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Gregorio Eguiguren
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Very interesting article, Juan Carlos.
I really like the way Birchbox was able to decouple the purchase process of cosmetics. I think they were brilliant in realizing that the trial piece was the key to convert preferences into purchases, and then they perfectly executed by separating out the trial phase of the process through a subscription box business model, though I believe it was only sustainable if conversions into full-size product purchases were made on their e-commerce site, right??
However, I wonder what should they have done to sustain their value proposition, in order to avoid the competition from copycats. As you mention, a few years after BirchBox success tens of companies offered the same beauty box subscription: Ipsy, GlossyBox, Play! and even Amazon has a similar service. Perhaps, having exclusive agreements with product manufacturers and brands would have raised barriers to entry…. nonetheless, customers have been always able to disintermediate again and buy the full-size products outside the BirchBox website. Should they have integrated their model with a physical retail presence?? Or was the whole model doomed to disappear anyway??
Thanks for the post, Daniela!
Given the analysis you presented above, my concern is that I now realize that the only long-term winners with this platform are the end users. ClassPass is certainly creating value to fitness-conscious people who value flexibility too. Being part of ClassPass give you access to multiple boutique studios, improving customers’ selection assortment at reasonable prices.
But the problem is that ClassPass add little value to boutiques themselves in the long-run (excluding some marketing support and increased traffic for newcomers). Therefore, I would expect that both boutiques and big-box gyms serving a common geographical sector will come together with their own aggregating app to give their customers a bit more flexibility without risking to lose them completely, and, of course, without giving up the booking fees to a third party!
Really interesting post!! This is the first time I see a “purpose marketplace”, which creates value by addressing the recycling problem in such an innovative way. While in this case is clear how network effects come in place to work in favor of all users, I am not that sure about the payment-free feature. Though I recognize it as an aligned tool to the purpose of the platform, I think it might hinder the ability of the whole ecosystem to grow… Would an independent player (i.e. outside the WeChat) be able to build such a large customer base just by establishing a barter-economy platform? Is the purpose attractive enough to afford to limit the value captured by its users?
I think this is an excellent example of how network effects work. By securing the incentives alignment between retailers and the 3rd party developers and partners, Shopify has built a comprehensive product that distributes value to both the merchants and the back-end suppliers of the ecosystem, making it attractive to everyone. My only concern with regard to this model is how easily these developers and partners could replicate the offering outside Shopify. Let’s say that the top features are developed by a few players, and that same is true for the “experts”; then how could Shopify avoid them from eventually becoming competitors??
Thank you for your post, Hanif, very interesting!
It is good to know that the private sector is trying to push further for financial inclusion in developing markets by building innovative business models such as BTPN Wow! However, I wonder about the next steps. While I value the fact that they have created a branchless bank for clients to open a savings account, and all the benefits it delivers (i.e. faster, easier, cheaper and safer services); I consider it only the very first step into real financial inclusion. Probably the most important piece missing in the developing world in this regard is access to credit, but as of today, there are no signs of any progress on this side. Additionally, I am concern about how this branchless bank is educating both their customers and agents so that there is no space for abusive practices when dealing with a less savvy customer base.