In search of new business models, some media andretail companies are trying to find new marketing strategies online.One of the latest examples is Lockerz Inc., a youthtargeted media website that doles out points to members for watching videos, taking surveys, signing up other friends, and completing other socialnetworking tasks.
What is Lockerz?Lockerz is an international social networking and e-commerce website based out of Seattle, WA. The site was last stated to have 17mln members in 195 countries.The company was founded in 2009 by now-CEO Kathy Savitt. Shes the former Executive Vice President, CMO of American Eagle Outfitters and was previously a senior executive at Amazon.Lockerz is funded by Kleiner Perkins Caufield & Byers (KPCB), the Silicon Valley venture capital firm, and online media conglomerate Liberty Media.
Who uses Lockerz?Lockerz is targeted to Generation Z which is defined as those born between 1990 and 2010, designated as the first group to never recall a time without the Internet. Practically, the sites target audience is college age.Most members are located in the United States, Western Europe, Brazil and Australia.
L.A.B.The Lockerz Advisory Board, was created by Lockerz a few months after the launch of the test splash site. It consists of an exclusive group of less than 300 members from all around the world. They are "a selected group of Lockerz members from around the world chosen for their creativity, smarts, and dedication to the Lockerz community. This in–the–know team provides support to our membership and tests new site features before they are officially released”.
Mission 1Become the home page for "Generation Z."Catching Zs: "This is the first generation that was born with a mouse in their hands," Savitt said. "They dont embrace brands the way others do, but seek out their preferences in each category”.
Mission 2Baby-sitting: Savitt hopes Lockerz will meet the media and social needs of todays college generation, but she expects them to move on. She compares the site to MTV, which is quite different today from when it started. "Youth culture has changed and has different needs”, she said.Not my generation: Savitt understands marketing and youth, but the company isnt driven by her own instincts. There is a team of "Member Experience Gurus" on staff, which tries everything from the merchandise being sold to the site itself. "Generation Z is the most disruptive generation since the baby boomers”, Savitt said. "I want to have a front-row seat as they take over the world”.
How does it work?Earn PTZ® to get up to 100% off the hottest products by watching videos, shopping, connecting with friends or by just logging in.
How does it work? Members are rewarded with Lockerz points (PTZ®) for: » Logging in to the site, » Watching short videos, » Referring friends, » Answering daily questions and polls, » Social networking with fwb;) ®Creating ValueAllowing virtual value (PTZ) turning into real value (Money/Prizes).
How does it work?Members can then redeem their PTZ for discounts on clothing, electronics, fashion accessories and other products in the Lockerz SHOP and special redemptions. With every purchase from Lockerz, members earn additional PTZ for future discounts.Discounts range from 1 to 100% off merchandise.
Friends With BenefitsNew kind of social network: buying “decalz” and sharethem with friends to allow them know what you think canbe interesting, if they buy you are rewarded with PTZ!Fwb;) is now at 1.0 version.Brings this site in a new position among the various social network.
ShippingPurchased or redeemed items will ship from Lockerzs warehouse as indicated on the product details page.Orders are usually shipped with UPS, however, they may use other methods.At Lockerz, you can either pay for shipping or use PTZ to discount your shipping cost.You can return apparel and accessories to our warehouse up to 21 days for US orders and 30 days for all other countries from the date of shipment.
ShippingDoes lockerz ship internationally for shop?They currently ship orders to the following countries: Australia, Canada, France, Germany, Ireland, Italy, Netherlands, New Zealand, Spain, Sweden, United Kingdom, and the United States.
Viral marketing vs. Invitation systemThe shopping community has always been free to join, but initially it required an invitation. This system of registration, along with the viral marketing techniques adopted by Lockerz, contributed to the creation of a community. Curiosity and the "will-to-be-in" are both powerful means to reach for large amounts of users over the internet.
Business Model» Company Categorization» Stakeholders» Coda Diagram» Profit / Income Models» Venture Capital» Exit Strategy
Company Categorization» NEW ECONOMY: Based completely on Internet, granting a virtual visibility» PRIVATE: founded by the actual CEO Kathy Savitt, funded by Kleiner Perkins Caufield & Byers (KPCB), and online media conglomerate Liberty Media» PROFIT: for-profit organization that aims to maximize profits.» GLOBAL: international distribution company, accessing the website, and shipping internationally.
Stakeholders» Top Managers: founders (now-CEO Kathy Savitt), and more likely assisted by funders of Liberty Media and KPCB. They are interested in keeping the business alive.» Registered Users: they are interested in earning PTZ in order to convert them into discounts or redeem prizes.» Online Media: they are the providers of media contents on the website, and are interested in widen the geographical area for their contents.» Marketing societies: they probably buy users informations (not individual ones) to profile better contents and stuff to be selled in the shop.» Brands: theyre the brands of the products selled on the website and are interested in selling without too much effort.
Profit / Income ModelsLockerz makes money two ways:» Commerce – by selling merchandise and experiences including clothing, travel, food and electronics» Advertising – advertising sold to a variety of brandsIt is possible that Lockerz does sell information about members, but not individual ones, it is more likely that Lockerz uses trends extrapolated from the databases, avoiding privacy issues."We do not sell INDIVIDUAL member information”. [Savitt]
Venture CapitalVenture Capital: is financial capital provided to early-stage, high-potential startup companies.The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, software, etc.The venture capital investment occurs in the interest of generating a return through an Initial Public Offering (IPO) or trade sale (vendita) of the company.
KPCBLockerz is funded by Kleiner Perkins Caufield & Byers (KPCB), a famous Silicon Valley venture capital firm.(Some quotes about KPBC)- “One of Silicon Valley’ s top venture capital providers". [The New York Times]- The "largest and most established" venture capital firms in the world. [The Wall Street Journal]"One of the most successful venture capital firms in the world”. [Reuters]Since 1972, KPCB has supported hundreds of entrepreneurs in building over 475 companies, including such major names as Amazon.com, Sun Microsystems, Compaq, Macromedia, Netscape, Electronic Arts, Intuit, AOL, Verisign and Google.
KPCBIts team includes the world leading venture capitalist John Doerr; Sun Microsystem s co-founder Bill Joy; NASA rocket scientist K.R. Sridhar; former US Vice President Al Gore; and former US Secretary of State Colin Powell.KPCB is highly selective in the companies it invests in, and it aims to build "category defining companies" that will become leaders in the field. It has traditionally focused on early-stage investments, but also does later-stage investments, for example in the field of renewable energy technologies. KPCB is highly respected within the industry, and is regarded as having the best track record of building world-class companies. As such, an investment by KPCB is considered a sign that a company has great potential.
KPCBKPCB paid $4 million in 1994 for around 25% of Netscape and profited from Netscape s IPO and subsequent $4 billion acquisition by America Online. (KPCB ha pagato 4M$ nel 1994 per circa il 25% di Netscape e ha tratto profitti dall’ Offerta Pubblica Iniziale di Netscape e successivamente dall’ acquisizione da parte di Amerca Online per 4B$).An investment of $8 million in Cerent was worth around $2 billion when the optical equipment maker was sold to Cisco Systems for $6.9 billion in August 1999.In March 2008, KPCB announced the iFund, a $100 million venture capital investment initiative that funds innovators developing applications, services, and components for Apple’ s iPhone and iPod touch platform, including Shopkick, ngmoco, Booyah and Shazaam. KPCB doubled their iFund investment in April 2009 to $200 million.In April 2008, it was reported that KPCB was raising funds for a $400 million growth-stage clean-technology fund. In October 2010, KPCB has launched a new $250 million fund called sFund to fund the startups in the social space with Facebook, Zynga and Amazon.com as its co-investors.
Exit StrategySince websites cannot last AND make money for a long period of time, probably Lockerz has an exit strategy, that is the way theyve planned to get rid of the company or to improve it when things will turn bad.» Sell the company: due to its "viral" nature, the companys success spreads quickly among youngs. Moreover, since it is still a young company it will benefit more growth in the immediate future. Thats why Lockerz would be an attractive option for interested buyers.» Improve the company: after a relatively short period of time, people get tired of spending time on the website just for earning marginal discounts if compared to the time spent collecting PTZs. Thats why probably Lockerz.com will turn in an online shop (wich is what theyre aiming to right now).
Critics and Doubts» Is Lockerz a scam? » Are gifts shipped for real? » PTZ count is correct? » Are IP addresses controlled? » Plug-in and Bots for Auto-fill forms are allowed?» Users from USA are favored over “rest of the world” members?» Its a GIFT, so why do I have to pay for it?» How do they know if Im really watching a video?» Can I be sure that Lockerz is not selling my personal information?» Why do I have to get invited?» Why some videos cannot be watched?» Is it worth spending a lot of time for getting a few ptz?