Chapter 2 – E-Commerce Business Models and Concepts
Case Study Questions
1. What is Dollar shave Club’s business model and how does it differ from its competitors?
Dollar Shave Club is a subscription service that provides affordable razors and shaving supplies. They are made in South Korea and the company does not go through a retailer which saves them a lot of money.
They are a B2C (Business to Customer) business model. Other companies that sell razors sell them through retailers which makes to price higher. The other companies sell the primary razor at a lower price and
the refills for a higher price. Dollar Shave Club delivers the product directly to their customers. They value talking to customers and not using automated systems. Customer Service is a strength of Dollar Shave Club.
2. What are the key elements of Dollar Shave Club’s value proposition for consumers?
Dollar Shave Club has a men’s lifestyle magazine (MEL). It provides men information about razors and taking care of themselves. They use customer service to attract more customers by being relatable and available
to talk. They also respond on social media which is very good for attracting younger customers.
3. What revenue model does Dollar Shave Club use and why does it work for them?
Dollar Shave Club bases everything off of the customer. The first video was low-cost, but it attracted customers because it was funny and relatable. They have great customer service which allows them to gain more
customers. Dollar Shave Club hasn’t made much of a profit yet, but they are optimistic because they have a loyal following.
4. How would you characterize Dollar Shave Club’s online business strategy?
Dollar Shave Club’s business is all online strategy because they do not have a physical store. They need to be able to reach customers even though they won’t see them in person. The use videos and social media which
reaches the younger audience. Their website is modern and attractive looking. They use humor a lot which is relatable to the customer.
5. How have Dollar Shave Club’s competitors responded?
Gillette has lost a lot of business since Dollar Shave Club started. They are trying to be more aggressive since they did not have to be in the past. Customers can now order new razors and blades by texting them. Gillette
is also giving more discounts and using promotions to attract customers. The On Demand Program that they started, promises that razors will be delivered within 3 business days. They have dropped their prices and
created a marketing campaign to bring back customers.
1. Select an e-commerce company. Visit its website or mobile app and describe its business model based on the information you find there. Identify its customer value proposition, its revenue model, the marketspace
it operated in, who its main competitors are, any comparative advantages you believe the company possesses and what its market strategy appears to be. Also try to locate information about the company’s
management team and organizational structure. (Check for a page labeled “the Company,” “About Us,” or something similar.)
Amazon is trying to be more sustainable and in their About Us section, they have “Committed to a sustainable future.” On their website you can take a tour and learn about the company. They also offer tours at 23 locations
around North America and their headquarters, which is in Seattle. Amazon employees over 125,000 employees. They have a lot of articles about the company and their revenue tripled from 2017 to 2018.
2. Examine the experience of shopping online versus shopping in a traditional environment. Imagine that you have decided to purchase a digital camera (or any other item of your choosing). First, shop for the camera
in a traditional manner. Describe how you would do so (for example, how would you gather the necessary information you would need to choose a particular item, what stores would you visit, how long would it take,
prices, etc.). Next shop for the item on the Web or via a mobile app. Compare and contrast your experiences. What were the advantages and disadvantages of each? Which did you prefer and why?
If I were shopping for a camera in store, I would look at the different models and narrow it down to a few I liked. I would factor in price and ask the sales associate their opinion on the cameras. I would most likely only go to Best Buy.
Even if I wasn’t buying online, I would look at reviews on the website of the cameras and factor that into my decision. It would probably take me about an hour to choose a camera and any accessories. I might be in the store longer
looking at other things.
If I were shopping for a camera online, I would go to Amazon and look at the cameras. I would add the ones I liked to a list and compare them. I would compare prices and see what the best deal is. I would also take the ratings and
reviews heavily into consideration. I would probably do this for an hour or longer, because I would probably be multitasking this with something else.
I think that both ways of shopping have advantages and disadvantages. The advantage of shopping in store is that you can see the physical camera and you can talk to people in person. The disadvantage is that you are limited to the
selection that the store has and they may be out of stock of what you want. The advantage of shopping online is that you don’t have to go out of your way to buy it. You also can look at all of the reviews and see pictures that people
have taken with the cameras. You also have more options to choose from. The disadvantage is that you don’t get to see the actual product until after you have paid for it.