ITS 380-001 Global E-Commerce Systems
CH2 – E-Commerce Business Models and Concepts
P.105 Case Study Questions:
Q1: What is Dollar Shave Club’s business model and how does it differ from its competitors?
Answer: Comparing with the one of their competitors, Dollar Shave Club had a more innovative and different approach to their business model. Different from the company’s many competitors, Dollar Shave Club used the Internet and its vast possibilities to build a razor business. Their value proposition comes to the customer in delivery convenience and minimal price for a simplistic but effective design. The company saw a market opportunity in the younger generations need for access to a simple design at a reasonable price and capitalized on the delivery and internet-based market. The realization that the competitive environment was missing what the customers truly wanted is what gave the company its competitive advantage to gain a large share on the market fairly quickly. The organization seems to have a fairly flat organizational structure that trains all employee to be capable of interacting and solving customer problems in creative and funny ways. The Dollar Shave Club took a basic needed product, made it simple, reasonably priced and easily accessed and this is the model that has led to success and innovation in the razor market and even has major rivals flailing to reciprocate.
Q2: What are the key elements of Dollar Shave Club’s value proposition for consumers?
Answer: The Dollar Shave Club has a very different value proposition for customers than most of the major razor companies on the market today. The company looks to provide the younger generation of American males with a product they need but to be in touch with the needs of this demographic. This meant that they would overturn the status quo of expensive, fancy featured razors in favor of a simplistic design at a reasonable cost. Many razors had fancy features that most users were indifferent about and these features made the razors more expensive with no real value for the customers. The Dollar Shave Club looked to change this idea of the industry and innovate a product that customers sought for a cost that they could agree with.
Q3: What revenue model does Dollar Shave Club use and why does it work for them?
Answer: The Dollar Shave Club follows a subscription revenue model where their customers subscribe to their service on a monthly basis. I am actually a Dollar Shave Club member and have been for several years. The subscription service offers a variety of flexible options to cater exactly to your needs. It can be monthly, bi-monthly, and you can pause the service and go back to it whenever the need arises. This model works well for this type of business because it keeps loyal customers by making the ordering hassle free. There is absolutely no work in order to receive the new razor heads, it simply charges your card and ships your razors on approximately the same day every month. This convenience is why I personally have remained a member for several years, it is one less thing that I have to think about or take care of and I love that about it.
Q4: How would you characterize Dollar Shave Club's online business strategy?
Answer: Dollar shave club has situated itself as a club and not as a standard organization. It has tended to the real issues of men which they cause while buying prepping items. In spite of the fact that they are really doing everything equivalent to it is finished by a standard organization; their promoting procedure is different. One of the focuses to note about the video is that, not normal for other regular Razors ad, this ad converses with watchers in a relate-able voice and cause them to interface with it. It has been effective in mapping the shopper conduct. Alongside the items, it likewise centers around building up an immediate association with the clients they were managing. The emphasis is more on the brand experience which can be found in each showcasing move.
Q5: How have Dollar Shave Club's competitors responded?
Answer: They have focused more on innovation like Gilette, paid premium to acquire disruptors, fostered internal innovation. Also, Unilever has acquired Dollar Shave club by providing huge revenue.
Q3: During the early days of e-commerce, first-mover advantage was touted as one way to success. On the other hand, some suggest that being a market follower can yield rewards as well. Which approach has proven to be more successful-first mover or follower? Choose two e-commerce companies that prove your point, and prepare a brief presentation to explain your analysis and position.
Each of these
· First Mover
Has its advantage and each can be successful depending on how it was executed.
First Mover: It worked very well for Craiglist, as they took the market by storm
· They listed the most important categories
· Identified core categories
· Focused on the those, stabilized the model, got profits and then expanded to new categories.
After that several companies tried to defeat them but as they had captured the market and kept optimizing quickly, they still remain the market leader.
As a follower, Amazon perfected the ecommerce, though eBay was the first and started the E-commerce revolution but due to different management they have now shifted their focus to auctioning.
Amazon used the customer focus approach, learned from the mistakes of the market leader, made losses for several years but due to their learning and optimized model, they were successful.
So, being a optimized follower is a better approach.
· They learn better and faster
· They optimize the business model
· They make more revenue
· They reduce the cost centers and optimize faster
Q4: Select an e-commerce company that has participated in an incubator program such as Y Combinator, TechStars, Dreamit, Capital Factory, or another of your choosing, and write a short report on its business model and the amount and sources of capital it has raised thus far. Include your views on the company's future prospects for success. Then create an elevator pitch for the company.
AMAZON e-Commerce Company: Amazon is one of the leading companies in e-commerce business industry. It’s the current leading ecommerce business pioneer in the world. The biggest online retailer store in the world provides almost all products and groceries are made available to every customer through Amazon website. There are so many online books are available in online book store of Amazon and can watch all kinds of movies with newly introduced Amazon prime. It made human life easy and access the worldwide available products simple by Amazon web. The company has participated in incubator programs by helping other companies in terms of sharing innovative ideas, trainings and support from Amazon.
Business Model: Amazon business models are different compared with other companies. There are so many strategies and models for revenue generation. Everyone who is able to access internet can access all Amazon services. The planning and implementation of Amazon strategies are well designed and well maintained in order to generate the revenue from multiple sources. The Amazon business models that generates amount and source of capital are online store, Amazon books, Amazon music and videos, Amazon gamming, Amazon Prime etc.,
Amazon online store with Amazon store there is huge access to the products and services that can be purchased through Amazon website. The biggest and best online store in the world for almost provides all kinds of products.
Amazon books provide sales of different types of books through which huge revenue are generated to the company. There is e-book facility is available through Kindle an innovative of Amazon.
Marketplace for Amazon generated revenue from sellers by collecting the commissions
Amazon also has videos and access to music through its website. Where we can watch videos and listen to music through internet movie database (IMDB)
Gaming zone in Amazon is also an innovator thought through digital game store
Amazon prime is also one of the best methods of attracting customers and delivering valued services through prime membership.
Amazon participated in so many incubator programs to help the industries to grow, by providing the training, support and developing innovative products and services. In that one of the products is Kindle where every information made easy access to books, articles, news can be accessed through offline.
Amazon developed new techniques to accelerate the success by launch the products and services faster, get discovered by the market in very less time, developing the own brands and supports to go to global markets.
View's on Company's future prospects for success: As an e-commerce company its services like digital online shop, books are never lasting. The day by day innovative products and services of Amazon are the future prospects of success. Amazon is best for its new technologies implementation like cloud computing, digital marketing etc., always keeps the company's future success and will be the number one company. There are so many strategies and implementations that are followed by Amazon for future goal. Its future plans and strategies always lead to great success as an online ecommerce company.