How do you stand out in the crowd when all competitors do the same thing? How do you provide a unique benefit that no other can offer? This seems an illusionary quest. And yet, Priceminister reveals that it is possible. This company has taken advantage of the e-commerce market disruption. It has created an innovative benefit for its clients, putting itself above standards. Judging by its results, it has played better in the market disruption than a lot of other protagonists. What is their secret in reaching this objective ? The answer is observing clients' frustrations.
Priceminister is an online buying and selling site for new and second hand products. The corporation was created in the year 2000, a very inauspicious time, being in the middle of the internet bubble collapse. Nevertheless in 2006 the business is doing very well. It handles 20,000 transactions in France per day, with a 100% growth in 2004 and 2005. At this pace, the business should outmatch E-Bay soon. Priceminister is one of the few able to create a new business in electronic commerce and earn loyalty from customers, while many others have not survived the new economy's dream.
The key to success resides in a major innovation in value proposition towards the client. Priceminister has created two unique benefits that are unequalled today by its competitors. The first benefit is the trust instilled between individuals during transactions of second-hand equipment. The second benefit is the precise description of cultural products (books, CDs, films/movies) of which variety is almost infinite. Each product on sale is described as precisely as if new. How did the founders of PriceMinister come up with these ideas?
The inspiration came by observing the frustration clients felt with other solutions. Let’s take the example of a web surfer who wishes to buy a product on line, without going through the misfortunes of auctioning. He can buy a new product using a traditional online buying/commercial site, such as FNAC.com or Rue-du-Commerce. The products are perfectly classified with well defined characteristics. The site guarantees the buyer’s satisfaction: if the client is not satisfied, he can send the product back and is refunded. However, the site does not have fulfil all expectations. Perhaps the buyer wants to groove on the sound of Charles Aznavour’s first songs, whose album is not in stock at the store. FNAC.com's catalogue will not include the desired product.
Or perhaps he wants to acquire a second-hand DVD player in order to enliven his rainy afternoons in his country house. To him, FNAC.com's prices seem too expensive. Our internet user can then try online classified ads. This allows a contact between a great number of sellers and buyers: the choice is large with appealing good deals.
But the buyer embarks on a journey riddled with traps. The ad describing the product is incomplete, maybe even erroneous: he isn’t sure he’s ordering the right product. He makes contact with a seller he does not know: and what if the stranger isn’t honest? If he is not satisfied with the product he receives, he has little resort . It is a risked transaction and he can pray god that it will not go amiss.
Priceminister has defined its value proposition by addressing clients' frustrations. Why not offer the best of two worlds: FNAC.com's high quality service and/combined with the diverse low prices of auctioning? Its CEO, Pierre Kosciusko-Morizet explains: "We have designed our service to equal the performance of online e-commerce sites. For each of our transactions we act as a trusted third party between the buyer and seller. We guarantee that the seller will be paid.
If the buyer is not satisfied, he can send us the product and is refunded. We put at the seller's disposition a gigantic data base with products' characteristics. When they put an item on sale, all they need to do is enter its bar code and its pre-registered technical information is activated. This allows the buyer to be completely reassured on the product he orders."
By designing such a service, PriceMinister has created a new market: the company targets a new segment made of unsatisfied clients of e-commerce sites and disappointed users of online classified ads. It’s the emergence of a new market that explains the company's regular growth.
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