Preferential treatment a click away
April 30, 2012
Nicci Herrera launched her business in July 2011, within three weeks she had 500 members and four competitors.
YOU may not have yet heard of s-commerce, but it has gained serious traction in the US. If that experience is anything to go by, Australia will soon follow suit.
S-commerce stands for subscription commerce. A derivative of e-commerce, in an s-commerce business model consumers pay a subscription to gain preferential access to hard-to-come-by products and services.
An early example of this type of operation in the Australian market is Lust have it! The business sends its members about five new trial-size premium beauty products each month for an annual subscription of $160, or a monthly subscription of $14.95.
Founder Nicci Herrera based her business model on that of US company Birchbox.
”I had an idea for a company but I wasn’t sure how to execute it and when I saw the US version I knew what I needed to do,” Herrera explains.
She began the business when her baby daughter was just three months old after recognising there was a gap between high-end professional products and the end consumer.
”People want to buy professional products but often they can’t justify the expense unless they know it’s going to work for them. So, giving them the chance to trial a product in their own home allows them to buy beauty products with confidence. You won’t find anything in the Lust have it! packs in the supermarket.”
The business launched in July 2011 and within three weeks Herrera had 500 members and four competitors.
But she says she had a march on the competition as she had researched her business for 11 months and as a former sales rep for a professional beauty products firm, she had the industry contacts to attract high-end brands such as Lancome, OPI nails and Dermalogica to the business.
Lust have it! is also the first investment for fledgling ”super angel” investment firm Foundry, started by Dale McCarthy, former director of corporate development at Fairfax Digital.
Angel investors are people – often friends, family or industry contacts – who tip in small amounts of seed capital for a stake in a start-up business. Super angels take a similar approach, but often lend skills to the operational side of the business as well as invest in it.
McCarthy says s-commerce, a subset of ”e-commerce 2.0”, is poised to gain real traction in the marketplace. ”E-commerce 2.0 is the next wave of online commerce,” says McCarthy. ”It is driven more by factors like push-based marketing, social-recommendation and entertainment,” she says.
As evidence McCarthy points to a rash of companies in the US that use this model. One example is ShoeDazzle, which sends members a pair of shoes each month for a subscription of $US39.95 ($A38.13).
Another is Trunk Club, which send its male subscribers a trunk of clothes selected based on their style preferences and arranged in outfits. Its customers return the clothes they do not want and keep the ones they do want.
As for the future of Lust have it! McCarthy says Foundry’s exit strategy will depend on Herrera’s wishes. ”We’re helping them to build their capability but they won’t be reliant on us in the long term.”