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Minted, where great designs come from

Video March 10, 2017 lottevuden Leave a comment

“Could crowd-sourcing design build an e-commerce company that stayed in tune with its consumer audience forever?”- Mariam Naficy, founder of Minted

Minted was launched in 2007 after the owner Mariam Naficy got intrigued by the idea that there was hidden creative talent around the world whose work was not accessible to consumers and that the Internet could help surface. Minted started with a save-the-date card design challenge in 2008 and the company has been expanding ever since. Nowadays Minted is an online marketplace platform of independent artists located in Jackson Square, San Francisco. The marketplace offers a portfolio of four different product lines namely: stationery, fine art prints, home decor and wedding decor. (Minted, 2017)

“Our purpose in life is to uncover exceptional design from all over the world and bring this to savvy consumers who won’t accept anything else.” – Minted

According to Minted, great design lives and thrives in the hands of independent artists that people do not have access to through traditional retailers. Minted uses technology to allow consumers to discover great creative talent, making Minted a place where artists can learn, gain exposure, and build their businesses. (Minted, 2017)

To give you an idea, the video below shortly shows an example of holiday cards.

How it works

The value generation lies within the hands of Minted’s customers and artists for several reasons. First, Minted continuously organizes open design challenges for independent artists from all over the word. The idea behind these challenges it that every artist, upcoming or experienced, is able to submit his or her ideas (Customer Value Proposition). These design challenges take place within every product line and next to Minted, consumers can also request for a design within a challenge. Second, within these challenges, customers vote on the design submissions and thereby deciding the winning designs (key resource and process). These winning designs are then taken into production and sold on the Minted marketplace (profit formula). By using crowdsourcing for physical design purposes, Minted applies a co-creator model (Chui et al., 2016; Johnson et al., 2008 Minted, 2017)

In addition, their crowdsource initiatives go even further. Minted’s community supports the personal development, creativity, and careers of independent artists in the world. Minted’s community currently exist of independent artists that are located in all 50 states of the US and more than 60 countries. For artists, Minted builds their brands and connect them with other artists. Within the community, artists are able to express themselves in a unique way and learn from critiques of other artists and talented peers (Customer Value Proposition). (Johnson et al., 2008; Minted, 2017)

Efficiency criteria

With the current structure of the challenges and Community, artists, customers as well as Minted benefit from it in distinctive ways. As you will see, this business model results in joint profitability for all parties. Within the platform, every artist is able to get exposure to the world and can thereby grow its own name. Artist of the winning submissions even receive a portion of every sale, and they earn a store where they can launch and sell designs using the Minted fulfillment platform with no need to manufacture, ship, or provide customer service. Customers vote and can thereby give direction to which designs they would like to see for sale (i.e. efficiency benefit). Finally yet importantly, Minted benefits from all the votes and uploaded ideas because it gives them certainty that they produce the most desired furniture.

MADE.com also satisfies the feasibility of required reallocations criteria. First, the polity is not directly involved. Second, terms and conditions regarding what is allows and what not need to be accepted by stakeholders before contesting a challenge and creating an account on Minted. In addition, they only take 50% of the customer payment at the time that the customer accepts the project proposal. Remainder is retained by customer until the final artwork is approved and Minted does not remit the final payment to the artist until the delivery of the artwork is confirmed. Thereby ensuring for safe payments. (Minted, 2017)

To answer the question that started it all: YES, Minted shows that with crowd-sourcing design you can build an e-commerce company and stay in tune with its consumer audience forever.

References
Chui, C., Liang, T. & Turban, E. (2016) What can crowdsourcing do for decision support?. Journal of Decision Support Systems, 65: 40-49

Johnson, M.W., Christensen, C.M. & Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 86(12): 50-59

Minted (2017). From https://www.minted.com/about-us. Assessed at 07-03-2017

Articles

There is nothing permanent except change—analyzing individual price dynamics in “pay-what-you-want” situations.

March 5, 2017 lottevuden Leave a comment

The innovative pricing mechanism Pay-What-You-Want (PWYW) has received increased attention in both research and practice during the last years. Museums and restaurants such as Brooklyn Museum and Little bay in London already implemented it. With PWYW pricing, buyers determine prices, and sellers need to accept every price, even if it is below zero. This can create a positive consumer experience, since it eliminates fair and related risks. (Kim et al., 2009)

PWYW can either be used as a promotion tool (e.g., when introducing a new product) or as a sustainably pricing mechanism. However, when buyers determine the price paid, it is important to consider individual price dynamics. This is what Schons et al., (2013) looked at. They examined the dynamics in prices paid in PWYW situations over multiple- customer-seller transactions on an individual customer level.

How did they measure this?

In order to test this, they conducted a field experiment in combination with a survey. They collected data by selling iced coffee at PWYW prices in an outdoor coffee bar frequently patronized by young people for over eight weeks. The iced coffee was added to the bar’s product portfolio for the purpose of this study, which enabled the researchers to track customers’ pricing decisions without existing supplier-specific internal reference prices (IRP). To monitor repeat purchases, they added a loyalty card that contained an ID that customers used to code their questionnaires at every purchase. The resulting sample comprised 966 first-time customers and includes 333 customer with two, 183 customers with three, and 128 customers with four purchases.

What did they find?

This paper elaborates on the importance of individual dynamics within PWYW pricing. First, first-time transaction prices are based on IRP. However, the influence of IRP on prices paid decreased over time. This is mainly because individual dynamics change over time. Buying frequently results in a decreasing downward slope in prices paid and IRPs because price paid in the first transaction calibrate IRPs to a level that already reflects customers’ fairness discounts. Second, customers with higher preferences for fairness pay on average higher prices. Third, repetition negatively affects customers’ price behavior, especially along the very first purchases. Lastly, it is important to note that within this study, the prices paid reached a steady state after the third transaction, only nine customers paid zero prices supporting the findings of Kim et al., (2009) and Kim et al., (2010), and customers underestimated the product’s cost by 16%. Can you imagine: buying the same product for the second time and pay a lower price or no price at all, while if you buy it for the fourth time, the price will not differ from your last price paid?

So what does this mean?

Sellers need to be aware that implementing PWYW for frequently purchased products does not ensure profits over repeated transactions. The profitability of a PWYW application depends on whether the long-term price paid after three transactions is still above the suppliers’ cost. In addition, this study confirms that customers have difficulty determining actual seller cost and hence consistently make lower estimations. PWYW pricing practitioners should therefore provide cost information to adjust customers’ initial estimates. Since this study investigated in PWYW prices at a local coffee bar, it would be interesting to see whether other larger settings such as clothing or electronic equipment result in the same conclusions. What is your opinion? Would you rather go to a coffee bar with PWYW pricing or to one with fixed prices? And if so, would you pay more than zero euro?

References

Kim, J.-Y., Natter, M., & Spann, M. (2009). Pay-What-You-Want—a new participative pricing mechanism. Journal of Marketing, 73(1), 44–58.

Kim, Ju-Young, Natter, M., & Spann, M. (2010). Where customers pay as THEY wish. Review of Marketing Science, 8(2)

Schons, L.M. & Rese, M., Wieseke, J., Rasmussen, W., Weber, D. & Strotman, W. (2012) There is nothing permanent except change—analyzing individual price dynamics in “pay-what-you-want” situations. Marketing Letters, 25, 25-36

Business Case

MADE.com; shifting the power of creativity to consumers

February 15, 2017 lottevuden Leave a comment

“The 3 Cs of modern creativity are Community, Crowdsourcing and Co-creation”- Jon Wilkins

MADE.com , what is it?
MADE.com, located in London and launched in 2010, is a brand that designs and retails furniture online and via several showrooms across Europe. MADE.com is known by its high frequency of two releases of new collections per week and not owing their own factories. Instead, they give factories instructed to meet orders. More importantly, the most fascinating thing about MADE.com is the way they actively involve customers. (MADE.com, 2017)

Business model – How it works
MADE.com shifts the power of creative innovation to stakeholders in two remarkable ways, so customers and designers create most of the value. First, customers decide which designs go into production by voting on them (key resource and process). The most popular designs make it to the production facility. By using crowdsourcing for physical design purposes, MADE.com applies a co-creator model (Chui et al., 2016). Second, MADE.com created a service called “Made Unboxed”. The idea behind MADE Unboxed is that customers upload photos of their interior designed by MADE.com, with the purpose to inspire other customers (key resource and process). Consumers can now look at items in a real environment, without going to a showroom. Moreover, the online community nominates some home designs to serve as a showroom. Everyone who is interested can visit designs at the “interior designers” homes. This adds the extra service of touching and feeling the items, instead of only viewing the items (Customer Value Proposition). This short video, which serves as an overview of the services offered by MADE Unboxed, shows that cities are covered with multiple mini MADE.com showrooms. (MADE.com, 2017; Myndset, 2015; Johnson et al.,2008)

Moreover, their crowdsource initiatives go even further. MADE.com also organizes an annual online contest that is similar to LEGO ideas (Mladenow et al., 2015). The Made Emerging Talent Award is a contest in which promising upcoming designers are able to submit their ideas (Customer Value Proposition). The ideas will be judged based on the number of votes given by other designers and customers. Obviously, the designs with the most votes wins the contest. After the contest, MADE.com takes the winning design ideas into production and adds them to their product line for the next 12 months (Profit formula).

Efficiency criteria; Win-win-win situation
With the current structure of the contest and MADE Unboxed, designers, customers as well as Made.com benefit from it in distinctive ways. The designers get exposure and maybe even a career boost if they win (see video for further explanation). Customers vote and can thereby give direction to which designs they would like to see for sale (i.e. efficiency benefit). Finally yet importantly, Made.com benefits from all the votes and uploaded ideas because it gives them certainty that they produce the most desired furniture. In addition, because of all the mini showrooms, MADE.com does not need to have many showrooms themselves, resulting in lower asset costs. It clear that this business model results in joint profitability for all parties.

MADE.com also satisfies the feasibility of required reallocations criteria. Het polity is not invloved and terms regarding what is allows and what not need to be accepted by stakeholders.

Sources:

Chui, C., Liang, T. & Turban, E. (2016) What can crowsourcing do for decision support?. Journal of Decision Support Systems, 65: 40-49

Johnson, M.W., Christensen, C.M. & Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 86(12): 50-59

MADE.com (2017) MADE.com. Available at: http://www.made.com/about-us. Accessed on 14/02/2017

Mladenow, A., Bauer, C., Straus, C. & Gregus, M. (2015) Collaboration and Loyalty in Crowdsourcing. International Conference on Intelligent Networking and Collaborative Systems.

Myndset (2015) Available at: http://myndset.com/2015/04/digitail-experience-made/. Accessed on 14/02/2017