Business Development · Entrepreneurship

Which business model is suitable for my idea?

Abdelaziz SLIMANI Civil engineer student and young entrepreneur

Last updated on May 17th, 2018

I have a business idea, it's about a mobile app for deals and promotions.

It informs the user about good deals, promotions and hot offers in local markets, restaurants ... in his area using a map and from online stores too. The app is equipped with a virtual assistant which helps you sieze the best opportunities according to your budget and what you prefer.

What do you think about the idea and what 's the best way to monetize this business ?

Alexandre Azevedo Founder of The Traction Stage Blog & Podcast

May 15th, 2018

Hi, Abdelaziz!

Firstly, it is important to understand what differentiates your idea from other promotions apps that are already running in the market. Is it the intelligent assistant? Does it provide customers better offers? How much savings on average may the consumer consider? Or maybe it provides an advantage for stores? They'll get more customers? Or more qualified leads? Only when your value proposition advantage is clear enough, I would recommend you a business model to follow.

For example, If you provide significant better offers than your competitors, you may design a business model around this advantage. However, if it doesn't relate to better discounts for consumers, but getting more qualified leads for stores, maybe you could see more of your revenue coming from these stores.

Wish you success!

Alex



Dane Madsen Organizational and Operational Strategy Consultant

May 15th, 2018

You also need to take into account high cart abandonment, especially in mobile. If you find a compelling deal, but the seller is poorly structured in their checkout processes, you may be frustrating your users and you both. It will not be the seller's reputation on the line, it will be yours.

Alyssa Kwan Co-Founder and CTO of Infallisys, "Data Team in a Box"

May 17th, 2018

@Yi Li. Yes, that was @Dane Madsen's point. "Zero consideration" means they sold for so little money it was considered immaterial from an accounting perspective. After raising $900MM in venture funding, it was an absolute failure.


To answer the original question - the key is the intelligent assistant. Anyone can use a partnership force (like LivingSocial did) to get businesses to offer deals. The problem is the relevance.


You have to understand consumer psychology - getting them to buy something means getting them to deviate from their routine. That's really hard. There's a reason why, at least in the USA, you get flooded with advertisements when you physically move homes - your routines are disrupted, you're forming new ones, and any business that can embed themselves in your new routine stays there for years.


As for the tech, I don't know your background. I assume you're non-technical and non-scientific, as anyone who just throws terms like "intelligent assistant" around as if you can just hire 2 or 3 PhDs and get one in 3-6 months must be a business person. (Can you tell I'm a bitter engineer?) The fact is that, from a data science perspective, you can't gather enough raw data about consumer preferences and how they relate to time-windowed decision making to build a predictive model that doesn't just produce junk mail. This is why LivingSocial failed. They tried. They had the PhDs. They couldn't get good data to model upon. So they just became a mailing list for discounts - and as @Yi Li pointed out, bargain hunters aren't loyal; they optimize for price alone.


So the question is - what is the empirical, statistically valid, scientific research that you have done that you can produce an intelligent agent that can offer non-discount based relevance? That's the IP upon which you found this business.

Yi Li Mechanical engineer with programming experience

May 16th, 2018

Sounds very much like LivingSocial. You could look to them for ideas. They were very hot a few years ago, but have been struggling a bit, due to businesses not seeing repeating customers after the intial discounts, so they’re being reluctant to contiune offering deals.

Dane Madsen Organizational and Operational Strategy Consultant

May 16th, 2018

@Yi - Living Social was acquired by Groupon about 18 months ago for zero consideration. Living Social had raised over $900 mm in venture funding.

Yi Li Mechanical engineer with programming experience

May 17th, 2018

Dane, yes. But it used to be valued at $5-6 billion at its peak, with 4,500 employees. So it's fair to say that they've had some struggle.

Dane Madsen Organizational and Operational Strategy Consultant

May 17th, 2018

@Alyssa Kwan - That was the most insightful and well-framed response in this thread. You hit exactly on the issues with building technology without real marketing depth. Marketing is not about advertising - it is about the issues you raised prior to even thinking about a business. Solving a problem for yourself is not how great companies are built.