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Business Model Development

A simpler reference to a business model is ‘how a business intends to make money and be profitable’. A business model should seek to define what value is delivered to customers or answer why customers will be willing to buy the product/service, highlight what differentiates the offering from that of the competitors, establish the feasibility of the distribution process, and identify the technological/business applications platform required to successfully create and deliver the intended offering.

More technically, business model development is about crafting the strategic framework for creating the value chain and internal capabilities that will make the business idea tick.

Potential loopholes in business model development and its upkeep

Developing an effective business model can be a challenging task including the task of keeping it relevant. Many big brands and successful products of the past have been decimated because of the poor business models associated with them. Business models are fundamental in nature, and they stay active for a longer period.

Not anticipating solutions, lack of innovation

The viability of a product/service idea lies in what customer problems it solves or customer needs it fulfils. For instance, Nokia 1100 came with a built-in flashlight. Serving as an emergency flashlight that can be carried in a pocket was an instant hit with customers. It is still the world’s best-selling phone of all time. Even though Nokia was then the market leader the flashlight feature in a phone was a masterstroke. When it comes to retail innovation, there is no such thing as a standard retail industry business model.

Not keeping up with technology

With 65 million registered subscribers, 9000 stores and with a workforce of more than 80,000, and valued as a USD 3 billion company, the business model of Blockbuster might have remained indemnified from introspection. What the company undermined or could not adjust to on time was the variable of technology and its impact on their retail chain business model.

Over-reliance on one channel

The emergence of O2O strategy provides a strong hint that whether it is a retail store or an eCommerce business, reliance on a single sales channel is risky. An omnichannel or multichannel distribution approach gives a retail enterprise the access to both the online and offline market thereby lending more agility to its retail business model.

Lack of a proper business IT platform

Even conventional retail cannot afford to shy away from modern-day business application requirements unless a business chooses to stay on the back foot. Today, conceiving the idea of a business model would be incomplete if the prevalent ecosystem of business applications is not taken into consideration. Both core and support business operations will prove to be inefficient if the business applications platform used is any inferior to that of the competitors. With every passing day, more and more businesses in the supply chains are becoming a part of the same technological ecosystem.

How YRC can help: a glimpse

YRC’s business model development focuses on crafting the strategic framework for creating the value chain and internal capabilities. In doing so, we address UVP, omnichannel strategy, business applications/ IT architecture, technological requirements, and operational planning.

Establishing UVP is one of the most critical parts of the business model development process. A UVP could be established via pricing, payment options, product features, delivery, product demo and installation, return policy, customer service, personalization, etc. But talking of UVP, a business enterprise cannot be numero uno in all respects. It takes a careful assessment of the customer needs and expectations, prevailing levels of competition, a study of industry standards, environmental feasibility, operational strength and competence, etc.

With a dominant traditional retail market and emerging eCommerce opportunities, the omnichannel approach provides wider access to the retail customer base. On the other hand, the customers benefit in the form of a seamless shopping journey and experience with the integration of the physical and online channels. For a business model, an omnichannel strategy should specifically identify the internal and external channels and how these two will work in cohesion to benefit customers and business.

Without the essential software applications, sustaining a business model is nearly inconceivable in the present date. For delivering superior customer experience and promised value and offering, an enterprise needs to have a strong framework of backend processes driven by business software applications for various functions like warehouse and inventory management, payment processing, CRM, HRM, analytics, etc.

How and with what features business operations are being carried out directly or indirectly has a bearing on customer experience. Adjusting and aligning such operations or operational aspects is a strategic area of performance for elevating customer experience and delivering the intended UVP. Such decisions could come in the areas of business process automation, dedicated customer service, transparency in order fulfilment, efficiency in returns and repayments, real-time updates, etc.

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We are a boutique retail consulting firm. To know more about our business model development services or if you have any query, drop us a message and we will get back to you.

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