The Honeycombers - Case Study

After several years working in Singapore, Chris Edwards was well aware of its status as one of the most exciting and vibrant cities in the region – if not the world.  With an eye for new things, she had found an array of great places to eat, drink, shop, and much more.  Singapore offered an incredible mix of opportunities – from hawker stands to Michelin-starred restaurants, and from the bazaars of Little India to the high-end shops of Orchard Road.  Chris was finding new places even after years of exploring, and the pace at which new places opened only seemed to be accelerating.

In spite of this variety – or perhaps because of it – Chris began to notice just how difficult it was to keep abreast of what was out there.  Word of mouth helped – but as the expat population turned over fairly quickly, it could take time just to get into the right networks to hear about new places – let alone be enough of a local to discover them.  For a young Australian woman living in Singapore, it was obvious that the male-dominated expat community wasn't necessarily getting the message out about outlets and experiences which would appeal to women.

Seeing a gap in the market and knowing that her skill set matched the opportunity, Chris set about designing a product to exploit it.  The idea was simple: to help young, expat women quickly navigate Singapore and get the most out of it by being a trusted source of information about great places to go.  Crucially, the product would have to do more than simply identify good places to try.  In order to be credible and cool, it would need to do so quickly, adding value to its customers by having them first in line for new and exciting experiences.

Key learnings

  • Identify an unexplored opportunity - Australian Chris Edwards saw an opportunity in the market for a lifestyle website directed at young expat women in Singapore.
  • Build from existing knowledge and skills - Chris understood how to develop a product for this niche in the market because she and people like her were the consumer.
  • Start with a low-cost setup - The Honeycombers started out with a virtual office and a small staff, reducing the risk inherent in any new enterprise. It was able to scale up over time as its position became more secure.
  • Exploit an underserved niche - Because The Honeycombers served a market that was high value and difficult to reach for advertisers, it was able to quickly generate revenue. In rapidly changing economies it may be possible to forge an advantage by being the first to discover an opportunity the market is not serving. The Honeycombers unexpectedly also appealed to an additional market: modern, middle-class Singaporean women who, like their expatriate counterparts, were keen to explore new, exciting experiences in their city.
  • Understand the demographics of Asian countries - Singapore has long been wealthy. But the appeal to Singaporeans of a lifestyle website explicitly designed to appeal to expatriates was still a surprise. A niche for a product or service may still exist even if it was originally designed for a Western demographic, especially as the economic structure of Asian markets changes rapidly.
  • Expand through focusing on a clear market - Understanding the market in Singapore laid the foundations for success in Jakarta and Bali, because The Honeycombers had found a clear demographic to market to. With this experience, it could expand to other geographies while maintaining the same business model.

The Honeycombers concept: building from existing knowledge and skills

In a city like Singapore, it would be very easy for an average person – even one who regularly went out and enjoyed a busy social life – to be largely oblivious to life in another area or social scene.  A busy lawyer might find time to frequent the bars and restaurants at Clarke Quay – but never be aware of a new café in Holland Village or the best curry in Little India, even though both are only a stone's throw away.  A successful lifestyle website had the potential to stitch the city together for its users, turning them from residents of a single Singaporean village into citizens of a major global city.

Creating the business: starting from a low cost setup

One of the drivers for the explosion in the number of web start-ups in recent years has been the ease of entry into the market.  While such projects have a high failure rate, the low cost of registering a domain name and beginning to write content means that those with an interest in online, content-heavy businesses can often afford to experiment and test ideas.

Chris was able to develop The Honeycombers quickly and without risking a great deal of money.  The Honeycombers started with no office and a small staff, and drew on Chris' existing skill set, her own knowledge of Singapore and additional knowledge she sought from her network.

Correctly identifying a gap in the market for consumers of information also meant that Chris had found a gap in the market for advertising.  Businesses that wanted to access young expat women were also looking for opportunities to advertise, having had little success to date.  This demographic was a clear priority. Young expat women had disposable incomes, busy social lives, and an interest in trying new things.  Their value and the difficulty in reaching them meant that advertisers were happy to pay a premium for channels that promised access.

The difficulty in reaching young expat women meant that advertisers were happy to pay a premium.

The Honeycombers business model: exploiting an underserved niche

Chris provided two ways for advertisers to monetise her audience.  One was traditional banner advertising.  But as many legacy publications have found, the revenue from such advertising can be disappointing.  The other was sponsored content, which allowed advertisers to use the site to promote long-form explanations of their product or business.  This form of advertising was far more valuable, allowing advertisers a type of deep engagement with their customers which they can rarely gain from brief text, photo, or video ads.

The combination of extremely low overheads and a clear revenue stream enabled The Honeycombers to become profitable almost immediately.  This success resulted in avoiding two common pitfalls of online start-ups.  First, it did not need to endure a long period of unprofitability while building an audience.  Many start-ups seek to build an audience over time without generating a profit or even revenue.  Some even build the audience without a clear idea of what the eventual profitable business model will look like.  This model has been successful for many, including such giants as Facebook and Twitter - but because businesses must invest heavily before realising revenues, this model can increase the cost of failure.

The second pitfall The Honeycombers avoided was damaging the ability to build an audience by seeking to generate revenue directly from users too early. While it can be tempting to seek to directly convert eyeballs into dollars through a subscription fee, customers can easily be put off a new product by the need to pay – especially when so much content is available online for free. Many businesses have responded to this concern with a 'freemium' model, in which customers register for a free product for a limited period or with limited features. But The Honeycombers was able to avoid the complexity of freemium by finding an alternative revenue source.

Early profitability gave The Honeycombers the freedom to expand the business as its audience and income grew. While traffic grew at a steady rate for the first two to three years, it then drastically increased. When this occurred, it became possible for The Honeycombers to set up an office and hire more staff – embedding their audience gains through an improved product.

 

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