The companies that roll on the web have been able to invent or reinvent their economic model, to innovate, to be more attractive than their competitors. Whether you’re setting up an e-commerce, networking platform, or downloadable application, your challenge is to build a business cycle that optimizes your profitability. Here are ideas, examples of economic models that have proven themselves on the web, from freemium to the box through the startup model. Business on the Web: Today’s Winning Economic Models
Besides, what is an economic model?
An economic model or business model is an offering of products/services linked to an organization/business cycle that enables the company to make its business profitable. Simply put, a business model explains how your business will attract customers and make money.
On the web, companies are constantly reinventing their model to stay competitive in the face of the influx of competitors, especially as the idea of free is increasingly rooted in the collective unconscious of Internet users. The internet has effectively changed our perception of the value of things and companies are forced to lower their prices to attract customers. The media, for example, are bearing the brunt of this digital tidal wave.
Readers who want free access to news, newspapers can no longer live off the sale of their articles and are forced to multiply their sources of income in order to remain profitable. Thus, Rue89 proposes to conduct a journalism degree. This activity now represents 20% of sales. Liberation has opened its own cafe and shop in addition to its web and print content; used the Huffington Post
“volunteers” in exchange for fame in order to be able to reduce fixed costs. These are examples of economic models, which are still sought after for some of them or as the Huffington Post, are already well established and profitable.
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The freemium business model: pay without looking like it
Among the business models operating on the web, the freemium model has prospered because it respects the notion of free that today’s Internet users have been looking forward to for so long. For example, the company MailChimp, a tool for managing your e-mailing, offers a free interface up to a certain volume of mailings and charges more demanding users. Ditto for DropBox (cloud storage) which asks you to pay a subscription only from a certain amount of data stored in the database.
In brief, the freemium business model (shortened from “free” and “premium”), consists of offering free access to a basic offer and then additional paid features. The model only attracts customers if the features in question have real added value (think CandyCrush Saga: who hasn’t paid a few bucks to keep playing their game?).
The Xtranormal site has been innovated in the freemium model. The company, specializing in the production of tell a story in video, offers a credit of points during registration, used for the first purchases on the site. Once at 0, the customer is forced to top up points (paid this time).
Sarenza .’s example
In 2005, Yoann le Berrigaud founded Sarenza.com, an online shoe sales company, a rather absurd idea for a product usually bought in stores. Who wanted to buy their shoes on the internet at that time, before they could try them on or see them up close? Yoann le Berrigaud avoids the problem and offers THE winning economic model for selling shoes online: a wide choice of items – much larger than in stores – first-class photos of the products, and above all, delivery and free resending.
It was enough to think about it! Of course, the model can only be profitable on a large scale, powered by the Internet vector. Today Sarenza realizes a turnover of more than 250 million euros.
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Pay attention to the model of the box!
Subscription is a web-based service. By offering your customers a recurring, monthly product or service, you can obtain stable cash inflows, anticipate your cash flow and buy your shares just-in-time. In short, the subscription model optimizes your spending. However, be careful with the concept of the box used and reused in all sauces by e-merchants.
For little history, the “BirchBox” is a pioneer in this field. Here, samples of the best beauty products are sent to subscribers every month with branding centered around a pretty box, making the BirchBox the monthly treat people love to find in their mailbox. Other beauty boxes have followed the concept, then gourmet boxes, fashion accessory boxes… There’s even the BigMustache web retailer that offers monthly deliveries of razor blades at a lower price than products found in supermarkets.† (Consumer boxes are only relevant if the product in question is indeed a recurring/monthly purchase for the consumer and the price is attractive.)
As a result of this enthusiasm, there are countless cancellations in the saturated box market. Not for nothing: products that are not very original, are easy to find in stores or even a certain fatigue to receive the same type of product every month… It’s up to you to reinvent the economic model of the box!
The web startup model, how it works
New technology companies are a hit on the web because they have a formidable medium – the internet – to reach as many people as possible, while offering a product/service that does not require additional manpower with increasing sales. For example, a web application has to be developed, but once on the market it is only necessary to entice internet users to download it. The concept works for many tools available on the internet: software, applications…
On this basis, a startup is thus defined, among other things, as an organization that prefers a “repeatable and scalable*” modelas Silicon Valley serial entrepreneur Steve Blank points out.
Obviously, the winning business model on the web is one that allows you to multiply sales without hiring staff, resulting in exponential and non-linear growth in business.
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*scalable means extensible, scalable
Questions to ask yourself before choosing a model on the Internet
Ask yourself the following preliminary questions to think about your business model on the web:
– What do you sell ?
– How do you distinguish yourself?
– What are the barriers to buying?
– How do you organize yourself to mobilize as few resources as possible and optimize your business cycle?
Whether you’re setting up an e-commerce, networking platform or downloadable application, the challenge on the web remains the same: succeed with your customers, differentiate yourself from competitors, optimize your profitability. To every web entrepreneur his economic model!
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