The EasyInternetCafes were the subject of yield management approach as it answers classical criteria for that sort of services:
Cafes are large, but their capacity is nevertheless limited; the Internet services are highly perishable product, once an access hour is over, there is no possibility to regain it and put in inventory or resell it.
From the other hand there is a possibility to forecast the consumer behavior, as demand differs by time of day, day of week, but also across other time and season.
Fixed costs are stable, no matter how many persons are there in a café, the bandwidth is the same.
The chain offered a dynamically priced product, which was a breakthrough in customer service management: as the occupancy (the number of customers) in the store increases, so does the rate per hour they pay.
From the other hand that could provoke some confusion from a customer understanding how much he will pay: prices are flexible while the access is provided by days:
http://www.easyeverything.com/offer/index.html
In addition, lowest prices and franchisee management could be often a source of true neglecting the clients:
http://www.easyinternetcafe.com/forum/viewtopic.php?t=14
Meanwhile, it was reported that a very high percentage of customers thought that Easy cafes represent good or excellent value for money.
Financial issues
Nevertheless, despite the huge amount of cyber points, venture is lost an estimated USD 150 millions in the years 2000- 2003.
The analysts measured that a customer would not go out for internet purposes only, so that pushed the management to create partnerships with fast food outlets.
According to the FT, the company leased expensive freehold property.
The management is blamed as for operational faults, as the cafes were too large - economies of scale don't materialize if they are half empty; company purchased sophisticated and expensive information technology; staff overheads were excessive. By mid 2001, with cash running out and the original partners like HP being not prepared to advance further funds, immediate action was necessary:
•EIC issued 1.5bn £1 shares at a 1p (£0.01) each. This immediately devalued the holdings of the original shareholders to almost nothing. Many employee shareholders were badly affected.
•head office staff were cut from 60 to 20 and store staff by 75%.
•excess space at front of stores was sub-let.
•unprofitable stores were closed.
•a franchising plan is being developed.
The future will reveal whether the above actions are sufficient.
CyberFuture
Some points are to revise:
-there are more and more people have Internet access at home, even more - free points at their work or study places; we could expect the expansion of internet access by mobiles or affordable options of satellite access;
-targeted clients should be more attentively defined and so café’ locations could be changed;
-how the idea of internet access could be combined with other services or attractions – searching for other strategic partnerships;
-revise the customer perception of dynamic pricing? Do they accept it or they find it irritable? Do they understand that a cafe is uses dynamic pricing or are they confused at paying a different price on each visit?
-how does its pricing compares to the numerous flat rate schemes of unlimited access that becomes evidently even cheaper than any hours access?