The Value Proposition of Brickhouse Security

The growth in ICT has enable make companies to take their business online. Furthermore, globalization has made it easier for e-commerce companies to thrive and reach a wider customer base. Companies that want to venture into new geographical markets, find it easier if they use an online approach. However, organizations have to be very careful because e-businesses differ greatly from normal business operations. For instance, e-business requires greater adaptability to technological and market changes, and faster delivery of goods and services than traditional business (Osterwalder & Pigneur, 2010). Online businesses also require less costs, enables an organization to deal directly with customers instead of using intermediaries and generation of data to inform customer value (Osterwalder & Pigneur, 2010). Furthermore, e-commerce businesses require operating models that anchor on innovation to gain competitive advantage and increase financial performance. Companies can use a business model canvas to determine their suitability in a certain business environment.

The purpose of this assignment is to identity three online businesses of different sizes and locations that have demonstrated innovativeness in their approach. The companies chosen are Brickhouse Security in the US, Boots UK and OzBaragain pty limited in Australian.

2.0 Brick House Security Inc.

2.1 Brief Company background

The company sells security systems to individuals, businesses and law enforcement in the US and abroad. The company was founded in 2005 by Todd Norris who is the current CEO (Brickhousesecurity.com, 2018). Some of the products sold by the firm include GPS trackers, video cameras, alarm systems, cybersecurity, counter-surveillance, hidden cameras, home automation among others (Brickhousesecurity.com, 2018). Brickhouse uses an e-commerce business model where it sells the majority of its products online via the company website (Brickhousesecurity.com, 2018).

2.2 Key partners

Some of the key partners for Brick House security include regulators, other security firms, shipping organizations, technology companies that manufacture security systems and payment processors. For example, the company is regulated by the Bureau of Security and Investigative Services in California which provides licenses to sell security systems and accessories in the state (BSIS, 2018). Additionally, the firm has to partner with payment processors such as PayPal, Visa card among others to allow consumers to pay for their products electronically. Although the company was self-funded initially, it has managed to attract investors due to its high performance.

2.3 Key Activities

Some of the key activities include marketing and advertisement through online platforms, development, and maintenance of the website, daily operations, hiring of security technicians to offer installation services and liaising with technology companies that make security systems.

2.4 Resources

Brickhouse security has resources and capabilities that are valuable, unique, devoid of imitation and sustainable. One of the major resources is that the company hires very talented employees. Currently, the firm has close to 100 full-time employees (Brickhousesecurity.com, 2018). However, the small number of employees also limits the organization’s capability to provide services to its growing customer base in different parts of the US. Another resource is having an extensive technology platform that allows it to offer advanced products to its customers and meet their security demands. The firm’s acquisition of GPS manufacturer Securus and tracking device developer Zoombak has enabled Brickhouse security to sell the state-of-the-art products and systems for security purposes. Strong brand and excellent reputation is also a resource for the company to offer the best products and services to its customers.

2.5 Core value proposition

Every business should ensure that it maximizes customer experience and satisfaction by proving a higher value proposition than its competitors. It is vital that value is defined by both the seller’s and customer’s perspective. However, customers are the one who determines and derives value from using a product or service (Talola, 2016). In fact, a business can only offer a value proposition and hope that customers will find satisfactory (Talola, 2016). The core value proposition communicates to the customers for them to buy products from a specific company and not go for an alternative (Osterwalder and Pigneur, 2010).

Brickhouse Security has managed to create a distinct value proposition that utilizes its core resources and capabilities to appeal to customers as envisioned by Osterwalder et al. (2014). The company has leveraged on the use of innovativeness to create a uniquely defined value that can be recognized by its extensive clientele. The following are the core value proposition that Brickhouse Security offers its customers;

Shipping that fast and free: the company does not charge their customers for delivery and ensures that all orders that have been made before 5pm are shipped the same day (Brickhousesecurity.com, 2018). Furthermore, the firm offers flexible exchanges and returns within 30days for products that do not meet customer demands (Brickhousesecurity.com, 2018). Due to the nature of online business, customers derive higher value if their products can be delivered very fast and at a convenient location of their choosing.

Excellent warranty: customers who buy products that have been branded by Brickhouse Security get a lifetime warranty while any other devices get 90 days (Brickhousesecurity.com, 2018). Since the company has been authorized by the manufacturer, clients are able to get a full warranty that they can get if they were buying directly rather than through Brickhouse Security.

Lifetime technical support: some of the products sold by the company are technical in nature. Therefore, customers will require assistance from the company. Brickhouse ensures that clients are able to receive assistance from its technicians and security experts on matters pertaining to the products they buy. For example, cybersecurity products need consultation from the parent company (Brickhouse Security), hence consumers will likely approach the firm frequently seeking help

Selection of best products by knowledgeable security experts: the products the company sells are vetted and selected by highly trained and experienced experts who are confident that they can meet security demands of customers (Birckhousesecruity.com, 2018). Moreover, the company examines consumer purchasing behavior on the website and determines which products can best suit their needs (Ostwerwalder & Pigneur, 2010).

Offers competitive prices with protection: the majority of the firm’s products are relatively cheaper than those of the competitors without compromising their quality. In cases where the product is higher than substitute products, the company provides a price match for their consumers (Brickhousesecurity.com, 2018).

2.6 Customer relationships

An excellent value proposition can only be effective if an organization develops a good relationship with its customers (Talola, 2016). For Brickhouse Security, relationships are enhanced through support by a dedicated customer service team. The customer service team is on-call 24 hours, 7days a week to offer consumer care services related to company products and services (Brickhousesecurity.com, 2018).

2.7 Customer segments

Businesses, law enforcement agencies, and individuals.

2.8 Channels

The company website, resellers.

2.9 Costs of revenue generation

Brickhouse engages in operational activities to generate revenue while incurring costs in the process. One of the costs is wages and salaries for its employees including technicians, security experts, IT support, administration, and management. Another cost is the marketing and advertising of the company on TV and radio, newspapers, the internet etc. Brickhouse Security also incurs costs in the development and maintenance of its website. Additionally, there is an assumption that the company incurs shipping costs since it does not charge customers for delivery. Furthermore, there is an assumption that the company will incur expenses to provide training and education to its personnel and also customers who may also be interested. There also production costs in the case of subsidiaries such as Zoombak and Securus.

3.0 Sources and methods of revenue generation

Last year, the firm made revenues amounting to $4.5 million (owler.com., 2017). The main sources of revenue for the company are the sale of security systems, cameras, GPS trackers among others. Additionally, consultation fees paid to its security experts is also another revenue stream. Fees generated from leasing security systems and maintenances to third parties also form part of the revenue for Brickhouse Security. However, the company is discouraging leasing and makes exceptions in very few cases but prefers a direct sale. Brickhouse Security also uploads instructional videos on its products and services, some of which are pay per view as a source of revenue. The company website is the main method of generating revenue but the firm has not taken any steps to increase traffic. The lack of traffic to the website reduces the number of orders and renders the revenue model ineffective (Hongelin and Jansson, 2013).The revenue model of the company needs to be expanded since the organization operates as a pure e-commerce business although not at the level of Amazon, or eBay. For example, Amazon has been able to diversify into other fields such as grocery, health and cloud computing services to expand its revenue streams.

3.0 Boots UK

3.1 Company profile

Boots UK is a subsidiary of Walgreen Boots Alliance since 2014(boots.uk.com, 2018). The company is the largest pharmacy beauty and health chain in the UK and Ireland (boots.uk.com, 2018). It also provides optical and hearing services care for customers in all its stores (boots.uk.com, 2018). Boots UK has 2, 486 stores and over 14 million people use the firm’s products (boots.uk.com, 2018). Furthermore, the company employees over 70,000 people of which 6,500 are professional pharmacists (boots.uk.com, 2018). The firm is suitable as an innovative business because it has managed to integrate physical stores with an online business. Boots UK has managed to grow its online business to account for 5% of its revenues (Sillitoe, 2017).

3.2 Key partners

Key partners for the company are investors, pharmaceutical manufacturing companies, NHS facilities, supply chain companies and other pharmacy chains.

3.3 Key activities

Marketing and advertisement, daily operations, platform development, and maintenance.

3.4 Key resources

The main resources for boots UK are a huge number of stores that are located within 10 minutes from where 90% of the population lives, a large pool of talented employees, effective supply chain management, Walgreens Boot Alliance brand, and reputation. However, the company’s brand reputation has been a steady decline due to cases on low-quality products, poor in-store standards and claims that pharmacists are being pressured to conduct costly but unnecessary health checks on customers visiting their stores (Hubbs, 2016). The company has increased collaboration with suppliers to ensure that the products they receive can satisfy customer demands.

3.5 Core value proposition

To boost its online business, Boots UK is trying to re-invent its customer value proposition to appeal to a wider range of clientele. However, its technology platform is not well developed leading to less generation of revenue in the online category (Tarragano, 2014). The value proposition for the company is based on quality, affordability, accessibility, fast and fast delivery. To enhance its value proposition, the company is updating its homepage to reduce the number of promotions available on the platform to allow for easier navigation. Secondly, for its fast delivery, customers get their products within 24 hours after ordering (Tarragano, 2014). Boots is also improving the quality of products sold within its stores and online to improve a tarnished brand reputation. In terms of affordability, the company products are relatively cheaper but the health checks are quiet expensive.

3.6 Customer relationships

To improve its customer relationships, Boots UK relies on an intensive customer care service personnel who ensure that all inquiries and feedback from, the customers are directed to proper channels for redress. The company also has a software application which is downloadable from play store and Apple store to enable customers to access Boots products from their smartphones, tablets, and laptops.

3.7 Customer segments

People concerned with quality and convenient beauty and health products and services. Businesses that buy pharmaceutical products for resale also form part of the customer segment. The company targets regular clients and visitors who are new to the company website and curious to check out what is being offered.

3.8 Channels

The major channels which customers can access Boots UK products are apps, physical stores and accredited facilities authorized to use the company brand.

3.9 Costs of revenue generation

Due to the high number of employees, the majority of operational expenses at Boots UK goes towards the payroll. To reduce the high wages and salaries bill, the company has plans to cut 700 non-store based jobs to improve the firm’s financial performance (Good health suite, 2015). However, the decision is unlikely to reduce soaring operational expenses because more stores need more personnel. The logic would be to decrease the number of stores and take most of the operations online. Additionally, investing more resources in technology will increase operational efficiency by cutting costs (Good health suite, 2015). Boots UK has conducted initiatives to reduce costs of generating revenue by implementing mobile refill scans for customers that require repetitive prescriptions and electronic stock management to enhance in-store consumer experience (Retail analysis, 2016).The company also invests heavily in marketing through advertising its products and services in the UK, Ireland, and Thailand. Such heavy marketing costs lower profit margins but anticipates an increase in sales revenue. The huge number of facilities has made the company increase its economies of scale but also made the maintenance costs to increase exponentially. Therefore, facilities maintenance expenses are some of the cost of generating revenue. Other pharmacy chains such as Drug Emporium have managed to reduce their costs by operating less number of stores than Boots. Also, license fees to its professional pharmacists also generate a huge expenses bill for the company.

4.0 Sources and methods of revenue generation

An organization that is planning to take whole or part of its business online should develop a revenue model that will steer it towards profitability (Ostewalder & Pigneur, 2010). Currently, Boots UK financial performance is declining but can be improved by focusing on increasing the 5% revenues derived from online business to about 8%. In 2017, the firm made operating revenue amounting to £6.83 billion and pre-tax profits of £498 million (Jahshan, 2018). This performance was poor compared to £523 million profits before tax in 2016 (Jahshan, 2018).

The primary source of revenue for the company is the sale of pharmaceutical products. Customers enter the store and buy prescription drugs and those that are off-the counter. It also gets revenue from the sale of optical products and hearing aids to consumers that walk into their establishments. Boots UK also earns income from consultation involving health checks before buying drugs and medicine. The company also employs dermatologists that provide professional advice to clients and makes recommendations on which beauty and skin care products to buy at Boots UK stores. Its online business streams include drug and beauty care products and pay per click on various links to goods and services provided by the company. The assumption is that consumers who visit Boots physical stores will also generate more traffic towards the company website and apps.

4.0 OzBargain

4.1 Company information

OzBargain is an e-commerce company that is a subsidiary of Delve Media Pty Limited (cloudways.com, 2018). It is among the top 50 most visited websites in Australia (cloudways.com, 2018; Santos, 2017). The website collects deals from all over Australia involving electronics, travel, home, and garden, fashion and apparel, groceries, computing among others (ozbargain.com.au, 2018). The company is quite small and only has four full-time employees (Santos, 2017). OzBargain has been in existence for 11 years and was founded by Scott Yang who is also the CEO (Santos, 2017). The firm brings together buyers and sellers to create the best deals that offer discounted prices to products sold (cloudways.com.au, 2018). OzBargain is also operational in New Zealand.

4.2 Key partners

Merchants, tech companies (Google), buyers and regulator.

4.3 Key activities

Marketing, technology support.

4.4 Key resources

Deals, a huge number of buyers and sellers, technology platform. However, the small number of employees has limited the growth of the company into an e-commerce giant such as Amazon and eBay.

4.5 Value proposition

Despite being a small company, OzBargian has managed to grow and survive for 11years through by offering a unique value proposition. One of the value propositions is cheaper prices. Buyers in Australia are able to bargain with sellers and get products and services at a discount. In fact, products sold on OzBargain are relatively cheaper than eBay and Amazon. Furthermore, there are more sellers, buyers, and items that made it easier for any customer to get any product he/she wants. There is also guaranteed customer experience for using the website. Most customers like the fact that the interface is nice, easy to navigate and the home page are less complicated.

4.6 Customer relationships

Website rating and peer reviews. Customers are invited to provide feedback on their experience using the website and providing a rating. The rating and the reviews enable OzBargain to build relationships with its customers.

4.7 Customer segments

Individuals and businesses who are looking to sell their merchandise at a short time’s notice and also buyers looking for the best deals at cheaper prices to satisfy their demands.

4.8 Channels

Apps, website.

4.9 Cost structure

Advertising costs, insertion fees. The company spends a lot of money on advertisements in all states and territories in Australia and New Zealand. Additionally, it incurs insertion fees in websites and apps of other companies to inform customers of their existence.

5.0 Sources of revenues

Ads, revenue sharing agreements between partners, and commission from affiliated companies. Ads account for more than 90% of all revenues for OzBargain (Santos, 2017). In fact, the company has partnered with Google through AdSense. However, the firm needs to diversify its revenues streams because being a community-based platform, income from ads alone cannot sustain the growth, survival, and success of the company. Furthermore, the company’s business model can be easily imitated by any new company since the barriers to entry in the e-commerce industry in Australia are very few. There are also other organizations which are affiliated with OzBargain that enables the firm to get a commission when any of its products or services is sold through the website. Additionally, the firm has revenue sharing agreements with business and individuals wanting to post deals on the website. The revenue sharing agreements could generate more income for the company if it was expanded to serve a global customer base instead of limited itself to Australia and New Zealand.

6.0 Conclusion

E-commerce companies are generating significant revenues by conducting their business online. Majority of consumers prefer buying their products and services online due to the convenience it offers. Despite the huge potential as a result of great opportunities, the e-commerce industry experiences numerous challenges. For instance, advertising costs are very high and so does site maintenance, hiring, and training of personnel. The problems can be overcome through innovativeness in pricing, quality of products and speed of delivery.

7.0 References

Boots-UK,com.(2018), About boots. Retrieve from http://www.boots-uk.com/about-boots-uk/about-boots/boots-in-numbers/

Brickhousesecurity.com(2018). Why Brickhouse. Retrieved from https://www.brickhousesecurity.com/why-brickhouse/

Cloudways,com.au (2018).Top 20 e-commerce sites in Australia. Retrieved from https://www.cloudways.com/blog/top-20-ecommerce-sites-in-australia/

Good health suite (2015).Boots reshapes business model and announces 700 job cuts. Retrieved from http://www.thegoodhealthsuite.co.uk/Pharmacist/pharmacy-business/577-boots-reshapes-business-model-and-announces-700-job-cuts

Hobbs, T .(2016).Boots hopes new health and wellbeing positioning can arrest brand decline. Retrieved from https://www.marketingweek.com/2016/05/16/boots-hopes-new-health-and-wellbeing-positioning-can-arrest-brand-decline/

Hongelin, I., & Jansson, J.(2013). Business models in the E-commerce. Retrieved from http://www.diva-portal.org/smash/get/diva2:642454/FULLTEXT01.pdf

Jahshan, E. (2018).Boots posts annual profits and revenue slump. Retrieved from https://www.retailgazette.co.uk/blog/2018/05/profits-fall-boots/

Osterwalder, A., Pigneur, Y., Bernada, G., Smith, A.,& Papadakos, T.(2014). Value proposition design: How to create products and services customers want.

Osterwalder, A., & Pigneur, Y. (2010).Business model canvas.

Owler.com (2017). Brickhouse Security’s competitors, revenues, number of employees, funding and acquisitions. Retrieved from https://www.owler.com/company/visionofus#top

Ozbargain.com.au(2018). Company information. Retrieved from https://www.ozbargain.com.au/

Retail analysis (2016). How boots are responding to market challenges. Retrieved from https://retailanalysis.igd.com/news/news-article/t/how-boots-is-responding-to-market-challenges/i/11409

Santos, A.(2017). OzBargain’s Founder Takes Us BTS Of Australia’s Loosest Discount Site. Retrieved from https://www.pedestrian.tv/money/ozbargains-founder-takes-us-bts-of-australias-loosest-discount-site/

Sillitoe, B. (2017). RBTE 2017: How Boots aims to make shopping more relevant to customers. Retrieved from https://www.essentialretail.com/news/rbte-2017-boots-shopping-relevant/

Talola, J. (2016). Creating an effective customer value proposition process. Retrieved from https://www.theseus.fi/bitstream/handle/10024/112212/Talola_Jalmari.pdf?sequence=1

Tarragano, J. (2014). Retail review Boots: retail strategy. Retrieved from https://internetretailing.net/themes/themes/retail-review-boots-retail-strategy-12180