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Threadless The Business of Community Case Solution
Threadless.com is an online Chicago-based t-shirt company run by Jake Nickell, Jacob DeHart, and Jeffrey. The business model of the company is such that it enables everyone to submit t-shirt designs, and then a community of almost 500,000 members selects the design by voting. The company also encourages these members to critique the designs, share videos and songs inspired by the designed shirts, and purchase t-shirts that have won the weekly competition. Because of its unique business model and the success it has achieved in a short span of time, it has managed to attract the interest of large retailers. Now Nickell, DeHart, and Kalmikoff are facing a tough decision of whether they should accept the offer from giant retailers of carrying volume of Threadless t-shirt in their stores, or not.
Following questions are answered in this case study solution
What are the similarities and differences between a community-driven product development process and a traditional product development process within a firm?
What motivates community members to participate? What is threadless offering its community members?
How winning designs are currently selected? Figure 1 and sample 1 show the sample design and their respective scores. How would you go about selecting winning designs?
What are the barriers to entry into this kind of business?
In what other areas this model might work? How might you leverage to exploit this model or innovation and product development in your business?
What should be a Threadless response to offer from a large retailer?
Case Analysis for Threadless The Business of Community
1. What are the similarities and differences between a community-driven product development process and a traditional product development process within a firm?
Analysis of the case study shows that there are numerous differences and similarities between a community-driven product process and the traditional development process. Talking about the similarities, firstly the basic purpose of both the processes is to satisfy the needs of the consumer. Secondly, both are done in order to increase the sales and profit of the firm by retaining existing customers and attracting the new ones. Thirdly, during both processes, the product has to go through the same development curve which includes designing, marketing, packaging, etc. Moving on to the differences, while the traditional development process involves employees to know the customer preferences and develop the product, the community development process relies mainly on the community. Any change in the community will certainly affect the business and product. Secondly, the community development process takes longer than the traditional development process. Since the community process involves taking input from a lot of people, the average time increases. Thirdly, for the traditional development process, the company has to pay its employees. For the community-driven product process, the company has to offer some incentives to its community members in order to convince them to help the company.
2. What motivates community members to participate? What is threadless offering its community members?
The business model of threadless.com is based upon the community development process. Under this process, the company takes input from its community members to develop the product. In order to motivate the members to participate, the company must give some incentives to them. In the case of threadless, community members consist of voters, designers, buyers, and employees. To convince them to help the company develop the product, they have developed an extensive strategy. Designers were given access to blogs and design critique portal which they were using to get feedback about their designs before outing them up for voting. These designers also get free advice from professional designers through the alumni club. To keep voters motivated, the company had the strategy of giving points to all those members who send their pictures wearing threadless shirts. These members were awarded credit points, which can be utilized while buying new shirts. The community members of the company also consisted of people who advertised the company either on other websites or on their blogs. To motivate them, the company gave away referral points to all those who advertised the company. These points help them win free shirts. Through these strategies, the company keeps its community members motivated to participate.
3. How winning designs are currently selected? Figure 1 and sample 1 show the sample design and their respective scores. How would you go about selecting winning designs?
Threadless was initially started as a sample site for a web developer company. Its business model was such that it involved taking input from more than 5000 community members i.e. it followed the community-based development process. Generally, designs were uploaded on the website, and then community members voted for their favorite design. Winning designs were mainly selected on the basis of votes. The higher the number of votes for a design, the higher is its probability of winning. Even though this strategy provided the community members with an incentive to interact and vote repeatedly, there are numerous customers whose opinions get neglected. Furthermore, the PR of the designer also mattered in this case. A designer with PR would be able to get votes irrespective of the design. Therefore, to an extent this strategy is unfair. Under the given scenario, the best strategy for the company is to follow the community-based process but limit the number of votes per person. Also, they should try to ensure that the maximum number of people voting the product is the same ones who are buying the product. If the company does not keep a check and balance system under this process, it runs the risk of being misled.
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