Pattern description

Traditional products or services are delivered through online channels only, thus removing costs associated with running a physical branch infrastructure. Customers benefit from higher availability and convenience, while the company is able to integrate its sales and distribution with other internal processes.

Inventive problems

Application examples

One company that has perfected the E-commerce business model is Amazon. Jeff Bezos founded the bookseller in 1994 and a year later the company had already sold its first book after launching its website and E-commerce platform. Since Amazon faced far fewer restrictions in terms of logistics, it was able to offer a much larger selection of books than brick-and-mortar stores at the time. Amazon’s strong growth and increasing pervasiveness on a global scale allowed it to continually introduce new product lines. The E-commerce model enabled Amazon to establish integrated ordering and distribution systems as well as to make these systems available to other retailers via its online platform.

Formed in 1999, Zappos.com is America’s largest online footwear retailer, offering a vast collection of shoes by way of its E-commerce website. The company further diversified to include products such as clothing, accessories, sports goods, eyewear and home goods. Now linked with Amazon, the company aims to provide an easy-to-use online shopping experience with speedy delivery. Zappos warehouses all products and distributes in-house so as to streamline the process and eliminate intermediary costs. Minimising infrastructure and intermediary costs, the E-commerce model results in lower prices, a convenient online shopping process and good customer service coupled with speedy delivery, bringing more customers and revenue to the company.

With almost 300,000 customers, Flyeralarm, founded in 2002, is one of the largest printing companies in Europe. Customers place orders on the E-commerce website and receive products, including flyers, magazines, office supplies, branded accessories, brochures, etc. Users specify the format, size, colour, artwork and paper quality and many orders are delivered within 24 hours. Flyeralarm is an example of an efficient E-commerce website on which the printing process is automated, thereby eliminating intermediaries and reducing costs while customers are attracted to the fast, efficient service and inexpensive printing supplies Flyeralarm offers.

References

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