To be or not to be? It's about the Business Model

Things have been quietly changing. Not so long ago, when the pace of life was slower, a lot slower than now, there were three clearly differentiated roles in the theatre of business:

1. Manufacturers – who would design a product, make it in the factory, create a brand, receive large orders, ship orders and give a few weeks’ credit. These were their most important fucntions.
2. Wholesalers – who would buy in large quantities and subsequently resell to retailers in smaller orders. They would also keep large merchandise quantities in warehouses, products delivering, offer financing, etc.
3. Retailers – who would, basically, resell previously purchased products to consumers and keep the inventory as low as possible, just enough to avoid running out of stock. And, all of that, while offering a great customer service.

Nowadays, however, these protagonists have changed their role in this theatre. In fact, there is no longer a script. Everyone does what they consider appropriate. Nowadays there are retailers who develop their own brand, manufacturers who sell directly to consumers, last-mile delivery companies who cook, in ‘dark kitchens’, the pizzas they will be carrying to individuals within a few minutes, etc.

Let us look at an example that will help us formulate a useful method for a better business management. When Nestlé sells Nescafé to Carrefour, Nestlé is in 'b2b' mode. However, in many countries Nestlé sells Nespresso directly to the individuals. Here, Nestlé is in 'b2c' mode: this is retail.

Considering this company's case, the question is obvious: Is Nestlé a retailer? Or is it a manu-tailer? (...please, do forget this disaster of a word!).

The answer is clear. When selling Nescafé, Nestlé is not in retail. However, when selling Nespresso to individuals, it is in retail.

The current reality in business can be understood with a slight rephrasing: it is no longer about ‘being a retailer’, but about ‘being in retail’. 

A company, for example Nike, may decide to sell sneakers simultaneously to both other companies (here, it would not be in retail) and to consumers (here, it would be in retail).

Today, there are no longer ‘retailers’, because this concept referred to the old theatre role that necessarily involved undertaking some predefined activities or functions. This mummified role, just like the ‘manufacturer’ or ‘wholesaler’ roles, is now dead.

Colloquially, we could say that we have ‘lost the plot’. Nowadays, any company can decide to undertake a given function, or - the opposite - to release some functions to other companies (e.g. design, branding, making, warehousing, product presentation, delivery, after sales service, customer support, reverse logistics, etc.).

Companies can shape new business models like playing Lego, gathering or leaving some blocks. Every block is a 'function', a type of task.

When we use the words ‘manufacturers’, ‘wholesalers’ or ‘retailers’, we are non-consciously accepting the risk of missing out on the amazing possibility of transforming our business. The vocabulary one person uses has a non-conscious influence on their decision making processes.

We're lucky to be now in a business job. Nowadays business management can be more rooted in creativity and freedom than in continuous improvement.

___ ? Oxygen bubbles. Authors: m+f=! team. BCN, April 2020 ___

Registered at SafeCreative:

Other previous Oxygen Bubbles ?

Shopping is a part of life

Exchanging money for a tennis racket?

Customers are more important than a Ferrari

How many products does Zara sell?

Does the Average Transaction Value really matter?