Business Model Canvas Analysis of B2W

The Internet has experienced substantial growth over the years. The tool has changed from a means of storing information to become an essential element of communication and business. People have developed various online companies that employ various business models to achieve their goals. The following report discusses the business model canvas of three Internet-based enterprises, B2W, Wallis and Twice to identify similarities and differences in their approaches. The report indicates that in areas such as key resources, key activities, cost structure and channel the companies bear similarities in the techniques used. However, the companies differ in the other aspects, for example, value propositions, customer segments and customer relationships. Consequently, they offer a means to understand the way online firms model their business to respond to consumer needs and achieve their purpose. They can give adequate understanding of the level of planning and execution that companies operating through the Internet must undertake to be able to generate revenues above their expenses for them to become profitable. Thus, the report is an in-depth analysis of three companies that offer their commodities to consumers using the Internet.

E-Business and Value Chain

The expansion of the Internet in the previous two decades has seen the establishment of new companies that apply new online business models to generate success. The nature of the models differs depending on a range of factors, such as the customer relationship, customer segments, channels and cost structure. Examining the enterprises’ approach to their business using a business model canvas can help to provide an understanding of the way online companies can drive their purpose and achieve growth. The following report provides an analysis of three Internet-based firms, B2W, Twice and Wallis using the business model canvas developed by Osterwalder and Pigneur (2010).

B2W Analysis

B2W is an Internet-based company from Brazil that was formed after the merger of Submarino.com and Americanas.com. At the time of combining the two businesses, the company has about 50% of the market share in Brazil. It has continued to experience significant growth over the years getting an estimated US$2.1 billion in 2017 (B2W 2017).

Key Partners

Business partnerships are essential to gaining new customers, accessing new products, reaching new markets and increasing the loyalty of customers (Zhao 2005, p.6). As a result, companies pursue new partners to enable them to meet these goals. B2W has several associates that help it to achieve its goals. Most of these partnerships aid the company to get the supplies that it sells on its website. They differ based on the type of product that it makes. For example, B2W has partnered with organisations such as Samsung, Apple and Motorola to offer electronics. The company also works with Usado and Livro that make watches and kid’s books respectively. The critical associations of the enterprise provide supplies that the company markets on its website to the Brazilian people.

Key Activities

The principal activities in an enterprise represent the things that a business must do to make its business model work (Stonehouse and Houston 2003, p.269). B2W performs several vital tasks to enable the success of its approach to business. Since the company mostly sells ready products, the main activities are managing the site for orders and distribution of the products, developing strategies that will permit the growth of the brand and marketing and promoting the products it sells. Dealing with products from other businesses ensures the company does not need to undertake tasks such as research and design or production. It can concentrate on the actions that allow it to reach the customer and generate interest in products.

Value Propositions

A value proposition is an essential aspect of marketing and getting the attention of customers. The idea refers to the value consumers get by choosing a specific product or service. B2W as an enterprise has established itself as a company that offers quality and convenience when it comes to getting products. The business works with the MIT Center for Transportation & Logistics that has seen it develop warehouses in several key cities in Brazil. The strategy enables it to deliver products to any part of the nation within three days from the point an individual places an order. Convenience is one of the critical elements that has led customers to adopt online shopping (Jiang, Yang and Jun 2013, p.192). B2W has recognised the need and strived to meet it. Quality is also essential to establishing customer loyalty by delivering durable items that match the expectations of consumers.

Customer Relationships

Building relationships with consumers help companies to understand them and determine their needs as well as the best way to respond to the requirements. Establishing the right connection with customers requires businesses to be efficient, responsive and friendly to them (Campbell, Gutierrez and Lancelott 2017, p.65). B2W stresses these elements to build the right relationship with its customers. Efficiency is achieved through its distribution channels that ensure quick delivery of products to customers. Back end services such as order processing, service and support permits the business to build trust. Social media and the business’s website are an integral part of the way the firm communicates with buyers. The social networks help to increase business through recommendations. The representatives of the enterprise have to ensure they are friendly to the customers at all times.

Customer Segments

Due to the wide variety of commodities that the business sells, it serves different customer segments. For example, B2W serves children, teens, adults, men and women. Customers are the heart of a business. Businesses must know who they aim to reach to determine the best way to inform them, raise their interest and get them to take action (Credle, Chembakassery and Iammarino 2010, p.100). The different customer segments that the company targets have led to the utilisation of different techniques to market its products. Social media marketing, search engine advertising and online campaigns are some of the strategies it employs to reach the customer segments. Storing and delivering the latest products to the customers also allows the enterprise to drive its business.

Revenue Streams

The primary sources of income for B2W are the sales it generates through the online store. Through the buyers of the different products on its website, B2W can generate revenues. It mainly charges a higher price than what suppliers charge to earn profits.

Channels

The delivery of value propositions requires companies to use various channels to get information and products to the consumers (Saarinen, Tinnila and Tseng 2005, p.12). B2W employs several avenues to reach the customers, for example, advertising on television and the Internet, distribution of products via trucks and cars to its warehouses and the customers and sales through the website. The methods make it possible to spread information and increase sales as well as meet the value propositions that it promises consumers.

Cost Structure

The elements described in this section of the report lead to a cost structure for the company. The business spends money on marketing through the advertisements it places on different media. The firm also incurs costs on the distribution of products from the main centre to the warehouses and from the warehouses to customers. Lastly, the cost structure also involves personnel required to build relationships with customers in the Brazilian market.

Key Resources

The primary resources of the company are the website, personnel, distribution channels and suppliers. Each of the elements plays a fundamental role in increasing the performance of the company. The site is necessary for enabling sales by allowing customers to view products and place orders while personnel respond to their questions and problems. Distribution channels are vital to getting products to the customer. Suppliers are critical resources because they provide the products that the business sells to consumers. B2W’s brand is a crucial resource. Customer’s associate the name with the value proposition of the company enabling it to remain relevant in the market.

Twice Analysis

Twice is an Internet-based marketplace that enables the purchase and sales of secondhand clothing located in San Francisco, CA. It handles the selling, merchandising, pricing and shipping process allowing the customers to place orders and receive their items. Twice was a startup before its acquisition by eBay (Colvin 2014).

Key Partners

Unlike B2W that has partnerships with the producers of various goods, the principal partners of Twice are people who need to sell their used products. People can sell items they no longer use on its webpage. As a result, ordinary consumers form the primary aspect of the critical partners since they provide the products that it sells. Another category of crucial partners is shipping companies which deliver products mainly to international buyers.

Key Activities

Key activities depend mainly on the nature of the business and require companies to identify solutions to their customer’s problems (Osterwalder, Pigneur and Clark 2009, p.37). Twice performs several tasks to meet the needs of its consumers. First, the company purchases the product. Second, it markets the goods using offline advertising (TV). Online marketing (mainly social media) helps it to interact with the customers and build a community. Third, the company delivers the products and gets payments on behalf of sellers. Fourth, cyber security is essential to maintaining the privacy of customer information.

Value Proposition

The primary value proposition that the business gives to consumers is inexpensive clothing. As mentioned, the firm gets its products mainly from people who want to sell their old items. The strategy enables the company to offer cheaper apparel compared to other online retailers. The lack of physical stores is a significant advantage of the online businesses as it allows them to keep costs down (Grewal, Iyer and Levy 2004, p.705). Twice benefits from the technique by being able to control its expenses that it passes to the customers.

Customer Relationships

Concerning the relationships with customers, the business has established a reputation of being inexpensive and addressing the needs of customers. Twice pays specific attention to the quality of the product that sellers want to place on its website. The clothing has to be in good condition for them to agree to sell it. Also, the customer has to charge a low price since the item is a used product. Delivering good quality goods at a low cost has enabled the business to build a good relationship with its customers. The association with customers also considers technical assistance, support from the sales departments and customer service.

Customer Segments

The primary segment that the business serves is women, especially young women. The company has recognised that this group of individuals is the most highly influenced by fashion trends and wants to buy trendy clothing. Customer segmentation allows companies to classify individuals and determine ways to serve them better (Bodea and Ferguson 2014, p.1). Twice has categorised its buyers to identify women as the primary target and created a means to fulfil their interest in fashion by offering inexpensive clothing. The technique has seen it gain a more significant market share since the development of the business in 2012.

Key Resources

The critical resources for the business are the personnel and vehicles used for delivery of the second-hand clothing. Staff have a crucial role as they are responsible for taking orders, checking the quality of the clothes, responding to customer concerns and managing the finances of the business. In the US, the organisation delivers the clothing to consumers using various means mainly vans. Thus, they are an essential asset for the transportation of commodities. The brand is also a crucial resource as it increases awareness and sustains the value proposition of the business.

Channels

Social media marketing and Internet advertising are the fundamental ways of getting information to customers. The business also tracks purchases that customers make to determine trends. Online retailers have established following the items customers buy based on demographics can help to predict their preferences (Mohammed, Fisher and Jaworski 2003, p.34). Thus, the Internet plays a crucial role in their business models. Shipping of items is done using their vehicles or international cargo handlers. The use of other companies to transport merchandise aids the business to reduce expenses by avoiding some maintenance costs.

Cost Structure

Twice incurs minimal expenses in its business. Majority of its spending is on the personnel needed to manage various elements of the company. Customers cover the shipping costs and purchasing of second-hand clothing. As a result, the business can channel funds to vital areas such as marketing. The low-cost approach has enabled the company to achieve significant growth catching the attention of eBay that bought the organisation.

Revenue Streams

The primary source of income for Twice is the sales of second-hand apparel to customers. Twice buys quality second-hand apparel and then sells it to buyers through the its site. In this way, the business generates the finances it needs to sustain its business. The company lacks diversification of its revenue streams which can be a challenge when the market for the clothing experiences problems.

Wallis Analysis

Wallis provides stylish and contemporary shoes and clothing to women between 30 and 40 years. The apparel is designed to give a modern feel focusing on the quality and fit. Wallis also deals in jewellery although this forms a small element of the business. New collections are added to the online store each month. Wallis UK is a medium-sized enterprise that generated $9.7 million in 2017 (ecommerceDB n.d).

Key Partners

The main partners of the business are designers and clothes makers. Most of the apparels come from emerging designers rather than the established companies to allow the company to control pricing. They are relatively inexpensive items with prices ranging from £30 to £60. The pricing helps to reach mainly working-class women who want trendy clothes.

Key Activities

The primary activities of the business are sourcing the clothes and shoes, displaying them on the website, receiving orders and delivering them to buyers. The company’s business model requires it to establish and maintain relationships with the suppliers of the various items sold on its site. The primary tasks of Internet-based companies extend beyond the online transactions to include the Internet and physical interactions with partners, customers and suppliers (Karim 2012, p.15). Thus, the business has to show the items it is selling, take orders from customers and ship them to the buyers. The company also manages its website and protects customer information.

Key Resources

Various sectors need different resources as the primary factor for the business (Kocovic, Behringer, Ramachandran and Mihajlovic 2017, p.61). The principal kinds of resources required by Wallis are human resources, financial resources and physical resources. Human resources are the people needed to fulfil orders, manage the organisation and respond to consumer issues. They enable the company to meet its duty to customers and manage its affairs. Financial resources are needed to buy clothing because the enterprise buys then sells the goods. They also allow payment of workers and the marketing aspect of the business. Finally, physical resources such as warehouses, vehicles, offices and distribution points are vital to the company.

Value Proposition

Wallis has established a reputation for giving consumers quality and fit as the fundamental propositions. Customers get trendy and durable clothing, and they can get apparel for all seasons and occasions. The promise permits it to appeal to a working-class segment of the market.

Customer Segments

The primary segment of the market that the business focuses on reaching is women aged between 30 and 40 years. In the fashion industry, companies focus on two main types of segmentation: customer and product (Vecchi 2016,p.167). Customer segmentation requires businesses to undertake a careful analysis of the target audience to identify and respond to their needs and discover the best way to reach them. Wallis uses this approach driving it to engage in extensive market analysis.

Customer Relationships

The process of developing, establishing and maintaining relationships with customers for Wallis demands the use of its human resources. Advertising is an essential step in enabling it to reach the customers. The business gets the attention of customers through advertising on television and the Internet. It creates the association by getting them to buy the items available on its website. After-sales service and responding to customers’ problems are the fundamental ways of maintaining the association. The company hires personnel who address the issues of the consumers helping to show them that the business is not interested in the money alone but also giving quality to them.

Channels

As with most online companies, Wallis uses several channels to communicate with customers and distribute its products. Communication with consumers is vital to raising awareness, knowing their needs and responding to the challenges they encounter (Baran and Galka 2016, p.111). Wallis makes practical use of social media to achieve the aims. The company promotes its products, conducts surveys and answers the complaints and questions of the buyers. Sourcing and supplying the items is also a vital element of the enterprise’s channels. Through its fleet of vehicles and partnerships with shipping companies, the business can deliver products to customers in any part of the UK.

Cost Structure

Developing and giving value, sustaining relationships and generating income make companies incur expenses (Freitag 2014, p.56). The structure of the costs for Wallis involves several elements: personnel, purchasing of goods, shipping and marketing. Workers are needed to manage the business and sales aspects. Wallis maintains teams that help to realise the aim. The firm sources the clothes and shoes from different suppliers and incurs expenses for that purpose. Although consumers refund the company for moving the goods from its warehouses to the customer, Wallis bears some initial sum of money to enable it to distribute the products. Finally, the company must engage in promoting the goods to attract buyers.

Revenue Sources

The primary source of revenue is the sales of products on its website. Customers buy items from the site and receive them. Wallis gets its income from such transactions. As a result, the business has been experiencing significant growth over the years from such activities.

Conclusion

Online companies use various business models to enable their business to thrive. The three enterprises examined in this report utilise approaches that bear substantial similarities but also contain some differences to allow them to achieve their goals. The essential resources, revenue streams, cost structure, and critical activities of the businesses are almost the same since the companies have a comparable business strategy. They all use the Internet to market, reach consumers and get the orders from their buyers. However, the models of the enterprises differ in areas, such as value propositions, customer relationships and channels. Dealing with different types of products requires firms to apply several methods to know the consumers who are interested in the products, determine the best way to reach them and know what value they seek when purchasing the foods. As a result, the companies have different value propositions where some give quality while others concentrate on convenience. The information reveals that the types of commodity and target consumer are fundamental aspects of the business models that online companies employ. Therefore, organisations must know these elements to enable them to make the best decisions when it comes to developing the models they will use in their business.

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