Week Two – Business Models

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.

Facebook

  • Value proposition – Connecting the world socially
  • Revenue model – Advertising
  • Target customer – Anyone over 13 years’ old
  • Distribution channel – web, apps

Fishpond

  • Value proposition – New Zealand’s biggest online store
  • Revenue model – commission
  • Target customer – people in New Zealand
  • Distribution channels – web

Github

  • 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:

businesscanvas

at https://canvanizer.com/canvas/DDbgBJ-KhRQ

The business model the start-up uses is Lock-in & Subscription in combination.

References:

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/

8 Replies to “Week Two – Business Models”

  1. Some great examples there. I see that your a b it of a coder? iphone/android? How would you get around the same/similar look and feel between energy customers?
    One challenge you may have is when energy companies resell 3rd party services like internet, provisioning is not as ‘automated’ as you might think it is 😉 from what i understand.

  2. I will present you with the same questions I asked Ayden.

    Have you played around with the business model? I.e. is this the first one you have come up with or have you done a number of “prototypes”. Also do you intend on “getting out of the building” and testing your assumptions.

  3. What is your general feeling about the business model canvas? Is it a good yardstick, is something missing? Since you seem to have experience in this field, I’d be interested in hearing your comment.

  4. I’ve used business model canvas in the past for previous startups, but I didn’t for Eneropp, because I had a pretty intimate awareness of the startup, the market, and the audience. I did use http://www.liveplan.com/ to create a Business Plan Online, which covered the same sort of information but in more detail.

  5. I’d start it as a mobile website, and then focus on using Cordova to create the iPhone/Android apps. From a theming perspective, it uses Jquery Mobile, so I use the Jquery Mobile Themeroller (https://themeroller.jquerymobile.com/) to change the style of the apps. Also, the business plan wouldn’t be to sell to the same energy companies in a particular region, to create a sustainable competitive advantage in using the Eneropp platform. As for if energy companies resell other services then I probably won’t target those companies in the first instance.

  6. This was the first one I’ve put together for this business, I’ve done others for other businesses. Once the business model canvas was complete, it was through the creation of the company, and the building of the products which is how I tested the assumptions. Really doing a minimal viable product, rather than doing too much testing of assumptions to be honest.

  7. I think the business model canvas is a useful thought exercise, because it helps you to think about all the components of the business to consider. However, once it’s done, it’s more useful to start drilling into the detail, which I did by creating a business plan online (http://www.liveplan.com/). I think it’s an OK yardstick, as it goes someway towards describing what the business should look like, but it doesn’t really describe any measures, such as costs of partners, or benefits to customers. I guess that’s not its purpose, but those are useful ways of describing whether a business should be created or not.

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