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 are creating an e-commerce, a networking platform or a downloadable application, your challenge is to set up an operating cycle that optimizes your profitability. Here are ideas, examples of economical models proven online, from freemium to the box through the startup model. Online business: the winning economic models of the moment
By the way, what is an economic model?
An economic model or business model is an offer of products / services combined with an organization / operating cycle that enables the company to make its business profitable. In short, a business model explains how your business will attract customers and make money.
On the web, companies are constantly reinventing their model to remain competitive in the face of the influx of competitors, especially as the idea of free is more and more entrenched in the collective unconscious of internet users. The Internet has really changed our perception of the value of things, and companies are being forced to lower their prices to attract customers. The media, for example, carries the bulk of this digital tidal wave.
Readers who want free access to news, newspapers can no longer make a living from the sale of their articles and are forced to multiply their sources of income in order to remain profitable. Thus, Rue89 proposes to lead the education in journalism. This activity now represents 20% of its revenue. Liberation has opened its own café and shop in addition to its web and print content; Huffington Post user
“voluntary contributors” in return for fame in order to lower its fixed costs. These are examples of economic models that are still being sought for some of them or that e.g. Huffington Post, are already well-established and profitable.
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The Freemium business model: to pay without looking like that
Among the business models that work online, the freemium model has wind in its sails because it respects the notion of free, which is so long awaited by today’s internet users. The company MailChimp, for example, a tool for managing your emails, offers a free interface up to a certain number of shipments and charges more demanding users. Ditto for DropBox (cloud storage space), which asks you to pay only one subscription from a certain amount of data stored in its database.
Shortly said, freemium business model (the summary of “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 has not paid a few euros to be able to continue playing their game?).
The Xtranormal site has renewed itself in the freemium model. The company specializes in the production of storytelling in video, gives a credit on points during registration, used for the first purchases on the site. Once at 0, the customer is forced to refill points (paid this time).
The Sarenza example
In 2005, Yoann le Berrigaud Sarenza.com, an online shoe sales company, created a rather absurd idea for a product that is usually bought in stores. Who at the time wanted to buy their shoes online before they could try them on or see them up close? Yoann le Berrigaud circumvents the problem and offers THE winning economic model for selling shoes online: a wide range of goods – much larger than in stores – top-of-the-range images of the products, and above all delivery and free reshipment.
That was enough to think about it! Of course, the model could only be profitable on a large scale, made possible by the Internet vector. Today, Sarenza achieves 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. Offering your customers a recurring, monthly product or service allows you to achieve stable cash flows, anticipate your cash flows and buy your shares just in time. In short, the subscription model optimizes your expenses. However, be wary of the concept of the box being used and reused in all sauces by e-retailers.
For the little story, “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 beautiful box, making BirchBox the monthly treat people love to find in their mailbox. Other beauty boxes have followed the concept, then gourmet bags, boxes of fashion accessories … There is even the BigMustache online retailer that offers monthly shipments of razors at a lower price than products found in supermarkets.. (Consumer goods boxes are only relevant if the product in question is in fact a recurring / monthly purchase for the consumer and if the price is attractive.)
As a result of this enthusiasm, deregistrations are legion in the saturated box market. With good reason: products that are not very original, easy to find in stores or even some fatigue by receiving the same type of product every month … It is up to you to reinvent the economical model of the box!
The web launch 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 extra labor with the increase in Sales. For example, a web application requires development, but once it has hit the market, it is only left to attract internet users to download it. The concept works for many tools available on the Internet: software, applications …
A startup is thus defined on this background, among other things, as an organization that favors a “repeatable and scalable *” modelas Steve Blank, a Silicon Valley serial entrepreneur, points out.
Clearly, the winning online business model is a model that allows you to multiply revenue without hiring, resulting in exponential and non-linear growth of activity.
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* scalable means expandable, scalable
Questions to ask yourself before choosing a model online
To think about your business model on the Internet, you need to ask yourself these introductory questions:
– What are you selling?
– How do you differentiate yourself?
– What are the barriers to purchase?
– How do you organize yourself to mobilize as few resources as possible and to optimize your operating cycle?
Whether you create an e-commerce, a networking platform or a downloadable application, the challenge on the web remains the same: to hit the mark with your customers, differentiate yourself from the competition, optimize your profitability. For every web entrepreneur, his financial model!
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