At the beginning of August the Dutch newspapers and websites picked up the news that Kruidvat (a Dutch retail, pharmacy and drugstore chain specialized in health and beauty products), was adding wills and cohabitation-contracts to its services through a partnership with Ligo. Jokes as ‘Hair wax, paracetamol and wills in in one shop’ were the headlines in the news. You could miss the fact that this could be a sign of disruption in a very conservative market.
Notaries and their services
Notaries and junior notaries deal with all kinds of law (real estate, private, family and company). If you want to set up a will, want to make you cohabitation official, or if you want to start your own company, you have to go to a notary to make it official. The current business model is mainly based on hourly fees. This results most of the time in high prices for products, which leaves a lot of customers without a will (exact numbers are unknown, but a study by Dela in 2015 claims 60% of all Dutch people). One of the main causes: too expensive.
The services that are offered by Kruidvat and Ligo are standard-documents, customers that fall in an exemption category cannot use the product. However, if you are eligible for this product, you pay €199 for the product, instead of up to €750 at a notary. Quite a difference, and exactly where this is a solution to a painful problem: too expensive.
Christensen, disruption and the notary market
Looking at the Christensen, and his theory on disruptive innovation, the notary market is ripe for disruption, and the products offered by Kruidvat is a good start to this. The notaries are focusing on improving their products for their most demanding customers. Entrants (Ligo x Kruidvat) are successfully targeting those overlooked segments. Incumbents tend not to respond, and where the new entrants move up in the market and are adopted by mainstream customers, disruption has occurred.
Technology behind the disruption
This price reduction earlier mentioned, it has to be saved somewhere. So what do these start-ups do? Ligo uses software to automate the concept documents in the process of wills (and also incorporations of limited companies and foundations). This saves time, thus the services can be offered at a lower price and at a higher speed. Because of the legal position of notaries, customers still need to go to a lawyer (which is attached to the platform), to lawfully pass the deed of the incorporation of the will.
(Overlooked) consumers are the winners
Looking at it from a consumer perspective, these developments are great. Why would you pay an hourly fee, for setting up a concept, if you can use software for the same product. Looking forward, taking into account the new generation that come to the market, these kind of applications will be used more and more. One could think of the ‘older generation’ not feeling comfortable with online products, but the new generation certainly won’t have a problem with it. (After all, we will all get our Masters distinction via online education, right?)
Main takeaways
During the lectures of Information Strategy the term disruption has fallen frequently. Maybe yourself are thinking of a sector that is ready for disruption, and you want to start your own business for this. Let the business model of Kruidvat and Ligo be an example to you. To enter a market, the product itself doesn’t need to be that complex, you just need to start and serve the overlooked segment. (And if you start, use a platform like Ligo to incorporate your business, instead of the conventional way.)
Hi, Abele!
Your example with Ligo made me excited. You are right that it is a disruption, and now I want to do the same in Russia! Just joking.
The 2 things I am wondering about are competitors and rationale behind this decision:
– Are there any Ligo direct competitors who use the software to automate documents’ creation? Or firms from other industries who can easily imitate this software?
– Why Ligo chose Kruidvat as a partner and why Kruidvat chose Ligo? Pharmacy and drugstore is not directly linked to legal issues. Are the audiences of these two companies really similar?
I also want to mention one example from Russia, that came to my mind while I was reading your post. In 2018 Magnit (huge Russian food retail company) piloted several projects on selling food items in the governmental “Post of Russia”. Today this post sells not only simple food items, but Japanese food items, cosmetics and other goods that are frequently cheaper than in the majority of other stores. Offices of “Post of Russia” are everywhere and I mean it when I say it. They are everywhere. Moreover, post offices, especially in the regional areas and countryside, are really popular – old and young generation receive money/goods there and it is convenient for them to buy everything at one place. Therefore, it could have been a good example of disruption, but.. The quality of the service provided by “Post of Russia” is really poor and more and more people switch to other post providers, such as DHL or Boxberry. However, everything can change, right?
Looking forward for your answers!
Hi Ekatherina.
To answer your questions, there are indeed some other players on the market that do the same, right now the are co-existing with Ligo on the market. I would say the barriers to entry are low-medium. Of course it will take some time, development power and especially money; but then you could copy the platform as it is.
Secondly, I think Ligo chose Kruidvat to benefit from the nationwide audience and customerbase that it has. I think for many brands it would be a dream to be under the attention of so much customers. The question whether the audiences are the same is a legit one.
Thanks for sharing your experience in Russia, despite travel restrictions, we are still learning from other cultures here!
Hi Abele,
Thanks for introducing this interesting topic! Although I have seen links selling vocation packages when I am buying daily supplies from Kruidvat online, I have never seen this webpage mentioning notary services with Ligo. I am actually shocked when I see your blog post.
I like the analysis part of your blog post, i.e. the last 3 paragraphs. However, I have a question on your argument: ’Entrants (Ligo x Kruidvat) are successfully targeting those overlooked segments’. How overlooked are they? (Since I notice that HEMA has been doing something similar like this for 7 years already, and they even provide bundling products like health insurances). Also, I guess how big data analytics can be applied to this market is vital. Will Ligo provide differentiated lawful services based on the customer profile of Kruidvat, in compared with the one of HEMA? What to do when new entrants come in (Let’s say Etos + another new legal-tech platform)? Maybe the bargaining on how Kruidvat promotes this service on their website is also the key success factor. For sure this market is dynamic as online platform develops.
Agree that the benefits of such cooperation are obvious: convenience, cost-saving, efficiency that brought by the software for automation of those legal documents. This is in line with the transmutability and reproducibility feature of information goods. I am thrilling to see what will happen next of this market and if possible let me know the answers since you seem to have more deeper insights:)
References:
HEMA, 2020
Hi Jiayun. Thanks for your reply and interest in the article.
To come back to your question. I see your point, and it is true there are players on the market already that serve this consumer group. However, it might be that the targetgroup is not aware of being overlooked. Especially when it comes to something abstract as wills, people think it is not for them, it is only for rich peope that have a lot to inherit.
However, I argue that. From a certain age-group everyone will benefit from having a will. It is only, as you say, the task of the companies to promote the service and to stress the urgency of it.