Wyngle case study Essay

Submitted By qwerman2001
Words: 1017
Pages: 5

Change of business model

Start-up out to show Wyngle is no wangle
Date
May 15, 2012

Christopher Niesche

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Wyngle co-founders Sebastian Langton and Damien Cantelo.
Damien Cantelo is preparing his retail website for launch in the US market with a name change and a push for more investment.
Up and running as wyngle.com.au in Australia, in the US the site will be known as wynbox.com because Americans didn't like the name Wyngle.
“The feedback on the name 'Wyngle' in the US was that people thought it sounded like 'wangle',” he says.
“When we tested it, it tested better in Australia.”
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The name change is one of many decisions Cantelo and co-founder Sebastian Langton have wrestled with as they try to chart a new course in online retailing.
The site hasn't turned a profit yet, but the planned US expansion is a measure of the confidence Cantelo, 33, and his backers have in their retailing concept.
Wyngle.com.au is a new category of online shopping, which its founders have named “ratio buying”.
Instead of offering discounts, it offers buyers the chance to pay just $1 for a product instead of paying full price. For instance, buyers have a one-in-three chance of getting a watch for $1 rather than the full price of $177 if they buy the watch. Cameras are for sale, with a one-in-six chance of paying $1.
Ratio buying is based on an idea of Langton's, who has a background in retail, after he saw that online discounting was becoming unsustainable.
“Consumers keep expecting deeper and deeper discounts and they expect them all the time as well,” Cantelo says.
"We saw this ongoing trend of just driving that price down and we thought 'What's the future here?' You can't do 100 per cent off.”
For retailers, there is a downside to online discounting. While retailers can sell more products, consumers can easily find the discount offers online and once they have, they are reluctant to pay full price for the product, even if the promotion is over.
Cantelo and Langton started with the knowledge that companies usually had a margin built into the recommended price of their goods and services for promotions and giveaways.
“So we looked at ways we could use the margin to create a buying incentive without the need to discount – and that's probably our key value proposition,” Cantelo says.
“What that means is that if a brand has a widget they sell for $100, they can continue to sell that for $100 and that puts them at the $100 price point out in the market without having to sell for $50, because if it sold for $50, no one's ever going to pay $100 again, especially online.”
The pair launched the site in August, following what's known as the 'lean start-up model'.
Under this model, entrepreneurs get their website up and running and released as quickly as possible to test their assumptions, even if the site isn't yet perfect.
“You can sit there and whiteboard things and analyse market data and sit there until the product is 100 per cent complete and then no one wants it,” says Cantelo, who has a background in technology and IT start-ups.
“We got a minimum viable product out to market quickly and started testing our assumptions, like: Are people attracted by the chance to get something for $1? Is a ratio more attractive than a discount? Would people trust the site?
“As an entrepreneur you're sitting around going 'Yeah, they're going to love it, and they'll tell all their friends and we'll take over the world', but the reality is you've actually got to get out there and test these things.”
Wyngle tested well enough to continue pursuing the idea.
Its founders will adopt a two-pronged strategy ahead of launching into the US.
They will…