Pattern description

In this model, services or products from a formerly excluded industry are added to the offerings, thus leveraging existing key skills and resources. In retail especially, companies can easily provide additional products and offerings that are not linked to the main industry on which they were previously focused. Thus, additional revenue can be generated with relatively few changes to the existing infrastructure and assets, since more potential customer needs are met.

Inventive problems

Application examples

The oil and gas giant Royal Dutch Shell (Shell), which successfully launched an innovative business model based on the Cross-selling pattern. Shell uses its network of petrol stations to sell a range of goods that are quite unrelated to the oil business, such as groceries and other everyday items. Legend has it that the practice started when a clever Kentucky Fried Chicken (KFC) franchisee opened a KFC restaurant in a Shell petrol station. Soon customers were refuelling not only their cars but also their bodies, sparking the idea of Cross-selling at Shell. In fact, the combination of food and petrol was so successful that Shell rapidly applied the Cross-selling concept to other areas of its business.

The Swedish company IKEA is the world’s largest furniture retailer, The company manufactures ready-to-assemble furniture, appliances and home accessories. To complement its furniture sales, IKEA employs the Cross-selling concept, by offering a wide variety of additional services and products such as interior equipment, home decoration, in-store restaurants, and car rental services, all of which significantly increase the company’s profits.

German coffee retailer and coffee chain Tchibo also successfully runs a Crossselling-based business model. The original coffee business was founded on the mail order principle by Carl Tchiling-Hiryan and Max Herz in Hamburg in 1949, after which the company successively added non-coffee products to its range. In 1973 Tchibo established a new division specifically for non-food products. Under the slogan ‘A new experience every week’, Tchibo offers a wide range of non-food products for a limited time at competitive prices. The myriad items available include cookbooks, household goods, clothing, jewellery and insurance, to mention only a few. The expanded product range contributes to about 50 per cent of Tchibo’s revenues and to more than 80 per cent of its profits.

References

The Business Model Navigator: 55 Models That Will Revolutionise Your Business