This week we covered a formal description of business models, noting their specific components as defined by Michael Rappa. These components are:
- Value proposition
- Revenue model
- Target customer
- Distribution channels
We were then tasked to look at organisations with similar business models to Google, Amazon and Netflix. I selected Facebook, Fishpond, and Github.
- Value proposition – Connecting the world socially
- Revenue model – Advertising
- Target customer – Anyone over 13 years’ old
- Distribution channel – web, apps
- Value proposition – New Zealand’s biggest online store
- Revenue model – commission
- Target customer – people in New Zealand
- Distribution channels – web
- Value proposition – Online collaborative code repository
- Revenue Model subscription
- Target customer – developers who want a code repository
- Distribution channels – web and apps
We then were tasked to discuss differences between B2B and B2C business models, where B2B focuses on the supply chain of raw materials, to manufacturers, to distributors, to retailers, versus the B2C supply chain of Retailers to Consumers.
The Internet makes it possible to disintermediate companies from the supply chain. A good example is Amazon.com which plays both the role of the Distributor and Retailer. As Amazon gained experience in distribution, they then expanded themselves to offer that as a service to other organisations notes (Services.amazon.com, 2015).
The most interesting change I believe the move from Manufacturer to Customer, bypassing Distributors and Retailers, a good example of which is AliExpress (http://www.aliexpress.com/). (Aliexpress, 2015) states the purpose is the find wholesale products from China Wholesalers, allowing customers to purchase at far lower costs, but with less confidence about quality, than through a retailer.
The final focus for this week was to focus on a business model that wasn’t covered in the lectures. The business model I selected was disintermediation, where airlines sell directly to customers via their online booking websites, rather than going through a travel agent. The most well known airline in New Zealand with online booking is Air New Zealand at http://www.airnewzealand.co.nz. Interestingly, the experience gained by Air New Zealand in online bookings has allowed them to expand their offering into booking hotels states (Airnewzealand.co.nz, 2015), which is reintermediation in a different associated industry to airlines. The net consequence is that travel agents are starting to move to a Pay as you go model, where each booking is paid via a service fee directly to the consumer notes (Houseoftravel.co.nz, 2015), rather than being subsidised through rebates by the airline.
Another example of disintermediation is (Apple.com, 2015), who sell directly to consumers through their stores or online. However, they haven’t fully embraced disintermediation, and still wholesale to other retailers.
Finally, we needed to create a business model for a startup idea. I choose Eneropp, a startup I’ve created which is a subscription service for energy utilities which allows them to quickly provide a mobile online services website and app to their customers (Eneropp, 2015). The business canvas I created is:
The business model the start-up uses is Lock-in & Subscription in combination.
Services.amazon.com,. (2015). Boost your sales with Amazon’s world-class fulfillment.. Retrieved 24 July 2015, from http://services.amazon.com/content/fulfillment-by-amazon.htm
Aliexpress,. (2015). Find Quality Wholesalers, Suppliers, Manufacturers, Buyers and Products from Our Award-Winning International Trade Site. Wholesale Products from China Wholesalers at Aliexpress.com.. Retrieved 24 July 2015, from http://www.aliexpress.com/
Airnewzealand.co.nz,. (2015). Hotels – Air New Zealand. Retrieved 24 July 2015, from http://www.airnewzealand.co.nz/hotels
Houseoftravel.co.nz,. (2015). Fees – House of Travel. Retrieved 24 July 2015, from http://houseoftravel.co.nz/popups/fees.htm
Apple.com,. (2015). Mac – Shop Mac Notebooks & Desktops – Apple (NZ). Retrieved 24 July 2015, from http://www.apple.com/nz/shop/mac
Eneropp,. (2015). Eneropp. Retrieved 24 July 2015, from http://eneropp.com/