1. tobe bm: subscription commerce + charity organizations
Insight text: "Subscription Revisited (PDF)" by Ko Younghyuk — summary.
Open market: grew the market centered on cheap prices.
Social commerce: carefully selected products sold at dramatic discounts for a limited time.
Behind it, the most important role is the MD who composes a lineup of cheap or attractive products. In short, the core is, as an intermediary, to use expertise to curate (select and combine) from many products and deliver a value greater than the sum of the individual items.
Opportunities in the brokerage model
Brokerage typically arises when the parties on both sides of a transaction find it hard or inconvenient to deal with each other directly.
Overseas express delivery or purchase-agent services are brokerage models that arise when physical contact is hard; real-estate brokerage or headhunting arises because producers and consumers are each too numerous to see each other well, making appropriate matching hard.
Subscription: receiving products and services regularly through a paid subscription. Not a new model — we've encountered it in daily life for a long time (learning subscriptions, water purifiers, milk, newspapers, etc.).
> A business model in which the producer of goods is connected directly with the subscribing customer.
Locking a customer in for a period is a foundational way to lower the switching rate to competitors and competing products in the market.
Tie in a period, and tie in appropriate rewards for staying or extending, and you secure a stable revenue base in the form of a "customer."
Home-visit sales like learning subscriptions are business-attractive precisely because they are a classic model of "regular cash coming in."
Subscription commerce
Rather than offering a single product, it bundles several products into a "gift-set box" style offering.
A company sources, under "marketing proxy," free sample products that producers have made for marketing purposes, assembles them into attractive gift boxes, then gathers consumers likely to be interested in those products and offers the sample boxes for a regular subscription fee.
By assembling rare items that are hard to find on the market, it effectively attacks niche groups with high curiosity (e.g., Foodzie).
> What the customer is connected to is not the producer of goods but a different company that plays an "intermediary role."
The final act of selling goods to the customer for money may look the same, but in this kind of business model the contact point is not the goods but the customer itself.
That is, in a model where goods are put on a shelf and customers pick them up, it is not easy for the producer to know the consumer directly — only indirectly.
But when you first secure customers and then sell goods to them, there are many more chances and ways to know the customer compared with the former.
The former can also try, but the very approach is different from birth.
Especially, subscription commerce, unlike existing open markets or social commerce, does not handle an indiscriminate range of products but specializes in a specific category, so the customers it targets can also be a clearly defined group with a clear color.
Subscription commerce is based on brokering between producers and customers with presumed high loyalty.
From the producer's side, it is more than just a sales or distribution channel — it is a marketing channel and a chance to focus on the product itself and see what kind of customers are loyal.
"Being able to focus on the product" matters because when producers deal directly with customers, their position as producers acts as a filter that distorts reality.
So producers are likely to see subscription commerce as an attractive channel for sample marketing, surveys, and promotional events.
From the consumer's side, there is the advantage of being able to spread risk by previewing samples before buying items they can't fully evaluate.
Someone might say — isn't that also possible if companies provide samples directly? As mentioned above, trust in direct provision by a company has a different color from trust in intermediary provision.
On top of that, most consumers want to compare across products from multiple companies within the same category, and if they can experience various products through a broker without great cost, they find it attractive.
Risks
In customer-satisfaction surveys, the share of complaints is reportedly higher than in other services.
The absolute quality may be sub-par, but another factor may be that, having paid up-front, customers strongly expect correspondingly good service going forward.
Because it is a brokerage business model, you can't succeed by attacking only one side; there is a fundamental difficulty in having to attack both.
The standard playbook is to attack one side first, build references, and then use those to attack the other side — but a company without sufficient references on either side faces a really hard business.
Also, because it's an intermediary model, without achieving economies of scale, profitability and the next stage of growth are both hard.
Of course, unlike other commerce, it's basically a niche-market play, but the niche itself is fairly large, so achieving economies of scale is not an impossible goal.
Also, the revenue structure is not based on transaction fees but on membership fees and affiliate-marketing commissions, so analyzing sales and profit structure may unfold quite differently from past patterns.
In the end, the company has to feel its way forward carefully as it builds the business.
Because it is an intermediary business, the biggest risk factor is ultimately the credibility of the intermediary itself. If that breaks, it's over.
That is why the curation ability of the curator who composes the products and services is emphasized so much. How attractive a composition the broker keeps offering is the core factor deciding customer satisfaction.
But if the founder and the many people strongly loyal to the founder are not excellent curators, the company takes on another risk: what happens if the curators you worked hard to secure grow popular and leave?
That differs slightly from MDs or shopping hosts in existing commerce, but shares enough in common that it's a fully plausible scenario. Moreover, because early concentrated segments are in women's fashion/beauty and childcare — areas that are comparatively easy for other companies to copy — this risk can become quite pronounced.
To succeed with subscription commerce
What is being taken too lightly
In the process of mentoring startups, I realized this is an issue worth dealing with — so let me look at it from that angle...
Not only with subscription commerce but with every kind of business, there are many cases of mistaking a prerequisite that must still be solved and secured as one that has already been met. This is worth checking not only in startups but in existing companies too, when their business isn't going right.
For subscription commerce, that prerequisite is precisely customer sign-up. There's a vast gap between "a potential customer worth getting to sign up exists" and "actually getting them to sign up," and that gap is too often underestimated.
Similarly, people often treat a signed-up customer as firmly secured. Keep in mind that they are customers who can unsubscribe and leave anytime.
We need to be faithful to the name "subscription commerce." Rather than treating it as "commerce for customers who have already subscribed," we should treat it as "a business aimed at customers who still have to be subscribed in order for commerce to happen."
What must be thought through hard and seriously
In the end, the thing to spend the most energy agonizing over is the customer. We need to continually find answers to: what do we need to attack to get a customer to sign up, and how do we keep a signed-up customer?
When I was working on the ground — building and activating an online market for financial and telecom products, which had traditionally been transacted efficiently through offline face-to-face channels — I agonized a lot. We needed to thoroughly benchmark how offline face-to-face sales channels gathered customers and kept their loyalty, and then optimize that for the online form.
The customer touchpoints of subscription commerce exist both online and offline, but offline is mainly where the delivery function operates, and the person at that touchpoint is a non-specific delivery worker with weak ties to the main player of the business — so its utility is limited. Of course, box packaging that captures the customer's heart, the display when the box is opened, and the small elements that can stir emotion — all those matter.
But we have to put far more care into grasping and responding to customer behavior through the online channels, where we can communicate more actively and observe customer reactions more closely.
As for the comprehensive experience around the product, what content format (here, "content" includes everything the business can communicate with the customer about the product, not just the delivered product itself. A few companies are beginning to think about and test this.) will we use to deliver it? How will we stage the user experience (UX) of receiving something regularly so that it yields moments of emotion and surprise? Where in the service process does the customer hesitate? Where are the points of dissatisfaction and satisfaction? — all of these must be checked and thought through from the customer's viewpoint.
In any business, customers are the most important thing — but in a business predicated on sign-up, we must put extraordinary effort into properly caring for customers.
To my mentees and to the many people building businesses around subscription commerce — I wish them all much learning, growth, and success in this model, and I'll stop here.
2. English study group — for productivity
Form: translate well-known foreign magazines into Korean and post them on the site.
Use a wiki approach so multiple subscribers can edit.
Store a translation DB between English and Korean.
BM: receive translation fees. Advertising revenue. Receive support funding via the translation DB. Run it as a social-subscription.
Risks: Feasible only on the assumption that I set everything else aside and commit to English. A site or blog is needed. I have to form a study group. + I must continuously manage them. + They need a carrot. Proposals must be sent. Sales outreach to related firms is needed.
