At year-end 2009, a few months after the relaunch of Cork'd, the Company stood at a critical junction for growth. It has gained more traction in attracting new users, thanks to increased level of media coverage including TechCrunch and WSJ, but customer engagement was lacking and even decreased in the period, with fewer comments posted and lower user month-to-month stickiness. Meanwhile, the website continue to lag in user experience and offerings due to limited cash generation / injection and its historical roots. To sustain its growth and survive in the long run, Cork'd needed to aggressively focus on enhancing user experience and differentiating itself to create a loyal, active user base.
The success of Cork'd's business model is predicated upon the capability to capture a sustainable and engaged user base. It makes money from wineries signing up for annual membership (and potentially partnership with online retailers when individual users buy wines), which naturally competes with each other and importantly don't generate much utility for the individual users. Therefore, winning individual users is not only important for creating the network effect within the user base, but a critical mission to provide value for Cork'd's "customers" - wineries who pay the annual fees.
When Cork'd relaunched, it was already at a weak and defensive position vis-a-vis its core competitors. Due to inactivity during the revamp period, Cork'd has lost some of its most active users to other platforms. Though they have some willingness to come back, Cork'd faced an uphill battle to regain their favor - its competitors had differentiated, niche offerings to the wine aficionado. Unless Cork'd can create compelling value for users, it will not be able to gain a foothold in the market.
Therefore, I think Cork'd needed a fresh injection of capital in order to survive after 2009. It needed to hire more engineers to upgrade interactive features for the individual users, and need to spend more to acquire active, contributing users who have positive impact on user retention. Meanwhile, it should aggressively explore partnership opportunities with online retailers to broaden offerings, both to generate additional revenue streams and to complement the user experience with online shopping opportunities. If the embattled Cork'd could not break through its current limitations and rejuvenate its dwindling user engagement, it would be very difficult for the Company to survive.
I also commented on this case in one of my posts. I should have noted the obvious point of another round of capital injection! I agree that hiring and retaining an engineering team is critical to their core product offering - the website! It seems like the case focused a lot on their relationships with wineries, promotions, tastings, etc, which were complementary, but not core to their original business model. We had similar ideas with respect to connecting with online retailers to increase revenue stream and track the value add for wineries paying the annual fee. Thanks for your post Eric :)
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