Week 4 Web Business Models

 What did I read or watch: This week I found very interesting. Especially the examples, but I'll come to that later. So the first two bullet points were reads and the other ones were video clips.

· Business Model Generation p 56-119

· Business Models on the Web

· Warby Parker

· Bonobos

· Hointer the new way to shop

· Recorded breeze session on “Emerging Business Models on the Web”

 Topics discussed, messages conveyed and content learned through the texts:

The text in the “Business Model Generation” describes the unbundling of businesses. The non-core types of business and activities can be spun off, as is described in the Telco example. The different business types could also coexist in the same company, but need to be treated as separate units with a different focus. The Long Tail as business model advocates for selling a large number of niche products. Which is what Seth Godin stresses when he recommends looking at the un- or under-served fringe customers. The business model can also be based on connecting content providers with content consumers. These Multi-Sided Platforms allow the enterprise to profit from both groups, but both groups are essential for the business to succeed. As discussed in previous weeks the goal is to turn passive users into active participants.

The text on “business models on the web” discusses the different categories of web-based business models and the opportunities that exist within each category. It also suggests how traditional companies, such as manufacturers, can adapt to the digital world. The internet strategies that could implement for the different businesses are exhaustive. It was good that the text came with examples to understand how that concept can be implemented. Reading the article really gives you a sense of the number of ways businesses can incorporate web tools into their existing business model or start a new line of business solely based on the web. I think the author did a good job breaking down the different web-based business models, and I was amazed at the different sub-categories there exist within the 9 main categories.

Discussion of the examples presented:

Most exciting for me were the examples of Warby Parker, Bonobos and Hointer presented in the videos. They show how brick and mortar storefronts can complement the online retail business. The challenge for a web business is to figure out how they best interact with the customer and how to set up the transaction with the customer. The customer will only accept the model if it offers him a convenient purchase experience. In the fashion industry, which includes apparel and eyewear, a physical customer contact point needs to be positioned before the transaction so that he/she can choose a product that fits her/his size and style. In traditional online retailing that’s hard to do, and mailing back unwanted items is the opposite of convenience. Netflix figured out a system how to ship DVD to the customer and have him return the item in a hassle free way 10 years ago, but that system can’t easily be adopted by the apparel industry with its bigger items and customer specific components. Customers don't want to have to package the unwanted item and drive to a postal office or UPS store in order to mail it back. The idea to use a physical brick and mortar storefront to allow customers to check out the products and pick an item they like, and have the rest of the transaction done online combines the advantages of traditional with online retail. The retail space those hybrid businesses rent doesn't need to have much storage and can be smaller and cheaper than is required for traditional stores. That cost savings allow higher margins and part of it can be passed on to the customer who enjoys the low sales price of an online business and the peace of mind to have bought the right item and not having to deal with returns of unwanted ones. After all the fear of buying the wrong size, color or style, and having to send it back and waiting for the replacement is what keeps many people from ordering more online. For online retailers it can also mean a boost in sales since customers who step into a store are more likely to do a purchase than someone visiting the website of an online retailer.