Happy new year everyone, 2017 is going to be great! I'm very excited about what we're doing in the new year, and I think you will be too. Before I get going, let me extend a sincere thank you to the many users who have supported us and whose advice and feedback have shaped this platform. Seriously, thank you.
First off I want to talk very briefly about long term vision. Community powered retail doesn't just mean funding inventory. We believe that people should be empowered to participate and add value wherever they can in the product chain, and be compensated for doing so. From coming up with new products, all the way to selling the finished landed goods. This was our vision when we started this company two years ago, and it is still our vision today. We have always strongly believed that making these opportunities available to more people would make the world a better place. This sounds like start-up mumbo jumbo, but it's based on the belief that more money for more people is better for the economy as a whole. The only people who would really lose would be the banks as their deposits went to find more profitable places to be.
However, all of that is contingent on people making money and I know that is not the case for everyone. We make our best efforts to recover on every co-op. We also feel betrayed and lied to by the small and medium retailers (SMRs) whom we welcomed into the community, who later turned their backs on us. Fundamentally we believed in the trust economy, and that was a mistake. We move forward with the understanding that our platform and our processes must ensure good behavior. That failures reflect poorly on us as well as the SMR that breaks trust.
Not only that, but we have found that even before people lose money, the idea of losing money is so aversive that they are turned off from what could otherwise be great opportunities. This phenomenon called loss aversion was originally demonstrated by Daniel Kahneman and has been well researched since. It is supported by the the user behavior we have observed. Based on their findings, 1 failed co-op out of 15 even at 10% each would be enough to turn off an average user. Something had to change if we hoped to achieve our vision, so this is what we’re going to do.
- 100% PO Backed co-ops only – Starting this Monday 1/30/17 (some are live now), the co-ops we launch will be 100% PO backed only. Additionally, we will receive an assignment on the PO for any co-ops we fund. This means we will take payment from the vendor (e.g. Target) and then pay the SMR and users at the same time.
- Removing PSC – For 100% PO backed co-ops you will get paid immediately when you sell a piece (FIFO still active), or paid out in full when we collect on the PO. There will no longer be a PSC to consider. In the future, this will be replaced by a variable commission the SMR can set.
- KF based communications – For these PO backed co-ops we will institute a KF update system where we will provide updates at key points in the co-op lifespan. Right now we consider these to be – (a) PO Verified (starting point) (b) Inventory funded (order placed with supplier) (c) Inventory shipped (on its way to retailer) (d) Inventory received (in payment term) (e) Complete, AR collected. In addition to those standard updates, if something happens out of the ordinary we will provide a special update at that time. Since the expected payout graphs will be functionally useless for 100% PO backed co-ops we will replace it with something that looks like the Domino's Pizza tracker but for your co-op.
- Updated Credibility Metrics – We will show what steps we have taken on each co-op as they may be slightly different as well as display some traditional credibility metrics we pull in our diligence. See here for a VERY ROUGH example of what it might look like for Guo Tai, with actual numbers.
- Concurrent Co-ops – We will allow businesses with multiple PO’s to run them through the platform provided we receive an assignment on each PO. Each co-op will be limited to 1 PO.
In the future, we will allow businesses to fund inventory that exists in 3rd party logistics warehouses, but the above changes will be much more immediate. We are 100% committed to our original mission. This is a temporary consolidation of focus in order to be more efficient with all parts of the business, from sales, to vetting, to the re-payment process. By temporarily limiting the type of co-ops, our team will be able to give everyone we are able to serve a smoother experience.
We heard from you that PO backed is the #1 metric you look for. It makes a lot of sense. The vendor qualification process to get into a major retailer is extensive, and by focusing on PO backed companies only, we can leverage their due diligence to better serve you. We can still grow quickly by focusing on these companies and allowing them to do more business on our platform.
Now, we’re currently fundraising with several conversations going on right now. We are looking at a cost of roughly $3m/12mo with the team we are putting together. If I can raise enough capital ($4.5M+) part of what I would like to do is buyout the majority of the outstanding cancelled deal flow.
Here is how you can help
1) Rate our Facebook page and leave a comment
2) Rate our TrustPilot page and leave a comment
3) Provide feedback and ask questions below
I'll be in and out of this thread throughout the weekend to answer any questions. Thanks again, and here's to a great 2017!
-Sean De Clercq
P.S. My family surprised me with a new Belgian shepherd puppy for my 30th bday. Bonus puppy pictures
tl;dr - 100% PO backed co-ops for the immediate future. I got a puppy.
edit: Added content about serving non-P.O. companies in the future.