Innovating your business model
Amazon – The Grand Daddy of e-commerce model
I’ve recently stumbled upon a great and imaginative business model. Naked Wines helps winemakers sell their products online. But they’re not just retailers, Naked Wines also invests in independent winemakers to make exclusive wines for their customers.
Business models are not rocket science. As we enter 2013, now is the perfect time to re-think your business model. You can innovate your business model simply by tweaking how you provide your product or services.
Think about your customers. What are their grouches and pain points? If you manage to solve these for them, then it’s really just about execution and keeping your costs low to succeed.
What is my business model?
A business model is how a business generates revenue and profit from their operations. When a person asks you what your business model is, he or she is basically asking you how your business makes money. But don’t just be satisfied with this explanation. There is so much more that can be gained from this concept. It can reveal to you what your unique selling point is.
So you create something marvellous that people genuinely see a need for and they buy it. We call that ‘invention’. That’s brilliant. I hope you get to do that someday. But Amazon didn’t invent books, Richard Branson didn’t invent flying, and eBay didn’t invent auctions.
When we talk about business model innovation, it may very well be that you provide the same old products you have always sold, but you create or build a new approach to service the customer. Maybe the products are just bundled in a new way or bookings are made via a different, simpler system.
Here are some powerful examples:
Naked Wines introduced the concept of “Wine Angels.” These angels are investors who chip in a small amount (usually $40 per month) to aid artisan winemakers in their production of high quality wines. Essentially it is a subscription service. The winemakers don’t have to worry about marketing costs, since there are people crowd sourced by Naked Wines who are ready to snap up their products. Wines are one-of-a-kind (you can’t find them at any other store), and winemakers have funding to further improve their craft. Same old wine, but new delivery to market.
Amazon is the big daddy of all ecommerce websites. Their successful business model has been replicated over and over again. Initially they were a simple online bookstore. Amazon then diversified and remodelled itself into being an online marketplace for all sorts of items.
Their website is packed full of goodies consumers would want to know – reviews, best-seller lists, shipping info, the works. They are also fast, reliable and efficient in delivery.
Here, sellers can set up their very own online store and post their handmade creations to sell to people who are looking for unique items. Beats visiting some of the nanna markets I’ve seen.
The most exciting businesses for me are the ones at the forefront of business model innovation. Think of innovation in this way, and you might create a new opportunity in your industry.