As new Turkish Ambassador of Board of Innovation, Erhan Sanbay will be writing about some high-achievers of Turkish digital business in his upcoming initial articles. In this first article, he’s outlining the widespread success of Yemek Sepeti from 2000 to 2011.

Yemeksepeti.com was founded in Istanbul in the beginning of the new millennium as Turkey’s first online food ordering website. Apart from the websites such as the ones of Papa John’s, Domino’s etc. and the websites of other smaller restaurants, as an independent online food ordering company, it also created the first business model globally which gives out the opportunity to order food online without paying a service fee. Now, let’s have a look at the thriving business model of yemeksepeti.com:

1. The customer selects a restaurant on yemeksepeti.com and orders food online.
2. The order is submitted by yemeksepeti.com to the restaurant automatically via fax, e-mail, or mobile applications.
3. The prepared food is handed over to the courier of the restaurant.
4. The food is delivered to the customer’s address.
5. The customer pays via cash, cheque, coupon, prepaid card, or credit/debit card. (It is also possible to pay with credit card online before delivery.)
6. Yemeksepeti.com receives commission from the charged value.

For customer acquisition and other services, member restaurants pay also a monthly fee to yemeksepeti.com. With over 5,000 member restaurants and over 1 Mio. registered users, yemeksepeti.com supplies nearly 300,000 different food choices and receives approximately 30,000 orders daily. It is currently operating in 36 cities in Turkey and Cyprus, and since 2010 it has two local brands in UAE (Foodonclick.com) and Russia (Izrestorana.ru). In addition to their online food ordering service, yemeksepeti.com also accepts orders via digital TV and all mobile applications including iPhone, Nokia, BlackBerry, and Android.

According to recent research, yemeksepeti.com makes its member restaurants achieve 10% to 50% order increase thanks to its user-friendly interface and hassle-free online order service. Obviously, it is significantly important for yemeksepeti.com that the menus of restaurants are regularly updated to ensure a continuous order flow 24/7/365. Besides, in order to assess the performance of restaurants there is a rating system in which the customers can rate and comment on speed of delivery, quality of service, and the taste of the foods.

On yemeksepeti.com customers can see the actual menu, pictures of the foods, food customization choices, order comments box, delivery areas, working hours, delivery time and period, minimum order amount, promotions, gifts, and payment method choices of each restaurant. Yemeksepeti.com customers have also the chance to get in touch with the crew for their orders and campaign information via call center, online chat, company’s blog, Facebook, and Twitter. The call center of yemeksepeti.com is known as one the fastest service units in Turkey which supports member restaurants in case of unavailability of ordered foods by bringing together the customer and the restaurant for updating the order, and most importantly, this process occurs without a delay of predefined delivery time.

According to recent analysis, the order rate of yemeksepeti.com’s visitors is 41%. This rate sounds reasonably high considering that 1% is usually taken as successful in e-commerce websites. Additionally, 2% fault rate of member restaurants can also be regarded as a very low one. Still, for the sake of service excellence, yemeksepeti.com management is determined to bring this rate closer to zero through their highly effective restaurant selection procedure and restaurant process performance system. Yemeksepeti.com, with 11 years of market experience, also offers timely regional and local market reports to its member restaurant chains and advices them on their campaign models.

It seems that, since the year 2000, yemeksepeti.com’s business model has been the first and best e-commerce model of its kind turning all everlasting offline restaurant processes into a simpler, faster, safer, and comfortable online process and making the customers save energy, time, and money in case they wouldn’t rather go out and wait for their desired food at restaurants. As mentioned above, member restaurants also benefit significantly, as they get 10% to 50% order increase. Consequently, we have here a proven “win-win-win” business model coming out of Turkey as a perfect service business case in which customers, member restaurants, and yemeksepeti.com win.

When you think of starting a new business the last option is to enter into a mature commoditized market where the margins are low and where you have to compete with big wealthy players, right? The Aje Group has proved us all wrong… there is a big opportunity if you look in the right place: the bottom of the pyramid.

Let’s start in Latin America, where Aje Group – with their flagship brand Big Cola – began their growth journey… In Latin America, wealth is not well distributed at all. Our country, Colombia, is the eight most unequal country in the world and is the most unequal country in South America (according to the GINI Index). In Colombia there is a social stratification that has 7 levels, from 0 to 6. Categories from 4 to 6 have higher purchase power and are loyal to the traditional sodas like Coke and Pepsi and some local brands, but the categories 1 to 3 are a market segment in which these drinks were not an option because of the high prices. That’s where Aje focused their business model on.

To be competitive they needed to reduce the costs as much as possible and be sure that they are going to be able to reach places no other distributor could reach. In order to reduce the costs they are building on the following strenghts:

• The flavor of their soda is proprietary so they do not have to pay royalties or import the syrup.
• They heavily invest in technology reducing the production costs.
• The distribution is outsourced, reducing distribution costs. They give the product in consignation so if the distributors do not sell the products, they do not earn money.

The key strength is their distribution model. This distribution strategy has paid off in Colombia: under their impulse the soda market has grown by 5%, and Aje now controls 10% of this market in just 5 years; a unique growth by a new company in a new market. The company is growing at an amazing rate in the developing countries, opening operations in markets as far as Vietnam.

Because they give the product in consignation, the distributors have a huge incentive to sell more and enter in new zones, because the more they the more they earn. So the interests of the company and of the distributors are completely aligned. Aje shows us how a clever change in a critical part of an industry business model may have big rewards, and how exportable a business model can be.

Like for every company the strategy and business model of the Aje Group has its strong and weak points. We have covered the strong points already, now let’s have a look at the challenges and threats associated with a company that has less direct contact with their consumers than most of the companies in the same industry. Their main challenges and threats are:

• Less insights in consumer behavior: because the Aje Group gives the product in consignation, they do not have the same knowledge of consumer behavior compared to their competitors integrated with distribution. There can be quick changes in the consumer pattern that will be unnoticed for the Aje Group but not for its competitors. This includes unsatisfied demand because the distributors do not share the information.
• Being labeled as a cheap brand: Latin America is growing faster and most of the projections say that this is going to take millions of people out of poverty. Because of its market position as a cheap alternative, customers may decide to switch to another brand as soon as they have a better economic position.
• Loss of product: because they give their product in consignation they can start to lose it because the distributor does not show up anymore. This is not the case because it is a model quite close to the micro lending system – where the repayment rates are really high, but it is a threat.
• Lack of reliability on the distribution network: again because the Aje Group does not control the distribution network, they cannot easily assure that the distribution network is reliable. This situation may drive the retailers to stop their business with the Aje Group.

The Aje Group is a highly successful global company with both innovation and cost reduction in their DNA. They have to face huge challenges in the future, but showed us all that they can solve them in an incredibly efficient way. We’ll keep an eye on the next innovations of Aje!

Guest article by Daniel de La Cuesta (Daniel.delacuesta@innotekne.com) and Camilo Serna Zamora (camilo.serna@innotekne.com).