Tomato electric quotient and network effect

On the evening of the Mid-Autumn Festival, I chatted with a new acquaintance about buying vegetables on the internet. The friend on the opposite side is very good at talking about his past rich entrepreneurial experience, including the project of a fresh electricity dealer. But I cite the example of buying tomatoes.

Tomatoes, also known as tomatoes, are a common vegetable. With the help of agricultural technology, no matter North and south, no matter the spring and autumn, everyone can buy a good tomato. This juicy, taste more like a fruit vegetable is the main ingredient of "tomato scrambled egg". Suppose my girlfriend has a "tomato scrambled egg" dish when she wants lunch 11:30 noon, so how can I get tomatoes?

We envision a situation where we can place orders online and not even consider where to ship them, because we believe that a fully competitive market will make prices and quality strong, or that technology can be standardized to produce tomatoes. Orders are sent to all vegetable suppliers providing delivery services-they may not have a shop-and then choose the best option based on factors such as price, quality, delivery time, etc. After 15 minutes, the doorbell rang, the tomatoes arrived, and after signing, a new one was added to the credit card bill. We turned this into a new start-up, called the "tomato Dealer."

It's as natural as the mobile phone we've been getting used to calling cars. Here are some key assumptions:

Products have been highly homogeneous (commoditized)

A fully competitive market in which pricing is priced in terms of cost

Competitive advantage between suppliers shifted to quality of service (e.g. delivery speed)

The above three points for the "tomato electric" is not actually sufficient, because for a large number of physical goods, quality of service related to the large number of costs and problems from warehousing and logistics. To address these offline, seemingly less glamorous issues, Amazon and Jingdong have to spend a lot of money. In view of the urbanization process, the population gathers the degree unceasingly to ascend, the logistics needs to enter the city center densely populated area from the city periphery. The traditional wholesale-retail system has actually established the circulation loop of logistics. Perhaps the "tomato dealer" has no need to re-establish its clumsy infrastructure to allow tomatoes to be transported from greenhouses to community convenience stores.

Are suburban farmers and community convenience stores willing to join the "tomato Electric dealer"? This is another typical bilateral market problem. The development team of "tomato electric dealers" often need various inducements to promote the growth of the number of businesses, while bringing enough consumers and orders. In fact, for retail terminals, joining a larger network does no good to short-term profits. On the Internet, the price of the product became a slave to the competition and the engine of parity. But a businessman's thirst for size is always there, and when a store gets a significantly larger order because it's joined, other shopkeepers will be tempted to repeat the countless prisoners ' dilemma.

It can be predicted that at last we can easily buy tomatoes at very low prices. It is not the network itself that makes the retail terminal owner suffer, it's the tomatoes that make it almost impossible to differentiate. KK in "New economic rules" said: "Completely disconnected people, not to promote new ideas and intangible assets of the company became a rarity." If these maverick people can retain their attributes and their own value to connect with the Internet economy, they will be the target of being pursued, and they will be priced very high. "This is not a new economic order, but the pricing power of differentiated competition as mentioned in the economics principles of the freshman year."

The really important thing is that most of the greengrocer eventually became the supplier on the "Tomato Electric Dealer" platform. Every new supplier actually makes the platform more valuable to consumers (more dishes to choose, faster delivery). If the snowball keeps rolling, the "tomato" will become a big platform, more likely than the current producers of fresh electricity.

The story sounds too Good to be true (it's not true), but some early investors would still be willing to pay. Life will be simpler and more efficient. KK in the book repeatedly elaborated that point of view, simple individuals connected to form a huge network capacity, the tomato link up, but also very amazing.