Franchisers and franchisees (to be continued)

In France there were 5600 retailers specialised in photography distribution in 2005, the so called “photospecialistes”( SIPEC). These firms are mainly micro-societies counting an average between three and four employees. Activities of the shops are usually organised around two major areas:

- The selling of small electronic items such as cameras, MP3 players, printers and camcorders.

- The photo finishing : the laboratory process to transfer the image on paper.

A third activity exists consisting in the reportage shootings such as portraits, weddings or industrial; it should be developed apart, as it is more related to art or work of art activities and implicates different stakes.

Concerning the first activity shops are usually very similar, regardless of their size; yet, there are two major trends concerning the second one:

- 57% of the shops internalise their photo finishing activity, basing their production on the use of minilab machines. Almost 100% of the work is done in house, enabling better margins. The use of minilab is also very linked with the positioning of the stores, as it is synonymous to high quality (work done by professional), personalised and fast service. Prices are therefore usually higher in these shops in which it is possible for the client to talk with the lab operators. Nevertheless, running a minilab implies high investment in both the equipment and personnel who are usually highly skilled photographers trained in specific schools.

- 43% externalise there production to industrial laboratory. This usually means longer times of processing and relative lower quality than in house processing. Prices and margins are usually lower than in the previous quoted stores but initial investments are lower as well. This choice also enables the retail point to be owned or managed by one single person focussing on the relationship with the client. Nevertheless, these shops are very independent to their suppliers that can be counted on two fingers: Kodak and Fujilab. (there used to be actually more but they either closed or been absorbed).

In the year 2005,750 shops closed due to retirement of economic reasons. This only impacted the externalised shop as the number of minilabs owners remained the same (SIPEC).

A survey of “observatoire de la franchise” (2002) shows that between 1991and 2002 the number of franchisers including all areas has increased from 600 to 719 while the number of franchisees has remained almost the same around 33000. The global gross profit moved from 22€ billion to 33€ billion which lead to admit that the approach is profitable.

In order to understand what could be the drivers of pursuing a collaborative approach of going on line, it is important to primarily clarify the motivation for store owners to regroup under the form of franchise. These motivations mainly concern the enhancement in two aspects of business activities which are:

- purchase power: economy of scales and other effects on operations and supply chain.

- marketing :brand recognition, advertising.

Through the readings of divers articles concerning the relationship between franchisers and their franchisees, I have identified other aspects that should be as weighting as the previously mentioned in the choice of regrouping. Franchisees may be expecting these features as well :

- Leadership: the ability to analyse the context, to extract a vision, to set up and formulate common objectives and strategy.

- Internal communication: the ability to share experience and best practices.

- Training and learning : the ability to follow trainings that are relevant to the industry context and brand objectives.

Develop and quote

In an environment of growing pressure and competition there is a need to identify real stakes of the industry to extract a strategy. Store owners therefore look for management support in their mother chain to analyse and clarify the situation, and provide with consistent decisions and objectives to follow. The major challenge of leadership in franchise is to balance between what should be focussed on and what should be changed. K.Powell Chief Executer Officer of a US franchise company, reports in a article (Franchise executives share insights on leadership, 2007) that it is very difficult to implement changes trough a network when few franchisees feel they are successful and do not need to break anything. Yet, it is obviously more dangerous not to adopt changes to anticipate new requirements.

The communication may be a crucial part as there is a need for franchises to exchange good practices or test the one they have developed. There is a need for the small units’ owners to find out if they are doing right, to compare their results and to receive feedback on their actions. Exchanges can take place between franchisees themselves or with managers whether it is done trough day to day electronic exchanges or during punctual meetings such as conventions. The choice of Information technology and the frequency of meetings may impact the overall quality of communication. A good communication process can affect the level of satisfaction and the overall motivation of franchisees. E.STITES in a paper called “Satisfaction is everything” (2006) states that franchisers should allocate more resources in measuring the satisfaction level of their members toward the brand; this is based on the idea that what is good for the chain is good at the unit’s level. Insuring franchisee’s satisfaction may lead to these results:

- Work harder

- Follow the system

- Make more money

- Easier to manage

- More loyal the brand

- Bring good ideas to the table

- Create a marketing or public relation opportunity

- Validate better

- Refer more candidates

- Renew their franchise agreements

Learning about the industry and understanding a brand approach may be also important as it is generally focused on the specific issues of that industry. This includes development of technical, commercial or management skills. This aspect is tightly linked with communication or a consequence of it. But it is more specifically related to a process of knowledge management where expertise is identified and recorded to be shared. Training program can result in formal meetings such as class, or to ICT choices such as forums and e-learning plat-forms; K.Powell (2007) mentions a example of a Californian franchise that implemented a Peer to Peer system to facilitate exchanges between the experts of the brand.

Virtual value chain creation

There are multiple opportunities to create value integrating ICT systems in the network of suppliers. Yet, in the virtual area these opportunities mainly relies on the abilities and the willingness of the actors to share information. According To jelassi (page 111), “opening up new opportunities to make this information available to customers, thereby increasing the value created, is the main goal of the virtual chain.” Jelassi mentions five steps to make information valuable: it should be gathered and organised, selected and synthesized by relevance, and finally distributed using the right format.

In the physical world, small retailers usually regroup under brand names or franchises in order to weight in front of larger competitors. This generally results in both concentration of resources and centralization of activities. Mother chains’ contribution to the value creation process usually appears under the form of cost reductions with effects of economy of scales, better product/service availability and enhancement in marketing proposals. Today many manufacturers simply refuse to deliver small quantities to the shops and concentrated their strategy to work with the chains. The use of ICT between chains and franchisees has globally amplified the results in these areas, but also contributed to develop the most crucial aspects today: the on time processing of orders and the transfer of information and knowledge. Therefore, chains have become as important to their franchisees as to their suppliers playing the role of information broadcaster and providing within the supply chain. Tapscott in the introduction of the book “Creating value in the new economy” states that in the new economy “knowledge, as the principal source of wealth, has become the source of value creation, and that work and learning are the same”.

Actors of the supply chain should be categorised in order to identify where to develop tight relationships. I propose the use of suplly chains’ Kraljic matrix ( Kraljic 1983) which was initially designed for the physical world to weight the strategic importance of the partners in terms of risk compared to cost. This model applied to the virtual chain can help identifying opportunities for new forms of partnership to generate value.

Exhibit 6 : Kraljic matrix applied to the photo distribution.

This figured was extracted from a previous work concerning a brand chain of photography and its relations with its partners. The two dimensions of the model are horizontally the costs and vertically the risk that are inherent to the transactions, representing the power and interdependence dimensions stated by Kraljic. Risk is related to the number of suppliers, it increases if they are only a few; it is also related to the nature and sensitivity of the supply in the strategy of the firm: i.e it may be more risky to stop relationship with one ICT providers as it would require more changes within the firm, than shifting from one delivery supplier to another. The following lines explain how the suppliers can be segmented and what nature and degree of relationship could be applied in accordance of their position

Bottleneck and Strategic items :

These are suppliers that small retailers cannot avoid, because they are only few and weight a lot in the market. They require long term relationships, high level of trust, and a lot of information sharing. The current collaborative scope should be extended by integrating ICT systems from shop website to the management of inventory, identifying relative ad equation in the objectives. This could be for example the connection of the web site to the ordering system of the mother chains. Retailers could enhance their relation with these suppliers providing accurate statistic information related to inventory turn over, accuracy of marketing proposals, and efficiency of processes. Automation of processes such as ordering and billing would obviously bring results in lowering costs by improving efficiency. Extraction of customers information should lead to improve the accuracy of commercial proposals at every stages. In addition, the more accurate figures retailers can generate to bring visibility, the best position they will have to negotiate purchases conditions or other forms of participation such as advertisement and allocation of resources from their suppliers.

Routine and leverage items:

These suppliers are the less “vital” but remain as important in the value chain creation process. The power is balanced by the fact that they are multiple choices for the retailers and that it is easy to shift form one to another. Therefore retailers can more easily act on the relationship and extract high values. For example it is easy to negotiate consistent and valuable guarantees services from insurances firms that are numerous. Web based services providers such as web designers, payment services, referencing services, forum plat-forms and form builders should be included in that area. I suggest that, although, the sharing of information with these partners is less crucial, meaning it is less subject to pressure, this the area in which the most opportunities to create high value are present.


One the twelve themes of the new economy developed by Tapscott is des-intermediation, the fact that using ICT technologies some firms may eliminate some intermediaries such as retailers, to directly interact with consumers. In the photo finishing industry the two main traditional actors, Kodak and Fuji chose opposite strategies. The first chose a “dis-intermediated” and cost leadership approach opening a B2C website that distributes its products such as camera and memory cards, and launched its own on line print services throughout divers websites worldwide. Consumers are directly linked to Kodak laboratories which deliver prints at home. Costly intermediaries have disappeared of the chain and, in Europe, production has been delocalised and concentrated in Poland. The second supplier chose the “re-intermediated” way opening both B2C and B2B websites to interact with consumers and retailers; Fuji offers retailers the possibility to connect their website to their plate-form meaning prints can be delivered at the customers’ or in store. This choice can be related to exhibits 4 et 5 in the previous chapter, highlighting the opportunity of creating value collaboratively in a process of “re-intermediation”. In addition it can be related to Kim et al quoting Porter: “Tight integration between a company’s Web site and its physical store locations not only increases customer value, but it can also reduce costs. It is more efficient to take and process orders via the Web, but it is also more efficient to make bulk deliveries to a local stocking location than to ship individual customer orders from a central warehouse (Porter,2001)”. In the mentioned example the local stocking location is the retail store, and information can be captured in both virtual and physical places. Tapscott bases the opportunity of re-intermediation on the ability to create value based on electronic exchanges; yet I would suggest, that they are more opportunities in that case to use an integrated approach of both physical and virtual assets, following Kim et al’s theories.

There are two aspects that cannot be taken is account with Kraljic matrix which are the role of consumers in enhancing the value proposition and the capability of the entire network of partners to enhance its own knowledge.

The first aspect mentioned is related to what Tapscott describes as the phenomena of “prosumption” when the consumer becomes an actor of the production. ICT enables the consumers to configure and personalise their orders; there are many examples of personalisation or customisation in divers industry: it could be choosing the memory capacity of computer ordered from Dell, the colour of seats at Toyota, or the addition of a personal identity number on a Ipod. The choice made by the consumer affects the entire process of the supply chain and directly contribute to its value creation process. The customer does not order a product but participates in building his own product. Therefore it is crucial to consider consumers as actively contributing to the value creation process and implement tools to measure their contribution. This theme is closely linked to another defined by Tapscott as mass-customisation, in which electronic exchanges enable the vendors to deliver high volumes of personalised products. ICT has enable on time reaction meaning that when a specific demand is being done, the entire supply chain is ready to answer immediately.

The second aspect is directly linked with the level of commitment of the divers actors of the supply chain to integrate electronic activities in their strategy. It is related to the level of adoption of e-business or ICT adoption. A firm using basic features of e-activities such as sending/receiving email has less opportunities to capture and extract consistent data to be shared with partners. On the other extremity of the ladder, a organisation that fully integrates the system generates opportunities to create value trough the knowledge it has developed. Therefore, the effectiveness of the value chain creation is mainly dependent on the organization around e-business activities themselves as shown in exhibit 7. The figures shows that the more a firm implies itself in a sophisticated approach of e-business, the more it will require organisational changes, and the more it will generate global benefits.

exhibit 7: the DTI ladder adoption



It would be unrealistic to think of a single store crossing the stages to reach the state of transformed organisation on its own. First, because it does not have the resources to develop and sustain such a process; furthermore, because reaching such a stage, implies by definition the implication of various human experiences and know how to be successful. Stores are rarely run by more than 3 or 4 persons. Yet, it would be more relevant to evaluate retailer's relative contribution in an inter networked organization. As previously mentioned the new economy is leading firms to be more customer centric in opposition of being product or market centric in the ancient one; therefore, I would suggest that the stream of value creation process does not any longer follow a linear process from factories to retail shops, but rather a circle movement that initiates and comes back to the consumers. Retailers, whether they are physical or virtual, as being the main touch points with clients, have become the upstream source of information; they are not any more just the last step who deliver the product. In that prospective the flow of information has to take its source in the retail shops and horizontally spread through the network of suppliers/partners, which implies that retailers should put themselves in position to provide information and weight more in the value creation process.

Value creation and pricing (updated)

It is commonly accepted that Internet has brought the possibilities for SME and micro societies to compete on new basis with larger competitors. The technology brought the possibility to open virtual stores either to communicate or sell to consumers worldwide. Like bigger firms, small retailers understood that going on line would automatically affect their volumes of sales, but in reality only few succeeded because they missed the real opportunities the media.

I will use the definition of value creation proposed by T.Jelassi and A.Enders in the book Strategy for e-business (2005; page 97-102) in a synthetic way before discussing the divers aspect of the concept.

In the book the authors state that the ability of a firm to create value is a required condition to reach and sustain its profitability. Nowadays, environment has become even more turbulent, it has become even more important to understand how value is created within a company, and how it is captured under the form of profits.

Jelassi (2005) proposes the following definition to value created: it is the difference between the value perceived by the customer and the cost to produce it.

Perceived value can take form as following:

- The product or service itself

- The speed of delivery

- The brand or reputation

- Convenience and easiness of use of a service

- Variety of choice, etc,..

The term of perceived value is used because the same feature may not lead to the same interest for every customers. For example, one hour photo processing may not represent the same value for a customer who lives near the store and another who lives 50 km, or if one hour relates speed to poor quality for him.

To be successful on the market place the value created must fulfil two requirements:

- Must be positive : costs must be lower than the benefit it provides. This does not refer to a accounting profitability approach but rather a safe line that should not be crossed, for example to avoid situations in which huge costs could generate poor customer’s benefits.

- Must be higher than the value created by competitors. A competitor could produce the same benefit decreasing its cost; or it might improve the benefit without increasing the cost.

Jelassi points many firms were bankrupted after Internet booming in the early 2000s as they were more focussed on the acquisition of new customers, and the growth of their revenues, choosing the way of lowering both costs and prices.

Internet and e-business strategies made cost reductions easier, and many firms chose this approach to implement their online deployment; this often lead to consider low pricing as the principal value proposed to customers. This trend is characterised as “the myth of lower cost and price” by Kim et al (2004), as they are no limitations to how much costs and prices can be reduced. This does not suggest no effort should be done in lowering costs, but more efforts should be allocated to create other forms of values to differentiate, as the role of value is to be turned into benefits for the company. SMEs cannot afford to be cost leaders betting on volumes and economies of scale; and they do not have the resources to resist successive price decreases or price wars. Therefore, to create value that is superior to competitors, SMEs should emphasis on extracting differentiated value at a the lowest possible cost, in a way that allows flexibility of proposals. Doing so, SMEs can either minimize the effects of price decrease by offering more, or focus on other proposals that maintain a satisfactory level of margin.

According to Jelassi (2005), the process of value creation itself does not tell anything about how it is distributed between the producer and the consumer of a service; it is the selling price that determines how the value created is divided, splitting in too entities :

- The producer surplus: the difference between the cost of producing/buying and the selling price of the service.

- The consumer surplus: the difference between the consumer willingness to pay and the price he actually paid.

Consumers generally look for products/services that offer the greatest surplus, but the price that they are actually willing to pay can be difficult to estimate.

From my own experience, pricing have always been a source of discussions between shop owners and/or salesmen; should the same price be applied on and off line? What should be the answer to a client asking for a discount, relating to a very low price seen on line? Answers always come under the form of objectives of margins based on accounting principles. J.Hogan (Journal of Business Strategy , 2006) identified that as an old twentieth century way to price, and as the first trap to avoid in an environment of global economy and expanding Internet market places. Pricing should be done in accordance with the value of the product/service, not the benefits it is expected to generate. The article, based on a study of 1000 companies, shows many examples of firms that increased their margins following that rule; actual examples show that products or services can be sometimes priced five times the price set by “accounters”.

Nevertheless, two factors influence the distribution of created value between consumer and producer:

- The structure or context of the industry: If competition is intense, as it has been the case for the past years in the photo industry, the balance should weight on the side of customers. As the actors are looking for market shares they either propose low prices or highly valuable bundles of products/services to protect their price.

- The relative level of value generated by the company: When a company manages to generate more value than its competitors, it owns the potential to generate more profits (Jelassi 2005).

Jelassi (2005) proposes one way to improve creativity in the process of value creation. Firms should be looking outside their traditional framework to find sources of value creation, meaning outside the standard business practices of the industry or “outside of the box”. I will use the value curve provide in Jelassi’s book to compare online and in store print ordering in terms of consumers benefits.

Exhibit 4: The value curve applied to photo processing on line orders vs In store

Online photo services has changed the standard of value creation in the industry, bringing convenience, customers can make their choice using their usual interface and the time they need. Equipment in large bandwidth enables a fast transportation of the pictures through the network, while maintaining a satisfactory level of quality: quality depends on the size/weight of the files.

I assume here that print ordered on line were delivered home and executed by a virtual actor. The comparison is done with a store that processes prints internally within an hour. The difference in convenience relies on the fact that the client has to come twice to the shop, to leave and pick up the work. The difference that occurs in the selection range may come from the fact that in the photo industry unlike in others, variety of options remains wider in store (it could be size of print, number of copies, quality type of paper et etc etc). The level of customisation is difficult to reproduce for pure virtual players, as it requires a lot of investments for small returns in terms of volumes. The difference in pricing can be justified by taking in account all the value that is added the right side of the figure (speed of delivery, personalised advice).

Exhibit 5: The value curve applied to photo processing home delivery vs In store delivery

I assume here that the same store can provide on line services within one hour and deliver the picture both in store and home. Price in store has changed, even there is still a difference, because I have assumed that the store provides a service of prepaid pictures as it became common these days: payment are done in store downstream, and price is based on the quantity of prints bought. Therefore price per units decreases; this way of consuming pictures was inspired of the photocopy industry. Convenience has raised because the client can chose the interface, store or web site, and only has to come once to pick up the work in store, or can chose to be delivered home. Some clients prefer not to find their enlargement bent in their mailbox, while others may not enjoy queuing at the post office to get their pictures; queues are usually shorter in retail shops.

Regardless of the choice of the generic strategy the main purpose of understanding how value is created within a firm is to identify a strategic advantage that should be capitalized. The essence of a strategic advantage, in a synthesised definition, resides in its uniqueness that makes it hard to imitate. This could take form of processes to lower costs or to produce differentiators. For example the strategic advantage of photo retail shops against pure virtual laboratories could be identified as their physical presence that enables delivery in store. A virtual player could be trying to copy the system but it would require the building of an entire network of shops; this would be much more difficult than the opposite, many shops building a website to sell on line. Jelassi (page114-115) initially suggests there are two opposed views of extracting a strategic advantage trough value creation, the market based view (Porter,1986) and the resource based view or core competency (Barney, 1991); the author finally proposes that both theories are consistent and complimentary. A firm should survey both the structure of the competition within the industry and focus on its inside core capacities to develop and sustain its strategic advantage. I suggest this approach is particularly relevant in a digital environment that has become customer centric; the customer has become part of the value creation process and the core competency of retailers may become to develop and share this knowledge.

As mentioned previously, the consumer perceived value is a variable that relates to the consumer, it localisation and other factors. These factors cannot be omitted in the value creation process; furthermore, they became easy to identify using ICT technologies. Retailers are in direct contact with their customers. Knowledge of the clients used to be their strategic advantage and core competency allowing them to provide very personalised services. This knowledge was built on informal and implicit information base on the conversations with the clients. Shops passed one stage by integrating the use of computers to record their sales, leading to little more formal knowledge. On the other side, Internet has enabled a very deep knowledge by recording all transactions and traffic. Large companies which succeeded in implementing efficient ICT system have reached level of mass-customisation of exchanges (Tapscott), narrowing the distance with their final customers and competing in the field of the retailers.

R.Amit and C.Zott propose a model (exhibit) that highlights the four sources of value creation. This tool can help identifying in which areas retailers could be adding value.

Efficiency is generally related to areas where costs reductions can be achieved through economy of scales, speed of transactions and symmetry of information. The authors state that the more information flows in two ways between buyers and sellers, the more reactive are the actors of the chain.

Complementarities concern the additional products or services that can be bundled within a purchase. Different level of complementarities can be developed; for example the most obvious would be to propose bundles of photo print with frame , but it can also reside in the synergy of on line and offline print ordering.

Lock in refers to customers’ retention. The more customers are loyal and repeat transactions, the more they will contribute to value creation by giving chance to customize the service. This aspect is also related to network effect, as the more clients use the service the more chance the firm has to develop value and attract new users. Value perceived may come from the convenience, easiness of use of the service, the network effect itself, and the reliability of third parties such as payment services.

Novelty is related to the innovation’ contribution to the value creation. This could be technological innovations or new products, yet the best opportunities are to be found in the transactions processes. For example, it may be valuable to transfer the pictures stored in a came phone directly to a website, the transactions being billed monthly on the telephone invoice.

Internet adoption and the SMEs

Exhibit 2 : E.ROGERS’ Diffusion of innovations theory

This model is inspired from the adoption curve of E.ROGER (xyz) is used to classify adopters of a new technology and monitor its diffusion. Rogers’ theory states that adopters of any new innovation could be categorized as innovators, early adopters, early majority, late majority and laggards. Characteristics of these categories are described further. The horizontal axis represents the life time of the technology; this length of time is variable but always follows the same path, accordingly to two factors. The speed of adoption take off and the speed at which later grow occurs. Factors could be the price to access the technology (if it is cheap take off should be quick), and its ability to spread the network effect. This tool can be used to help marketing decision, as it enables to identify the potential users of a technology in time; in other words, it can be used to test the maturity of a technology on a market. It helps measuring the investment risk, targeting the right consumers at the right time. Investment can be done at the pike of the curve, when the maximum amount of consumers will be concerned; marketing strategy can be voluntarily targeting other profiles of users, i.e. to enter a niche market.

Here follow the categories of users:

(source: www.valuebasedmanagement.net )

Innovators: Brave people, puling the change. Innovators are very important communication.

Early adopters:
Respectable people, opinion leaders, try out new ideas, but in a careful way.

Early majority:
Thoughtful people, careful but accepting change more quickly than the average.

Late majority:
Skeptic people, will use new ideas or products only when the majority is using it.

Laggards:
Traditional people, caring for the "old ways", are critical towards new ideas and will only accept it if the new idea has become mainstream or even tradition.

In small retailers photo store there used to be a natural segmentation of two categories of customers: these who buy on line and these who buy in store.

I used this curve to evaluate the adoption of Internet use in photography consumption, and more specifically the photo finishing consumption. One of the question to answer for a small retailer could be : Is it the right time to invest and build a system that enable on line photo consuming? Or, in other words, identify in which stage is currently evolving the online photo market, and what segment of adopters should be the target going on line now?

ccording to the SIPEC study, Internet has directly impacted the way to consume photography during the past years. In 2000, 4% of the prints were ordered online, today it represents 16% of the total prints orders[1]. The growth is recorded with 100% of progression per year as the number of shots increase. Yet, Internet also brought many new possibilities for the consumers to store, organize and share their pictures. PMA study estimates that 2/3 of shots were not be printed in 2005, but does not mention what have been done with these pictures. As of 2006 Snapfish, a web company that proposes storing, sharing and printing services since 2000 claims to have over 19 million members, and houses over 350 million unique digital pictures (wikipedia). Another survey from the web company Hitwise reveals that Snapfish’s market share of visits was only 4,06% towards the other players of that market the 17^th of June 2006 (exhibit 3). PixVillage a French peer to peer company dedicated to photography sharing announced in April 2005 that it had recorded the sharing of more of 1 million photos; in September 2006 the number was over 3 million.

Impact of network effect can be clearly identified in the growth of the studied market, and the role of incremental Internet innovations may be as well. That is a point on which Roger’s model can be criticised for being a too simple representation as it does not explicitly assess the interaction between the technology and its adopters.

Roger Clarke, in the article A Primer in Diffusion of Innovations Theory (1999) states that the nature of innovation might be impacted itself by the users as it is moving through the stages of adoption.

According to Clarke the stages through which a technological innovation passes are:

• knowledge (exposure to its existence, and understanding of its functions);
• persuasion (the forming of a favourable attitude to it);
• decision (commitment to its adoption);
• implementation (putting it to use); and
• confirmation (reinforcement based on positive outcomes from it)

Important characteristics of an innovation include:

• relative advantage (the degree to which it is perceived to be better than what it supersedes);
• compatibility (consistency with existing values, past experiences and needs);
• complexity (difficulty of understanding and use);
• trialability (the degree to which it can be experimented with on a limited basis);
• Observability (the visibility of its results). proposes a set of characteristics to define the stages of a innovation diffusion.

During the period concerned by the statistics surveys, Internet improved in several aspects such as the development of Web2.0 and peer to peer functionalities. The purpose here is not to discuss if these technologies have to be considered as incremental or disruptive technologies against the “traditional” use of Internet. Facts show that these technologies contributed to the success of the firms quoted in Hitwise survey. On the other hand, these firms managed to enlarge and fasten the process of adoption, basing their activity on consistent business models and value creation processes for the consumers. .

Speed and succeed of adoption are therefore based on a combination of elements that are inherent to the technology capacities, and the adopters actions on them as well. For example, XML technology has made the Internet easier for users, and users have turned this technology into valuable features such as Web 2.0; online storing of pictures has proven relative advantage against the old way (i.e. CD storage) but firms contributed to it diffusion making it “try able and observable” by making it valuable, often almost for free.

Therefore the initial question “Is it the right time for small retailers to invest and build a system that enable on line photo consuming?” should be formulated as following: “what could be the small retailers’ contribution in diffusing the use of Internet in photo consumption?” The issue is not anymore to find out whether they have opportunity to target early adopters or majority. It would rather be evaluate their own capability, in terms of business model and value creation process, to go and generate revenues on line.