Over the coming weeks I intend to reacquaint you folks with what I’m been up to in terms of research over the past couple of years (yes, the blog had been moribund for that long!).
One project I commenced while overseas earlier this year looks at the nature of collaboration in the global craft beer scene. Here’s a blog post over at a beer site where I talk through our initial findings.
This interview with Travelfish founder offers some nice insights for those of you/us thinking that building a career around lying on a South-Eastern Asian beach would sure beat winter in Melbourne (feel free to substitute your wet and windy hometown here).
Stuart McDonald certainly seems to have built a nice life of running an informative travel website for several prominent countries north of Australia.
I presume many of his site visitors (the folks who are providing the click through revenue) come from down under and other Western nations. But as the interaction is web-based the visitors don’t really care where he is.
His suppliers (i.e. the content providers) and advertisers/clients (the hotels, travel companies etc) are in the six countries his site covers. He has made the very judicious decision to base himself closer to these folk. This reduces his overheads dramatically (as cost of living is so much lower) and makes his revenue requirements much lower. He presumably can also deal with any dramas much more quickly (espcially if they require a physical presence) then if he was sitting in an office in Sydney or Melbourne.
There are other aspects of strategic importance here (such as the decision to focus on a regional niche, the possibility of considerable early mover advantages from network effects, and the scope to extend the model to other locales users identify).
It sounds like a pretty cosy life. Now, can someone think of a version for the rest of us to pursue? 🙂
Good strategy oftens requires undoing old habits and embracing new. Firms who think outside the industry norm can often find themselves at a better place competitively. External factors that look like threats might actually be opportunities.
Take the current dramas in the Melbourne live music scene. In the past week two long-running pub venues have hit the newspages with the tales of woe. First, the Tote and now the Arthouse, have announced they will close their doors to bands and music fans, in the face on recently imposed laws regarding security requirements and opening hours.
Here’s a summary:
“The Arthouse’s manager, Melanie Bodiam, said Liquor Licensing Victoria had given the venue two options: close at 1am instead of 3am, or stay open until 3am at a reduced capacity of 90, instead of 300. She said both options were financially unworkable.
”Once our bands finish playing, musicians and patrons want to sit around, have a beer and a chat,” she said. ”We don’t want to have to usher them straight out the door.””
Now I have been a big gig-attendee over the years and love the sweaty confines of said venues (and numerous others), but it strikes me that there is a real opportunity to respond in a way that will be ‘punter-friendly’: start the bands earlier. Have the headline act on by 9.30. That way you can still get the post-gig drinking bucks, while potentially also tapping into the come straight afterwork and have a meal beforehand market. It works in UK extremely well.
It is too easy to get stuck in the well-worn groove of the firms/products around you. But when faced with a challenge, think beyond the norm. You might find there is a much bigger market over there…
Last week, Aussie surfwear giant Billabong announced they had entered the online retail arena via the acquisition of California-based boardsports website Swell.com.
Swell carries a wide range of brands beyond the Billabong stable. Billabong’s argues “the purchase will allow the company to take advantage of higher margins”. This is certainly logical, but it begs the question why more consumer durable producers have not gone down this path.
Firms like Billabong carry an enormous range of products that are distributed in low quantities to a very dispersed (and individually pretty inconsequential) set of bricks and mortar retailers (presumably via margin-eating middlemen wholesalers). Building a front-end in the online world could give firms a much more direct, more responsive and more lucrative customer interface. One can imagine Billabong offering exclusive and limit-edition ranges through the Swell store, and also tapping into more insightful customer preference data.
The challenge resides in the perceived channel conflict. Will other retailers feel threatened by the firm as a competitor (leading to them cutting back purchases)? While Billabong feel restricted in its pricing at Swell?
Likewise, there may be hostility from competitor brands. Will these firms still want to offer product to Swell, given Billabong will be earning a big chunk of their profits?
Billabong have done a smart thing in buying a firm with proven technology, a functioning back-end and known brand rather than going alone with such forward integration.
What are some other examples of such moves in the e-commerce space? And have they worked?
Wednesday’s presentation from the Ben & Jerry’s founders was certainly a popular event (I guess free icecream trumps the pain for many of us standing for an hour+). They told some fantastic tales of their almost accidental rise to fame and fortune.
The main message of their talk was how a business can be run in a socially responsible fashion. They offered some intriguing examples of (as they put it) “improving the quality of life in our community” without necessarily contradicting the usual modus operandi of business (i.e. pursuing customers with an attractive product).
It was great to see how they had leveraged their existing value chain and capabilities to deliver genuine social benefits.
At the supplier end they discussed their involvement with Greyston Bakery in Yonkers, New York. This bakery offers training and employment opportunities for socially-disadvantaged folks. Rather than just throwing these guys some money to keep up their good work, Ben & Jerry’s designed an ice-cream (Chocolate Fudge Brownie) using the Bakery’s output. They said this now sends around $4m worth of business the bakery’s way each year. See more on this here (including a cool video).
At the distribution end the firm has awarded a number of their retail franchises free to not-for-profits in various locations. Again, these NGOs usually offer training and employment opportunities for at-risk youth. These Partnershops look and feel like the for-profit stores, and the charities presumably seek to make surpluses in just the same fashion, equipped with the processes and expertise transferred to all franchisees.
Both of these approaches embrace the power of the firm’s core competitive advantages (designing, marketing and delivering fancy ice-cream) so as to achieve a financially and socially profitable result. It’s a great model for others to follow and adapt.
Oh, and the free Chunky Monkey Ice-cream tasted great. See a brief snippet from Jerry here.
International BS Blog 
