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.

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).

The apparel/clothing market in India runs into billions of dollar, nearly 30 billion annually. The big brands segment that accounts for just 5% share of this overall pie, attracts the most attention. Its share is likely to grow several times as more Indians move into urban areas and the middle class in India aspires for more. (Aspirations- as I had written in my last column and quite obviously so- is a defining force in Indian commerce). The premium apparel segment corners good margins of around 40%.

There are a number of players within this space with different price points and positioning. But the segment is still markedly different than the unorganized, non-premium segment which jostles for decent margins competing with the low cost imports from the Chinese and the South East Asian garment manufacturers. Sundry markets in India with rows and rows of garments shop selling garments at only a fraction of their branded counterparts are very popular. But the branded segment has the power of brand and design on its side. The consumers buying in this segment have graduated higher up on the Maslow’s hierarchy, and don’t see apparels as mere commodities anymore. They have come to experience their clothing as an expression of their individuality. Both brand and design address this need.

Brands are expensive to build though. Investing in brand advertising & communications, integrating the physical supply chain, renting & running stores at high rents are cash hungry operations suited for market players with deep pockets. Therefore brand ain’t something that small, new entrants could hope to build quickly unless they have some innovation hidden up their sleeves.

One emerging apparel and accessory firm in India – Inkfruit – has taken up the route of leveraging great designs in order to break into higher margins. Overtime good performance on design converts into brand. There are a number of t-shirt retailers in India who are experimenting with great contemporary designs to attract the young crowds. Inkfruit has gone ahead and adopted a co-creation model and democratized its design process. They’re crowdsourcing their design process, similar to the likes of Threadless.

From the beginning their business model has been focused on getting their ‘designs’ right. In this process, Infkfruit’s business model has gradually evolved into a more intensive co-creation model. Inkfruit currently holds ‘always on’ design contests for the community. Designers and freelancers can submit their designs which are open for general voting. Designs that get the most votes in 90 days, are selected for production and retail sales. The designers get prize money and recognition as creators of the designs, and perhaps the satisfaction of watching their design being worn by people.

Inkfruit initially began by holding design contest in design schools and college campuses. However they quickly realised that such captive design contests restricted participation. A lot of good designers couldn’t participate in such a format. Also the format was not an ‘always on’ contest i.e. it was held at different places intermittently and neither it was easily scalable. Therefore Inkfruit moved towards an online around-the-clock contest format. This ensured that designers from far flung areas could also participate and bring in more designs. A centralised contest brings in more efficiency too. More participation in the voting process by a larger online community also helps Inkfruit in getting their ‘designs’ right. Holding online contests costs less than holding contests offline and the whole co-creation process is also integrated with the online shopping platform.

But beyond the online platform, it would be naïve to assume that physical back end – the supply chains- could be any less efficient than the digital front end in order to sustain. Inkfruit’s brick and mortar supply chain- the suppliers & retailers – plays an equally important role. Inkfruit had particular difficulties in sorting out their deals with the suppliers and retailers in the initial days due to their low volumes.

As Kashyap Dalal, founder-CEO of Inkfruit explained to me that during their interactions with the t-shirt printers, they realise that there is always a fixed cost and a variable cost of printing any design. The fixed cost consists of making the dyes used in printing the t-shirts. When the volumes are low, the fixed cost is a major component and therefore it is not profitable for suppliers to supply low volumes of t-shirts. In order to solve this situation, Inkfruit cut a deal wherein Inkfruit paid a fixed price, to cover the fixed costs of the manufacture, and a variable price. Overtime, with their volumes improving, they switched to the conventional system.

There were similar problems at the retailer’s end. Retailers were doubtful about how long Inkfruit would continue and if Inkfruit would be able to bring in sufficient sales. Inkfruit again provided the retailers a minimum sales guarantee deal wherein Inkfruit will compensate the retailers for any sales less than the agreed minimum target. However Inkfruit received warm response from customers and they never really had to compensate any retailer. Even in cases where they did not achieve targeted sales initially, the retailers were happy to continue their relationship and did not ask for compensation. The key as Navneet Rai, Cofounder Inkfruit explained lies in building trust with the retailers. In fact much more than the ‘minimum sales guarantee schemes’ it was the genuine commitment that Inkfruit brought to its relationship with suppliers that kept the Inkfruit’s boat steady with the retailers right through its journey. Since those early days with just two employees, today Inkfruit has grown into a team of 75 with revenues of two million dollars and growing.

Over and above the smart handling of their supply chain, the stage at which inkfruit creates most value in its business model is the co-creation stage itself. Getting the supply chain right is cool but getting the design right is essential; So much more when that’s the only moat between you and the low cost competitors.

Young people have the brightest and most creative ideas. No doubt about that. As such we are very pleased to have the opportunity to give several lectures and workshops to creative youngsters this year. Two weeks ago we were invited at the Technical University of Eindhoven (NL), and yesterday we gave our second workshop at the Antwerp Management School (BE). We asked the students at AMS to think of new and innovative business ideas to make money with chocolate. So what did they come up with?

1. Men-only Chocolate with Vending Experience: Chocolate bars branded for men with specific tastes (f.e. beer taste), sold through vending machines that throw out the bars so men have to catch it. There’s certainly a lot of potential in bringing more experience to vending machines. Have a look at the Friendly Vending of Guus Baggermans as another (student) example.
2. Chocolate Toys:  A lot of ideas were built around chocolate toys for children, ranging from Chocolate Lego Blocks to Chocolate Plasticine. Kids could build their own structure with it, or eat it of course. :)
3. Chocolate Wellness: Image yourself taking a bath in chocolate. Totally emerged in the flavors, but without the negative side effects. (Read: getting fat). The product could be marketed in the form of bath salt.
4. Let your kids design the dessert: A Bob the Builder-kit would give children the opportunity to ‘design’ mom’s dessert. Nice family experience!
5. Ready-made desserts by Star Chefs: As people want convenience as well as quality, premium ready-made desserts could be developed and marketed by Star Chefs. Distribution could go via traditional supermarkets – at premium price – or through home delivery.
6. Recipe book & community: Offer chocolate with recipe books to make starters and main dishes with chocolate, in addition to desserts. And start a community where people can share their own recipes.
7. CreateYourChocolate.com: On this platform you can make your own chocolate creation or ‘Creachoc’. CreateYourChocolate.com would partner with DHL for distribution and with Callebaut for their great Belgian chocolate. MyMuesli.com is a similar customization venture that shows that it can work.
8. A reason for…: One of the most inspiring ideas for me was the nice marketing approach by the young lady Candide. Women feel guilty for eating chocolate, a problem that needs to be tackled. Her solution was a brand called ‘A reason for…’, boxes of chocolates divided in separate compartments. On top of each compartment a simple reason (to eat the chocolate) is printed.  I cleaned (almost) the whole house, I’m having a bad hair day, I ran …km today, and so on. No need to feel guilty, you deserve it! A simply approach, but it would work!

Of course some of these ideas already exist or may not be fully realistic, but we saw some inspiring presentations yesterday. Congrats to the students!

You could say these companies take their bet on a successful variant of a razor-blade model, in which one free service boosts the sales of a secondary product. HP and Yahoo fail at the executional level though. Privacy issues asides, people will not be eager to allow companies to print ads, considering the fact that HP print ink is nearly twice as expensive as human blood. There is a lot to win for the news and content providers, the advertisers and HP; but their is no value for the consumer. This is clearly an old media business model by HP, struggling to get a grip on this ‘new media thing’ they didn’t understand yet.

Similar business systems can be found in some gift certificate models. As always many players are involved which could make it hard to manage. But in this case, everything is fully automated. This makes a huge difference. Wraply didn’t only take away the hassle for its clients, but also for itself by using this model. Hooray!