Innovative Online Retail: A Review of Ztail's eBay Resale Offering

“Global Recession” happens to be the most daunting of words these days, and online e-commerce sales are taking a hit as a result of the current economic crisis, but perhaps it’s true that With Crisis Comes Opportunity. The online business model of Ztail may indeed be emblematic of such an opportunity, and on the outset, my preliminary review of the site’s offering indicates that it may be a promising venture.

Ztail’s new online offering is built around an upstream trusted network of online vendors (listed here) who have partnered with the website to sell their products, and the site uses eBay as its downstream channel for resale. Essentially, Ztail provides a simple limited insurance policy that guarantees that customers will be able to resell the items they purchase through Ztail’s business partners at a substantial price through eBay within a certain time period after their purchase.

Buyers can visit the Ztail online catalog (an aggregation from various partner merchants) where they can browse products, and for each item, the buyer will be presented with the item’s normal price from the merchant, as well as its Ztail price (difference between the sale price from the merchant and the guaranteed resale price). When a buyer purchases an item through Ztail’s catalog, the site will guarantee that a within a certain time period after the purchase date, Ztail will be able to resell the item on eBay for a certain amount. For example, for the item shown in the picture below (item details available here), Ztail is guaranteeing that a $300 MP3 music system through Cambridge Soundworks will sell for at least $135 on eBay (within a year of the purchase date).

What I really like about the service is it’s automated workflow. Once buyers completes the purchase transaction, Ztail emails them a link that they can click whenever they’re ready to re-sell the item. The link is also accessible through the buyer’s online Ztail account. The resale workflow uses the eBay auction wizard to post the buyer’s item on eBay, and all auction settings are configured behind the scenes to maximize the buyer’s return. Other than entering your eBay and Paypal information, it’s a hands-off process!

It can get even better if your auction price ends up being higher than the guaranteed resale price, in which case, you get to keep the extra money. You also need not worry if the auction ends with a final selling price below the Ztail’s guarantee, as Ztail will refund the residual.

So what do you think?

I personally think the idea has great potential for products that require frequent upgrades or things that you might not need to keep forever. The one year time limit is a major restriction though, but I suspect this will be increased as the service gains more traction, and Ztail builds a critical mass of buyers and sellers.

From the buyer’s perspective, the service sounds appealing because it gives them some confidence in the product and offers them an alternative down the road if they don’t like the product, or want an upgrade. Also, the hands-off approach to the resale process through eBay is a plus - I personally never get around selling unwanted items on eBay because of time constraints.

Also, only time will tell whether there is a particular category of products that this service is more suited to… high priced products? fashion accessories? technology products with a short life-cycle?Only time will tell if the service proves to be viable, at which point, I wonder whether we’ll see Ztail’s offerings being integrated with major online storefronts – i.e. rather than having to purchase through Ztail’s catalog, we’d be able to purchase directly from the online retailer and choose Ztail as an additional option. How will that business model work? Further food for thought…

B-school Bashing in Overdrive!

It seems like B-School are being bashed left right and center this past week, and MBA programs are being blamed for the current financial mess that we’re in. I’ve also read various opinion editorial pieces and heard interviews of faculty members who have commented on the role business schools have played directlyor indirectly in leading to the current financial mess. Notably, the academics who’re chiming in have been from all tiers of schools… from Harvard to Stanford to McGill to Dalhousie.

First and foremost, is Henry Mintzberg and his article in the Globe & Mail where he refers to the current financial crisis as a “monumental failure of management”, and points to management education as a major contributing factor. It wasn’t surprising to read his column since he has always been a detractor of traditional MBA programs citing that the MBA approach to a management education is fatally flawed, and as an answer to this problem, he co-founded the International Masters Program in Practicing Management (IMPM).

Mintzberg’s opinion about b-schools producing graduates who have an “excessively analytical, detached style of management” is shared by Peggy Cunningham, who is the new director of the School of Business Administration at Dalhousie University, and is currently involved with restructuring the the school’s business programs around the core concept of responsible leadership. In her interview to the Globe & Mail, she says that it’s the excessive focus on individual success and obsession with corporate competition that makes people forget about social accountability.

In both these discussions, focus on individualism has emerged as a common theme that can be identified as a root cause for the current mess, and I started to wonder whether individualism is really to blame here! I believe that it’s important to differentiate between individualism and self-centeredness. It is my contention that individualism isn’t necessarily a bad thing – afterall, it is our individualism that gets us to be self-reliant, remain active, competitive, and independent to be able to look after ourselves and our families. The problem arises when individualism gets overridden by self-centeredness and that’s what leads one to ignore or overlook values of social and moral consciousness, and ultimately causes irresponsible economic behaviour.

Coming to the issue of business schools, while it’s easy to point fingers at them, I personally don’t think the blame wholly lies there. In this podcast, Jeffrey Pfeffer, Professor of Organizational Behavior at Stanford Unversity’s Graduate School of Business talks about b-schools and how what is taught in management programs is really only a small part of the problem.

I personally believe that there are things that b-schools need to do better - especially in instances where there has been an unbalanced and unhealthy focus on financial engineering and novel modeling techniques… but I also believe the current financial mess has a lot to do with common sense management or lack thereof. Common sense cannot be taught in business schools, and someone doesn’t need an MBA to figure out that overly and recurrently leveraged portfolios and risky derivates will probably lead to disastrous consequences.

On the one hand, it may the "Quants" in the firm who used imprudent innovative techniques for risk assessment, but it was the decision makers who went along without taking the time to understand the assumptions or dynamics of such novel mechanisms.

Contrary to what common sense would dictate, in their pursuit of exotic financial instruments, the Quants put too much faith in mathematical risk models and in the process, they forgot that financial models are just that – models! They’re meant to be used as maps and not bibles.

This is not to say that B-schools don’t need to change – many would need to re-evaluate their programs and curricula and incorporate business ethics more seriously than they have before. I know that for most schools seeking accreditation through AACSB or EQUIS, this is a requirement, but I suspect that many schools still treat the subject of ethics as a snippet in their course discussions.

In devising a new way forward, management schools need to make sure that students have a naive faith in free market, and they also understand that business ethics is not to be a taken as a moving target and that there’s no harm in bending the rules to suit one’s own personal interests. Secondly, for schools focusing more on the technical aspects of financial engineering, and risk management, they need to strike a balance between short-term gains, social accountability, and long-term sustainability.

Hand-in-hand, our overall business culture also needs a massive overhaul – afterall, management schools are a reflection of current organizational customs and conventions, and most practices that get communicated at schools make their way into the books and syllabi through the industry. Investors demanding higher returns and rewarding managers for short term performance need to look at the bigger picture. The question of proper performance incentives needs to be revisited, as managers becoming shareholders in the company doesn’t seem to be the be all and end all approach for getting managers to perform in the best interests of the firm. The decline of regulatory oversight is another issue that deserves a closer look.

To end my diatribe, I agree with Jeffrey Pfeffer when he says that B-Schools don’t really shape the world as much as they reflect the broader societal trends and the ideology of the world they exist in, and to lay the blame entirely on them is being over-simplistic and overly reductionist.