Is Your Current Business Model Working For You?

Business Model innovation has enabled business owners to explore various avenues for growth in a quick and cost productive way. Businesses no longer have to stick fast to a ‘bricks and mortar’ business model. There are profitable opportunities out there for business growth if you take advantage of business model combinations. Adapting your original model or combining models doesn’t have to be costly either, if you utilize the Business Model Canvas, for example, to explore your options.

3 Business Model Examples:

Bricks and Clicks

A bricks and clicks model allows you combine your offline retail business with an online customer service. Instead of your customers being restricted to shopping within certain time periods, e.g. store opening times, they could order online (click) and pick the item(s) up from your store at a time more suitable to them.  So, if you already operate a bricks and mortar business model, i.e. a business that sells products directly to its customers from a  shop front, for example, you could provide a more convenient service to you customers and expand your customer base. You could take this even further by combining a delivery service.

Razor and Blades

The razor and blades model was originally attributed to Gillette, where razors were sold at cost but the blades to go with them were expensive.  Therefore, it wasn’t the razor that made the profit but the subsequent sales of consumables. More recent examples of this model include, Nespresso, which sells coffee machines and their own coffee capsules to fit them. The premise is, if customers buy a Nespresso machine, they have to buy the capsules too; and, if they want to change their coffee, they will have to invest in a new machine.  Apple is another example. It originally sold hardware and software but expanded into online services with their iPod and iTunes.

Subscription

A subscription model is where customers have to pay for a service on a regular basis, e.g. monthly or yearly subscription.  Magazines, newspapers, internet/broadband providers are only a few examples.  Babba Co, an American company founded by Jessica Kim, initially developed and sold products for the baby and toddler market.  She added another dimension to her business model by introducing a subscription service to mums that provides a monthly activity box for 3-7 yr olds. Combining business models helped her competitive advantage and took her company to a whole new level.

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