Business Model covering the Core Value Proposition & Methods of Revenue Generation - ABP E-Business Assessment Answers

ABP E-Business AssignmentHelp

You are required to identify 3 online businesses that you feel are innovative and write a report outlining their business models. The three examples you identify should not all be from the same country. They should also be from organisations that are of a different size (i.e. not all from 3 large organisations or 3 small organisations).

The assignment assesses your ability to be articulate, informed and to apply business model concepts to three real businesses demonstrating an awareness and understanding of the range of issues and factors involved. The business report will be assessed on the basis of:

• Clear and logical discussion of each Business Model covering the Core Value Proposition, the Sources and Methods of Revenue Generation, the Costs of Revenue Generation and the potential for growth stating any assumptions that you make

• Application and understanding of business model concepts
• Identification and use of three appropriate innovative business models giving examples of organisations following them from different countries/sizes of organisations
• Evidence of wider reading/research to substantiate the discussion
• Justification for statements made (e.g. logical reasoning rather than unsupported statements)
• Critical appraisal rather than pure description
• Suitability of the three businesses proposed
• Clear title, summary, contents and conclusion
• Clear citation and referencing (sources – relevance, range, citation accuracy)
• Professional standards of presentation

The businesses need to be innovative and therefore NOT from the ones that are widely known about and have been around for many years like Alibaba, Amazon, Google, Yahoo etc. You will be marked down if you use well known traditional online Businesses that are not particularly innovative.

Juicero

• Introduction

Juicero is the inventor of one of its kind juicing system. This San Francisco based startup has recently launched the high tech, one touch juicer. It is the first cold pressed home juicing mechanism. After almost three years of research and hard work, the company has finally brought this unique product which makes organic, raw juices within seconds. This technique is tested over time and extracts high quality, zero additives and nutritionally rich fresh juice at home. Doug Evans a veteran from juice industry is the brain behind this revolutionary juicing system.

• Summary

The mission of the Juicero team is to help people drink freshly produced juice in a convenient and regular basis, given the fact that on an average people consume half the amount of fruits and vegetables as recommended by USDA. Also it is difficult for an individual to consume the recommended amount in a single day i.e. 5 cups of fruits and vegetables. Thus this out of the box, progressive engineering and carefully handpicked farms is introduced with the aim of manifesting good health.

• Core Value Proposition & Business model

The core value proposition or the main benefits of the business model is an important factor for the success of any business. Juicero has clearly defined as to how it is an ideal and interestingly innovative appliance for a smart kitchen. The company had positioned its product with a simple yet attractive tag line “One is Mission to Deliver Good Health in a Glass” (Juicero, 2016).

Juicero produces pre-chops and triple washes the fruits and vegetables, and creates ready to juice packs. It is a smart juicing method, unlike the traditional juicer it is way quieter and smarter way of getting fresh juice in a glass within seconds. Juicero presents a very unique value preposition i.e. a non messy, no chopping, no cleaning, no wash, no water, dry pulp juicer. Also the design and the size fit any kitchen counter. The juice is extracted by crushing the fruits and vegetables and not by grinding them which gives a good quality, smooth juice and because of the cold press technology the flavors are not lost as no heat is used.

The app connects the juicer to internet making it more convenient to make juice from anywhere and without wasting any time. This app also tracks which, what and how much nutrients are being consumed etc. It also offers personalized weekly subscription with doorstep delivery of the pouches which can be altered as per requirement. All these features make Juicero uniquely different from all its competitors.

The business model has invited criticism because of pricing and juicing standards highlighting the loopholes as well comparing it to its competitors.

Especially the following:

1. According to one of the leading newspaper organic juices which are pre-made are cheaper than the ingredient pack of Juicero. Juicero comes with a minimum subscription of about five packs, which costs around $7 to $10 for a pack, which sums up to $1,680 to $2,400 in a year in addition to the actual cost of the Press which is $699. (Gelula, 2016).
2. Considering the fact that the juice packs are not being recycled currently and discarding the plastic packs is not an environment friendly method. Though it has been decided that these plastic packs will be recycled through Terracycle eventually. However taking into consideration the quantity of plastic bags it will go through, it is unhealthy for the planet.
3. The juicer uses Wi-Fi connection to monitor the freshness of the packs, delivery of the packs, expiration date and dispensing the juice. Thus there is a dependency on need for a Wi-Fi connection.
4. The company has just started and is available only in few places, where they have their farms and production unit. Thus it is not available in other countries.
5. Thought the innovation of Juicero can be called above the average high end juicer, still it fails to solve real matter of increasing the access and affordability to organic juices.
6. It can’t be denied that Juicero delivery nutrition unlike other pre made juices. But it won’t be long enough when users will realize the fact that instead of using an expensive appliance of $700, it is more economical to directly consume the ingredient pack as salad.

• Revenue Generation & Competitors

Juicero has risen $90.5M in 4 rounds and through 17 Investors till date. With $16.5 million in Series A financing and $70 million in Series B. It is now in the process of raising even more, which is currently $28 million, (Anon, 2016). The challenge for Juicero is to create large user base to increase the production and eventually the presence in the existing as well as potential countries.

According to analysts the rising concern for health has affected the sales as people are gradually more worried about sugar level and increasing health problems related to it. Even in the case of its occurring naturally.

As of now the only competitor of Juicero is LivBlend which delivers the somewhat same kind of fresh juice. It is an attractive smoothie maker with self cleaning technology and ultra modern design. Juicero is maintaining its market share by effectively raising money by creating household products as well as a whole range of agricultural produce. Thus it is attracting attention of major brands by growing fresh fruits and vegetable, and supplying them to different parts of the country.

• Conclusion

The future of the company is linked to increasing the accessibility to the fresh fruits and vegetable in the neighborhood, where it is hard to be found. It is a major milestone that needs to be achieved. For the company to grow they should increase the affordability as well as the availability of the product. Even if the success is not measured on the basis of high priced and affordability of the product, the ease of access to those who need healthy food will have an impact on the measure. It is expected that in the coming prospect Juicero will transform the way fresh fruits and vegetables are being delivered.

Zomato

• Introduction

Zomato is an online search engine for restaurants. It was founded in July, 2008 by Deepinder Goyal and Pankaj Chaddah. Initially it all began with the name “Foodiebay” later in Nov, 2010 this name was changed to “Zomato”. Including India there are other 23 countries where Zomato operates at present. With 62.5 million registered users and restaurant listing of about 1.4 million. The company uses the term Zomans for their employees. According to Zomato they have over 2000 Zomans across 23 countries, who are passionate as well as smart and are continuously growing. This team of 2000 Zomans consists of 32 nationalities.

Analyzing the need of an online restaurant search engine the founder decided to make the menus of various restaurants available on the internet. They started with scanning the menus and uploading them. According to them they realized that it takes a lot of time for a customer to decide on what to eat from a menu, especially if there is a queue for ordering food.

After the launch of the website, it faced a lot of traffic.

• Summary

The company started with Delhi NCR region and in a short period it spread in many other parts of India as well as other countries.

The website provides details information about any restaurant which is listed under it. In-depth information’s like contact details, menu, rates, branches, address, ratings, customer feedbacks and reviews etc.

With a mission to make sure no one has a bad meal Zomato is assisting people in finding out good places around them. They gather and update information from time to time to ensure the details are fresh and current. The reviews help customers to make well informed decision and discard any chances of confusion through ratings. Ordering food or booking a table Zomato is making the process smoother and a better dining experience.

• Core Value Proposition & Business model

There value proposition focuses and revolves around food. Restaurant discovery online is the core value proposition of Zomato. It aims in helping out to find the best restaurant which fits the budget as well as the choice. Giving users profuse dining options, easy decision making and time saving etc. The business model is based on “hyper – neighborhood advertising.

The business model involves the Restaurant, Zomato and the Users. Zomato generates revenue through featuring restaurants, users view these restaurants and this increases the footfall of customers thereby increasing the value of featured restaurants. Thought it is among the fastest growing and vastly being used as a search engine for restaurants, there is one linked loophole that happened. The privacy of 62 million users was compromised when an ethical hacker was able to get into the details of Zomato data base. Though later Zomato claimed that this issue has been solved.

• Revenue Generation & Competitors

Revenue generation in structure of advertising indicates a confidant and a strong business model. It can be called as an application which is public centric by keeping the general public engaged to review the various restaurants, and working out a way to earn and generate revenue through website traffic and advertisement. On an average about 90 million Zomato users comes to the website every month for options like home delivery, reviews, fine dining etc.

Revenue method and sources of Zomato are Advertising, Event Tracking and Restaurant Booking. It also helps in Event management, targeted promotion, administration and professional management of online existence, Improving the visibility, Performance tracking and Customer service and satisfaction.

Out of 23 countries where it exists, Zomato has break even record of 6 countries. Its strong internal structure is the key resource of its competency and success. It includes the application, website, customer service and vast user data base. It has received 5 rounds of funding i.e. First from Info Edge of $1 million, second of $3.5 million, thirds and fourth of $2.5 and $10 million, fifth of $37million.

The target audiences are people who are food lovers and like to explore new places to enjoy meal. It has also worked out a way to engaged people on a general duty which is performed 3 to 4 times a day, ease seeker and also tourists. Since 2010 $6.5mn has been invested by Info Edge. Number of listed restaurants in 2008 were 4000 and in 2013 were 94000. Monthly visitor were 0.015million in 2008 and 11 million in 2013. Also the yearly revenue generation is approx 0.06 crores in 2008 and 11.3 crores in 2013, (Dsim.in, 2016).

With a strong network and database Zomato has competitive advantage of new products and services and has a prospect to expand its compass of activities. It considers Foodpanda as its competition. Though Foodpanda was found in the year 2012 as compare to Zomato in 2008. Even though Zomato existence is in 23 countries as compared to 40 of Foodpanda, it successfully maintains its market share by 90million monthly users as compared to 4.5 million monthly user of Foodpanda.

• Conclusion

Zomato has clearly focused and is successful in capturing the market. The growth strategy involves entering into new markets, will automatically increase the revenue source and will also boost the network which in turn will help in faster customer acquisition. The mobile app can be used to monetize as it leaves massive potential of revenue stream unknown. A large amount of traffic is received through mobile app and thus it can be used to generate revenue i.e. by charging the customers for booking table etc. With an attempt to offer cash free services Zomato is adding a new product line which will allow users to pay bill through the mobile application. This product is in the process of being launched in next few months. Thus the company has all the advantage and thus it should plan for Global expansion by capturing new Geographic’s. With a vision to expand to 50 more companies Zomato needs to work towards its different strategies like updating the information, featuring a user friendly website, creating a mobile app which is global, digital marketing, by acquiring the competitors and utilizing the social media strategy to create a profound presence.

The growing competition in online business has risen concerned on dependence of revenue generation through advertisement. Zomato loses $9million monthly on its operation, which they termed as “burn rate” . Apart from high monthly operational cost the company is also its revenue share in few countries like India and UAE. Thus to sustain the leadership in the market and to achieve the profitability, company should invest in last mile delivery options.

Sampler

• Introduction

With the aim to convert the simple and informal consumers into diehard fan Marie Chevrier founded Sampler in the year 2013. The company uses sampling campaigns which are targeted to make products reach to its ultimate demographic. After a lot of research on personal level the founder realized that a lot of startup is looking for a way to be continuously connected to its consumers, for an existing as well as for any new products. Taking up this proposal in mind Chevrier presented the idea of sampler to its potential customers. The founder wanted to make it simple and easy for the companies to spread sample across potential consumers. The first client existed even before the actual technology and in the time frame of merely 62 days Chevrier founded Sampler. Studies have proved that people rely on friends and family for reviews and information about a particular product. Though there are less number of companies now being involved in old method of sampling, though there are few who still think it is one of the original and best way to market the product. Chevrier has refashioned this old method of sampling by creating Sampler.

• Summary

Sampler is service software to create, promote and analyze sampling campaign for different brands. Sampler focus on diagnostic and consumer data, so that companies have a better understanding of its consumers and what impact it places on its brand, through their campaign efforts. Apart from becoming the latest Canadian member of 500 startups, Sampler has been awarded with an additional honor of “Unilever’s Foundry50 even in Cannes”. It is promoting the top 50 startups in the field of marketing tech. The Cannes Lions International Creativity Festival scrutinized over 3000 different startups. Sampler was the only startup to make the cut and win this over 300 applications.

• Core value proposition and Business model

With an ingenious fresh marketing initiative the Samplers Core value is to encourage people to try products. Discarding the traditional way of distributing samples to potential consumers, Sampler has changed the way a company tracks and measures its distributed samples. The core value is to empower the existing loyal consumers into brand ambassadors, who will encourage and promote the brand by giving away free samples of products. This would also help in tracking and gathering of unswerving feedbacks. Though the concept and strategy of social media branding had a strong theory, changing the conventional way of doing things, especially for any large establishment is difficult and time consuming. Thus the founder identified first movers, companies which are open to any kind of experiment and ideas.

The business model of Samplers involves Digital product sampling through existing social channels, logical managing to help customize and measure the sampling campaign, creating content for customer through established influencers as well as partners and cross promotion of viral events like Back to school, Ultimate online Baby shower, Beauty week, Gro, Mom’s Week, New year, new you and week of wellness etc, to share coupons and samples. The challenge is to improve continuously and work towards developing the best user experience. Though there is no limit to the opportunities available. Customizing campaign for each client and increasing client base through innovation can push the opportunities further.

• Revenue Generation & Competitors

According to the founder, the initial year of operation has been very encouraging. The Canadian investors have helped Sampler in raising $1 million investment. The company is experiencing an increase in revenue from U.S clients. One of the many reasons for the increase is because the expenses are done in Canadian dollars and clients are paying in US. dollars. In packaged goods categories these clients have grown and have extended up to six consumer packages. The company will invest $645,000 received through financing from investors like MaRS’ Investment Accelerator, Canada Export Development and others for developing technology, marketing and sales. Sampler has redemption rate of 75% on coupons and about 65% opt for follow up from the brands.

For the startup pitch competition “Sampler” is facing “Granify” as its competitor. Granify is a Canada and US based company which uses artificial intelligence to convert more customers, by predicting whether the guests are going to invest or will change their mind. Unlike Samplers it compares historical data of websites to make the predictions. It also helps in identifying which and how these visitors can be converted into buyers. As compared to Samplers which distribute promotion offers through re-marketing, Granify engages big data and technologies to enhance sales. It has been funded in 4 rounds and has a current equity funding of about $13.54 million. Both Sampler and Granify is a SaaS based solution.

Even though there is a difference in the financing of both the companies Sample is successful in maintaining its market share. The company app is being used by 89 clients and over 250,000 customers for trying out the samples. It also has a client base of 25 paid clients from U.S.

• Conclusion

Highlighting the importance of peer recommendation the founder points out her perspective as to how the client base can be influenced. This method is also a cost effective way of marketing. A lot of major brands have started using online sampling rather than traditional sampling. It is being discussed as the marketing technique of future. Using the existing acquired customer’s one can create further more customers. The company needs to continuously demonstrate the need of its services by doing competitive analysis as to how it is profitable as well as how the target market for the product is full of potential consumers that can be converted. For a smooth functioning the retailers need to be clear about who are the target audience and second will be through the Sampler’s own network of audience. Using initiative like targeted sampling Sampler is proving itself as an ultimate solution for different brands for example targeting young women for a shampoo company, especially those who were preparing to go for prom. The company also focuses on planning and deciding these target audience. Working with industry giants and with a list of global clients Sampler seems to grow with every passing day. The in-depth knowledge about its customer and marketing strategy are the two key factors for success.

With only two years of operation and 100 clients the founders aim to become one of the world’s leading names in sampling is approaching fast. Such rapid growth over a short period of time is one of the major motivational factors to continuously work towards achieving success, along with the clients.