Business Press kit
Context
To
better understand Endossa, just take a look at the market. That
is, look more closely at three realities that, when intersected,
show a discrepancy between supply and demand in retail. This gap
leaves room for us, a self named collaborative store. The three
realities are:
Retail
Dictatorship
As
Exame magazine once said, Brazil and the world are hostages to a
kind of “retail dictatorship”, a scenario where
increasingly less players control increasingly more shelf space,
which in turn is targeted by increasingly more brands. The result
is that new players have a more expensive and difficult access to
traditionally efficient points of sales.
The
Generation C
On
the other hand, there has never been such an explosion of people
and small businesses transforming ideas in products before. This
trend, which trendwathichng.com calls Generation C, means that
increasingly more people will generate more products, services
and content and will wish to commercially explore them.
Long
Tail
Thirdly,
we should remember the Long Tail phenomenon identified by Chris
Anderson, editor of Wired magazine. Long Tail indicates that the
future of business is to sell progressively less quantities of
more varied products, and not to accumulate offers and sell
massive quantities of a few product types.
Therefore,
if the Retail Dictatorship shows the difficulty of new
players to obtain shelf space, the Generation C demonstrates the
increasing number of such players and the Long Tail phenomenon
indicates the existence of demand (however non-massive) for not
easily obtained retail products, why not try and build a business
model that takes those realities into the equation, creating
value by reducing the cognitive dissonance created by putting
them together?
How does it work?
Endossa was designed to be a solution for minipreneurs, which the company endearingly translates as “mini-micro-empreendedores”. The internal definition of that goes somewhat along those lines:
Mini-Micro-Empreendedores = artisans, fashionistas, alternative designers, independent musicians, garage scientists, people who spend their time changing their ideas into reality and need help bringing them to the public.
As the company sees it, the obstacles to this type of entrepreneur are, normally, getting shelf space, administrative knowledge and access to a support network (consulting, feedback etc).
Based on these three barriers, Endossa created a service package to help those new players grow and stabilize themselves into a new business. At low cost and low risk. This solution is sustained by a tripod, composed of:
Shelf Space
Physical space, in the store, to exhibit, sell and store your products and, most importantly, your brand. Clients are left with the responsibility of having the Idea, producing it and taking the final product to the store. All processes pertaining to consumer care, from selling to managing the paying of sales taxes, are done by the company.
Software
Like any other internet application, it does not require any type of download. To access it, just login and enter your password in a computer connected to the web through your favorite browser.
The software provides the client with several administrative tools to follow up on the performance of their space and their products, in a simple and comfortable way. Initially these tools will include sales performances, inventory levels and product pricing.
The software is always evolving. New modules will be added in time, depending on the needs identified by the users.
Community
A small but focused community where the client can find support for any undertaking. Starting with the sales personnel, who know the products, and free the designers from actually having to be in the store and make sales. In the future, the company will add new consulting services to simplify the life of our clients.
Moreover, all brands in the store (and even brands which have never been nor will ever be in it) can create a website profile. This profile will work as a communication point between the brand and its target market and will serve as the basis for new website functions to be created in time (Forums? Wikis? You name it).
The Endossa service pack is made available to the mini-micro-entrepreneur and renewable every 4 weeks. The prices range from R$80 to R$650 depending on size and location of their space in the store.
The adopted pricing system makes it possible to avoid previous judgement of products so that virtually anybody can rent some space, regardless of their offered goods. The traditional business model uses a proprietary filter (by consignation of chosen products, for example). But, by itself, our model would create a store that would offer an unfocused product mix and, worse yet, offer no quality filters whatsoever.
Along comes the mechanism of Every Purchase is an Endorsement
The mechanism proposes to solve these questions in a less authoritarian way. It offers an alternative to proprietary filters which uses the wisdom of the crowds and also guarantees equal opportunity to several products and sales strategies.
Its workings are very simple: at the end of every contracted period the sales from a particular space (income) are compared to their price (rent). If, after a determined number of consecutive contracts, sales are less than a determined proportion of the rent value, the brand cannot renew its contract for the next period.
This mechanism has several advantages:
The store self-segments.
Contrary to proprietary filtering systems, at Endossa the consumers will, in time, adjust the product mix to their expectations. It is possible to argue that this inevitably happens in traditional retail, but consider three factors. First, the adjusting mechanism at Endossa is impartial and publicly known, which means the consumer can see it in action more effectively. Second, since costs and risks associated with Endossa are lower it could mean a higher level of experimentation and, therefore, a shorter response time. Third, since no one is selecting the vendors that may rent space, the store is not subject to any bias or myopia, every product starts with the same set of possibilities.
The mechanism generates commitment from the consumer.
Every Purchase is an endorsement
The product mix keeps changing.
Thanks to the collaborative filtering, the products sold at Endossa are constantly under evaluation by our consumers. This makes Endossa somewhat of a cool-hunting machine, where supply should follow demand very closely.
Additional Angles
Translation of the Web 2.0 Spirit to the off-line world.
In many aspects Endossa may be seen as a Web 2.0 business. And that is not due only to the fact that its website is user-content based. Endossa may be considered 2.0 because, in essence, it is a store built around content and the participation of all players involved. Moreover, at the core of Endossa there is the belief that the barrier between the on-line and off-line worlds is coming apart. As a result the store was created so that both experiences can come together, interact and improve each other continuously. Therefore Endossa can be understood both as a tool to provide content and as a tool to filter and rank content. Only in this case the content is physical instead of digital.
An experiment in self-segmentation and collaborative filtering.
Endossa may also be explained as an experiment which challenges some incontestable truths in business. Although its basic appeal may be seen as somewhat interesting by some consumers, the lack of control over product characteristics and values indicates a simplistic segmentation effort.
The company believes, however, that its collaborative filtering mechanism not only solves this issue, but also promotes self-segmentation of the store.
In a few words, the segmentation process happens in a feedback game between minipreneurs and their consumers with the store working as a neutral platform which interferes only by defining the rules, not playing the game.
Almost a “Cool Hunting machine”.
Endossa may be used as a marketing research machine. More specifically a platform to perform “Wet-Tests”, i.e. to find out how much a consumer would actually pay for a new product.
Its eclectic array of products and low entry barriers combined with low entry risk make it a perfect site for such a purpose.
Moreover, the filtering mechanism and the tangibility of the product filtering guarantee consumer opinion is translated in the product mix presented by the store.