Nowadays, innovative business models inspire and help in bringing change. We know many successful businesses, like Airbnb, Uber, Alibaba, etc., that have an excellent business model behind their success. Surely by now, you must be thinking, what is a business model? A business model is a ratio that helps in understanding the functioning of an organisation; for instance, how it works, the social, and economic culture. The business model helps in formulating strategies and helps companies identifying their customers and competitors. We have listed down some successful businesses with unique business models and help create value for customers.
It is the biggest accommodation provider and the most loved business model example. This online marketplace helps people find, list and rent accommodations (apartments, rooms, houses etc.) at an affordable rate. It is the biggest accommodation provider that doesn't own a single room and is not renting any accommodation from the host. Instead, it conveys a practical combination and balance of demand and supply. Some of the key factors from Airbnb’s business model includes:
- Vision: It believes in sharing economy and believes that house owners would wilfully rent out all the free space to strangers.
- Key activities: It includes building and maintaining the host network and improving the matching algorithm.
- Key resources: Community of travellers and home providers using algorithms and data.
Alibaba Group is the largest retail online company in the world. The secret behind the Alibaba group's successful functioning is that they do not have any inventory. Their biggest competitor is Amazon, which buys different merchandise and sells it to other customers by using their infrastructure. The main aim of the company is to connect both buyers and sellers. Alibaba's value lies in its software interface more than its products. Some of the key points from Alibaba’s business model includes:
- Vision: It wants to connect Chinese sellers with other buyers around the world.
- Channels: Customers are connected with Alibaba through their app or the website.
- Key Activities: It includes marketing and sales, loan service with data management (offer optimisation, buying behaviour and individual customer recommendation).
IKEA is popular for selling and designing ready-to-assemble furniture appliances and home accessories. The company is using one of the best types of business models. It includes complete global sourcing of accessible suburban stores, components, European-design and good-quality products at cheap rates and various in-store amenities like coffee shops, day-care facilities and restaurants. The company makes sure that customers receive stylish furniture at pocket-friendly prices. Key things of IKEA’s business model that make it exceptional includes:
- Customer Service: They ensure complete online customer assistance for the issues regarding the products sold.
- Key Activities: It includes developing new markets, managing logistic supply, branding, and marketing to procure cheap elements.
It is a multinational Liechtenstein company known for developing, manufacturing and marketing products for maintenance, construction and mining industries. They provide services mainly to the professional end-user. The company is using a transactional/rental based business model. The company believes that the customer does not need a reliable tool; rather, they wish to have the right tool at the right time. It is a business model example, where the company handles the maintenance cost of the tool and customers rent them whenever they want. The key factors to learn from Hilti’s business model includes:
- Key Activities: It includes contract management, optimisation of the fleet management and offering services.
- Channels: They sell their products directly from the sales team.
- Key Resources: The high-quality tools, highly skilled sales force and IT infrastructure are their key resources.
One of the popular brands around the world, it is an American automotive and energy storage company. It manufactures, designs and sells electric cars, battery products and electric power train components. Tesla motors aim in bringing the mass-market of electric cars to the market. The company offers a wide range of quality services. The Tesla motors ensure that the use of an electric car becomes uncomplicated and easy. Due to this reason, many customers love Tesla motors. Plus, the company invests a huge amount in infrastructure to enhance future growth. The exclusive thing about their business model is:
- Customer Retention: To know and understand customer feedback, the company organises various customer events.
- Key Activities: They are developing the latest technologies, design and production of the cars. Battery management of the company and educating potential customers.
- Key Resources: It includes battery production, technology leadership for electric vehicles and infrastructure.
Who doesn't know Wikipedia? One of the most used free internet encyclopaedia that helps in gaining common knowledge. It provides users to edit almost every article. It is also one of the most popular and general reference works on the Internet and is among the ten most popular websites. Their success is the company’s ability to motivate a large group of people to participate in the company projects without providing them with any financial benefits. The best thing about Wikipedia’s business model is:
- Value Propositions: With many contributions from the online community, Wikipedia ensures in providing quality content to its readers.
- Key Activities: Wikipedia follows the quality assurance of the system.
When it comes to fashion, Zara is the brand many opt to shop from. Zara is a Spanish brand that deals in clothing and accessories. It is one of the most popular and largest international fashion companies in the world. It is one of those business model examples which sells where it produces. The brand works on a tight supply chain from initially designing through final production. That helps the company in adapting to new fashion ideas and trends within two weeks. This results in the possibility of fast replenishment of sold-out merchandise and short lead time for new products. Zara’s business model includes:
- Key Activities: It includes logistics, store management, manufacturing and design with brand management.
- Channels: The Zara products are easily available to customers through mobile apps, retail stores, bloggers and websites.
8. Local Motors
It is an American motor manufacturing company. The motor vehicle manufacturing company completely focuses on creating low-volume open-source motor vehicle designs with multiple micro-factories. However, local motors believe in searching for new and forward-looking solutions to problems. They believe in completing work faster with low cost than other companies with a huge contribution to society. Key things from their business model are:
- Value Propositions: They believe in having a strong customer relationship, and for that, they have created an online community for the customers. Also, they are known for building cars with customers.
- Key Activities: It is finding new mobility areas and developing new solutions to solve them.
It is a direct bank and is the second-largest bank in Austria. The easy bank provides various financial products through online banking and without any branch network. Also, the bank keeps the minimum infrastructure cost and provides services without any account and transaction fees. Key factors from their business model:
- Value Proposition: It is using a simple and secure online banking platform and covering most bank transactions.
- Customer Retention: They focus on building a great customer relationship. They have a chat with customer service and provide various special offers that motivate them to switch to banking service.
- Channels: Easy bank has its net banking app and website to connect with customers.
10. Red Bulletin
It is a famous lifestyle magazine featuring culture, sports, music, entrepreneurship, lifestyle stories, and sports. The magazine focuses on establishing the brand of Red Bulletin around the world. The magazine earns through subscription fees before going for production. Also, the magazine creates value by advertising various red Bulletin activities.
- Customer Relationship: The magazine acquires customers through sports activities and provides them with a subscription service for retention.
- Key Activities: The brand focuses on is creating unique and exciting stories, brand management and distribution and printing of the magazine. Plus, the focus on creating entertainment through high quality and unique sports stories.
All the above companies use different types of business models through which they meet customer needs. Also, they have good customer knowledge that makes their business successful. All the business models teach us is that a genuine business model will give you success in the long run. Create a business model by thinking out of the box and finding ways to deliver value to the customer. Moreover, staying open-minded will lead to success in the long run.
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Q. How does Airbnb’s business model differ from its competitors?
Ans. Airbnb is known for renting space to people at affordable rates. It does not own any single room; rather, it conveys accommodation between supply and demand. The company believes in sharing economy, and that is what makes it different from competitors.
Q. How do Amazon and Alibaba have a different style of working?
Ans. Amazon buys various merchandise and sells to customers. In comparison, Alibaba does not have any inventory and believes in connecting buyers and sellers. The company’s value lies in the software interface than the products.
Q. What makes Tesla a popular brand in the world?
Ans. Tesla aims at giving the mass market for electric cars to the company. It offers quality customer service and ensures that electric cars are easy and uncomplicated to use. The company organises customer events while investing a huge amount in infrastructure.