I think user created content is a must for high margins in the businesses of the future. The perfect example of this is threadless.com. They’re essentially a t-shirt company that allows their users to design, vote on and buy t-shirts. Sounds like a simple business, but it’s brilliant.
Since consumers are voting on the t-shirts, you know which ones will be popular, ensuring everything sells out. The designers get a modest $2,500 if their shirt is chosen and they even get people to send in pictures of themselves so they don’t need to hire models (they’ll give you a $1.50 credit on your next purchase per picture). They don’t spend any money on external advertising, since the designers word of mouth brings in people much more effectively.
This all leads to a growing business that made a profit of $6 million on $18 million in sales. Margins that would make most companies the envy of their competitors. If you can create a company that has its consumers: create, advertise and sell your wares, you’ll be in the money before you know it.
-Craig Sharkton
5 responses so far ↓
1 Matt Hanson // Jun 27, 2008 at 10:00 am
Good writing. Keep up the good work. I just added your RSS feed my Google News Reader..
Matt Hanson
2 Netflix - A Revolutionary Business Model // Jul 20, 2008 at 3:24 am
[...] great business model can make the business. For another great one check out our Threadless.com [...]
3 Starting a Car Wash - Is it a Good Business? // Aug 3, 2008 at 6:27 am
[...] And since your customers won’t travel far you’ll need to dish out enough for a great location. In fact that’s the number one cost of a car wash, the dirt underneath. Overall, I’d say they’re an okay businss, but there is lots of competition, you can only reach the customers within a few miles and it costs a heck of a lot to get started. I’d much rather leverage an innovative business model rather than my bankroll and pursue something similar to Threadless.com (check out our post on threadless.com). [...]
4 jack // Jul 9, 2009 at 1:59 pm
your facts are incorrect sir…
5 marthafines // Dec 24, 2009 at 8:59 pm
Merry Christmas to all… and to all a good night.
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