Saturday, February 27, 2010

Crowdpreneurship and Open Innovation: The case of

Organisations are now in the new age. This is the age of virtual marketplaces.These virtual marketplaces, through the use of Web 2.0, make full use of the crowd for everything in terms of content. So, is crowdpreneurship a type of open innovation? Let's look at the case of

It was started in March 2000 as a local London classified ads and community site, designed to connect people who were either planning to move, or had just arrived in the city, and needed help getting started with accommodation, employment and meeting new people.

Viral Marketing
It has grown a lot since then through word of mouth and it is loved by its rapidly growing community. It now covers 60 cities across 6 countries - the UK, Ireland, Poland, Australia, New Zealand and South Africa - and is the UK's biggest website for local community classifieds including flat share, flat rentals and jobs. High profile users in the UK have included the wife of Tony Blair, Cherie, who browsed the service to buy an alarm clock and shoes. In 2005, Gumtree was bought by eBay More than 25,000 new rooms are advertised a month, which means at least 10,000 rooms are rented a month through Gumtree. There are more than one million visitors every month and as of November 2009, total advertisements reached 50 million.

Value proposition
The aim of Gumtree is to give the community a simple and easy-to-use tool that enables them quickly find what they might be looking for. One can find everything they need to live their life with the help of the local Gumtree community; from a job or a flat, date, a nanny for kids or a bargain to a language teacher and a tennis partner.

Business Model
Gumtree is an extensive network of online classifieds and community websites. They offer free services (advertisements) to the community. This is either meant to attract customers, membership sign ups, or simply just that – free service for everyone. However, these free services are only free for first appearances only then a fee is charged thereafter for reappearance in subsequent months. Commercial advertisements are liable to monthly fees for any of the categories.

Gumtree is a global marketspace. Buyers and sellers are matched, exchange of information, goods and services is facilitated and payments associated with market transactions are done. All these activities are done through an electronic infrastructure that is governed by a legal and regulatory framework to enable efficient functioning of the market. The following are some of the marketspace components for Gumtree:
• Buyers- these are actual or potential customers who surf on in 60 cities across 6 countries - the UK, Ireland, Poland, Australia, New Zealand and South Africa.
• Sellers- all those that are offering a huge variety of items, and advertisers.
• Products and services-these are both physical and digital.
• Infrastructure-this includes electronic networks, software and hardware.
Gumtree can be considered to be a public e-marketplace (B2B). Sellers and buyers do not have a stake in the ownership. It is owned by a third party (E-bay) and it can be said that exchanges take place because of the presence of many buyers and many sellers (trading communities).

In short, the community provides content to this virtual marketplace in a form of advertisement. Can we say that this is a case of open innovation? Read this book on crowdpreneurship.

We welcome your comments.

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