Looking at Collaborative Commerce, it is a powerful business model that can take an emerging business and help it go mainstream. As the collaborative community grows from tens of thousands, into the hundreds of thousands, and ultimately millions and millions; how much is that kind of new customer base worth?
I don’t think it can be exactly quantified but let me give a taste with some numbers from one of the most recent companies to complete an initial public offering, Blue Apron.
In completing an IPO Blue Apron were required to divulge their numbers so that potential shareholders can make an educated investment decision. From these, now public, numbers we can see the massive costs for traditional marketing for growth.
Source: SEC filing
These numbers were good enough for the market to award an IPO valuation of approx $2B. In fairness, since the IPO they have missed some important analyst numbers and Amazon decided to buy Whole Foods and declare they were going to become a direct competitor. Thus driving their valuation down to about a Billion as of this writing, still quite significant for a 5 year old enterprise.
Over the last four quarters Blue Apron has paid $178M to add 387,000 net new customers. These are the kind of numbers it can take to add more clientele to a new company, with a relatively new service idea.
What makes more sense for an ambitious emerging business, paying $459 for every one net new client, while losing $110.1M per year or plug in with collaborative commerce community. A committed marketplace that will buy from you assuming your offer has value. You simply work out how profitable you can make your product and cut the community into a portion of the margin, especially the 9-figure marketing budget that is no longer necessary. This makes sure that every sale can represent a profit.
I believe that with the massive trends toward e-Commerce, the C-Commerce concept is the way smart new companies are going to take advantage of it to become national and eventually international brands.