. making a difference in people’s lives honest, open, caring and fun

Some EasyGroup subsidiaries have been more successful than others.
For that reason and to expand, and cut down costs, EasyGroup decides that’s better don’t go on alone in big projects. So, the company has started to cumulate partnerships deals ( EasyCar, EasyWatch, EasyMobile) and to franchise the businesses (EasyHotel, EasyCruise, EasyInternetcafe).
Some of them are: Avis (EasyCar), Burger King and Macdonald (EasyInternetcafe), LIoyds TSB Group PLC (EasyMoney), Monester.com (EasyJob), Zeon (EasyWatch) and Love film (EasyCinema DVD rental).

Revenue Sources
The EasyGroup profits by either selling shares in the businesses or by licensing or franchising the brand to reputable partners.
The easy brand currently operates more than a dozen industries mainly in travel, leisure, telecoms and personal finance.
The company follow the "easy" format of taking away the frills in something to make it cheaper overall, plus using the yield management system of supply and demand.
The strategy is based on combination of low cost with minimize the service and internet reservation.
EasyGroup minimize cost by reducing cost for labors, deleting additional services, exploiting the whole capacity of machines, fixed price in accordance under the date of order.

The company’s sources of revenues are:
• Sales of discount products or services
• Advertisements
• Franchising
• Selling the easy brand name
• Commission per saleCompetitors

The others companies use this business model long before EasyGroup like the Irish airline company Ryanair that was Europe's original low fares airline and is still Europe's largest low fares carrier applies the same concept of low prices and no- frills business models. http://www.ryanair.com/

Unique & Sustainable
I think that this “Easy” business model is unique to the web and cannot be applied offline because Internet is his main support of selling goods and services.
In my opinion it’s a sustainable business model for his flexibility of prices according demand and supply.

Yield Management
Many companies try to apply the principle of Yield Management system for optimize profit as EasyGroup did.
The term Yield Management describes the process of revenue optimization and demand management.
Three industries where yield management is used most heavily are passenger air transport, lodging and rental car.
Airlines monitor through the use of specialized software how seats are being reserved and react accordingly, as for example by offering discounts when it appears as if seats will otherwise be vacant.
Hotels use it in largely the same way, to calculate the rates, rooms and restrictions on sales in order to best maximize the return for the property.
In the rental car industry, Yield Management deals with the sale of optional insurance, damage waivers and vehicle upgrades. It accounts for a major portion of the rental company's profitability, and is monitored on a daily basis.

Optimization can help the firm adjust prices and to allocate capacity among market segments to maximize expected revenues.
This can be done at different levels of detail:

by goods (such as a seat on a flight or a seat at an opera production)
by group of goods (such as the entire opera house or all the seats on a flight)
by market (such as sales from Seattle and Minneapolis for a flight going Seattle-Minneapolis-Boston)

Overall (on all the routes an airline flies, or all the seats during an opera production season) Yield management is particularly suitable when selling perishable products, goods that become unsellable at a point in time (for example air tickets just after a flight takes off).
With an advance forecast of demand and pricing flexibility, buyers will self-sort based on their price sensitivity (using more power in off-peak hours or going to the theatre mid-week), their demand sensitivity (must have the higher cost early morning flight or must go to the Saturday night opera) or their time of purchase (usually paying a premium for the luxury of booking late).

In this way, yield management's overall aim is to provide an optimal mix of goods at a variety of price points at different points in time or for different baskets of features.

Good yield management maximizes revenue production for the same number of units, by taking advantage of the forecast of high demand/low demand periods, effectively shifting demand from high demand periods to low demand periods and by charging a premium for late bookings.
While yield management systems tend to generate higher revenues, the revenue streams tends to arrive later in the booking horizon as more capacity is held for late sale at premium prices.

Using yield management, many companies are surprised to discover they have actually lowered prices for the majority of their opera seats or hotel rooms or other products. That is, they offer far higher discounts more frequently for off-peak times, while raising prices only marginally for peak times, resulting in higher revenue overall.

EasyGroup & Yield Management
EasyGroup has created a criteria matrix to select lucrative occasion: Their satisfying formula essentially required consumer facing businesses that displayed significant price elasticity, required a high fixed-costs base and low marginal-cots to service additional customer - factors that would enable the group to effectively yield management.

Applying a pricing strategy based on principle of flexibility of demand and supply we can see that EasyGroup applies very successfully this system.
For example, the customer who buy early get the better price: The earlier passengers on EasyJet booked, the cheaper the fare would be.
Besides if the percentage of seats sold was higher than normal, then the price would go up to avoid selling out popular flights months in advance.

By doing this, the company have actually increased quantity demanded by selectively introducing many more price points, as they learn about and react to the diversity of interests and purchase drivers of their customers.

The most successful division of EasyGroup is EasyJet.
Let’s take a look at:
Airline business cost structure improved by EasyJet:

Cost borne by all airlines
including EasyJet

Telesales Staff
Cabin crew
Pilot

Group handling
Insurance
Aircraft ownerships cost
Air traffic control fees
Maintenance
Fuel


Costs reduced by EasyJet

Advertising & Marketing expenditures
Airport and landing fees
Aircraft non-utilisation due to delays at congested airports

Costs eliminated by EasyJet

In-flight catering
Business class cabin crew
Travel agent commission

Monday, December 17, 2007

How does The Long Tail do money

Long tail : comment les e-commerçants peuvent en profiter ?
Des prix et du choix : et si cela ne suffisait plus ? La compétitivité des e-commerçants passera demain par l’optimisation de leur Long tail. C'est-à-dire de leur capacité à proposer le bon produit au bon moment pour optimiser leurs fonds de catalogue. (26/03/2007)
http://www.journaldunet.com/0703/070326-net-long-tail-definition-solution-outils-longue-traine.shtml

Thursday, December 13, 2007

The Long Tail

A happy customer

I’ve had enough of looking for a product and going from shop to shop without any result sometimes. I’ve wasted my time, my money, my energy and nerves.
But now, I’m a happy customer!!!
I find what I’m looking for easier and faster, I benefit by recommendations, I know immediately if it’s in stock or not and it’s delivered at home!
Because I buy on Amazon.com, Fnac.fr, Vente-privée.com, 3suisses.fr……….
What’s that?

It’s “The Long Tail”.
It’s the concept that describes the business models of selling on Internet. It explores new forms of sale without limitation of physic, time, geographical area, number of customers or high cost of production, marketing and distribution (in the case of purely digital services like iTunes).

The Long Tail represents economic models of virtual mega stores proposing very wide assortment where the products that are in low demand or have low sales volume can make up a market share bigger than those of hits, because everything is available, even the oldest ones which is no more produced.

Who are the customers?
People of all ages, all colours, all cultures in front of their computers, who save their time, money and energy, because everything could be find, everything could be taste and new horizons could be explored (recommendations : Amazon.com).

And the owners, partners and suppliers won too. No manufacturing and storage costs and hardly any distribution fees, a miss sold is just another sale, with the same margins as a hit, no low demand or low sales volume products, opportunity to touch unlimited number of customers all over the world with large developed distribution channels.

And it is the future!
The virtual world is all around of us. We communicate (Yahoo, Skype, Tagged, Facebook), work, entertain and create (Youtube, My spice, Second Life), buy (Amazon, Fnac, Vante-Privée, iTunes, Blockbuster), looking for information(Google, AltaVista) in a digital environment and we spend more and more time there.
It is sustainable, yes!
But are we menaced by becoming the virtual ones with virtual entertainments and virtual friends?


And now, from my point of view, if I owned the virtual business I would develop and extend my affiliation politic that consist in developing a partnership with others sites which will play the part of opinion leader to its customers.

There are two advantages:
- increase in my site’s visibility on Internet with number of sites partners
- increase in visits and sales due to this partnership
- low cost, because partners are paid on number of clicks (only if the link is effective)



I think, I wouldn’t create a business model now, but I would give you a remarkable example of a new creative form of sale proposing advantage for everyone: customers, owners, partners, employees and suppliers.
It’s the fascinating success story of Vente-privée.com:
http://www.lepoint.fr/content/economie/article?id=179470