CH2 E-Commerce Business Model and Concepts
Case Study Questions p. 105:
1. What is Dollar Shave Club’s business model and how does it differ from its competitors?
Dollar Shave Club is a community provider in a B2C business model. Their grooming products are targeted for male customers only. The main difference that Dollar Shave Club has from their competitors is that they are a subscription-based business rather than selling their products in retail stores.
2. What are the key elements of Dollar Shave Club’s value proposition for consumers?
Dollar Shave Club’s value proposition is mainly based on customer service and convenience. The subscription base model allows customers receive their product without having to go to the store. Dollar Shave Club trains the customer service team to respond to queries in a playful manner to reflect the company’s brand. Also, their subscription is very cheap and affordable which fulfills the needs of customers.
3. What revenue model does Dollar Shave Club use and why does it work for them?
Dollar Shave Club adopted a subscription revenue model by offering its customers grooming products for a monthly payment. This revenue model works best for the company because it differentiates their business from a company like Gillette. Dollar Shave Club’s goal is to help people save money and provide convenience; this strategy made the company very popular and gave them a competitive advantage over others.
4. How would you characterize Dollar Shave Club’s online business strategy?
Dollar Shave Club’s primary business strategy targets loyalty and customer engagement. They always include different perks like magazines and flyer to show their customers that they care about them by providing them with what they need. By having low prices and great customer care, Dollar Shave Club gains more loyalty as well as attracts new customers.
5. How have Dollar Shave Club’s competitors respond?
Because of Dollar Shave Club’s subscription plan and affordable prices, they created a massive competition in the industry. In 2017, Gillette had to launch a service called Gillette On Demand, where customers could order razors by text and would receive a free package after 3 orders. Gillette also implied that the delivery would be within 3 business days and that prices would be competitive to Dollar Shave Club’s. Gillette had no other choice but to come up with something alike because they already lost about 20% of the market since the Dollar Shave Club’s launch.
Projects: p 107-108
Question 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 operates 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.)
Question 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 you would gather the necessary information you would need to choose a particular item, what stores you would visit, how long it would 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?