Choosing the right one: Different types of Business Models

Choosing the right one: Different types of Business Models

We try to identify specific characteristics of Startup Business Models and identify some companies that use those Business models.

We look into different types of Business models and classify them according to their position in value chain:
OCSBP
OwnersCreatorsSellersBuildersPricing Strategy

 

S NoBusiness ModelDescriptionExamples
1
Bricks And Clicks
Sell products via both the online and physical stores
Pizza Hut
s
Dominos
Apple
2
Collective
Involves participation of a large number of likeminded professionals, traders related to each other by means or some other business interest.
Trade Associations
co-operatives
Franchise
3
Cutting out the Middleman
Cut out the middlemen in the value chain to pass on benefits to the consumers
Myntra
s
Amazon
Netflix
Warby Parker
4
Direct Sales
Producer directly meets and sells to the consumer
Tru Maker
s
Stella & Dot
Amway
Tupperware
Tesla Motors
5
Franchise
Franchiser offers its business concept for expansion with the resources of franchisee whereas franchisee enjoys reduced risks and established brand and business processes
McDonald’s
s
Pizza hut
Starbucks
Subway
KFC
6
Freemium
Offer some basic services for free and charge for the more advanced products
Flickr
s
Dropbox
Tinder
Hulu
LinkedIn
7
Pay what you can
The consumers are free any renumeration for the service used as they desire
OpenBooks
s
PRYDA
8
Auction
Online auction where the highest bidder gets the product
E-Bay
s
Rakuten
Etsy
NewEgg
10
Reverse Auction
A setup where multiple sellers offer the same product at different but comparable prices to the consumer.
Squeezify
s
MyHammer
FedBid
Priceline
Amazon
11
Premium
Offer high-end products and services appealing to targeted customers for high profits. (Basically charging for the brand value)
Rolex
s
Gucci
Chanel
Louis Vitton
12
Affiliate
Partner with other sellers to market or sell their products and earn a cut out of every succesful sale
Shopzilla
s
BabyGizmo
Gawker Media
Groupon
13
Subscription
Charge users a periodic fee for a range of services that may avail
Netflix
s
Spotify
Skillshare
Skype
Mailchimp
14
Monoplistic
Create a monopoly in a particular product or market segment and use that advanrtage to drive revenue and profits
Google
S
Youtube
Monsanto
Motion Picture Association of America
15
Razor and Blades
Offer a basic product at a low profit or even a loss and earn majorly through the sale of complimentary products
Gillette
P
HP Printers
Sony
Xerox
16
Inverted Razor and Blades
Offer the basic product at a premium and the complimentary products at a lower cost
S
17
On Demand
Offer instantaneous but desired services to the user
Washio
S
Spothero
Postmates
Glamsquads
Uber
18
Marketplace
Become a platform where buyers and sellers interact
AirBnB
S
Amazon
Flipkart
Alibaba
Snapdeal
19
Middleman (Warby Parker Model)
Cut out the middlemen in the value chain to pass on benefits to the consumers
Warby Parker
S
Casper
Brideside
audiside
Scarosso
20
Virtual Good
Sell ‘Virtual Goods’.Virtual goods are online only products users pay for normally in games or apps such as upgrades, points, gifts, or weapons.
Candy Crush
S
Clash of Clans
Facebook
FarmVille
WeeWorld
21
Multi level Marketing
encourage the existing distributors to recruit new distributors by paying the existing distributors a percentage of their recruits’ sales
Avon
S/P
Medifast
Tupperware
Young Living
Sunrider
22
Landlord
Owner of an asset charges the users for a temporary use of that asset
ZoomCar
O
23
Advertising
Earn revenue by selling advertisement spots to other business on your platform
Google
S
Facebook
24
Pay As You Go
Charge users as per their usage of the service
Psonar
S
Bharti airtel
Vodafone
25
Data
Earn revenue by analyzing or selling huge amounts of user data available with you.
google
S
Twitter
Facebook
Amazon
Zomato
26
Merchant
Wholesalers and retailers of goods and services sell directly to consumers online.
Amazon
S
iTunes
Zara
Argos
27
Brokerage
Facilitate the interaction between the buyer and the seller and charge a fee for that service.
LinkedIn
S
Paytm
PAypal
eBay
Orbitz
28
Commission
Charge commission for attracting customers or fulfilling transactions for other sellers.
Groupon
S
Paytm
Orderella
29
Manufacturing
Assemble or build products a large level (thus at cheaper prices) for yourselves or for others.
Foxconn
B
Richelieu Foods
Printing-In-A-Box
30
Crowdsourcing
Crowd thinks, delivers, chooses
Wikipedia
C/S
P&G Connect
Cisco
31
Hotel California Model
Create a must-have product that traps customers into buying unrelated high-profit items
Amusement Parks
S/P
Sports Events
Multiplexes
32
Network Effect
Users benefit if more customers start using the product
Facebook
S
LinkedIn
StackExchange
Twitter
YouTube
33
Loss Leader
Offer some products at very low profit or a loss to attract consumers in hope that consumer buys additional services (which usually are more profitable)
Flipkart
S/P
Jio
34
Flat Fee
Offer unlimited services for a fixed price
Netflix
S
Spotify
BookMyShow
35
Nickel and Dime
Price your niche product with the most basic features the cheapest and then charge for every extra feature
Porsche
S/P
36
License
License an intellectual property to other firms for commercialization. (usually works for patents, trademarks and copyrights)
.
Mickey Mouse
O
IBM
ARM Limited
BASF
37
Open Source
Products are built by community, Revenue doesn’t come directly from the product, but from the services around it
Linux
C/S
Wikipedia
Android
38
Peer to Peer
Company enables business transactions between private persons
eBay
S
OLa
Uber
Upwork
Freelancer
39
RobinHood
Earn more from privileged customer segment, but supply more to unprivileged customer segment which may not otherwise afford the offer
Aravind Eye Care
S
TOMS Shoes
40
Revenue sharing
Strategical partnership and collaboration to increase revenues in a win-win situation
iTunes
S
Groupon
CDNow
41
E-Commerce
Business transactions and communications via ICT
Alibaba
S
Graze
Ebay
Grainger
Flipkart
42
Target the Poor
Offers are targeted to the bottom of income pyramid, they are usually designed to cover minimal, but still essential needs of customers
Grameen Bank
S
HUL
Walmart
Freedom 251
43
Two sided Market
Platform concept where the suppliers and customers are brought together
Ebay
S
Facebook
Groupon
Diners Club
Zappos
44
Ultimate Luxury
Offers are targeted to the top of income pyramid, they are usually unique and suit for self-realisation needs of customers, Focus on branding, events, highest quality standards associated with large investments which are covered with high margin of sales prices
Hermes
S
Rolls Royce
Lamborghini
Abbott Drowning
Apple
45
User Designed
Gives consumers the ability and infrastructure to design, produce, sell and market their own custom products
Spreadshirt
Lego Factory
Ponoko
Dreamheels
CreateMyTattoo
46
Solution Provider
Offering not only a product, but also a turn-key solution around customer’s problem, so the customer can focus on its own core business
Wurth
S
Tetra Pack
3M Services
Geek Squad
47
Shop in Shop
Opening a business or a store (rent or franchise) inside another business or store
Bosch
S
Amazon
Tschibo
48
Self Service
Customer is actively involved in the delivery process of the offer, so thanks to the saved costs the company can further invest or reduce its prices
Ikea
S
Backwerk
Ibis Budget
49
Cross Selling
Sell additional products to your existing customer
Amazon
S
flipkart
Life Insurance Companies
50
Add ons
the core offering is priced competitively but there are numerous extras that drive the final price up so the consumer is not getting the deal they initially assumed.
Apple
S/P
51
Crowdfunding
Crowd invests for a sample product
Pebble
Music Record
52
Digitalization
Physical Products and Offers become immaterial
Speigal Magazine
S
53
Experience Selling
Offers exclusive and unique product and service experience combined with positive emotions
Starbucks
S
Ikea
Nespresso
Marlboro
54
From Push to Pull
Put customers as the central driving factor in every operation and decision, Produce only what the customer is ready to buy and do it as efficient as it is possible without waste
Toyota
S
Zara
Geberit
55
Guaranteed Availability
Provider offers uninterrupted availability instead of ownership, Provider is responsible for achieving this including timely repair, replacement and maintenance
IBM
S
Otis
Hilti
56
Hidden Revenue
Offers free or cheap service to customers, but generates revenue from ads
Google
S/P
57
No Frills
Cheapest prices by offering unusual, but still essential version of products
Southwest Airlines
S
Indigo Airlines
Aldi
spicejet
58
Lock-In
Offering products and services which are attached to intensive costs, time and learning if the customer wants to move to another provider
Microsoft Windows
S/P
Gillette
Apple
Nespresso
59
Long Tail
Offering a large portfolio of products, not only the ones most people buy, but also niche products
Amazon
S
eBay
iTunes
Netflix
60
Customization
Deliever services customized to the exact needs and demands of the customer for an extra personalized touch.
AppyCouple
S
Normal
Lumosity
CafePress
Zazzle
61
Orchestrator

Company focuses only on its core competence, everything else is provided by third parties, but the company is also excelled to administer and integrate the activities of third party providers

Nike
Bharti Airtel
Li&Fung
62
Reverse Engineering
Detailed Analysis of competitor’s products, services and business models to exploit the gained knowhow for its own business
63
Reverse Innovation
Innovation and R&D are executed in developing countries to meet the extreme needs of developing countries, and then the offer is brought to developed countries
Nokia
C
Haier
Samsung
General Electric
64
Product to Service
Instead of selling the product, sell the service it offers
ZoomCar
S
65
Leasing
Leasing out the products to the consumer for a fixed period in exchange of a fee
Zoomcar
O
ZipCar
66
Negative Operating cycle
Accept the payments before delievering the products or services
Amazon
S
67
Fractionalization
Customer owns a specific portion or usage rights of a product
NetJets
Sefage
68
Bundling
packaging together complementary goods and/or services into a single offering.
iTunes
S
McDonald’s
Microsoft (in MS Office)
69
Affinity Club
Pay royalties sto some large organization to sell products directly to their customers.
MBNA
S
70
SaaS
Stands for ‘Software as a Service’ : A software usually hosted on a central system is licensed to the users to be used on subscription basis
Oracle
S
Salesforce
Intuit
Adobe
Dropbox
71
Barter
Sponsoring and Value Exchange
P
72
Cash Machine
Collect Money from customers, but pay later to suppliers
Amazon
S
Dell
73
Performance Based Contracting
Client is charged based on the monetary benefit it received from the offer or based on successful delivery of complex/risky offers
Xerox
S
BASF coatings
Rolls Royce Airplane Motors
74
Rent instead of Buy
Customer rents the product instead of buying it which frees the customer to do capital intensive investments to use the product
Xerox
S
Saunders Systems
75
SuperMarket
Offers a large spectrum of product to fulfil many requirements of the customer at one place
Walmart
S
Merill Lynch
MediaMarkt
BigBazaar
76
Content Producer
Production of content or material that is designed to inform or explain
C
77
Make more of It
Offering core competencies to others externally
Google
S
Zomato
Porche Consulting
78
Ammmortization
Buy up an asset for a large value and then rent it out at small cheaper prices per month, per year types.
O
79
Trash to Cash
Exploit recycled material to build new products with reduced costs, Give the customer good conscience to use your product
Emeco
S
Greenwire
80
Sponsorship
helps reduce costs, marketing for sponsors
81
Bulk Pricing
Bulk domain/hosting buy
82
Per Transaction
money transfer
83
Increased discounting model
As the billing grows, discount increase
84
Retail Arbitrage
buy items at retail stores for lower price and sell them online at higher prices
Sellers on amazon
Local grocery stores
86
Day and Night
Shift 1 in day and shift 3 in night
co-working for day and night
87
Contrast
Leverage for complteley different purpose
Co-working conference for Movie screening
Future Work:
  • The financial and social performance of companies who follow different business models
  • Case studies of widely used Business models and the rarely used ones and identify why that is the case.
  • Study division of Business models between B2B vs B2C start-ups
  • Study division of Business models between Product vs Service Startups

This research can be used by startups who are developing/experimenting with their business models, trying to identify alternate revenue streams. It can be used to evaluate the viability of information aggregation initiatives.