Monday, 10 November 2014

Clever online business models you can adopt; more examples, some analysis




One thing Facebook did when they insisted users used real names is they ‘invented’ internet trust. Here, a company uses ‘trust’ in their business model....

Oodle runs a Facebook's official marketplace.  When buyers and sellers post items, their Facebook identities are attached.  This gives users more confidence in the transactions.

This one makes use of the networking effect, saving marketing costs...

TravelPony relies on users sharing hotel deals.  Users access the site via their Facebook login for hotel deals.  The prices are competitive thanks to users’ willingness to share a post on their Facebook or Twitter.  Once they’ve booked the hotel, they share the deal via the same social media ie indirect marketing.  Although not compulsory, it works probably because of the community spirit and it’s an honourable thing to do since it was through the community that they got better prices.  So, whilst competitors spend on marketing they rely on word of mouth via social media.  Saving on their marketing budget should, in turn, allow them to pass on savings in their hotel rates, thus hopefully helping to generate even more social sharing.

A way to monetise 'likes' and also turning it to a business model...

Wanelo, a social shopping site uses the concept of ‘likes’ so a friend’s choice becomes a powerful buying instinct.  Users upload images of products they want.  Members can follow other users or brands and cultivate their favourite items by ‘saving’ a picture, like pining on Pinterest.  Each image has a ‘buy’ button that leads to a page on say Zara where items can be purchased.  Wanelo receives a portion of the sale.  Many retailers are interested to install Wanelo buttons on their product pages because this is a demand platform.  “The combination of collecting and shopping has young women flocking to the site.”  The mall is personalised.  It’s like a personalised mall for the products a person like.

The above examples show eCommerce 2.0, using social and other internet mechanisms to sell.  During dot.com, with a few exceptions, most eCommerce sites were simply online facsimile of traditional stores.

Once a messaging service is just that, now....

Kakao is a South Korean messaging app. Its biggest revenue comes from its gaming platform where it uses its access to users’ list of phone contacts to pit friends against one another.  It makes money from sales of virtual goods. Another is a service called ’plus friends’ which allows users to become virtual friends with media outlets, celebrities and retail brands such as McDonald.  Through Plus Friends, participating brands send a set of monthly messages, coupons and real-time information to their followers, for a fee.  The third revenue generator is users buying cartoon images to send to their friends or to pay for real-world gifts.

Asian business mind, witness also Tencent and Alibaba besides Kakao, tends towards quicker monetisation and that means adding new ways to generate revenue and at the off.

Finally Bitcoin you have heard of but it is Block Chain, its core mechanism that’s going to disrupt the financial industry.  It can reduce the cost of transactions, speed it up and reduce fraud.

These examples show that the new economy works a bit differently from the old.  From the use of open source and peer-to-peer (showing how far p2p has come since Napster) to tapping the crowd for insights, as business models.  The latter, what I call outside-in (traditionally firms trust only internal resources), is a creative way to improve creativity and innovation not only by tapping the crowd deliberately but allowing consumers to design products themselves.  It inputs fresh ideas, extra skills and to ascertain trends closer to the market. In real-time!  Indirectly, outside-in is used for marketing and sales or to make it easier to close a sale.  They bring to light new and better ways to carry out consumer surveys and at minimal cost to boot. 

Operationally, by shrewdly using the crowd, they reduce costs; by improving inventory, cutting out traders in the traditional supply chain and tapping manpower they may not have to pay for.  Further, marketing costs is defrayed by having the consumers do part of it. Word-of-mouth too has been taken to a different plane in the internet era.  These same consumers are also coerced to bring more certainty to product development and as one example showed, even before they are made.  Notice that many actions are indirectly compelled whence once management exert direct control over all.

The internet economy seems to be moving the indirect model centre stage and an inward organisational culture outwards.  This new culture combined with clever ways to reduce prices allows them to disrupt the old.



More examples here.

Send an email to me, tommi.chen@yahoo.com and I'll reply with further examples. Or if you know of other interesting methods, let me know.  I'll compile and make another post. I also welcome your thoughts, interpretations or disagreements.