Recently quite a few brick and mortar retailers or brands have gone initial public offerings (IPO), often piggy-back on the growing e-commerce trend. These companies either develop their own proprietary e-commerce platform or buy services from e-commerce platform providers (more in another post).
The company’s valuation is typically governed directly or indirectly by the value of it’s brands, products, retail stores, distribution network, sales turnover, market share, growth potential, etc. Often the company owns the brands, the intellectual properties (IP) of the products, the physical stores, the revenue, etc. However, in a free and efficient market (!) what a company does not ‘owned’ is their customers.
In a simple demand and supply market, people would buy the product they liked and the company would make a sale. In case of an IPO the owners and investors of this venture is rewarded. However, what about the customer, what is their reward?
One would say the customer got the benefit of using a great products or services that they purchased and maybe some after sales support if relevant. Yes, it seem obvious but what about in longer term? Should they be content with customer services, more marketing for repeat sales, up-sell, cross-sell activities from the company, or to adopt a subscription model, etc.
If we take wider and longer term view, this is somewhat short sighted and limiting.
To illustrate my thinking let us take an example of Apple computer ($APPL). On 24 Feb 2015 APPL stock price is listed at $133 per share and a 13 inch Mac Book Pro (2.6 GHz) is selling for $1,299. With $1,299 theoretically I could buy 9.8 share of APPL in the stock exchange.
Since I would like to own the laptop AND to participate in the company: Assuming APPL gross profit margin is 40%. The sale of $1,299 would generate a gross profit of $519,6, which is an equivalent of 3,9 share. Hence, theoretically with $1,299 I could have bought a MacBook Pro laptop and 3,9 share of APPL (assuming APPL shared 100% of their profit for this example). Hence, making me a customer and investors
Ideally, such customer-limited share would follow the valuation of the stock exchange market. Such share can then be re-invested or sold in a specialised market to reinvest back into APPL, other companies or pre-defined activities. Hence, empowering the customer, building loyalty and creating a customer-investor aware community.
I wonder how such company would look like and more interestingly how would such world look like. Given today’s habits of crowdsourcing or funding, it seem such ‘social’ or community owned business model is becoming more accessible or common.