This is really interesting! It makes me want to try it :). I have a few questions though around how they capture value. This seems like a one-time purchase for a person and possibly his/her family members. Is the personalized health route the way they deal with capturing value across time from the same customer? Also, how to they enhance the direct network effects by first attracting people to use this service? I had heard of it a bit from the HBS community, but not elsewhere. I suppose they have to target wealthier people with more disposable income to spend on such a service. Do you know how they are trying to raise brand awareness and I suppose, more importantly, let people know how the company’s product can create a lot of value for them? I am also curious about any privacy concerns at play here. Who owns the data? If I send in my saliva, I guess 23andMe owns it? Are they allowed to do anything they want with it (i.e. sell it)?
I am so glad you posted about Amex! It is a fascinating company for many of the reasons you said. A few weeks ago though someone sent me this article: http://www.bloomberg.com/features/2015-how-amex-lost-costco/. It seems Amex is struggling now after it lost its 16-year old deal with Costco to co-brand Costco’s card. It sounds like the relationship went quite sour as Costco offended Ken Chenault and went with a cheaper deal with Visa. The CEO of Costco pointed to the extremely low credit card price for Costco in addition to Visa’s vast network. He said that he wants his Costco customers to be able to use the card in many more places than Amex offered. Amex’s small network in a closed loop adds a lot of value as you described, but I wonder if it also will hurt them in the long run because the network is so small. Also, since data is becoming commoditized, unless Amex has a way of analyzing that data in a way that is superior to others, I question how long they can maintain their competitive edge.
I have a different understanding of Eventbrite’s direct network effects. With every additional purchaser / user, the site itself does not really become more valuable (compare this to the case of WhatsApp, for example). I would argue that in its current state as a ticket sales platform for smaller events, there are relatively weak direct network effects. In the future, if Eventbrite is able to become more of a discovery platform, I could see direct network effects becoming stronger. People like knowing what their friends are up to and like going to the same events as others in their network. If Eventbrite can avoid multi-homing by event sponsors, it might entice many more users and enhance the direct network effects it can enjoy.
As a strong supporter of Lyft over Uber, I enjoyed this post! I fully believe Lyft is a better company and has a higher quality platform than Uber does. I take Lyft (or Uber if need be) at least 1-3 times per day, and I agree that multi-homing is pervasive on both sides based on discussions with drivers. I have heard from them, however, that Uber does not require an in-person meeting or car check before accepting someone as a new driver. Lyft, on the other hand, physically inspects your car and makes you do a short driving test before becoming a driver on its platform (or so I was told by some drivers). I feel much safer riding in a Lyft, therefore, than I do in an Uber. Given the product offered is the same as mentioned above, I hope that Lyft’s investment in quality pays off for them.
Interesting post! I am an avid online shopper but have not used Lyst myself. I wonder whether Lyst could differentiate itself by trying to bring online to offline. Given Lyst has many retail partners, I wonder whether they could work with the retailers to allow shoppers to buy on Lyst and pick up in store, or peruse on Lyst and then touch / try on the item in store. Brick and mortar stores are struggling with how to drive foot traffic now, given the enormous growth of e-commerce. I imagine they would welcome an online –> offline opportunity. Lyst would need to maintain its value as a platform, however, so that it does not get cut out by the two sides (retailers and users). The scope and breadth of Lyst’s offerings today will help it create value for both the shopper and the vendor, but I think it needs more in order to ensure it can capture that value. Perhaps creating indirect network effects by hiring complementers such as local stylists could help? I also am very interested to see how this company performs going forward.
Very fun post! I would push back, however, on the idea that Celine and Chanel are failing in terms of digital strategy. The fact that one cannot buy these brands online only adds to their aura of exclusivity and allure. It is precisely this aura that allows them to command exceptionally high prices for their handbags and other products. I wonder actually if the lack of digital presence (at least in terms of ability to shop their products online) speaks more loudly in the brands’ favor than any digital strategy could. I am torn between 1) believing that these brands have to catch up with the times and engage with the digital world more intensely and 2) thinking that these brands are being more smart than stubbornly stuck in their ways. Similar to some of the concerns posted on the Instacart + Whole Foods blog post around WFM’s losing the effect of the in-store shopping experience, brands like Chanel and Celine surely are focused on what is lost when a shopper cannot see, touch, and even smell a new handbag in person. It will be fascinating to see how brands can go beyond just a standard, beautiful website to simultaneously advance in the digital space and maintain brand exclusivity.
While I love the idea behind this site, I wonder whether it is a winner as I think it leaves a lot of value on the table. I am an avid beauty products purchaser, both in store and online, yet I have never heard of this site. I am surprised that given my shopping habits, along with my social media engagement across Facebook, Instagram, etc. that the name of this site has not surfaced. In order to win digitally, perhaps Skin Deep needs a better strategy to build its brand via social media. I imagine they could leverage network effects if they can get enough scale – perhaps partnering with health-conscious celebrities or finding a pioneering brand that has changed its ways would be a big step in the right direction. This would also help resolve some of the credibility issues Skin Deep faces. These issues are crucial to tackle because credibility is of the utmost importance for a health-related business.
I also love Instacart, especially the user-friendly interface of their website and their (mostly short) delivery times. I do see two significant areas for improvement, however. One is specific to the grocery home delivery apps and services, and the other is a more general comment on crowd-sourcing service apps (e.g., Uber, Handy, etc.). First, it is frustrating that many grocery items for Whole Foods on Instacart do not have images. If Instacart were to fix this and add photos for every single item, and have a fast way to update seasonal items as well as bakery items, I think more of the WFM value proposition could be brought to bear. Instacart fails to create additional value by not including images for all items it shows, and by not having every item in the store. Second, I have yet to see how successful the Instacart rating system is. I just received an order tonight with an incorrect item, and the “Customer Happiness” team sent me an automated message saying someone would get back to me. I also have received orders with bad-looking produce, that I never would have chosen for myself. These incidences have occurred over the span of a few months, even a year, so I am skeptical about quality control. The same applies to my experiences in Lyft and Uber – overall they are good, but there are still some “bad apples” (pun intended).