easyGroup or the web "low cost" diversification concept

The easyGroup was founded by Stelios Haji-Ioannou, a greek heir, who first created Stelmar at the age of 25, a shipping line, before creating the now famous low cost company easyJet in 1995. The first idea of Stelios was to cut the frills in the airplanes to reduce the costs, and then sell the tickets on the internet, using the “paying less the further in advance the customer buys”-principle to grow the average occupancy of the flights. Now these two principles have become the foundations of the group, and Stelios applies them to any business he likes to be in, like movies, hotels, cruises, internet cafés, pizzas, car rentals, cell phones and many more.

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The easyGroup focuses on customers by selling products cheaper than the competitors on a given market. Paying less is of course better for customers, as long as they are convinced to have the same quality in terms of service and security. This is especially true in the Airline business. A crash of an easyJet airplane would probably have more impact than for a regular company, because customer would immediately think of cost reductions in the security field, even if it was not the cause of the crash.

For suppliers and partners working with easyGroup is usually a “brand” issue. They hope to sell more using the name by attracting new people, but also by making regular “Easy users” come to their segment. It can be a really good opportunity for a segment that has no real added value, like car rentals. When the product is similar from one competitor to another, how can a customer choose? Only the brand can in some cases make the difference. But once the brand and the two main principles have been used and applied, the easyGroup has no general business plan, and has to start from scratch when trying to make money out of a new business. This is a disadvantage for suppliers and partners who will have a direct impact from the lack of experience of the easyGroup in the business. Many cars were lost or broken, for example, during the first times of easyCar.com, because of unsecured licensing. This generated huge losses, and the business had to be rethought, and experienced people had to be employed to make the business profitable.

Stelios, the easyGroup owner, is an unsatisfied person by nature, and wants probably to conquer a new business every day. He likes to apply the same method on all the businesses, but has the lucidity to adapt his business plan and to let people with experience make the decisions, in order to reach a yield management. This approach, when successfull, can make the easyGroup become a real empire and make the emperor a very rich and powerful man.

As the easyGroup has no official limit in the consumption market, the customer group, when globally extrapolating, is the entire humanity connected to the web.

The revenue source of the Group has no real difference with its competitors on a given market, but the key to make more money in the Easy philosophy is to sell a lot to compensate the low prices, and to be real “costkillers” in the way to run the business. Finally the cash is generated by the consumer. It is also generated by advertisement, even from competitors. You can find and link to Europcar on easyJet website, even if it is a competitor of easyCar. The group is ready to put two branches in competiton, like they would liberalise their own market, but they are also able to make partnership between two branches. It is a complete new way of making business inside a group. The easyGroup earns also money with commissions from partners, like Mondial UK for example, as they propose travel insurances from this company.


COMPETITORS :

The main competitor of the easyGroup is the Virgin company, runned by Richard Branson, which proposes similar product and services, and has a similar business model of web diversification. Both have the volontee to diversifie the business following the boss’ momental mood. But Virgin seems to be more structured in the diversification, as they have main domains in which they open new businesses like :

- Travel and tourism
- Leisure and pleasure
- Social and environmental
- Shopping
- Media and telecommunication
- Finance and money
- Health

Virgin does not compete internally, as they do not propose or make advertisment for a foreign company that could compete with another company of the group. Virgin does not want to be only a low cost brand, as they for example propose very expensive galactic trips (200,000$).

Another competitor that could be interesting to compare the easyGroup with, is the site voyages-sncf.com, which part of the french public group sncf. They are competitors in travel and resort, and can have lower prices than the easyGroup, and they prove it by creating an "EcoComparateur", which is comparing the costs between flight, car and train, as well as the greenhouse gaz emissions impact. They also propose packages with train hotel and a car, and have created a private subsidiary called idtgv, to dynamise the business.


The easyGroup model could not be applied offline, because internet has now become too helpful to reduce costs, by avoiding personal and buildings, so that this kind of business would for sure not be profitable offline. easyJet has, for example,its only office in the aiplanes’ hangar. Even online the easyGroup had losses in some ventures. Internet is also very helpful to find customer, as it is easier for them to shop at home. As the easyGroup needs to sell a lot to compensate low prices, an offline business would not match the basic principles of the group.


To the basic principle we can add secondary principles, like the entrepreneur spirit, the fun, that has to be concidered on both sides (partners and customers), and the simplicity and efficiency of the product. All this principles applied on a chosen market without fear, in the sense that the group is ready to fight on highly competetive market, with big companies well established (ex.: easyJet, easyHotel, easyPizza...), makes the easyGroup a sustainable company, ready to fight for every marketshare.
Moreover the brand is scaleable as it is becoming the paradigme of what a scaleable company nowadays can be. It has the brand, always the same orange logo, it has its constitution or principles, which can be generally applied to any business, it has the group, which helps until a new venture becomes self-sufficient, and it has thanks to the new technologies, no theoretical country limit. The group does not invest in a deal blindly, but invest if results and benefits are met, so that finally the kind of business is not important. The question is how long is the brand stretchable before it breaks, by losing its credibility, and how will a future big issue in a branch, will impact the otherones through the brand, like a domino?


If I had to run the easyGroup, I would try to diversify my revenue sources, by selling more advertisement on my websites for example. To compensate the lack of human contact with the customers, I would open one office in each country (not more to avoid costs), in centre of the capitals for example, where customer could buy an find informations about every easy ventures. I would call it an “easyCenter”.
I would also diversify the group, by creating other brands with other philosophies, to avoid the dangereous domino effect, that could blow my empire in a row. For example, by creating an “ethical” brand, using the green color, which would not be a low cost brand, but which would ensure the customers, quality and biological products, that allow small farmers and producers around the world to live correctly from their work. This brand would also withstand much better a eventual new e-crach!