Not On The High Street (NOTHS) represents an “exemplar” matchmaking business model which links independent producers or businesses, which have a limited physical store and web presence, with consumers looking for customized or specialty products within different categories such as home furnishing, gardening, fashion retail, jewelry and art, that are not easily available in traditional high-street shops. NOTHS does not fulfill orders, and does not own any inventory. Instead, NOTHS chooses producers to trade in its online marketplace, and makes it easy for customers worldwide to browse and buy unique bespoke goods. Other internet retailers in the same market, such as US-based Etsy, sell their products direct to customers, whereas NOTHS fully mediates the transaction between buyer and seller.
Entrepreneurs Holly Tucker and Sophie Cornish co-founded NOTHS in the UK in 2006. They secured the initial round of funding from close family, but were struggling with securing any outside funding from external investors. However, the duo made progress and the company has since raised £27m from investors, most recently in 2012, when they attracted £10m from Fidelity, Index Ventures and Greylock Partners, which valued the company at a little less than £100m.
Initially, at its website launch, the company had 200 partner producers. NOTHS now hosts 5,000 independent producers featuring an excess of 250,000 unique design and specialty products. In September 2014, the company launched its first dedicated overseas marketplace in Germany (notonthehighstreet.de), with more than 100 active German partners onboard as well as a number of existing UK partners.
The company now employees around 200 staff at its headquarter in Richmond Upon Thames, South West London, and has grown its revenue from £134,000 in 2006 to £127m in 2014, a 53 per cent increase from the year before.
Simon Belsham, Tesco’s former online director has now taken over as the CEO of NOTHS, replacing Holly Tucker who has been the sole leader since Sophie Cornish stepped down in 2012.
CUSTOMERS – WHO THEY ARE:
The business model represented by NOTHS serves two customer groups: (1) buyers who are looking for specialised or customised products and (2) producers and manufacturers of such products
ENGAGEMENT – VALUE CREATION PROPOSITION:
NOTHS value proposition is twofold.
First, the company offers buyers looking for customized or specialized products variety from thousands of independent producers and hundreds of thousands of different products with home delivery.
On the other side NOTHS offer visibility and marketing for producers through their marketplace, which also include search engine optimization, with search engines like Google and Yahoo. Moreover, the website offer producers with their own storefront, dedicated web address, and unlimited slots for different products.
Additionally, NOTHS intermediates the payment, which takes place through NOTHS web site and takes a number of important measures which enable the establishment of trust between the two transacting parties. NOTHS holds the money from buyers until the product delivery is complete, ensuring that the buyer is not swindled out of their cash and the producer does not sell to a customer who will not pay.
DELIVERY – THE VALUE CHAIN:
NOTHS has produced and maintains a website and an app that connect customers want to buy products from their partner producers. Customers can browse their website and look for desired products. The customers can then place an order and pay through NOTHS checkout. NOTHS then mediates the order, and holds the payment until the products are delivered. After delivery buyers can rate the products and the producers delivery on NOTHS website, increasing the incentive for producer to deliver a good quality product at the right place, to the right time. NOTHS does not hold inventory, and producers are required to ship the product to end customers.
MONETIZATION – VALUE CAPTURE:
NOTHS earns money from upfront fees paid by the producer of products though a one-off payment of £199 and a 25% commission on each sale that NOTHS intermediates.
Written by Mats Kallum and edited by James Knuckles under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016
Published 21 April 2016