Readings:
Business Models
Dollar shave club
Warby Parker
Menswear startup Bonobos
Hointer
The internet has the ability to drastically ease the
barriers of entry for any business- be it retail- B2C, B2B, IT services, Consulting
services by leveraging the virtual infrastructure rather than the physical one.
This significantly reduces initial investments needed to get the venture off
the ground. Allows manufacturers to source raw material and manufacturing
infrastructure from all over the world and get the product/ services to the
market without investing in a traditional distribution channel (at least
initially) or traditional media based advertising and yet have a wide enough
reach. As opposed to opening one retail location to test the market, you now
have the ability to reach a sizable population of customers to ensure the
product/ service will succeed.
The Web has taken traditional business models and added its
own flavor to the various pieces- be it value proposition, revenue, key
activities etc. Amazon web services (AWS) is a great example of how firms now
can offer products/ services through the cloud. Over the past few years, my
firm is in the process of productizing its proprietary technology and offering it
as software over the cloud. The AWS has significantly eased the barriers of entry
into the software world in a big way by giving a small business the ability to
reach many customers through the Web without investing in its own infrastructure.
The SaaS model has completely rewritten the traditional software models by
significantly reducing infrastructure needs for both the consumers and the
developers. The App store and its numerous apps have spawned a whole generation
of entrepreneurs by providing both the infrastructure and the channel to bring
their innovative apps to the consumer.
I see business models gradually morphing to suit the current
generation’s lifestyle. The current consumer leans heavily on technology on a
daily basis. This has resulted in a number of firms reaching the consumer
through the Web. Amazon’s revenues in 2013 were $75 billion with over 80
million unique visitors every month (https://www.quantcast.com/amazon.com).
Amazon has changed the way we shop- for books and everything else! I see Hointer,
Bonobos , Warby Parker and Dollar Shave Club an offshoot of this lifestyle
based marketing. Clothes were an item I (& most people) refrained from
shopping online given the need to touch, feel & try before buying it.
Hointer and Bonobos have changed one of the most painful experiences men had to
endure- shopping for clothes. It’s now been made easy, with as little human
interaction as possible! As this trend gains ground we are seeing traditional
brick and mortar stores gradually go out of business (Borders, Circuit City) or
dramatically modify their business models (Macy’s, JC Penny, BestBuy).
As with retail, the media industry is also shifting to the
Web with most of us relying on the internet for our daily dose of news and
entertainment! The web has brought about a paradigm shift in the creation and
consumption of content. In has completely removed barriers of entry into this
world by letting anyone with a computer or a mobile phone to create content and
reach millions. This is forcing traditional content creators to completely
rethink their business models. A great example is AMC with its interactive apps
for the various shows letting viewers get more out of their television
experience and incentivizing live viewing by letting them participate! Network
TV is facing the brunt of the growth in digital media with rapidly dwindling advertising
revenues. Youtube and other media outlets provide a great channel for content
creators to reach viewers without expensive infrastructure or bureaucracy.
The web has altered the way we work, shop and play- forcing
firms to change the way they conduct business. Easing infrastructural barriers
has spawned unique business models that cater to today’s life style. This is a great report by Ernst & Young
on digital retail and its effect on brick and mortar retail. http://www.ey.com/Publication/vwLUAssets/Digital_retail:_analyzing_the_effect_on_retailers/$FILE/Retail_thought_leadership_Digital_Retail.pdf.
But web based selling does provide a great amount of data on customer buying
habits and preferences allowing firms to tailor their offerings. http://mashable.com/2014/01/21/amazon-anticipatory-shipping-patent/
is a great article on how Amazon knows what you want!
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