Nahklar.net

1. The problem

• For centuries small shops, creatives, local entrepreneurs are driving community innovation - 75%+ are women
• The emerging global web & networked economy favours online giants like Amazon  thriving on massive economies of scale and scope
• Being excluded from those digital economies, talent and capital + 50-100k small retailers are expected to shut down in next 5-10 years in Germany alone (HDE, 2019)
• Women will suffer most driving economic inequality

2. The Solution

• Nahklar.net provides local shop owners access to digital economies..
• ..by creating a digital network & marketplace for brick & mortar shops..
• ..bundling resources to be strong in digital business
• ..using the assets of offline shops & local pride and networks
• …achieving sutainable inclusion and prosperity

3. Global impact as...

• ..Female roles are similar globally - such is the problem
• Nahklar.net can easily scale driven by core network effects

Target: As part of the community driven innovation challenge Nahklar.net is solving for creating and advancing equitable and inclusive economic growth for women and to support the critical community service of local retail and creative products. 

Challenge: Local retail is in steep decline. The german retail organisation HDE in 2019 predicts the closure of at least 10% or 50k esp small retail shops due consumer shopping online. This is driven by dominance of a few key online retail giants like Amazon. They can achieve and retain their dominance by virtue of their size with - in a gobal web economy - unprecedented economies of scale and scope - which in return makes them powerful in digital SEO and SEA. Vs this superpower local retailers are digitally invisible having 5k or less visits (RWTH Aachen 2017). This „winner takes all“ technically driven trend is seen as a key driver for latest increases in income inequality (Erik Brynjolfsson, MIT). With women running 75% of local retail this widens the inequality gap further.

Gap: make the 500k+ local shops digitally visible and reconnect local offline to online consumers.

Shop owners: The shops we target in Germany represent 83% of all retail with an annual revenue below €1 Mio p.a., creating in 2017 9,8% of retail revenue down from 15 % in 2006 with a large share self employed, They represent 27% of overall employment in retail and are run to 80-90% by women, often part-time, following their passion/realising their dream, highly engaged/ innovative in concepts & services - extremely busy and low digital literacy - and if - lack of time to properly deal with the matter

End customers: we are targeting local audience who wish to support their local dealer (82% - primary reason) and be mindful about resource consumption (38% and third most important in a study about drivers of shopping locally online)  

With both user groups we have done a series of product tests and meetups to
validate needs, to gather feedback and to start building the network

Nahklar.net is serving shops needs to for digital power by providing a state of the art webshop & commerce platform, gather user data, platform to network and bundle means for digital advertising. End customers benefit from transparency & inspiration for local products & deeper relationships.

To be effective we need to solve for both market sides: 

1. Local shopsgain local digital visibility as described + 2. Customers: For the start we focus on solving the customer problem of finding a meaningful gift. Gifting is a routine and complex social exercise users need help with and esp. small shops excel in. 

Our product function is to bridge the gap in the market with customers appreciating the flexibility get inspiration online for gift ideas 24/7 while small shops have limited opening hours & low online visibility. Emotional key feature is to create relationships, local pride and happiness by sharing local treasures. Technically it is a multi-store marketplace with ability to place products online (hygiene). Key innovative services along the user journey are:

a) Best gift feed & reco: We complement offline advise for gifts users appreciate in small shops with online 24/7 discoverability & an inspiring personalised gift idea feed populated by shops. USP for customers: With ML we learn through the lense of the gift recipient. As users enter quieries for diverse recipients we remember filters, dates and store profiles to providing auto-recos for subsequent searches. This we complement with intelligence shops owners have about their customers. This is unique as eg the Amazon algorythm learning is tuned to the userof the accout- not the needs of agift recipient. 

b) We limit product visibility to a 15km radiusto create local relevance, pride & focus (less is more) 

c) Products can be selected & purchased online - pick up is offline in the shop - this allows for better margin vs online only through cross sell, service like wrapping and emotional connection and in-store experience 

d) Shops will recieve analyticson user traction for existing products or new ideas. This will allow shops to much quicker validate and react to consumer demand and improve their portfolio and profitability and allow for personalised followup

e) driving engagement and variety in blogs shops or users can share their coolest findings and combinations 

Business &  Partnership model innovation and the Cause. 

Existing initiatives create a „Mini-Amazon“ or a city marketplace which are inferior to the „Origial“ due to lack of brand, depth of portfolio and network effects and more. Shop owners are customers who pay a license fee 

1. With Nahklar.net shopowners are partners creating local digital network effects & economies 

2. In our partnership model, they invest their offline strengths (service, acquisition) and network of customers, combine their online marketing budgets to boost their joint platform. Each customer one shop acquires - they acquire for everyone in the network reducing CAC 

3. They co-own the data created, complement it with offline data, can use it to validate & improve the product portfolio 

4. The cause: The purpose is key - to reconnect people with their neighborhood to give them better experiences and share the treasures the discover. Customers and shops become partners for a joint cause. We see a rising demand for this as a counter movement to the fact that via online we can have everything. The experience is key - the product is hygiene 

Technology elements used are

1. A multi-store market place - this will be as standard as possible as users require a known experience for smooth adoption incl. user and shop accounts

2. To deliver on best possible gift recommendations we will use ML to create profiles for gift recipients which users describe + recipient feedback + offline data created by the shops. Once this works we plan to deploy beacons in the shops to strengthen the personalisation & user recognition

3. A data-base that will allow shop owners to realtime see how users react to their offers posted, their sales funnel and conversions from online to offline/shop visit
 

4. A test-bed: Based on the data we will recommend to shops together with partners what to add to their portfolio - with either these or own ideas they can test new products and introduce based on customer reactions

5. Superior imaging & integration: Quality visuals and videos are key to be attractive for users. As part of our toolkit we will use superior imaging & video creation technology e.g. by Magisto to empower shops to create quality content at scale on their own. We will integrate with Facebook/Instagram to leverage the material shops post creating local relevance

Problem to solve: Prevent dramatic loss of jobs in small shops and inequality for women by increasing digital power, visibility, network  and ultimately economic equality. Also city infrastructure, vitality and properity will suffer esp in mid-sized towns  

In tests we conducted eg during last christmas period we identified that there is a strong latent demand for local goods sold in small shops (KPI: 8k site visits in Dec 2018, local radio station feature, €1k in incremental sales

1. As initial output- with our marketplace prototype we were able to achieve an uptake in sales of +$1000 for the participating 15 shops

2. As short term impactthis success has lead to an increased confidence and collaboration in the local community (supported by a WhatsApp Group) and shop owners connecting with others who were not in touch before. Among users it lead to higher awareness of local product portfolio

3. In 2 workshops in May/June 2019 with shop owners and stakeholders we could create a network and group dynamics that has lead to a strong conviction and plans to jointly tackle the challenge. Some have already started to collaborate eg a Gin and chocolate maker joining forces - we found many such examples of community innovation in the meantime

4. Long term the network & co-creation we trigger pls a strong local digital visibility will lead to economic success and thus stronger position & equality of women in retail businesses. 

Currently - one city - pilot area

• Shops: 25
• Users: 90

In one year - one full city

• Shops: 200
• Users: 30.000

In 5 years - assumption "Blitzscaling" - with product/market fit

• Shops:100.000 
• Users: 20 Mio

Next year

• Achieve product- market fit
• Create a strong, sustainable culture of the core community (key for the culture of the larger entity) - focus on mindfulness, respect, experience
• Achieve full by in and deep penetration in the local shop and network of creatives 
• Achieve support from further key stakeholders like local trade organisations, 
• Provide proof of the following which is fundamental to "Blitzscaling" - Reid Hofmann
  • Market-Size: show with the pilot that the market is there 
  • Distribution: Validate that we can grow via existing networks of shops 
  • Gross Margin: proof that attracting online and selling offline incl usage of Analytics drives massive profitable growth
  • Network effects: proof we can harness network effects and create increasing economies for the partners and users of the service

Next 5 years - "Blitzscaling"

• We aim to grow from a core market with a focussed offer (gifts - high need for advise, good WTP, emotional) in a circular way extending to neighboring cities as soon as a critical mass of 30 shops has signed up and is united - Facebook as grown in a similar fashion
• We will use local trade organisation as multipliers and hubs - involving them in the partnership - they will profit as they can offer a new, strong digital service to their members
• This model can grow for sure all over Europe where the retail structure is similar. 
• Ideally it can serve emerging markets in Eastern Europe, Africa where many people have or will have smartphones

This year - Do the "right it" (A. Savoia)

• Make sure we build a product shops and users need (build, measure, learn) - key growth inhibitor
• Finetune the business modell to create a source of income
• Build a strong community: Getting shops motivated to work together and to invest their time and network
• Getting customers engaged to the cause
• Setting up the core technology and develop the data base, AI and timeline incl an attractive UX - and making the whole thing work
• Getting the initial marketing right incl social media - Instagram very important
• Finding seed capital

In 5 years - "doing it right"

• Ensuring scalability of the technology (a growth inhibitor)
• Engaging multipliers like trade organisation to scale in their town/region

This year

• Overcome the barrier of product/market fit by iterating and testing, involving the community
• Creating a sustainable and strong culture of the core community - which will create the adhesion and commitment require to survive the long way to growth
• Seed: either get help from MIT Solve or other funds - potentially bootstrap
• Customer engagement: will work with shops to use existing networks and distribution channels to acquire customers - engage customers with blogs/adding their own experience/content/ideas
• Core technology: we will start with "off the shelf" technology and seek partnerships to add further competencies

in 5 years

• Convincing other multipliers will only work with a clear success story and to allow them to test on their own
• Operational scalability - for this we will need to acquire a savvy technical team - for this - we need an attractive culture, mission and purpose

We would like to create strategic/long term partnerships with shops and key stakeholders which is part of our business model innovation. We want shops to co-own the company, to drive community creation and a sense of ownership

We are still experimenting but believe that the ad-based business model that is fuelling hyperscalers like Facebook etc is very disfunctional. Reasearch done by Tristan Harris (Center for Humane Technology and former Google Ethisist) point into a direction, that the "attention" economy leads to companies creating and deploying mechanisms where high tech shoots at the human weakest points and "hack" the human mind To get people "engaged", to spend more time on sites they need to be steered. Steering people is most easily done by adressing basic emotions like anger, narcisim, need for belonging. This becomes critical when a company can control, what 2bn people or more get to see.

A counter model could be to refocus creating opportunities for direct contact between people, healthy and rewarding relationships. This is the big mission we are after

2 People

Axel Diehl

Johannes Bebensee

Initially we thought technology is the key to the solution - until we have explored similar offers and found -the reason why they failed is because they did not harness the strengths of the people the solution was meant for, they did not engage and excite them enough. Also they lacked network effects and appropriate incentives. Actually the solution to that is business and partnership model innovation and community creation. This is also our area of expertise 

The 2 co-founders are Axel Diehl and Johannes Bebensee:

Axel Diehl has many years of experience as the lead for Consumer Partnerships and Group Business Development at Deutsche Telekom. He has seen and interacted many high tech companies and knows what it takes to forge partnerships that last. He has been admitted to the Deutsche Telekom Entrepreneurship programm and as been educated on key tools. He is passionate about innovation and engaging in sustainability causes. He majored in Environmental and international Economics at the University of Münster

Johannes Bebensee - is an ex- consultant with strong conceptial skills and currently works as a marketing and product manager. He has strong product and technical know how. He is running and developing the product platform and selecting technical partners. 

Both have worked in their past in their resp local communities i.e. boy scouts and have a deeply rooted passion for communities and innovation.

We are partnering with our shop network, local trade and art organisations and local city officials

We consider extending the partnership with powerful digital players like Facebook. Initial talks with the German Facebook team were done.

We are currently tuning our business model optimising for 4 key impact/growth drivers in mind:

1. 1. Market size: Total potential in step 1 to impact 1 Mio people - mainly women - covered in previous sections
   2. Distribution: As digital CAC is pretty expensive already (at €1,7 per click on Google adverts and at converstion of 1% = €170/customer/shop) we create 2 unique channel levers
      1. existing networks: offline- shops will - as part of the partnership- promote the digital platform into their networks and to new customers. This reduces the CAC dramtically as one customer gained by one shop for the platform can be used & sold to by all the other shops. Online - focus of efforts/budget to create awareness
      2. Viral: as customers pass on purchases as gifts we will use this for a viral acquisition + benefits for users bringing users + integrate with Facebook for birthday information
   3. Gross margins: pure online shops suffer from minimal margin. Thus in our model once customers have found a product online for pick up as default we send them to the offline shop. This allows for up/cross sell, service and emotional bond
   4. Network effects: we maximise for 2 sided positive externalities by a broad participation  of shops making it super attractive for customer search for unique gifts which will attract more shops

   
   

   Key activities are to create & operate the multishop platform, populate the portfolio, run communication with shops. Revenue sources are revenue share from sales & shop subscriptions to the service

1. Initial pilots until July 2019: We follow the "pretotype" approach aiming to validate hypothesis at minimum cost. Required expenses of up to € 10k we covered  by own funds & the Deutsche Telekom entrepreneurship programme (50%)
2. Until end 2019: the next fully functional version using x-mas business & marketing - total € 10-20k we aim to cover by a) either the MIT fund and/or b) support by the local government who as part of a programme is supporting concepts for digital & offline retail innovation (80% of the cost) c) Shop contributions - €2- 4k or d) VC money
3. After that and depending on the outcome  we will need to choose a scalable platform with unit cost/shop of less then €1-2/month and a marketing, photo production/admin cost of less then € 2-3/month as we know from tests we can ask for €10 month/shop

We will highly appreciate the MIT & SOLVE network know to ensure we are doing "the right it"

• Top customer centricity and value for our communities
• Getting the mechanics right for a next gen marketplace - which will acc to our research be very much about deeper service integration in our case local retailers 
• leveraging latest technology (AI, retail innovation, analytics) to provide a highly personalised, engaging user experience and data for modern decision making for the retailers 
• Fineting of the business modell & growth factors to create sustainable impact & economic value
• Build a strong community: Identify tools & incentives to getting shops motivated to work together and to invest their time and network
• User activation: Getting customers engaged to the cause
• Getting the initial marketing right incl social media - Instagram very important
• Finding seed capital

Beyond that we would be delighted to learn from the experience of other SOLVER teams, to help them with our learnings

1. local retail: our key partners will be local retailers - we will tightly integrate them and a agree a set of dedicated actions with them in which each party uses their unique set of skills (as described above) incl fostering collaboration amongst retailers directly

2. Local retail organisations and art communities: These will be key multipliers to help us to engage and distribute our service to further communities. We would also encourage collaboration between organistions

3. Cities: Cities will be beneficiaries as Nahklar.net will help their retailers to thrive and cities remain/extend their vitality, sustainability and attractiveness

4. Women organisations: As our focus is to support economic inclusion of women we can imagine that working with women organisations is of mutual benefit 

• • Situation and Challenge

    • AI in step 1 will be key for the 2nd market side of customers
    • As per the descriptions our beachhead service is to help users to find meaningful, authentic gifts in their local community of shops
    • The problem we aim to solve with AI is that finding a gift that fits the recipients preferences is VERY hard and a socially delicate matter - people have different prefernces, there is almost too much choice
    • Yet gifting and giving in general is one of the relevant positive mindests that helps people to connect, create a positive spirit and inclusion in communities by sharing wealth
    • While AI & personalisation is doing wonders e.g. on Amazon they are always tunded to the user of the product. This creates 2 issues:
      • In case that user searches for kids gifts today and for the spouse tomorrow the recos & personalistions are mixed up
      • There is no learning meachanism available that consideres the profile of a 3rd party I might look for a gift for - 
• Solution
  • For those searching for gifts it would be a big help if - based on data entry, sources etc - it would be possible to create and use profiles of gift recipients to filter for the best gift - remembering the history of gifts, the recipient feedback etc
  • We aspire to create - with the help of the AI Innovation prize - this reverse AI 
  • This will give local retailers an additional powerful tool to differentiate vs pure online players 

With our initiative we are helping women to be supported and educated in being effective with their retail business in digital. Key levers are

• Easy entry to online goods presentation and selling by means of a standard - state of the are multi-store
• Access to analytics/user stats and support to drive business decision based on data from our platform on user behaviour. This will allow them to improve their portfolio and become more competitive
• Local network of retailers and creatives which will help women to learn from each other
• We plan to partner with Facebook to create a state of the art curriculum for retailers

By empowering female retailers to be strong in digital we will be able to improve their quality of live in multiple dimensions

• Our easy /state of the art multistore platform and bundled marketing efforts online and with a strong network offline will give them visbility in them web - a digital voice in a world dominated by a few globale giants managed by men
• The local network we create will provide them with new relationships, access to know how of peers and support
• As we network retailers and local producers we have seen that - driven by their creativity - they are coming up with new product ideas by mixing their products eg a local gin & chocolate, a bakery using a cake form with regional flavor, a craftwomen starting to sell her goods in multiple stores she became aware of through our network and instagram posts
• And finally and most importantly - being digitally strong - will give them a stable and secure source of income, improve their quality of life for themselves and their family

Nahklar.net is sparking change through innovating the way how small retailers present and sell their products in the web. Customers explore & search online and it is mandatory to be found - otherwise shops are digitally "invisible" 

The drama: visibility in the web is only achieved by a few, top scalers with highly professional web presence ticking all boxes of search algorythms paired with huge budgets. As corporates can benefit from global network effects as internet driven businesses the competitive advantage is unattainable

To break through, shops need to bundle their forces and leverage their offline strength and network + leverage the growing desire of consumer to buy locally, support their dealer, are tired of mass market services as product availability is no longer a limiting factor. This partnership model Nahklar.net is orchestrating - being purely web -based we can scale much easier then shops alone + by making shops partners we harness their commitment and creating a community of missionaries which will win against mecenaries