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E-standby Upgrade an e-commerce innovation from Silicon Valley

By John Giannatos

 

Studying e-commerce in the global Internet, using a philosophical approach of trade through online sales, I noticed that few services have improved the concept of commercial quality.

The Internet alone has improved sales and given the consumer the ability to look for better prices and specs. It has also given the Vendor the opportunity to leave the narrow local context, but there are few innovative ideas that can provide an all round win-win situation.

I want to explain what consumption in modern times means to me:
Right or wrong, a man builds the thought of “I am” through what he has and what he wants. Subconsciously, a consumer tries to improve his social status and recognition through the acquisition of goods and other things. That is why you see someone paying 300% more to buy a better car, yet it offers no relative, qualitative improvement for the price, etc.

When we buy a product or a service, deep in our mind there is a hope.

Hope to improve our life, our aesthetics, our experience, our social status, our expectations for a better life etc.

Can we upgrade our life through goods or materials?

I have observed the online commerce for years, trying to find when and where the Internet can give a framework for innovation, where trade wouldn’t have the same structure that was there 500 years ago. I’m looking for an innovation that will upgrade significantly, the lives of consumers and the market.

The answer came to me during a recent trip to Silicon Valley where I met an entrepreneur with an innovative idea that upgrades the lives of the buyer without just selling “hope.”
The service is called e-standby upgrade, and the company behind it is nor1.

23The service works as follows: A guest reserves a room at a hotel and then is offered the opportunity of a discounted room upgrade, which is not confirmed until check-in. The guest commits to pay a discounted price for the room upgrade, if it is offered at check-in.

Founder of this idea/project is Art Norins, (featured in a photo in the sections ABOUT) who is also the CEO and Chairman of Nor1.
I found the idea brilliant, not only for the customers, (the market proves this itself, since it produces a 20% conversion rate), but also in the field of business, since Goldman Sachs and Accel Partners, as well as other venture capital firms, have funded tens of millions of dollars in this project.

This is one of the most brilliant ideas I have seen in e-commerce, because it is one of the few occasions where a product or service gives profit to 3 parties, the Hotel, the Service provider, the consumer (Win,win,win!)

For the first time in history, the surplus of a “product” is offered to consumers at a lower price, while providing a profit for the “merchant” and at the same time a third “player,” gets to win in this game too.

If you study the game theory that is likely behind the idea of Mr. Norins, it is clear that it benefits the guest to always opt for the upgrade since any transaction always benefits all.

This service creates a better market and for this reason it is innovative.

Why only this service and not any other? Maybe I am exaggerating?
Not at all!

Let’s study any other form of service that offers multiple win situations; Ebay? Only under certain conditions (time, etc.). Groupon? It only has advertising benefits for the vendor, since the product or service is low-priced on the offered day.

In general, a discount may benefit the consumer, but works against the merchant, which depreciates this loss through marketing budget, thus you will not easily find a relevant service which offers the same innovations as “e-standby upgrade.”

All that remains is to see what other services and products can use this business model to create a better market and upgrade our life.