|It makes a lot of sense for small businesses to enter online. The extremely cheap setup cost, coupled with a wordwide audience and a 24X7 open shop makes it an attractive proposition. There has hence been a spurt in the number of online stores ever since the WordWideWeb started. |
But the business model in which such websites operate makes a great deal of difference. I shall take up three examples to show how effective or not effective these different models can be.
This is a model that most businesses follow. Fridgedoor is basically an online shop for fridge magnets. The model is quite simple. Display the catalog online with the price, allow a secure transaction gateway (like Paypal) and sell. You may as well use affiliates to sell the product for you, whereby you pay commissions to those who sell them for you. You may use CommissionJunction for such purposes.
Though the model looks quite robust, it can go wrong in its implementation. It pushes you from your core competency into territories that you don't know. For instance, though FridgeDoor's core competency is meeting the supply-demand gap of FridgeDoor magnets, this model requires a host of other things, like increasing the page popularity using SEO techniques, working out a proper affiliate commission model so that the commission paid is neither too less nor too high. It is not that the other business models I shall discuss, do not require them. They require them too. But, the return on investment is higher there. Also, FridgeDoor is a hit because it was one of the firsts in its niche, so that it has been able to retain its leadership ever since. However, a company starting now may find it difficult simply because there are too many existing players in every possible niche that gaining customers through this model may be a tough ask.
CafePress is a unique example which operates outside the conventional model. "If you have to get over the existing big players, get new players in the fray". CafePress is a website where you can shop for tshirts, caps, mugs, and other gift items. You choose the item, and they make them and ship it to you for a fee. This is very similar to FridgeDoor. But their way to increase business is through getting people with good design but lack of resources (read tshirt printing expertise) to get into the business by simply making the design for the tshirt or cap and promoting them on their website. This way, both cafepress and the designer make money for what they have done.
So, where does the company benefit? Here, CafePress has not spent on areas outside their expertise like SEO. They have not spent on new design research, which the seller base has taken care of. They only fufil the orders, and money spent is on promotional activities, which is an inevitable need for any firm. This besides, CafePress has also taken to the affiliate mode of business (which has the roadblocks that I mentioned earlier). But the fact that the website has already garnered a user base that is ready to design the products makes the publicity effort much more easier.
This is the most exciting business model that is exploiting the environment of web 2.0. Moo is again in the printing business, and they print cards. Their business model is to use the current online social networking scene to gain a customer base that would have never used their products otherwise. Moo calls for users to take their online relationship offline, and to do that prints 'minicards' for distribution. Now you can use these cards to provide your Skype or simply your email address to your contacts as an alternative to business cards.
To find the customer base, Moo has taken to Social networking websites like Flickr and Bebo. Since these websites provide an exponential referral list, targetting the web users in this model would mean that if the website can get one user to print his Flickr photo on the card, then his contact list could be the next target for a Moo purchase. This model has so far been extremely effective, since the 'modus operandi' is fresh and interesting.
A mixed model?
Now, the purpose of me discussing the three is not to judge the best model. This is because, not all kind of products can be marketed using one of the above models. But, there is definitely a lot of potential in a mixed model. For example, FridgeDoor can print Flickr photos on their fridge magnets, and hence a tieup with Flickr shall not be a bad idea. Fridge Magnets are a great gift-material and hence the company could try out some newer models to increase customer base, rather than trying the conventional model. No matter FridgeDoor has been an extremely popular site, but, gaining newer customers this way is not unwanted either.
Though Moo's model is exciting, it is something not all businesses can copy, simply because not everyone prints business cards. However a brainstorming can lead to many other similar exciting business models. But, a little competition to Moo's model is not bad after all.
Labels: Business Model Analysis
- Implications of changes in the Adsense ToS
- Age of Google: Branding an alternative Search Engi...
- Next Generation Image Search technology
- Embed Flickr slideshows on your blog
- Beautiful colors for your blog
- Watch TV Online while chatting with friends
- SMS Backup on your Yahoo mailbox
- Elicit - Blog client software for enhanced content...
- Create your own remixes
- Create your own Video surfing webpage
Del.icio.us | Digg | Google | Reddit