What is Depop, and how does it work?

The story of Depop begins in 2011 at H-FARM, the Italian startup accelerator headquartered in the Venetian lagoon. Fast forwarding to the early days of 2019, Depop has 15 million users worldwide and H-FARM signed the exit from the startup’s capital with a return of six times the initial investment (Terzano, 2019). Overall, one would not be mistaken to label Depop as one of the most successful startups ever launched on Italian soil. Headquartered in London, Depop is a mobile-based marketplace that allows its users to buy and sell new or second-hand clothes, accessories and designer items. Its community is primarily composed of creative, young people and is the app of choice of many established influencers. It can rely on a stable growth of 250.000 new users per month, a team of 100 people divided among offices in London, Milan, New York and Los Angeles (EconomyUp, 2018).

The user, rather than being a “simple” buyer, is offered a space become a full-fledged entrepreneur by opening a virtual shop.

As the picture shows, the interface closely resembles the one of Instagram. In a similar manner, users can stay updated regarding new listings by following other vendors, they can interact with a new item on sale by liking it, they can gather further information by posting a comment and they can directly message the vendor to negotiate the sale price and agree on the shipping method (by mail or in person). Coming to the revenue stream, Depop manages to stay up running by charging sellers 10% of the item sale price, once the transaction has occurred. This means that, as long as a vendor has not sold the item, no costs are incurred to keep the listing online.

Since the large majority of users are first-timers when it comes to selling a product online, Depop provides each new user with an extensive “bible” containing best-in-class examples to add successful listings, such as how photos of the item on sale should be taken and which information needs to be included in the product description. This, and many more suggestions have a double function: not only do they increase the likelihood that “novel entrepreneurs” have a successful experience with the app, but also that the overall quality of listings on the platform is high. A key feature along these lines is the possibility of leaving reviews on user profiles, which stimulates community members to strive for a quality feed and quickly flags instances of inappropriate behaviour. Another way through which Depop is trying to increase the “fashion savviness” of its users is through collaborations with establishes vintage sellers or experts of the industry that open their own shop on the platform. Such collaborations are another way of sparking curiosity and inspiration for best practices, as well as creating an element of excitement and buzz towards the latest trends in the world of vintage clothing. Overall, such collaborations aim at making the community feel more alive and offers users an opportunity for personal growth within this industry (Witte, 2018).

Problems and suggestions for improvement

In order to grasp what Depop users are mostly unsatisfied with and to provide possible suggestions for improvement, I decided to conduct an in-depth overview of app reviews on the consumer review website Trustpilot. Below are summarised the main issues that users have been reporting.

The Explore section features non personalised listings

One of the features of Depop is the Explore section, which is curated by the app’s Editor Team and is used to promote the best listings on the platform according to the “in-house style guidelines” (Depop, n.d.). However, users might be viewing categories of items that they are just not interest in buying, therefore causing Depop to lose on potential sales revenue. To solve this issue, Depop should tailor the Explore section to each user. For instance, they could populate this section with products that belong to categories similar to the ones viewed by the user during previous searches, therefore matching her/his tastes.

Scammers are a very real issue

Like any online marketplace, Depop users are not immune to scams. Over time, there have been various reports of sellers being paid but not sending the item, sending an item which is different from the one listed, or sending a counterfeit item. Overall, Depop does not seem to be providing enough measures against such unfortunate events and seller reviews alone are not a strong enough deterrent. To improve the current situation, Depop could take inspiration from eBay. For profiles that have too little reviews or do not provide parcel tracking with their deliveries, the famous online marketplace holds the payment for 21 days (eBay, n.d.). If, after such time frame, the buyer has received the parcel and has not reporting any wrongdoings, the payment is unlocked.

Vendors cannot track the performance of their listings

The last issue that users are facing is connected to the amount of information they have available to measure whether they are performing well and if there is room for improvement. In this regard, the only measures available at hand are the amount of likes and comments a listing receives and the customer reviews received by the community. To provide a better service to the community and attract new users, Depop could provide analytics insights that describe a profile performance in a more detailed manner. For instance, by knowing which item is being viewed the most, a user could shift her/his focus onto a specific product category. As it stands now, the user base is left in the dark and is missing out on key measures that would help them improve their virtual shop and the overall quality of the listings that populate the platform.

Overall, a close cooperation with its users can bring tangible improvements to the platform. The three points listed above provide three of the most mentioned pain points and require immediate action in order to provide a personalised, safe and insightful experience to the users.   

Sources

Depop. (n.d.). How do I get featured on the Explore page?. [online] Available at: https://depophelp.zendesk.com/hc/en-gb/articles/360001792207-How-do-I-get-featured-on-the-Explore-page- [Accessed 10 Mar. 2019].

eBay. (n.d.). Funds Availability. [online] Available at: https://pages.ebay.com/seller-center/service-and-payments/funds-availability.html [Accessed 10 Mar. 2019].

Economyup. (2018). 20 milioni a Depop, la lezione per il retail: permettere al cliente di aprire il proprio store online | Economyup. [online] Available at: https://www.economyup.it/retail/ratail-10-milioni-depop-la-startup-vende-abiti-online/ [Accessed 10 Mar. 2019].

Terzano, C. (2019). Exit H-Farm da Depop, cedute quote per 2,5 milioni di euro – Startupitalia. [online] Startupitalia. Available at: https://startupitalia.eu/103334-20190118-exit-h-farm-depop-cedute-quote-25-milioni-euro [Accessed 10 Mar. 2019].

Trustpilot. (2019). Depop is rated “Poor” with 4.5 / 10 on Trustpilot. [online] Available at: https://www.trustpilot.com/review/depop.com?languages=en [Accessed 10 Mar. 2019].

Witte, R. (2018). How Depop is Leveraging Collaborations to Grow Their Community. [online] Forbes.com. Available at: https://www.forbes.com/sites/raewitte/2018/06/26/how-depop-is-leveraging-collaborations-to-grow-their-community/#cad41705a004 [Accessed 10 Mar. 2019].

Nowadays, through just a few taps on your smartphone, you can get a ride to your desired destination from your current location. This is because innovation and technological advancements, paired with the widespread ownership of smartphones, have given rise to peer-to-peer centralized taxicab platforms. These app-based platforms match demand (people who need a ride) with suppliers (people with cars), and set prices to facilitate transactions. (Proserpio & Tellis, 2017). Today, the global ridesharing industry has been valued at over $61 billion, with projections that it will grow to $218 billion by 2025 (Curley, 2019).

With major players like Uber and Lyft dominating the market, who have a combined market share of 98% in the US for example, it’s difficult to see the space or need for new entrants (Molla, 2018). But there is one group of riders who are underserved in this market – kids. Namely, kids soliciting ridesharing services, or parents requesting it in order to shuttle their kids to activities. This seems like a convenient way for busy parents to get their kids from A to B, but there is a major problem – it’s simply not allowed. Account holders on Uber and Lyft must be 18 or older and cannot request a ride on the behalf of minors, unless they are accompanied by an adult (Heilweil, 2019). Uber and Lyft simply don’t have the certificates or insurance necessary to allow unaccompanied minors, and don’t want the liability that comes with it (Gibbins, 2018).  So how are kids supposed to get where they need to go when their parents are busy?

HopSkipDrive

This is where HopSkipDrive enters the picture. HopSkipDrive is a California based ridesharing taxi cab service, founded by three moms, catered specifically to minors. It was founded in 2014 by three working moms struggling to get their kids where they needed to go. (HopSkipDrive, 2019) With initial funding of $14.1 million, their objective is to make a difference in the lives of kids and parents by providing a safe and dependable way of getting kids where they need to go.

How It Works

On the app, parents can request a ride or preschedule one up to 8 hours in advance. For reoccurring activities like after school sports, parents can save rides and ‘repeat’ them. If kids from many families are all going to the same destination, the app has a carpool feature which will coordinate the pickup of kids from several locations for a discounted price. (HopSkipDrive, 2019)

In addition to servicing families, HopSkipDrive also offer ridesharing services to schools. By working with school districts, they are able to unlock opportunities for substantial business growth (Roof, 2018). Schools can book drivers for field trips or students who require special care, with just a few taps. Furthermore, if a school bus isn’t completely full, it can be a much cheaper option for schools to hire HopSkipDrive services instead. (HopSkipDrive, 2019)

To ensure the safety of kids using the service, HopSkipDrive puts it at the center of everything they do. Drivers are referred to as “CareDrivers”, who double as caregivers. To be a CareDriver, you need to be over 23 years old, have at least five years of childcaring experience,  a clean driving record, as well as a car that is no more than 10 years old (HopSkipDrive, 2019). Furthermore, drivers are required to pass a multi-agency background check, which includes fingerprinting, before they are officially registered on the app. HopSkipDrive also allows parents to provide detailed pick-up and drop-off instructions, and CareDrivers will confirm a predetermined ‘codeword’ and date of birth with each kid they pick up. Furthermore, all rides are monitored in real time by the HopSkipDrive team. (HopSkipDrive, 2019)

Efficiency of the Business Model

There is considerable demand from working parents to get their kids to activities efficiently and safely and with little time for preplanning. HopSkipDrive allows parents to organize rides for their kids whenever the need arises. On the other side, drivers are able to use their own cars, and spare time, to earn extra money. HopSkipDrive drivers can earn up to $30/hour, which is about three time more than Uber or Lyft drivers (Gibbins, 2018). Many parents are willing to pay the premium price for a safe service, and it is often cheaper than getting babysitter. There is however less flexibility regarding working hours for drivers on the HopSkipDrive app than on Uber of Lyft. This is because kids are in school all day and for the most part require rides in the early mornings, with requests only picking up again in the afternoon. Furthermore, a large number of rides on the app are prescheduled. (Gibbins, 2018)

There are clear internal rules and regulations in place to ensure the safety of kids, like strict behavioural guidelines as to how drivers are supposed to interact with the kids they are driving (HopSkipDrive, 2019). Unlike Uber of Lyft, HopSkipDrive has certificates and insurance necessary to work with minors, and a $1 million liability coverage (HopSkipDrive, 2019). There are legal measures that drivers must go through, namely drivers in California must register with TrustLine, which is a state database for nannys and babysitters. On the one hand, this restricts the number of potential drivers considerably because many do not fit the requirements, or do not have the time to go through the registration process. On the other hand, it may in fact open up the ridesharing industry to potential drivers who otherwise wouldn’t have considered it. HopSkipDrive drivers are almost all female, and either mothers, babysitter, teachers or so called ‘empty nesters’, who feel safer driving for HopSkipDrive than Uber or Lyft, and enjoy caring for kids (Heilweil, 2019).

This business model of ridesharing for kids has not been met without difficulties. Several similar platforms, like Shuddle and Shepherd, have shut down, despite receiving  considerable funding initially. These platforms sited issues stemming from the driver vetting and registration process taking too long, and failing to secure more funding after running into financial difficulties (Heilweil, 2019). In 2017, Uber piloted its own program for teenagers ages 13 to 17, but eventually shut it down after little success. This stemmed mainly from the fact that regular Uber drivers were used, who received no extra training or guidelines as to how teens should be transported  (Heilweil, 2019).

The Future Ahead

Building a ridesharing business is already a difficult and expensive thing to do, and adding kids into the mix doesn’t make it any easier. Despite the challenges noted above, the market for kid’s ridesharing is continuing to grow, with HopSkipDrive securing another $7.4 million of funding just last year (Roof, 2018). However, HopSkipDrive is not without competition and Zūm, another ridesharing platform for kids just raised their total funding to $70 million, and is already present in three States (Dickey, 2019).

Due to the somewhat uniform schedules of children, it’s a questionable whether drivers on kids ridesharing platforms will continue to get enough work on the average day. Because of this, it could be essential for these platforms to expand their businesses further than just parents requesting rides. The future of ridesharing for kids could be to sell rides directly to schools, largely replacing traditional school busses, something these platforms have already started exploring (Pinsker, 2018).

Sources

Chuang, T., 2018. First “Uber for kids” ride service launches in Denver by three moms, including one who grew up here. [Online]  Available at: https://www.denverpost.com/2018/04/05/hopskipdrive-uber-for-kids/

Curley, R., 2019. Global ride sharing industry valued at more than $61 Billion. [Online] Available at: https://www.businesstraveller.com/business-travel/2019/01/04/value-of-global-ride-sharing-industry-estimated-at-more-than-61-billion/

Dickey, M. R., 2019. Zūm, a ridesharing service for kids, raises $40 million. [Online] Available at: https://techcrunch.com/2019/02/28/zum-a-ridesharing-service-for-kids-raises-40-million/

Gibbins, P., 2018. Comparing the Top 4 Rideshare Apps for Kids. [Online] Available at: https://therideshareguy.com/top-rideshare-apps-for-kids/

Goldstein, M., 2018. Uber And Lyft: The Cost And Benefits Of Disruption. [Online]  Available at: https://www.forbes.com/sites/michaelgoldstein/2018/05/09/uber-and-lyft-the-cost-and-benefits-of-disruption/#568fcc4adfcb

Heilweil, R., 2019. THE TRICKY BUSINESS OF MAKING RIDE-HAIL WORK FOR KIDS. [Online] Available at: https://www.wired.com/story/ride-hail-sharing-kids-hopskipdrive-zum-kango/

HopSkipDrive, 2019. About. [Online] Available at: https://www.hopskipdrive.com/about

Molla, R., 2018. Lyft has eaten into Uber’s U.S. market share, new data suggests. [Online]  Available at: https://www.recode.net/2018/12/12/18134882/lyft-uber-ride-car-market-share

Pinsker, J., 2018. What Is the Future of Getting Kids to Soccer Practice?. [Online] Available at: https://www.theatlantic.com/family/archive/2018/10/uber-lyft-kids-hopskipdrive-zum/573424/

Proserpio, D. & Tellis, G. J., 2017. Baring the Sharing Economy: Concepts, Classification, Findings, and Future Directions. [Online]
Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3084329

Roof, K., 2018. HopSkipDrive raises another $7.4 million for its Uber for kids business. [Online] Available at: https://techcrunch.com/2017/11/21/hopskipdrive-raises-another-7-4-million-for-its-uber-for-kids-business/

Black Mirror

Everyone who has been keeping up with the offering of Netflix has heard of Black Mirror, the series about dystopian worlds becoming reality. In one of the episodes writer Charlie Booker depicts a world in which every citizen has a social score that everyone can vote on when getting into contact with the person in question. The main character of the episode is at a certain point in the episode denied access to a flight due to her low social score.  A scary thought, but as it turns out very much reality. The Chinese government intends to implement a similar system as portrayed in Black Mirror in which people are assigned a social credit. Main difference is that this score is attributed by the government through big data, not by fellow ‘victims’. In the coming year, 2020, the social credit system is bound to kick off. While the examples of a poor social credit provided in the Orwellian Black Mirror episode approach extremes, some of the scenes will turn out to be real consequences in China. For example, by the end of 2018 more than five million citizens of China have already been denied access to high-speed rail tickets due to having been placed on a blacklist due to debt  (Needham, 2019). Some other implications for citizens once the system initiates are being unable to find a job in civil service, journalism and legal fields or having your children being denied access to high-paying private schools (Botsman, 2017).

Sesame Credit

What if I told you that this social system has been a reality for over four years already? That’s right. Alibaba, the Chinese multinational giant in e-commerce and other sectors, has assigned its customers with a social credit score, commonly referred to as Sesame Credit (Jefferson, 2018). Alibaba is known to have close affiliates with the Chinese government and the Sesame Credit is partially a trial version of the social credit system about to be introduced (Financial Times, 2017).

So what is the Sesame Credit and how does it work? Alibaba collects a ton of data on their customers. Given that they are active in insurance, loans, e-commerce and even dating, it is evident that they have a lot to analyze. The credit system uses data on more than 300 million people and 37 million businesses (Alibaba Group, 2015). To add to this, their ties with the Chinese government provide them with access to official identities, financial records and even messages of Chinese WhatsApp alternative WeChat (Huang, 2017). All this data is gathered by Alibaba and then analyzed to come to a Sesame Credit, which can be interpreted as an indication of someone’s trustworthiness. While the exact algorithm they use to determine a person’s Sesame Credit is unknown, it is known that the heaps and heaps of data collected all amount to a different rating in five categories. Namely, credit history, fulfillment capacity (ability to live up to contract terms etc.), personal characteristics, behavior & preferences and lastly interpersonal relationships (i.e. your friends). Bound together, you get yourself your very own Sesame Credit.

Applications

Now, what to do with your Sesame Credit is a natural next question. A main difference when comparing the Sesame Credit to the approaching Social Credit system by the Chinese government is that the Sesame Credit is about rewarding trustworthy people rather than punishing those that do not have a high rating. Some ways in which the credit score has rewarded customers are when applying for a loan with Ant Financial, a daughter company of Alibaba or when trying to book a night at a hotel. The merit to a high social score there is not having to pay up front due to the high trustworthiness. Baihe.com, a Chinese dating site, has even started to allow users to add their Sesame Credit to their profile as a way to provide better dating opportunities for users (Hatton, 2015). These are just some of the more obvious applications for the Sesame Credit and how it creates value for people with a high rating.

A remaining question is the value for Alibaba itself. Other than being a nice perk to hand out to customers, a first glance at the credit system raises the question as to what the use is for Alibaba. The reason why Sesame Credit or any social credit in China has a lot of purpose for these entities is the way it points out desired behavior. By encouraging people to behave by making them aware of the fact that every move is being monitored and therefore counts, people will start to behave more desirably in order to retain their high Sesame Credit and, consequentially, the rewards that come with it.

Basically, the Sesame Credit seems to be a win-win situation for those people that are, in the most broad definition of the word, decent and Alibaba. By evoking good behavior in people so that their Sesame Credit becomes an accurate reflection of their proper conduct, Alibaba boosts the average trustworthiness of their customers as well as providing their model citizens with proper rewards. Naturally, there are questions as to the ethics of monitoring every step customers take as well as analyzing them and adding a trustworthiness tag to a human being, but all ethical issues aside, the business model seems to merit both the user and the company. It works, and given that Sesame Credit was a trial indirectly executed by the Chinese government, we can look forward to the implementation of ‘the real deal’, the actual social system that will go live in 2020.

Conclusion

In conclusion, the episode Nosedive from Black Mirror has opened the eyes to many westerners which regard to the social credit system that is about to be introduced nationwide in China. Despite this more recent revelation, the Sesame Credit, a predecessor to the big fish by the Chinese government has been up and running for four years already and is deemed a success. Customers get assigned with a trustworthiness score and in return get access to many advantages such as discounts or not having to pay deposits at hotels. If this system will work in a punishing fashion has yet to be discovered, but it will most certainly be an interesting development to keep an eye out for.

References

Alibaba Group (2015) Ant Financial Unveils China’s First Credit-Scoring System Using Online Data. Available at: https://www.alibabagroup.com/en/news/article?news=p150128 (Accessed: 7 March 2019).

Botsman, R. (2017) Big data meets Big Brother as China moves to rate its citizens. Available at: https://www.wired.co.uk/article/chinese-government-social-credit-score-privacy-invasion (Accessed: 7 March 2019).

Financial Times (2017) China changes tack on ‘social credit’ scheme plan. Available at: https://www.ft.com/content/f772a9ce-60c4-11e7-91a7-502f7ee26895?mc_cid=9068154611 (Accessed: 7 March 2019).

Hatton, C. (2015) China ‘social credit’: Beijing sets up huge system. Available at: https://www.bbc.com/news/world-asia-china-34592186 (Accessed: 7 March 2019).

Huang, P. (2017) WeChat Confirms: It Shares Just About All Private Data With the Chinese Regime. Available at: https://www.theepochtimes.com/wechat-confirms-it-gives-just-about-all-private-user-data-to-the-chinese-regime_2296960.html (Accessed: 7 March 2019).

Jefferson, E. (2018) No, China isn’t Black Mirror – social credit scores are more complex and sinister than that. Available at: https://www.newstatesman.com/world/asia/2018/04/no-china-isn-t-black-mirror-social-credit-scores-are-more-complex-and-sinister (Accessed: 7 March 2019).

Needham, K. (2019) China: Big Data watches millions during Chinese New Year. Available at: https://www.smh.com.au/world/asia/millions-are-on-the-move-in-china-and-big-data-is-watching-20190204-p50vlf.html (Accessed: 7 March 2019).

This blogpost provides information about the Connect+Develop platform created by Procter & Gamble (P&G). The blogpost by 441485DG (linked below) has also touched upon this subject, however, this post is a more up-to-date and in-depth analysis of how P&G  has been successful in value co-creation through their online platform website.

P&G is one of the largest consumer goods manufacturers, distributors and advertisers worldwide, with more than 65 products and a global reach of 180 countries (Procter & Gamble, 2006).

A short history

P&G was established in 1837 by William Procter and James Gamble, a candle maker and soap maker, respectively (Procter & Gamble, 2006). The company became successful soon: in the 19th century, P&G had several contracts to supply soap and candles to the Union Army during the American Civil War (Procter & Gamble, 2006). In 1930, P&G acquired Thomas Hedley Co, a company based in the UK, which was also the beginning of P&G’s international expansion. After this, P&G made several acquisitions, expanding to a number of different business divisions (Procter & Gamble, 2006). Furthermore, P&G launched a successful range of personal health, grooming, beauty and home care brands (Procter & Gamble, 2006).

However, during the 1990s, the company encountered a reduction in sales growth (Agafitei & Avasilcai, 2015). This was mainly due to their closed business model, where there was no communication with outside partners about the development of novel products (Agafitei & Avasilcai, 2015). Moreover, the company considered its technology a secret, and licensing was rarely done (Agafitei & Avasilcai, 2015). Because of the rise in global competition and the increase in R&D costs, the company decided to switch to a business model with more proactivity (Ozkan, 2015).

Business idea

In order to switch to a more proactive business model, P&G considered co-creation and open innovation. Co-creation occurs when a company brings different people (and parties) together to cooperatively produce a mutually desired outcome (Agafitei & Avasilcai, 2015). With co-creation, the key focus is on the interests of all stakeholders, creating value by continually improving experiences of all stakeholders. The advantage is that co-creation increases engagement with all stakeholders, and that it continuously builds on new interactions and experiences, leading to increased creativity, productivity, lower risks and costs.

According to Lawer (2017), open innovation is a standalone form of co-creation, because it is more distributed and because companies give more control to parties joining the platform. More specifically, open innovation is a way for firms to use the strengths and ideas of people outside their company, in order to improve products or internal processes of the firm (Ozkan, 2015).

Business model

In order to become more proactive, the company launched the Connect+Develop platform in 2001 (Procter & Gamble, 2019). This is an open innovation platform where the company engages with the most innovative minds to deliver on P&G’s opportunities (Procter & Gamble, 2019). The main idea behind Connect+Develop is to create an opportunity for people outside the company to improve current products, and to create innovative ideas for P&G (Agafitei & Avasilcai, 2015). Moreover, outside parties are also able to contribute by solving tricky problems within the company (Ozkan, 2015). In order to simplify and increase engagement with outside parties, P&G launched a Connect+Develop website in 2013 (Ozkan, 2015). The platform can be accessed via https://www.pgconnectdevelop.com/. The website directly links outside parties to the top needs of the company, and P&G management and evaluators directly to user submissions. More specifically, the “current needs” button shows all different needs for different categories. This way, the evaluation process becomes faster, increasing overall efficiency of the platform (Ozkan, 2015). For example, when a user clicks on the current need category “beauty and grooming innovations”, it shows an explanation of the category, and it shows that there are no current needs for it. However, every user is still able to submit his/her innovative idea by clicking on “click here to submit your innovation” (see figure 1).

Furthermore, there are several criteria that a user should consider before he/she is able to submit his/her idea, which is also explicitly shown on their website (see figure 2). P&G also states which type of solutions they are not interested in, which can also be found on the “submission criteria” page.

Through this online platform, P&G receives a great number of open innovation submissions. These proposals need to be managed and reviewed. In order for this process to work efficiently, the online platform helps P&G by collecting additional data the company needs. Then, the submissions are reviewed by a specific team within Connect+Develop. Approved submissions are then distributed to their relevant business departments for further review (Ozkan, 2015).

Efficiency of the model

Looking at it from a joint profitability perspective, the model works. According to Huston & Sakkab (2006), more than 35% of the company’s new products have elements of the open innovation submissions. Moreover, the success rate of P&G’s innovation has more than doubled and the costs of innovation have reduced (Huston & Sakkab, 2006). Lastly, since 2000, P&G’s stock price had doubled as well (Huston & Sakkab, 2006). From the customer perspective, the Connect+Develop platform has also been beneficial. By co-creating and using the open innovation platform, customers are able to define products they will eventually want to purchase, and they do not have to wait for firms to decide the key elements of a product (Agafitei & Avasilcai, 2015).

Considering the feasibility aspect, the model is a bit less efficient. According to Veer et al. (2015), process coordination costs and implementation costs are high for an open innovation platform. Furthermore, open innovation requires adapting the culture of the company, as there might be a feeling of loss of knowledge control among employees (Veer et al., 2013). Lastly, from a legal point of view, an effect of open innovation might be intellectual property spillovers (Veer et al., 2013). Because of these costs and risks, open innovation requires a lot of research and planning prior to its implementation, which might not be feasible for smaller companies or startups for example (compared to P&G).

All in all, P&G has been able to create an effective value co-creating, open innovation platform. By becoming more customer-centric, the company has increased its number of new products, and doubled its stock price. However, the risks of open innovation should be taken into account before implementing it.

Reference list

Article 441485DG: https://consumervaluecreation.com/2016/03/11/procter-gamble-from-rd-to-connectdevelop-platform/

Agafitei, G. and Avasilcai, S. (2015). A case study on open innovation on Procter & Gamble. Part II: Co-creation and digital involvement. IOP Conference Series: Materials Science and Engineering, 95.

Huston, L., and Sakkab, N. (2006). Connect and develop: inside Procter & Gamble’s new model for Innovation. Harvard Business Review. Retrieved from https://hbr.org/2006/03/connect-and-develop-inside-procter-gambles-new-model-for-innovation

Lawer, C. (2017). Eight Styles of Customer Value Co-Creation. Retrieved from https://www.umiohealth.com/media/2309/eight-styles-of-customer-value-co-creation.pdf

Ozkan, N. N. 2015. An example of open innovation: P&G. Procedia—Social and Behavioral Sciences 195:1496–502

Procter & Gamble. (2006). A company history. Retrieved from https://www.pg.com/translations/history_pdf/english_history.pdf

Procter & Gamble. (2019). What is connect and develop? Retrieved from https://www.pgconnectdevelop.com/what-is-connect-develop/

Veer, T., Lorenz, A., and Blind, K. (2013). How Open Is Too Open? The “Dark Side” of Openness along the Innovation Value Chain. Paper Presented at the 35th DRUID Celebration Conference, Barcelona, Spain, June 17–19.

Name: Berna Hizli
Student number: 408455

Symbaloo is an internet based company with 15 million users whose product is a homepage. On Symbaloo, people can click tiles that link them to their favorite websites or generate helpful tools on the website itself. People can choose to either use the standard homepage or to customize their own page (Symbaloo, 2019).

The (dutch) standard homepage of Symbaloo

The unique value that Symbaloo offers to their customers is defined in two terms: simplicity and customizability. Symbaloo mostly targets two groups of people. Firstly, the digital immigrants. This group consists of the more elderly people who have a rough time navigating the internet, who are mostly appealed by the simplicity of the website. Secondly, the digital natives. This group consists of younger people who are already sufficiently experienced with the internet and are more appealed by the customizability and the visibility of the website. (Prensky, 2001)

Symbaloo has to thank most of its users to customer centricity. Symbaloo has put a lot of effort in understanding who their customers were, why they were using Symbaloo and what the most important value was. This centricity was eventually the most deciding factor for most of the digital immigrants, who had trouble getting started on the internet by themselves. Symbaloo acted as a fallback for when users had troubles with using the internet, resulting in a lot of interactions by phone or by email.

The business model of Symbaloo consists of four different aspects:

1. The tiles at the homepage are sold to advertisers. Although it wasn’t specified that these tiles were sponsored, the tiles were highly successful, regardless of the fact that they were promoted by a biased recommendation agent.
2. Symbaloo sells PRO accounts for a fee, which offer more functionality than the free standard accounts
3. The searches in the google search engine (in the middle of the page) generate referrals for which advertisers pay (through google). This search engine also contains sponsored recommendations, which are displayed as natural results and were also equally successful as other search results, regardless of being promoted by a biased recommendation agent. The working of the tiles and the search engine contradict the results of the research by Wang, Xu and Wang, who mention that the sponsorship should probably have been disclosed. (Wang, Xu & Wang, 2018).
4. The wallpaper in the background, which either displays a beautiful picture or an advertisement .Personalized information was used to decide who gets shown what wallpaper. For example, some wallpapers were only shown to either males or females. It was not disclosed that this info was used, but it did lead to higher click to rates per view than when the advertisements were not personalized, which somewhat contradicts the research of Aguirre et al. (2015).

The homepage of Symbaloo with a (personalized) advertisement in the background

The business model of Symbaloo works well on the short term, but is not sustainable on the long term. As time goes on, the amount of digital immigrants will reduce and the amount of digital natives will increase, which means that the advertisements and the unique proposal they have now will have to be changed. The problem with the business model as it is now, is that most digital natives have little desire to use a homepage other than the standard google or bing for example. For the digital immigrants, Symbaloo offered simplicity, which was a necessity for some to be able to properly browse the internet. However, as digital natives do not experience the same limitation, the value of that simplicity becomes far less. In other words, the growth of the homepage of Symbaloo has stagnated. (Prensky, 2001)

The workings of the business model become more visible when looking at the BCG matrix. The BCG matrix is a matrix in which products are placed in any of 4 areas, defined by the dimensions market share and market growth. For Symbaloo, the homepage would be a cash cow, as they have quite a lot of users, but the growth has stagnated as mentioned before. Because of the lack of growth, Symbaloo is in danger of going out of business. In order to survive on the long term, Symbaloo has ventured into an entirely new branch: education. Symbaloo is looking to use their existing environment, userbase (a lot of users were educational users) and current knowledge in order to become a big party in online education environments. At the moment, the educational application is still starting up and growing fast (question mark on the BCG matrix), which requires a lot of investments. These investments were funded by the earnings of the homepage. (BCG, 2014)

The BCG matrix

Symbaloo nowadays offers two unique propositions to the educational world. The educational product (http://www.lessonplans.symbaloo.com) offers crowdsourced content creation in the form of lesson plans, which become available online. These lessonplans are about a single subject, i.e. Napoleon, Vulcanism, or Microsoft PowerPoint, and are created and used by the teachers themselves. The lessonplans are crowdsourced and marketed as such, which according to Nishikawa et al. (2017) increased its performance. Besides that, there is also the customizability. Symbaloo sells packages to schools, which allow them to fully integrate created lesson plans and other learning environments into their own single Symbaloo page. In other words, Symbaloo creates a personalized product for each different customer, which has proven to be very valuable to schools and school communities all around the world.

The story of Symbaloo includes both success and failure. Where the original product and their original value have been mostly deprecated, the expertise and developed environment have remained very relevant in the value that Symbaloo offers to their customers nowadays. Customizability and crowdsourced content creation are the two pillars on which Symbaloo continues to thrive nowadays. The company is one of the many examples that have shown the importance of customer centricity nowadays and its effects on the fate of companies.

Sources:

Aguirre, E., Mahr, D., Grewal, D., de Ruyter, K. and Wetzels, M. (2015). Unraveling the personalization paradox: The effect of information collection and trust-building strategies on online advertisement effectiveness. Journal of Retailing, 91(1), 34-49.

Boston consulting group. (2014). BCG Classics revisited: The growth share matrix. Retrieved from https://www.bcg.com/publications/2014/growth-share-matrix-bcg-classics-revisited.aspx

Nishikawa, H., Schreier, M., Fuchs, C. and Ogawa, S. (2017). The value of marketing crowdsourced new products as such: Evidence from two randomized field experiments. Journal of Marketing Research, 54(4), pp.525-539.

Prensky, M. (2001). Digital Natives, Digital Immigrants. On the Horizon,  NCB University Press, 9 (5), October 2001.

Symbaloo, (2019). What is Symbaloo? Retrieved from https://en.help.symbaloo.com/portal/kb/articles/what-is-symbaloo-22-2-2018

Wang, W., Xu, J. and Wang, M. (2018). Effects of Recommendation Neutrality and Sponsorship Disclosure on Trust vs. Distrust in Online Recommendation Agents: Moderating Role of Explanations for Organic Recommendations. Management Science, 64 (11), 5198-5219.

Note: most of the information about Symbaloo, their business model, history and way of working is based on my experience of working there (2017), of which there is no online source available.

Written by: Oskar Sabel, 414014os

Over the past twenty years or so the media have frequently carried reports about population aging. According to World Health Organization, the number of people age 60-and-over will rise to 2.1. billion in 2030, which translates into one fifth of the global population being in the retirement age. It goes without saying that this trend raises many issues, such as a significant increase of health or public and private pension costs. However, there is a silver lining to this phenomenon: older people are on average healthier than in past generations and especially in the developed countries, economic growth and accumulation of wealth have created a generation of elderly that is wealthier and more willing to spend money than ever before. As a result, the demographical trend has turned out to be a boon for business, creating an attractive, profitable customer segment. Companies who acknowledge that older people have slightly different consumer needs resulting from physiological changes connected to ageing, such as changes in eyesight, hearing, mobility and dexterity, can benefit from an access to a vast customer group. This attention shift is not entirely novel, and has already been recognized by some companies, especially in the financial and healthcare industries. What is new is that firms currently targeting this market have now started to leverage the most innovative technologies that allow them to personalize their offer and encourage their customers to co-create the products. One of the most interesting examples of innovative business ideas targeted at elderly is virtual tourism offered by Rendever.

Business model
Rendever is a company that leverages virtual reality technology to create a virtual journey experience by using algorithms that convert 360 panoramic photos and videos. The firm’s offer is a subscription-based service for individuals and facilities and is designed specifically for elderly. The virtual reality headset allows older adults to overcome mobility difficulties and virtually travel to a myriad of places in the world. The firm’s offer includes various touristic spots destinations, such as Machu Picchu, but also other ways of entertainment such as concerts, historical tours or architectural exhibits. Apart from the company’s existing virtual tourism destinations offer, Rendever also provides a service of a personalized content. This includes recreating spots of sentimental value such as childhood homes or wedding locations and converting photographs of family members, but also capturing a family event on camera that is later converted to a virtual reality experience. Finally, the Rendever wearable devices can be synchronized with other headsets, allowing users to virtually travel together.

Apart from the entertainment aspect, the company puts an emphasis on health benefits of using virtual reality. As research shows, leveraging this technology can serve as a distraction from pain, which is especially vital for seniors, many of whom have to deal with chronic pain and painkiller medication side-effects. For this reason, VR can be used during exercises or rehabilitation. Moreover, using virtual reality helps delaying the progress of dementia, stimulating the brain and reactivating neuropathways. In such case of cognitive decline or memory losses, as a part of reminiscence therapy, the firm offers individualized packages created from images of family members and meaningful locations from the person’s life.

Efficiency criteria
Both customers and the company profit from the product, therefore the joint profitability criterion is met. Elderly people, who due to mobility difficulties cannot commute, can overcome this barrier by travelling virtually – whether to far-off touristic destinations or places of sentimental value. The virtual technology helps them to avoid isolation that tends to increase especially when an older person needs to be transferred to an assisted living community, but also when he still lives at home but due to his age is not as dexterous as before. Customers of Rendever profit from goods and services tailored to their needs: the personalized offer helps them reconnect with family members and virtually attend events they would not be able to travel to. Furthermore, Rendever technology serves not only as an entertainment and an educational mean, but may also facilitate building new relationships through allowing users to virtually travel with others, therefore fulfilling their social needs. The health aspect is also of paramount importance, as using virtual reality may delay the diminishing quality of life due to memory and cognitive losses.
The company, on the other hand, gains access to two market segments. First, it can target a profitable and an increasingly larger group of elderly directly through their individual offer. Second, it can leverage a B2B business model. Marketing to elder care market and health care segment opens up a potentially vast revenue stream. As geriatric population increases, the number of elderly people suffering from chronic diseases such as dementia or Alzheimer rises. As a result, the senior care industry that encompasses elderly care or memory care facilities and assisted living communities has already reached 400 billion dollars of an annual revenue and is expected to grow at a significant pace. The company could also cooperate with the public health sector which struggles with providing care to an increasing number of seniors.
Furthermore, even though the company has to invest into costly advanced technology and production of wearable devices, a subscription-based business model allows it to reduce fixed costs. The manufacturing cost is also expected to decrease as virtual reality gear is becoming more popular and commonly used. Furthermore, the firm’s personalized offer creates an additional revenue stream and increases switching costs that customers may experience, as moving to a competitive product is connected to a loss of the personalized content.

Limitations
There are two significant obstacles that the company may face in the future. Firstly, some of the elderly have an anti-technology views and can oppose using virtual reality technology. As a result, convincing assisted living communities to partner with Rendever may meet with challenges. Secondly, despite the fact that virtual reality technology may help sooth isolation in the short term, there is no guarantee that it would be able to still cheer elderly up as they get used to it. And while seeing family and friends in the virtual reality may ease the loneliness for some time, even an advanced technology cannot replace a real, human contact. In order for the company to overcome these barriers, an awareness about what virtual reality is, what are its benefits for elderly and limitations, needs to be built. Only then will Rendever be able to expand its reach and become profitable in the long term.

Sources:
Bruun-Pedersen J.R., Serafin S., Kofoed L.B. (2015). Simulating Nature for Elderly Users – A Design Approach for Recreational Virtual Environments. 2015 IEEE International Conference on Computer and Information Technology. doi: 10.1109/CIT/IUCC/DASC/PICOM.2015.235.
Irving P. (2018). Aging Populations: A Blessing For Business. Forbes. Retrieved 13th February 2019 from https://www.forbes.com/sites/nextavenue/2018/02/23/aging-populations-a-blessing-for-business/#1b5bb47b7a77.
Laupp J. (2017). 7 Innovative Technologies for Older Adults. Retrieved 13th February 2019 from https://www.allegroliving.com/blog/7-innovative-technologies-for-older-adults/.
Mass Challenge Health Tech. (2018). Reconnecting the Elderly with the Joys of Everyday Life through Virtual Reality. Retrieved 13th February 2019 from https://medium.com/@MassChallengeHT/reconnecting-the-elderly-with-the-joys-of-everyday-life-through-virtual-reality-277bf957483e.
Ward P. (2017). Virtual Reality Is Helping Elderly People Explore the World. Retrieved 13th February 2019 from https://theculturetrip.com/north-america/usa/new-york/articles/virtual-reality-is-helping-elderly-people-explore-the-world//
Wolf Williams R. (2017). How Virtual Reality Helps Older Adults. Forbes. Retrieved 13th February 2019 from https://www.forbes.com/sites/nextavenue/2017/03/14/how-virtual-reality-helps-older-adults/#2e844ed844e2.