Monday, November 29, 2010

The Ultimate Retail Business Model in the U.S.

Today’s American Banker had an article titled What YouTube Teaches Banks About Customer Experience.

I do not know what YouTube teaches banks about customer experience. But I know what the iPhone and iPad have taught swindlers – hence the connection between the business and crime.

Apple’s business model is to provide cheap apps to a large number of users; about 250,000 apps to over 10 million users. You pay a few dollars for an app that often performs magnificently. Everyone is happy. You, because you got a good application at a next to nothing price, the vendor, who sold tens and maybe hundreds of thousands of apps, and Apple, which gets a cut from all this. The trick is the low price and large volume – the ultimate retail model.

Imagine now that you are a big company with a large number of customers and you go rouge: you begin to charge them a few dollars each month for no reason. Would anyone complain or notice? And if they did, would anyone have time to spend 45 minutes on the phone with “Mary” in Bangladesh to clear a $2 charge?

Exactly. (And if someone complains, refund their goddam few dollars.) So you get to make tens of millions of dollars a month swindling customers and hoping not to get caught.

How does this model work in practice? Click on the following links for the answer. You don’t have to read the articles. Just glance at the heading or the lead paragraph.

Click 1

Click 2

Click 3

Click 4

These are mere samples. Spend a few minutes goolging “class action lawsuit and telecom” and you will be surprised at the pervasiveness of the fraud.

Now comes the punchline: click here to see why your government has 3 branches and why the Supreme Court exists.