Data Done Right?

Earlier in the year we had covered ethical/legal issues that can come along with data storage, and how it may or may not violate a person’s privacy. I came across this article this morning, which outlines Ithaca’s new plan to take away metered parking, and to begin using LPRs, or License Plate recognition software which will allow for stricter enforcement of parking time limits. I think that this is an interesting approach, the software can recognize if the car has had five or more unpaid parking tickets. So far this is the only information that it seems that this software can recognize, other than whether or not the car has been moved within the past 2 hours, but it seems that there is potential for the software to dig up other information such as driving records and personal records as well that are tied to a person’s license. It definitely seems like an inconvenient change for the people parking their cars, for it forces you to move after two hours rather than just being able to feed a meter for more time, but it seems like the most efficient approach for the city. I will be curious to see how much more data storage comes into play as this system becomes more established.

Ithaca Parking Garage

Ithaca Parking Garage

http://www.ithaca.com/news/ithaca-embraces-parking-technology/article_97e8d0b4-c5a4-11e3-bd61-001a4bcf887a.html

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Twitter Handle Gone Wrong

Since we are talking about mobile strategies, and ways to use this for marketing, I found this article that shows how a simple hash-tag on twitter can cause unintended and very negative results. When the NYPD proposed the hash-tag #myNYPD, they intended to have people post pictures of themselves with policemen, however, this was interpreted differently among twitter users.

http://www.buzzfeed.com/ryanhatesthis/the-nypd-just-learned-a-very-valuable-lesson-about-asking-th

User Interaction Gone Wrong

User Interaction Gone Wrong

This is an example of how trends on the internet can spread very quickly, even if the results are not what was intended, and once they spread, they can be hard to control. What was intended to be a way to have citizens interact with the NYPD and show them in a positive light, but what happened was very different.

User Acquisition Tips for Mobile Marketing

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I love infographics, so naturally I was attracted to this post from Appia, a mobile user acquisition network that helps develop plans for developers, publishers and advertisers looking to attract new users for their mobile apps. The one element of this that surprised me was that users only recall branded banner ads 38% of the time. I would have expected this number to be higher, especially since banner ads have a tendency to be in a prominent position at the top of the screen, where users usually at least have to glance at it before scrolling down to the additional content. Perhaps this is because they know that it is a common place for ads to go, and they subconsciously tune them out.

Another part of this I still don’t know how I feel about is the target advertisements based on what websites the user has visited, or searches they have conducted. I like to see ads that are relevant to me, but sometimes they are not always relevant in a timely manner. For instance, I often get ads for a product that I have already purchased, off Amazon for instance, and I no longer need to be persuaded to buy the product. I think that ads like this could be more effective if one set was more of a follow up for post purchase, asking for a review or rating that would bring the buyer back to the seller or website (I don’t think technology allows sites to see whether or not things have been purchased just yet, but it’s just a thought.) This would eliminate redundancy and would foster more of a relationship between the buyer and seller.

Social Media: Serengetee

Keeping consistent with the theme of March Madness, the popular website Mashable introduced a bracket-style competition among small businesses to determine which one is “America’s Most Social Small Business,” based on elements such as social reach and engagement, brand identity and interactivity. The first round of competition looked at facebook activity, the second at twitter activity, and the third focused on visual presence on sites such as instagram and pinterest. Here’s an what the bracket for the second round looked like:

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For this case study, I will be focusing on Seregentee, a clothing company started by college students. What makes Serengetee unique is that the company travels to different regions of the world and collects fabrics and patterns native to the area. They then use these fabrics to create pocket t-shirts, backpacks, sweatshirts and other articles of clothing. When these are sold, a certain amount of the proceeds go back to the region from which the fabric was from, to a specific cause in the area. For instance, 5% of the purchase price of this patterned shirt, called Mokolo is donated to the TLC Children’s Home in South Africa. More information on the cause can be found here.

ImageCurrently, Serengetee has a strong presence on facebook, twitter, instagram and pinterest, with much of their success driven by the use of brand ambassadors. This semester, they hired around 1,000 college students from different regions of the country to participate in social media challenges, support the brand and share content on their own platforms to bolster awareness about Serengetee in return for incentives such as store credit and free merchandise.

Serengetee’s biggest following can be found on their facebook page, which hosts a little over 180,000 likes, with a nice diversity in what is being posted from week to week. Some posts highlight a cause and provide followers with more insight on the location and story behind the fabric. Other posts show the newest fabrics to be added to the Serengetee collection, and display models wearing the fabric. However, their facebook strategy is the most effective when it facilitates participation among users. With every “like” milestone (every 1,000 likes or so) they put forth a contest that encourages users to like and comment on a post in order to be entered into a raffle to win free merchandise. Serengetee also sponsors a “fan of the week” contest, where those that have ordered Serengetee products are encouraged to post pictures of themselves wearing Serengetee at locations all over the world. The winner is determined based on the number of likes each contestant gets on their own page, extending the reach of the Serengetee social presence. Almost all of the posts are unified with the use of their slogan “Wear the world. Change the World.”

Image

Image

 

Serengetee’s twitter presence is very similar to that of their facebook. Serengetee often holds “re-tweet giveaways,” where twitter users share the post on their own twitter page in order to be eligible to win merchandise. These contests are different from the facebook ones in the sense that they are sporadic, not based on specific quantitative information. With about 18,000 followers on twitter, Serengetee manages to keep up with most of the interactions facilitated by users, by re-tweeting pictures of them wearing Serengetee products, and answering any inquiries they may have about order issues or products. Serengetee also using twitter effectively to advertise flash sales they have, which usually requires users to act quickly in order to receive a special discount.

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Instagram and pinterest are the accounts that are more visually oriented, and slightly less active in terms of daily activity. The instagram account usually posts once a day, with 21,000 followers. Scrolling through Serengetee’s instagram, the posts are dominated by images of the fabric and patterns, images of the celebrity endorsers and the locations the fabric comes from. On occasion there are giveaways for merchandise, where the users are asked to re-post the image on their account with a specific hashtag, however these are much less frequent than on facebook and twitter. Finally, the pinterest account does not sponsor giveaways, but still bolsters close to 900 followers, with 26 different boards ranging from a showcase of all the fabrics, to a lineup of all the different products offered, to pictures specific to certain regions.

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ImageSerengetee presents a social B2C business that connects users through a cause, and creates a sense of community with the company as well. There are a few tactics used by Serengetee on their social media that are cohesive with the ideas of Evans’ social feedback cycle model, which is similar to the consumer decision making process. In the consumer decision making process, the consumer discovers a need and investigates different options for satisfying that need based on information provided by marketing communications outlets. After the consumer makes a purchase decision, they evaluate that purchase, form an opinion on the product, and begin to spread that opinion to others. What differentiates Evans’ model form the generic decision making model is the idea that consumers are becoming more influenced by user generated information and content such, as product reviews, and less influenced by marcom strategies. Here is a visual representation of the social feedback cycle:

Screen Shot 2014-03-25 at 9.36.22 PM

To focus back on Serengetee, their social media strategy often uses user generated content to engage other customers, build a brand image and bolster sales. The best example of this is the company sharing (facebook), re-tweeting (twitter) and uploading (instagram) pictures on the company page that users have submitted of themselves wearing Serengetee products around the world. In a way, this serves as a testimonial even though there aren’t any scripts or words, but the visuals are sufficient, for if an internet user within the same age group were to see this picture, it would likely resonate with them more so than seeing an image of a model wearing the products. The users submitting their pictures have evaluated the product, and were satisfied enough to associate their image with the company. In the context of the cycle, this then goes back to influence the consideration stage for other potential consumers.

The same idea can be applied to the fan of the week contest, where those who have purchased Serengetee post pictures of themselves on their own personal pages and compete for the most likes. After, Serengetee then shares the picture on their page. By sharing, re-tweeting and posting content that has been retrieved from personal pages rather than simply uploading the images only on the Serengetee page, there is a sense of credibility added to the testimonial provided. If a potential consumer sees that the content came from a personal page, they are less likely to think that there is a sense of false advertising produced by the company, or that the company is merely paying people to promote the brand, and this can affect their consideration stage in the cycle.

Serengetee also builds up a sense of community and engages interaction among customers with their friend referral program. If a consumer uses a certain link to get a friend to order from the website, they receive $10 credit towards Serengetee products, and the friend that was referred gets 15% off their order. This takes advantage of the idea that peer relationships are a great source of word of mouth, and provides incentives for satisfied customers to spread the word about the brand. The link can be shared on facebook, twitter, and through e-mail.

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Finally, Serengetee seeks out suggestions about the company, for instance what type of clothing they should produce next. This allows consumers to feel as if they are contributing the to company, and creates a relationship between the business and the consumer. If a potential consumer sees this, especially if Serengetee is responsive to the suggestions, they will likely feel that the company is receptive here, but also would be with questions, concerns and other comments they may have in the future.

Screen Shot 2014-03-26 at 9.11.58 PMIn terms of the social engagement process, Serengetee has achieved the highest level of engagement, collaboration, which consequently means that various users are also the levels of consumption, curation and creation. Serengetee has reached the collaboration stage because the users engage with one another, but also with the company while also generating, sharing and browsing content.

Screen Shot 2014-03-27 at 5.30.11 PM

Many of the strategies used that influence the social feedback cycle are also what contribute to the collaboration level being achieved. Serengetee creates a community among their customers, which is facilitated by users uploading pictures of themselves wearing the product, and Serengetee sharing these pictures on their own page. Interactions between users are encouraged with the Fan of the Week Contest, and the friend referral program, and interactions between the company and the customers is generated with Serengetee’s social media approaches that are responsive to customer activity and support. In addition, the usage of brand ambassadors is another way that Serengetee really connects their business with loyal customers and fans.

All in all, I think that Serengetee was a great contender for the title of America’s Most Social Small Business, and their spot in the final four was wholeheartedly earned. Wear the world, change the world!

serengetee-needs-logo-logo-design-99designs_11813268~c6f88955b31336d04b6cee7081ed9e7a78d74469_largecrop

 

 

Ethical/Legal Issues: Luxo AS v. Walt Disney

Pixar Logo

Pixar Logo

When viewers watch any Pixar film, it is likely they will recognize the endearing, hopping lamp that stumbles upon the Pixar logo and replaces the letter I. What they may not know is that this character, named Luxo, Jr. had its debut in Pixar’s first short film from 1986, which was nominated for an Oscar. Here, Luxo Jr. finds a ball to play with, which tests the patience of an older Luxo model. When the ball bursts, the elder Luxo is pleased, but this is soon eradicated when another ball, ten times larger than the last, comes along, much to Luxo Jr.’s joy. The short can be seen here.

Luxo Jr. Short Film

Luxo Jr. Short Film

This character has become iconic, and closely related to the Pixar (now Disney/Pixar) brand image. This is to the extent that a 6 foot tall animatronic replica has been installed in Walt Disney World’s Orlando Florida theme park, where it emerges throughout the day to “perform” for the visitors. Disney has also created working Luxo Jr. replicas to be sold with DVDs in a special edition bundle pack.

Luxo Jr. Animatronic

Luxo Jr. Animatronic

What viewers also may not know is that in September of 2006, the Norwegian lamp making company Luxo AS filed a complaint against Walt Disney, claiming that the use of Luxo Jr. was a trademark infringement upon one of their models, the Luxo LS desk lamp. In 1986, Disney (Pixar at the time) established an agreement with Luxo AS, where the studios were allowed to use the name Luxo in connection to the short film, and for use in the logo. Pixar creative genius John Lasseter had the Luxo LS desk lamp, which was where he got inspiration for the character from. However, Luxo AS claimed that Disney producing actual goods resembling their product, especially ones that functioned, would “cause devastating damage to Luxo and dilute the goodwill which Luxo has built up”, and was an element that was not covered by the initial agreement. They felt similarly about the animatronic replica at Walt Disney World.

Luxo Logo

Luxo Logo

Facts of the Case

  • Norwegian company Luxo AS manufactures, designs and distributes high quality lighting products. Luxo AS has sold over 25 million of its Luxo LS desk lamp models since its expansion into US markets in 1939.
  • Luxo LS lamp models have received numerous design awards as well as placement in the Museum of Modern Art‘s permanent collection. In addition, Luxo AS owns the title, rights and interest to the trade name Luxo, which is a registered trademark with the US Patent and Trademark office. This trademark includes the distinctive design “Luxo Trade Dress” pictured below:
Luxo Trade Dress

Luxo Trade Dress

  • Disney was advertising/distributing “Limited Edition Luxo Jr. Lamp Collectible Packs”, which consisted of a DVD and a small working lamp, with the name Luxo Jr. on the base, which resembled the character Luxo Jr., and thus the Luxo Trade Dress.
Collectible Pack

Collectible Pack

They also installed a new attraction at their Orlando Florida theme park in August of 2009, named “Luxo Jr.”, an animatronic replica of the lamp.

  • In the 1986 short film, and logo animations, Disney never explicitly referenced the name Luxo.
  • These lamps produced for the Disney collectible pack were determined to have been manufactured by an unknown entity, at a lesser quality than those produced by Luxo AS, contradicting the high quality standards upheld by the Norwegian company. This was thought the confuse the public, and lead them believe it was associated with Luxo AS.

Disney was charged with various trademark infringement violations, as defined under the Lanham Act. In order to have a valid case for infringement, there are three elements that must be proven:

  1. The plaintiff must demonstrate that they have a legally protected mark- Luxo AS had registered the name (Luxo), title and rights with the US Patent Office, demonstrating their ownership, which was filed in 1983.
  2. The plaintiff must have proof that they own the mark- can also be evidenced by the patent registration.
  3. The use of the mark must be similar enough to the protected mark, to the extent that it would cause confusion among buyers or retailer- The Luxo Jr. lamp was a very close representation of the actual Luxo lamp model, with the Luxo Trade Dress design
Patent Registration

Patent Registration

In November of 2009, Luxo AS withdrew the complaint against Walt Disney, however no details as to the settlement agreements were made available to the public.

I believe that the complaint was filed for a reasonable purpose, and that Luxo AS had a valid right to worry about the affect Disney’s retail endeavors would have on their business. With a focus on product quality, using stainless steel and high quality control standards, it is understandable to see how Luxo AS would not want a mass produced, plastic replica of one of their models to be associated with their goodwill and reputation. I also think that the semblance is striking enough to confuse consumers, especially since Luxo AS is not an American company, and many consumers may not know that it even exists at all. Before this assignment, I myself did not know that the character had been based off another company’s product, but I was easily able to recognize the Pixar character when I saw it.

I think that the main issue that makes me support Luxo AS’s actions is when Disney began to actually use the mark Luxo to market the bundle pack, and for a title for the theme park attraction. With mere use in the animations and logo, viewers just see a lamp and little else. However, using the mark Luxo adds a sense of identity to the character, that will more often than not cause audiences to relate the name Luxo to Pixar rather than Luxo AS. Since Luxo AS is the rightful owner of this mark, I believe that it was unethical for Disney to use it without addressing the question of whether or not it was covered in their initial agreement. It seems like they had a pretty cordial relationship prior to this, so I was surprised that Disney did not.

I would have been interested to see what was included in the settlement, and how large the damages were that were claimed by Luxo AS, for it seems like this had potential to turn out as a win-win for both companies if they chose to negotiate some terms. I feel that an easy solution to the problem of the collectible packs would be to have Luxo AS manufacture the small lamps, so they would be accredited for their work, and there would be no question of quality to confuse the consumers. The issue of the attraction in Orlando is a bit more tricky, but again, it seems that there are certain conditions that could be negotiated to create a mutual benefit for both parties.

References

“Luxo Lawsuit Settled.” Big Screen Animation. N.p., 4 Nov. 2009. Web. 20 Feb. 2014.

“Trademark Infringement.” LII / Legal Information Institute. Cornell University, n.d. Web. 20 Feb. 2014.

Free Pricing Strategy: King

Game developer King is a well known company that focuses on providing interactive entertainment for its users, which average about 92 million a day. They aim to make their games accessible at any time, anywhere and on any device, and strive to differentiate themselves from competitors: “our focus is to provide a highly engaging, differentiated entertainment experience where the combination of challenge and progress drives a sense of achievement.” (About, 2014). Additional information on the company is illustrated in their info-graphic timeline, which chronicles the high points of the company history, including the introduction of games such as Papa Pear Saga and Farm Heroes.

On April 12, 2012, King released a simple yet addicting game that has taken up residence on numerous Facebook accounts, mobile phone platforms and internet browsers. In March of 2013, it claimed the top spot for being the most popular game on Facebook, attracting 46 million users on average per month. For this case study, I am going to focus on the pricing strategies used for Candy Crush Saga.

Candy Crush Saga

Candy Crush Saga

Candy Crush Saga is a puzzle video game, where the player must swap certain pieces of “candy” on the game board in order to create rows of three of the same type of candy, including jelly beans, lozenges, chiclets, lollipops and lemon drops.

"Candy Pieces"

“Candy Pieces”

In order to swap one candy with another, they must be adjacent to one another, again with the goal of creating a set of three. Certain combinations of candy can create special effects, such as the color bomb seen above, created when 5 of the same candy are aligned, or the striped candy which eliminates the entire row it is in, allowing more candy to fall from the top of the board. In addition to the special candy combinations, the levels become increasingly more difficult as obstacles are introduced, such as obtaining a certain score within a set amount of time, or breaking through “jelly” which requires the candy to be aligned in a set of three twice in order to be taken off the board. As the player defeats each level, they move through a series of episodes, each with a new environment, set of characters and obstacles, such as Lemonade Lake or Minty Meadow. Users have 5 lives to try and pass a level, and if they fail then they must wait a certain amount of time before being able to try a level again.

candy_crush_game

This video helps to illustrate the different moves a player can make, as well as the set-up of the game.

Users can download Candy Crush Saga for free to use on their iPhone, iPad, iPod touch, android devices, Facebook accounts or Google play. As of November of 2013, Candy Crush Saga has been installed on Facebook, iOS and Android devices 500 million times, with 1/23rd of all Facebook users playing along (Hodapp, 2013). This is especially encouraged by the social aspect of the game, where players can ask their Facebook friends to give them an extra life, or a booster to help them in the game, thus increasing the spread of the game. Users have even created a wiki page that outlines the different levels, provides cheats and allows a forum for collaboration among users.

To move into the pricing strategies utilized by Candy Crush Saga, King uses the zero marginal cost approach as well as the freemium and cross subsidy strategies. Candy Crush Saga is a great example of a zero marginal cost product, for it is a completely digital product that can be distributed at no cost to King and the consumer, and is available to an extremely large audience.

Avg. Revenue Per Customer

Avg. Revenue Per User

To be more specific about the economics of this pricing strategy, Candy Crush Saga can be seen as a non-rival good, where one person playing the game would not prevent another to simultaneously play the game as well. This is usually the case with most intangible goods, and can also be seen with music downloads, or television shows, again, without presenting an additional cost to the manufacturer (Microeconomics, 2014). In addition to being a non-rival good, Candy Crush Saga is most often always a public good, meaning consumers are not excluded from gaining access to, or from having their usage restricted in any way. The only instance where users may be excluded would be if they do not have a platform to play the game on.

Rival vs. Non Rival Goods

Rival vs. Non Rival Goods

However, King generates the most revenue using the freemium, and then cross subsidy approach. Downloading Candy Crush Saga is free for users on all platforms, which gives the player access to the basic game play and features, however there are prompts throughout the game that entice the player to purchase low-price items that provide them with an advantage in the game. For instance, if a player is stuck on a certain level, they can opt to pay $0.99 to automatically advance to the next level.

In App Purchases

In App Purchases

This pay-as-you-play approach takes advantage of the idea that the players are so consumed by their drive to get to the next level, that they don’t mind spending a dollar here or there.

Upgrade Prices

Upgrade Prices

Candy Crush Saga even misleads the player at times, for example when one fails to pass a level, they are given a screen with two options, they can either choose to keep playing, or end the game. The “play on” button then flashes green attracting the attention of the player, but what many forget is that this brings them to the Candy Crush store, where they must purchase another life, or access to the next level to continue the game. Many will subconsciously, or accidentally choose this button, because of the wording and the attention it attracts.

End of Level Prompt Screen

End of Level Prompt Screen

Although it is possible to complete all the levels without paying for anything, the ability to purchase boosts throughout the game allows the player to speed up the process.

Website ThinkGaming analyzes the metrics of popular apps and mobile games, and estimates that Candy Crush Saga brings in over $750,000 daily, among close to 8,000,000 users per day (Candy Crush Saga, 2014). Candy Crush Saga has also done its fair share in topping numerous ranking charts, becoming the #1 grossing game on Facebook, and one of the top five grossing games worldwide this past year.

Rankings

Rankings

In addition, revenue has been estimated to have quadrupled to about $500 million this year. King is planning on expanding their work force as well from 400 to around 700 (Rushton, 2013) and currently holds offices all around the world including San Francisco, Stockholm and Barcelona.

Thus, the simple nature of the game easily draws in players of all levels, and the pricing strategies have worked extremely well thus far. It is rare to see advertisements for Candy Crush Saga on television or print, for there is so much popularity surrounding the social aspect of the game, as well as a substantial revenue from the in-app purchases that it would be unnecessary to dedicate funding to this. Even on the iTunes store, Candy Crush Saga has received positive reviews, and a four star average rating.

Ratings

Ratings

The choice players have to play through for free, or to expedite the game with in-app purchases is definitely a key factor in the success of the game, and can appeal to a variety of users. And even though the purchases seem minimal in price, the sheer quantity of people playing and purchasing certainly makes up for it.

Sweet!

Sweet!

 

References:

“About.” King. King, 2014. Web. 10 Feb. 2014.

“Candy Crush Saga.” Think Gaming. Think Gaming, 2014. Web. 11 Feb. 2014.

Hodapp, Eli. “Candy Crush Downloads.” Touch Arcade. N.p., 15 Nov. 2013. Web. 10 Feb. 2014.

“Microeconomics- Public Goods.” Pitt.edu. Pitt.edu, n.d. Web. 11 Feb. 2014.

Rushton, Katherine. “King Looking for Growth.” The Telegraph. Telegraph Media Group, 19 Sept. 2013. Web. 11 Feb. 2014.

Web 2.0 Case Study: Etsy

Web 2.0 represents an evolved version of the internet, which creates a much more dynamic approach to surfing the web. Instead of having web pages with little interaction available to the consumer, companies and sites that have adopted Web 2.0 allow for much more interaction, participation, feedback and information sharing. A few popular examples of this are Facebook, or Twitter, where the user can “like” pages, post comments and pictures and share things they find interesting. This isn’t limited to social media, for it can also be catered to all sorts of content ranging from customer service networks such as Yelp!, to blogs such as this one, and wiki pages. The graphic below is a visual representation of the variety of companies and services that can be categorized as Web 2.0 companies.

web2.0

Popular Web 2.0 Examples

For this case study, I chose to look at Etsy, an e-commerce website which creates a platform for users to make, buy and sell handmade or vintage items such as jewelry, artwork and housewares. Etsy is primarily used on laptops and computers, but also has apps for mobile users which gives access to all the same services and benefits.

etsy-logo

Etsy logo

Etsy utilizes highly personalized one to one marketing strategies to sell items, creating a connection between the consumer and the company. Upon logging into one’s account, Etsy displays a welcome message at the top of the screen,

Screen Shot 2014-01-26 at 1.35.53 PM

Account Login, etsy.com

Etsy keeps track of items the user has favorited and/or bought, and uses this information to suggest other items or sellers. In addition, Etsy allows the shopper to create lists of items that they are interested in, almost like  a playlist one would find within a music library. These lists are easy to access, and are saved within one’s account so they can be reached in the future.

Screen Shot 2014-01-26 at 1.18.53 PM

Item Lists

Screen Shot 2014-01-26 at 1.18.19 PM

Favorited Items

These features help to create unique offerings to each individual consumer, and allow them a degree of control over their shopping experience. In terms of personalization, Etsy offers even more within specific products themselves. For jewelry, customers can select the different material, length or color for an item. For other items, the manufacturer can personalize the product with engravings, embroidery or initials. This Tune Squad jersey for example, which is already a unique item within itself, can be customized further with sizing, player name and player number from the popular movie Space Jam.

Screen Shot 2014-01-26 at 1.38.17 PM

Customization

In terms of Wikinomics, Etsy is especially effective through utilizing the principle of acting globally. The website itself serves as a standardized platform, where artisans from all over the world are able to make, buy and sell products. This provides the consumers with access to truly unique items, created within different cultures and practices. They also employ a diverse workforce, with offices and employees all over the world. This approach is valuable because it allows Etsy to be given insight into markets, audiences and technologies from all over the world, rather than the limited scope that would be provided just from the United States. Because of this, Etsy can be seen as a sophisticated company that is open to new ideas and cultures, which will help to bolster their identity and company image.

Screen Shot 2014-01-28 at 8.45.26 PM

etsy.com

Etsy even offers users the ability to change the currency to the corresponding county, which highly emphasizes the global reach of the site, to cater to all different types of consumers and sellers.

Screen Shot 2014-01-28 at 8.41.45 PM

etsy.com

Courtesy of Etsyology.net

Courtesy of Etsyology.net

However, Etsy also can be seen as a peer network, where most of the activity is carried out by individual consumers and sellers creating and maintaining their own profiles, rather than having a hierarchy of superiors control the content and activity. The sellers are able to control their pages and customize them to what works with their products or offerings, and set up the process for purchasing and transactions. There is also informal communication through forums and blogs, which facilitates communication between the consumer and the seller and fosters a sense of community, and users can use a search tool provided on the site to find fellow “etsyins” in their area. Again, this helps to emphasize the close knit nature of the company’s mission- to sell hand crafted and unique items that haven’t been through massive scale manufacturing processes.

Finally, Etsy uses the brokerage business model to carry out day to day activities, specifically the virtual marketplace model. Since Etsy is a site for both artisans selling their goods, and consumers looking to buy, it would be considered the broker facilitating consumer to consumer transactions. Etsy makes it very easy to set up an “Etsy shop”. Information found on the website indicates that there is no initial fee to set up a shop, or join the community. Etsy charges sellers $0.20 cents to list an item on the site, and when the sale is made, Etsy collects a 3.5% transaction fee on the sale price of the item (Etsy, 2014) . The fees are accrued, and sent in a statement at the end of the month via email.  Other than that, Etsy has very little restrictions on what can be sold, how often, etc.

Currently, the Etsy site hosts over 24,000,000 listings covering 3,874 categories ranging from jewelry (the most popular, with 4,473,999 listings) to paper goods (around 904,106 listings) (Etsy Sales Statistics, 2014). With information from Etsyology.net, a site that analyzes Etsy metrics and transactions, it can be estimated that Etsy has brought in around $500 million dollars  since their inception in 2005.

Etsyology.net

Etsy sales by price, etsyology.net

With auction sites such as eBay as main competitors, Etsy has managed to maintain dominance in the area of handmade goods, with eBay’s products focusing on more hobby related activities rather than already produced items. In his breakdown of Etsy economics, Steven Carpenter has tracked increasing average sales prices (from $12.25 to $18.16) and the exponential growth of new listings, which helps to attract loyal customers (Carpenter, 2010) all achieved with a staff of about 20 employees.

Thus far, this model has been extremely successful for Etsy, as a majority of the action on the site is carried out by individual sellers. Etsy has to spend little on marketing and advertising, since this is done primarily through the sellers, and once a consumer purchases a product, they are likely to become loyal customers. Etsy is also attractive to sellers because they charge only a small percent for use of their services, as opposed to some sites who require monthly or yearly fees. The control rests in the hands of the one selling the goods, which is appealing to many small businesses or artisans. The only suggestion I would have would be to increase marketing efforts in the beginning of the calendar year to compensate for the influx of purchases around the holidays, since the site is very popular for purchasing gifts.

References

Carpenter, Steven. “TC Teardown: Etsy, It’s Crafty.” TechCrunch. N.p., 11 Sept. 2010. Web. 30 Jan. 2014.

“Overview.” Etsy Sales Statistics. N.p., n.d. Web. 30 Jan. 2014.

“Turn Your Passion Into a Business.” Etsy. N.p., n.d. Web. 30 Jan. 2014.