Creation of a business models
Business model (Business Model Canvas) the quality of the architectural business and the value creation process in the form of nine blocks, divided into four main areas:
Consumer segments (Customer Segments)
Here comes one or more customer segments, with the work of the company. A segment is a group of people united by a common problem or need. There are several types of segments: mass market, niche market, complex segments. The more accurately a company defines a customer segment, the easier it is for consumers in that segment to get a valuable product.
Value propositions
The value proposition is the reason why customers buy a product by choosing your product, not the participants. Selling product idea, unique selling proposition. The purpose of value propositions is to solve the problem of customer segments. The emergence of a value proposition is a set of goods, services and services responsible for the release of a customer segment.
Some value propositions may be innovative, creating new markets or carving out new segments within existing markets. Others improve existing market offerings by adding new consumer characteristics and features that are important and meaningful to consumers.
Distribution channels (Channels)
This block describes how a company interacts with its customer segments before, during, and after purchasing a product. Distribution channels are points of contact that work to promote a product and serve customers. Distribution channels can be divided into five stages:
Customer relationships
This block describes the types of relationships a company builds with its customers. In general, this block answers the question “how do we interact with the consumer”. Relationships with customers can differ depending on different business objectives:
Revenue streams
Revenue streams describe the sources from which a company earns profits. There are two types of revenue sources in the business model: income from one-time transactions (product sales) or recurring payments for subscriptions or after-sales services.
Each revenue stream has its own pricing mechanisms that are directly linked to the value proposition.
Key resources
This block describes resources, the most important assets required for a business model to be viable and scalable. Resources enable a company to produce and communicate value propositions, maintain customer relationships, and generate revenue. The company can be the owner of resources, rent or buy them from partners.
Key resources can be of the following types:
Key activities
If resources are the “materials” needed to produce and deliver value propositions, then key activities are the processes to create value propositions, customer relationships, distribution channels, and revenue streams. Key activities are the most important actions of the company aimed at creating value.
Key partners
This block describes the suppliers and partners that make the business model work. Some business models can do without partners, and for some partnerships are the basis of viability. Companies enter into partnerships to mitigate risk, strengthen value propositions, or obtain resources.
There are three main reasons for creating partnerships:
Cost structure
The last block describes the most significant costs required to operate within the business model. Creating value, building customer relationships, selling and serving customers all come at a cost. Costs are easy to calculate if we correctly identify resources, key activities and partners.
Costs can be divided into the following categories:
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If you’re starting an ecommerce business, odds are you’ll fall into at least one of these four general categories.
Each has its benefits and challenges, and many companies operate in several of these categories simultaneously.
Knowing what bucket your big idea fits in will help you think creatively about what your opportunities and threats might be. No matter your stage of growth or business model, BigCommerce can position your business for its maximum potential. If you’re interested in learning more, contact sales to request a demo.
1. B2C — Business to consumer.
B2C businesses sell to their end-user. The B2C model is the most common business model, so there are many unique approaches under this umbrella.
Anything you buy in an online store as a consumer — think wardrobe, household supplies, entertainment — is done as part of a B2C transaction.
The decision-making process for a B2C purchase is much shorter than a business-to- business (B2B) purchase, especially for items that have a lower value.
Think about it: it’s much easier for you to decide on a new pair of tennis shoes than for your company to vet and purchase a new email service provider or food caterer.
Because of this shorter sales cycle, B2C businesses typically spend less marketing dollars to make a sale, but also have a lower average order value and less recurring orders than their B2B counterparts.
And B2C doesn’t only include products, but services as well.
B2C innovators have leveraged technology like mobile apps, native advertising and remarketing to market directly to their customers and make their lives easier in the process.
For example, using an app like Lawn Guru allows consumers to easily connect with local lawn mowing services, garden and patio specialists, or snow removal experts.
Additionally, home service businesses can use Housecall Pro’s plumbing software app to track employee routes, text customers, and process credit card payments on the go, benefitting both the consumer and business alike.
2. B2B — Business to business.
In a B2B business model, a business sells its product or service to another business. Sometimes the buyer is the end user, but often the buyer resells to the consumer.
B2B transactions generally have a longer sales cycle, but higher order value and more recurring purchases.
Recent B2B innovators have made a place for themselves by replacing catalogs and order sheets with ecommerce storefronts and improved targeting in niche markets.
In 2020, close to half of B2B buyers are millennials — nearly double the amount from 2012. As younger generations enter the age of making business transactions, B2B selling in the online space is becoming more important.
3. C2B — Consumer to business.
C2B businesses allow individuals to sell goods and services to companies.
In this ecommerce model, a site might allow customers to post the work they want to be completed and have businesses bid for the opportunity. Affiliate marketing services would also be considered C2B.
Elance (now Upwork) was an early innovator in this model by helping businesses hire freelancers.
The C2B ecommerce model’s competitive edge is in pricing for goods and services.
This approach gives consumers the power to name their price or have businesses directly compete to meet their needs.
Recent innovators have creatively used this model to connect companies to social media influencers to market their products.
4. C2C — Consumer to consumer.
A C2C business — also called an online marketplace — connects consumers to exchange goods and services and typically make their money by charging transaction or listing fees.
Online businesses like Craigslist and eBay pioneered this model in the early days of the internet.
C2C businesses benefit from self-propelled growth by motivated buyers and sellers, but face a key challenge in quality control and technology maintenance.
Conclusion
In general, there are a lot of types of business model calculations, here you need to choose what is closer and easier for you for the first time.
Before trying to make the first sales and MVP of the product, think about whether you have a business model and how well you worked it out??)