Business Model Transformation

In most cases, new business models are an additional mainstay for generating revenue from alternative sources alongside the core business. This can be achieved through new product lines or optimized services for existing customers, but the focus can also be on new target groups.

The digitization boost of recent years has accelerated the development of new business models and created successful companies

New technologies have shaped this progress and form the basis for modern operational organizations, ways of working, services and interactions with customers. The possibilities of digitalization, agile ways of working and a faster time-to-market are reducing the lifespan of business models and permanently increasing international competitive pressure. Companies need to innovate and create unique selling propositions to succeed.

Direct-2-Customer (D2C) – Modern direct sales as a second pillar alongside retail partners and marketplace business

Direct-2-Customer (D2C), the modern term for direct sales, is a tried-and-tested business model that gives producers and service providers the opportunity to act with the end customer without intermediaries. As a second pillar, D2C offers many advantages that a service or consumer goods company should not be deprived of. Industry-specific potentials, feasibility and profitability must be ascertained in an evaluation phase for the market launch. Saving commission payments is not necessarily the main focus, but rather having direct access to customer data (BIG / Smart Data), being able to orchestrate cross-channel brand management on one’s own, consolidating direct customer relations and also marketing product worlds more efficiently. Other arguments are seasonal flash sale promotions to reduce inventories with pre-season goods or to offer new product lines in the consumer-to-manufacturer (C2M) segment, which aims at individual production according to customer specifications, e.g. “design your own” in the fashion sector or muesli mix according to own mixture.

However, the introduction of a D2C platform can also bring problems with it

If you don’t involve your existing trading partners and take away the prospect of cooperation, then problems can arise with the introduction of direct sales. Individual industries have been a bad example of lack of progress, lack of digitalization and lack of cooperation even before Corona. Falling commission payments, eternal disputes over customer data, established D2C offerings, online giants, but also lack of foresight, poor service, lack of USP’s and lack of sense in brick-and-mortar sales for own digital channels are notable reasons how business relationships between retail partners can develop negatively.

Storytelling is an important tool for brand management and customer loyalty in direct sales

Customers, especially in the lifestyle and luxury goods sector, love captivating, emotional stories that contribute decisively to brand loyalty. Through emotionalization, relevant, purchase-deciding information is permanently stored in the memory of consumers. High-quality content that captures the attention and desirability of addressees generates higher demand. Combine content and commerce, integrate your brand website with the online store, and offer matching lifestyle content with image brochures and multi-media content to reinforce your story. With the help of this combined content, dwell time on your websites will increase. Inspire and advise your customers, create the conditions for identification with your products.

B2B commerce platforms – besides Amazon & Co there are also B2B marketplaces

Amazon has become the generic term for marketplace business and has shaped the online shopping habits of customers in recent years like no other online shopping platform. Online shoppers can find the entire range of a department store or DIY store on Amazon, whether it’s sneakers, a drill or a notebook. Amazon has set new standards and pioneered the standards in online retailing with its all-encompassing product portfolio, attractive prices and fast shipping. In addition to Amazon, there are other e-commerce platforms that originally started with a classic distance selling concept and have since introduced a business model comparable to Amazon’s or are in the process of doing so. Zalando and the Otto Group are notable examples.

Marketplace Commerce is not a pure B2C form of commerce

In recent years, various industrial sectors have seen the emergence of their own B2B marketplace concepts from industrial companies. There are good examples of traditional industrial companies that have positioned themselves as B2B e-commerce pioneers with a history of over a hundred years. This does not happen overnight. Spinning off a dedicated digital unit responsible for realizing digital channels and marketplace platforms can be a path to digital transformation. Careful consideration of which digital sales channels are relevant and which business models are lucrative should be put to the test as part of a feasibility study before implementing an in-house marketplace solution. But sales via existing platforms should also be aligned with the corporate strategy, reach the right target group and be tested for profitability. Now is the time to act – it’s not too late for digital initiatives

Quick Commerce Boom through Corona

Quick Commerce is a new form of e-commerce that focuses on the fast delivery of groceries and hygiene products to the doorstep as a special service. The selection and ordering are done at a distance via digital channels of the respective supplier. While established retailers were already successful in the past with their delivery services in major cities years before the pandemic, Amazon had difficulty establishing itself as a significant player in the food and hygiene sector in Germany with its Pantry product. On the other hand, new providers in the food sector, some with a regional focus, have become established. There are hidden champions among the online supermarkets that have sought out strong partners for scaling and are only pushing ahead with expansion step by step. The concept is well thought out and a lot of emphasis is placed on quality. In the delivery areas, deliveries are made daily at various remote time windows that can be selected by the customer. The electronic delivery vehicles were developed and produced by a specialized manufacturer for this company. They are sustainable, environmentally friendly, small and agile. The digital offer is available exclusively via Android or IOS app and is completed by friendly contact services, such as Whats App in real time.

Would you like to learn more about Business Model Transformation or do you need operational support? Then we look forward to hearing from you!