A Wicked business model

Driving mundane hirecars around the South-Western US over the past month, sharing the roads with behemoth Winnebagos, and staying in equally uninspired motels all reminded me of an enterprise and business model I’ve been meaning to write up on this Blog for a good six months at least.

Strategy is the search for competitive advantage – offering a product that attracts and retains customers in a cost-effective fashion. The folks at Wicked Campers appear to do a great job on all fronts.

For those unfamiliar with this product, just head anywhere touristy and remote in Australia/New Zealand (and increasingly beyond) and you will find them. This mob hire out (and also sell) very basic campervans to the backpacker crowd. The campervans are converted work vans that have been fitted with a very efficiently laid out set of beds, seating, cooker, sink etc. The most noticeable aspect of them is the spraypainted (graffiti-style) exterior and a (typically tasteless) individualised joke/catchphrase on the rear.

We drove one around far-north Queensland last year and it was great fun and extremely practical.

So let’s look at the business model:

Target market: young travellers who aren’t overly endowed with money, are looking to sleep cheaply and explore a country with few constraints. They also like something different to include in their happy snaps and some form of differentiation from the retirees and families they’re sharing the roads and campgrounds with.

Competitors: fairly staid caravan and car-hire forms on one side. Sole operators with no reputation or service/dropoff network on the other.

Substitutes: public transport (land, sea and air), tour groups, and unreliable and transaction-cost-heavy used-vehicle markets.

Value chain: a steady supply of used vans that can be converted at pretty low cost (it’s basically a bit of carpentry, plumbing and supplies from a $2 shop). Standardised repair and maintenance (their pretty much all the same sort of vans). Online booking. Sheds and carparks as distribution points (with most customers prepared to go to dodgy neighbourhoods for the bargain).

Marketing: cheeky as all hell (see this discussion for the mixed opinions of their ad campaigns), with the vans as billboards, and loads of word of mouth.

Synergies: I can’t help but think a big chunk of this was accidentally strategic. Why are the van’s spraypainted with individual designs? Because the old work vans had decals and details from previous uses and the artwork is cheaper (and more distinctive) than a more professional respray.

Market positioning: definitely low cost, and perhaps focussed low cost (they aren’t targetting the broadest possible market). But they’ve managed to build in sufficient differentiation to make sheer imitation a little more difficult (and also opening up new entrants to “copy cat” derision).

Blue ocean-ness: they have stretched the market such that new consumers (backpackers) are considering the previously slightly geriatric and daggy campervan option, and also pared back the bells and whistles that incumbents competed around (comfort/reliability/newness).

Expansion: what brought this back to my attention was firstly lamenting our lack of Wicked Van in the US, and then hours later, spotting one of them. The firm has expanded from its roots in Australia to tackle other backpacker havens. The ordering seems comparable to another Aussie backpacker-related internationaliser, Flight Centre, in that they started with the most similar countries (NZ, Canada, South Africa), and are then broader options (US and Europe (with Italy first I think). Excitingly, the firm could well be considered global now, with Bangkok and Chile about to open.

All in all, this is a viable and well-structured approach. It’ll be intriguing to see if the international expansion can work. Will the humour (if you can call it that) translate?

Tags: Australia, backpacking, business, business strategy, campervans, competitive advantage, finance, hire, International business, Internationalisation, marketing, travel, Wicked, Wicked Campers