Ercu

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On December 14, 2015, Ercu commented on Yemeksepeti: Operational Excellence in Online Food Ordering :

Thanks for writing Aziz!

You are definitely right about the expansion moves outside of Turkey. It’s been a challenge and the management of the Company is trying to take only the right steps as they are still building the name for the industry (delivery, payments, trust, eating outside of home etc.).

On December 14, 2015, Ercu commented on Yemeksepeti: Operational Excellence in Online Food Ordering :

Melissa thanks for writing! I am copying the response I’ve written for JBP as a reply to a similar concern (as this was the rightful concern of many potential investors at the time who didn’t invest in the business). And yes you’re right about the sale, I didn’t want to mention the latest transaction just to highlight the business & operating model.

– In the past 15 years, the Company’s growth never slowed down, stopped or turned negative. In the first five years into its growth between 2000 and 2005, the Company heavily built its brand equity through proven growth it provided its member restaurants with.
– In the past 5 years, there have been strong / weak attempts (global and domestic players) as mentioned in your comment (actually this is one of the reasons why I wrote about this company). Yemeksepeti very very easily overwhelmed new entrants proving its simple yet crystal-clear and successful business plan. There are two reasons to this: Member restaurant owners have been smart enough to be not-price sensitive. They are traffic & growth & volume & reach & accessibility sensitive. Yemeksepeti’s established network makes this business very unfeasible to compete with (organic green-field competition is impossible + there’s no inorganic opportunities).
– For Uber: In my post above I mentioned the concerns of member restaurants in the region. Neither customers nor restaurants will give away their control in the process by transferring delivery and payment processes to a third party (and also, Uber would have to gather 10,000 member restaurant on a platform, making these restaurants violate their agreements with Yemeksepeti).
All in all, the service can be replicated but the whole business/operating model cannot be copied. Considering, being listed as a restaurant on Yemeksepeti is a source of pride for restaurants, this company’s accomplishments don’t seem to be temporary.

On December 14, 2015, Ercu commented on Yemeksepeti: Operational Excellence in Online Food Ordering :

Thanks for the comment JPB!

I will try to give you a bit more insight about the model and the competitive landscape:
– In the past 15 years, the Company’s growth never slowed down, stopped or turned negative. In the first five years into its growth between 2000 and 2005, the Company heavily built its brand equity through proven growth it provided its member restaurants with.
– In the past 5 years, there have been strong / weak attempts (global and domestic players) as mentioned in your comment (actually this is one of the reasons why I wrote about this company). Yemeksepeti very very easily overwhelmed new entrants proving its simple yet crystal-clear and successful business plan. There are two reasons to this: Member restaurant owners have been smart enough to be not-price sensitive. They are traffic & growth & volume & reach & accessibility sensitive. Yemeksepeti’s established network makes this business very unfeasible to compete with (organic green-field competition is impossible + there’s no inorganic opportunities).
– For Uber: In my post above I mentioned the concerns of member restaurants in the region. Neither customers nor restaurants will give away their control in the process by transferring delivery and payment processes to a third party (and also, Uber would have to gather 10,000 member restaurant on a platform, making these restaurants violate their agreements with Yemeksepeti).
All in all, the service can be replicated but the whole business/operating model cannot be copied. Considering, being listed as a restaurant on Yemeksepeti is a source of pride for restaurants, this company’s accomplishments don’t seem to be temporary.

On December 13, 2015, Ercu commented on Danaher and its Business System – A Model of Excellence :

It’s a very flowing overview of Danaher’s business system and its implications. I think it is also a great analysis because Danaher is one of the few companies that can keep its business model as a sustainable and profitable one while not operating with the most unique business system (DBS).

Many businesses find the long term and sustainable solution in inorganic growth when their core business / industry growth goes into a stagnant cycle. Inorganic growth is not the simplest art especially in manufacturing / industrials areas. As many services companies face little difficulty in growing their businesses inorganically as it requires talent management and training sessions only. In the industry segment which Danaher operates, acquirers should also be able to smoothly manage the change in business / operating processes. That’s what makes this journey a very difficult one, a very physical one. Apparently, Danaher, as an established and successful company, is a good operator of this process.

My long term concern about this model: Going forward, industrials / manufacturing players will be operating with very tight margins as the global competition is expected to be harsh for every player. I see it very difficult for Danaher to change / implement / adapt its current model when other competitors come up with original, more modern and efficient models. As Danaher’s operating assets in diverse sub-industries will result in harder implementation and adaptation processes, flexibility and quick response abilities to a top-down approach will be the key to successful competition in these industries.

On December 13, 2015, Ercu commented on Wal-Mart: Every Day Low Prices Business Model :

It’s a very good layout of WalMart’s operating and business model. WalMart is by far one of the top 10 businesses in the US and its operating model is known to be well established in years to serve its business model. Moreover, recent trends are worrying for the company management, as you summarized it perfectly.

After reading about this successful business model, it is very surprising to see that the company could not reach its phenomenal growth and business success in other geographies that much (other than the US and few other markets). After several entry and partnership trials in other countries, WalMart realized that in some geographies it is really hard to move the shopping habit outside the city. It is an established culture to hop on your car, drive for half an hour and complete your 2-weekly or monthly shopping. Seeing some competitors being able to compete with the low prices while located conveniently in the city and not aiming for high-volume sales discouraged Wal-Mart about the sustainability of success in these markets.

Also to your Amazon point: This is one of the hot topics in e-commerce / retail arena. People are very excited to see the consequences of this trend as WalMart is also trying hard with its online retail business arm.

On December 13, 2015, Ercu commented on Bim – pioneer of discount retail in Turkey :

This is a great post summarizing one of the most successful business models in Turkey and maybe one of the most successful retail models in the world.

BIM followed a completely new operating model in Turkey when it commenced its operations in mid 1990s. Instead of acquiring or renting convenient store areas already designed or used for retail, BIM pursued the best location with the best price by negotiating with home owners to turn their unused space into a retail area. With a nationwide specialist network, the company expanded its store network rapidly and economically.

To respond Baker’s Dozen’s questions raised above:
BIM, since its inception, has followed almost a counter-cyclical growth in a country where perception of an hard-discount retail brand was not that high. In time, the company has proven its products’ high quality. The perception towards BIM changed drastically as it was now a stop for both mid-lower income segment and mid income segment, making most of the one-shop convenience stores irrelevant and go out of business.
Many would agree that geographical expansion played a key role in BIM’s growth. In addition to geographical expansion, BIM achieved its success by eliminating some of the traditional one-store retail segments in many of the regions it started operating.
BIM is strategically located on a market segment / geography where only local players with great knowledge and experience in the area could do business and make positive cash flows. Many global and US-based retail giants are entering emerging countries without partnerships or co-name joint ventures. Costco, Wal-Mart, and many others tried to enter Turkey and the region many times but became unsuccessful because of the operating model misalignments. And also, many times these players were shocked by the very high valuations they were asked.