Ten web based business model

4/15/2014

EDM ASSIGNMENT | Megha malviya

MBA3-AICTE

ANALYZING 10 DIFFERENT WEB BASED BUSINESS

MODELS

Analyzing linkedin business model

LinkedIn is the world’s largest

professional network. LinkedIn

had 161 million members in

over 200 countries. LinkedIn

helps the professionals stay

connected with each other by

creating and managing a

professional identity and

building a professional network.

It has implemented a Multi-

sided Platform, which offers

different solutions to different

categories of users.

LinkedIn provides the following categories of solutions to its network members

for free: An ability to manage professional identity using tools such as Profile

and Profile Stats; An ability to build and manage professional networks using

tools such as LinkedIn Connections, Invitations, and Introductions; Access to

knowledge and insights using tools such as LinkedIn Groups, Network Updates,

News, Answers etc.

LinkedIn is a good example of a Freemium business model. While the core

offering is free for its network members, premium offering comes for a price.

The premium offering includes tools such as LinkedIn In Mails and Profile Stats

Pro. The users can upgrade from a basic account type to Business, Business Plus,

LinkedIn platform induces the same-side network effects among its members.

This helps in growing the network through word-of-mouth or connection-

request-emails. As the average number of member connections grows, the

strength of the network improves. The more the network becomes strong, the

more attractive it becomes to the users on the other sides of the platform. The

users on the other sides of the platform include Recruiters, Marketers &

Advertisers, and Developers.

LinkedIn offers LinkedIn Corporate Solutions, LinkedIn Jobs, and Subscription

products to the Recruiters. LinkedIn Recruiter is their flagship hiring solution to

find, contact, and hire candidates. Self-service postings help recruiters to post

and manage job opportunities. LinkedIn Referral engine helps organizations

leverage their employee’s network to find qualified candidates and provides job

recommendations to its members over Job You May Be Interested In (JYMBII)

section of a member home page. Also offers Talent Basic, Talent Finder, and

Talent Pro as subscription products to recruiters and hiring managers. LinkedIn

offers Job Seeker family of products – Job Seeker Basic, Job Seeker, and Job

Seeker Plus – to its members to stand out to recruiters and hiring managers.

LinkedIn revenues come from 3 key revenue streams: Hiring Solutions,

Marketing Solutions, and Premium Subscriptions. For CY 2011, these 3 streams

represented 50%, 30%, and 20% of total revenues of $522 Million. LinkedIn

sells Hiring and Marketing solutions through field sales organization and

through their website. The Premium subscriptions are primarily sold online.

Field Sales organization comprises of direct sales force, agencies, and resellers.

While online channel is characterized by lower average selling prices, the

offline channel is characterized by longer sales cycle, higher average selling

prices, and longer contract terms. During CY 2011, Field sales contributed 55%

of the total sales, whereas online channel contributed 45% of the total sales.

Tumbler

Tumblr (stylized in its logo as tumblr.) is a microblogging platform and social

networking website founded by David Karp and owned by Yahoo! Inc. The

service allows users to post multimedia and other content to a short form blog.

Users can follow other users' blogs, as well as make their blogs private. Much

of the website's features are accessed from the "dashboard" interface, where

the option to post content and posts of followed blogs appear. As of April 14,

2014, Tumblr hosts over 180.7 million blogs. The company's headquarters is

in New York City.

Tumblr was officially launched in February 2007 There are 120,000 daily signups There are 168.4 million blogs There are 74.7 billion posts There are 113.6 million posts per day There are 199.1 global visitors to Tumblr each month There are 5.187 billion weekly page views 61% of teenagers consider Tumblr their favorite social network 50% of active users access content through the Tumblr mobile app Tumblr was sold to Yahoo in 2013 for $1.1 billion Available in 13 languages

As of April 14, 2014, Tumblr hosts over 180.7 million blogs and more than

82.7 billion posts in total.

In April 2013 the website received more than 13 billion global page views.

As of April 14, 2014, over 101 million posts were created on the site each

day

Revenue Model Strategy: Revenue through community-enhancing features.

Freemium business model

Stream 1: Theme marketplace. Customers create and make money; Tumblr takes a

cut. Designers make money. (Two-side market).

Stream 2: Bloggers (business bloggers?) who need to promote. Promotion fee for

being listed in Tumblr’s directory.

Future stream: Pay to promote posts.

Marketing: Win over early adopters who are blogging using avant-garde themes. They love it. Their readers will adopt because readers want to “blog” too.

Features: Simple and easy to post (and use) because of the design.

Cool and avant-garde themes.

Challenge: Through features and design, convince people to blog who would be too frustrated with other platforms, paraphrase from David Cole, designer at Quora

Customer segments. (Now) practically everyone it seems.

• Initially avant-garde bloggers.

•Then people who wanted to blog/share;

•Then business bloggers?

•Designers

Models

Flip kart

Flipkart was founded in 2007 by

Sachin Bansal and Binny Bansal,

both alumni of the Indian

Institute of Technology Delhi.

They had been working

for Amazon.com previously.

Headquartered in Bangalore,

Karnataka. It is considered as

the e-commerce company that

made online shopping popular

in India. According to Alexa

Internet, Flipkart's website is one

of the top 10 Indian

websites. Flipkart has launched its own product range under the name

"DigiFlip", offering camera bags, pen-drives, headphones, computer

accessories, etc.

Key activities

supply chain optimization

Marketing digital and traditional innovation

Clients- Mass market, 50 to 60% of total sales from small towns, youth who

spend on discretionary activities

Value-Convince, high quality customer service, flexible payment option, one of

the fastest delivery times.

Key resources- Delivery, staffing technology, warehousing infrastructure.

Channels – own website, and other social media like Facebook.

Zomato

Zomato is an online restaurant

discovery guide providing

information on home delivery,

dine-out, cafés and nightlife in

cities of India, Brazil, Turkey,

Indonesia, New Zealand,

the Philippines, South

Africa, Sri Lanka, Qatar,

the United Arab Emirates and

the United Kingdom

Strategy of Zomato’s Business Plan-----------------------

A start-up founded in July 2008 in a country known for the most discerning customer behaviors in the World, reached the status of being one of the 25 most promising websites in the country by 2010. The turnaround strategy behind its working, owes a share of its success to the advent of smart mobile telephony and the internet in India. The upper and middle class people who were increasingly gravitating towards comfort and convenience increasingly adopted technology. With right time to market, one such idea of getting convenient access to details of all nearby places to eat without having to collect huge stacks of menu cards, gave birth to this business model. The lateral thinking put in the model was innovative and way different from way of operating of traditional companies.

Zomato’s offering to the customers is: solutions in the form of database of all restaurants, the type of food (menu), the economic constraints, contacts,

working hours and location of eatery and most importantly, the reviews from other users! Convenience and accessibility in the form of ‘on the go mobile apps’, easy interface, availability on various platforms as shown below

Zomato on official fb page

ZOMATO never advertises or mentions any of its restaurants on the fb page.

1. The photos section on the ZOMATO page consists of number of innovative

ads as mentioned above. Here, the turnaround strategy opted for advertising

was implementation of real-time marketing relevant to the current happenings,

a strategy opted by a very few other companies.

2. The cover page has innovative phrases with links to ZOMATO mobile app

for different operating systems (as shown in fig).

3. The events tabs has frequents updates of events held by ZOMATO (mostly in

malls and pubs) which includes stand-up comedy contests, food-eating contests

(ZOMATHON) held mostly for the promotion of the sites and app. (Though the

last event was held on 6th October, 2012)

4. The Pinterest section has a flow of articles, news, mentions, blogs,

interviews, etc. related to the mention of ZOMATO pinned on it. Few examples

includes the history of ZOMATO, info graphics, updates of apps briefly

explained, fun stories of a foodie and so on.

Zooppa

Zooppa is a place for creative minds to come together with leading brands to

develop innovative advertising. Along the way they have the chance to meet

and connect with other creative talents, get feedback on their work and get

noticed. Each competition grants cash prizes to the community's favorite

submissions. Members have won more than $500.000 to date. The community

will comment and vote on company ads, providing feedback and helping refine

the creative process.

As of May, 2009 they hadn't been profitable, but were getting very close. They

see themselves somewhat akin to a combination of YouTube, Flickr and

Facebook (in the sense that we serve videos, images and have a timeline), and

they had huge startup costs.

The Zooppa community represents a global social network of people from over

120 countries. Zooppa members are art directors, video producers,

photographers, graphic designers and creative individuals/teams. Zooppa is the

world’s largest social network focused on user-generated advertising, through

their creative community of more than 40,000 people.

Brands need only to launch a competition and let Zooppa's creative community

do the rest. They then choose the ads and concepts that best exemplify the

brand's image, identity, and aims. Companies can choose the kind of ads they

want: video, print, banners, radio spots, concepts, or all of the above. Not only

do brands receive brilliant creative material, but by opening the advertising

process to real consumers, they also gain valuable market research.

Competitions on Zooppa.com are open to submissions in multiple categories,

and there is no limit to the number of ads that can be submitted. If an ad gets

the most votes the creator can win thousands of dollars in cash prizes. The

brand may then use the winning ad for their online campaigns, or, in certain

cases, their offline campaigns. There are also awards for runners-up including

cash and other prizes.

Facebook

Facebook was founded on February 4, 2004 by Mark Zuckerberg & helps

Internet users stay connected with their friends, families, and colleagues. It

provides a number of products, free of charge, to its users: Timeline, News

Feed, Photos and Videos, Messages (Email, Chat, and Text Messaging), Groups,

Lists, Events, Places, Subscribe, Ticker, Notifications, and Facebook Pages, 100

billion friendships, 250 million photos uploaded every day and 2.7 billion Likes

and Comments per day.

Facebook is the leading Social Networking Site (SNS) of the World. The mission

is to make the world more open and connected. Facebook has built a Multi-

sided Platform (MSP) that serves different customer segments with different

value propositions.

Facebook helps Internet users stay connected with their friends, families, and

colleagues. It helps them discover and learn more about what is going on in the

world around them. It helps them express themselves by sharing their opinions,

ideas, photos, and activities. Facebook provides a number of products, free of

charge, to its users. These include: Timeline, News Feed, Photos and Videos,

Messages (Email, Chat, Text Messaging), Groups, Lists, Events, Places,

Subscribe, Ticker, Notifications, and Facebook Pages.

Facebook had 845 Million Monthly Active Users (MAU) by the end of 2011. The

following statistics are further illustrative of Facebook size and scale: 100

Billion friendships; 250 Million photos uploaded every day; 2.7 Billion Likes and

Comments per day. More than 425 Million MAUs, nearly half of Total MAUs,

used Facebook products on Mobile. With so many users using Facebook on a

regular basis, it has become an attractive destination for advertisers and

developers alike.

Facebook offers a unique combination of reach, relevance, social context, and

engagement to the advertisers. Advertisers can engage with users based upon

the information shared by users such as Age, Gender, Location, Education, Work

history or specific Interests. Facebook offers advertisers an ability to include

social context in their Ads. Social context highlights a user’s connections with a

brand or business. Businesses can also create Facebook Pages to engage with

interested customers and simulate an ongoing dialog with them.

Facebook offers development tools and APIs that enables developers to easily

integrate with Facebook. Developers can use Facebook platform to build apps

and websites that are more personalized, social, and engaging. Facebook offers

developers Open Graph API and Social Plugins that developers can use build

different user experiences, including Apps on Facebook, Desktop Apps, Mobile

Apps, and Platform-integrated websites. At the end of 2011, more than 7

million apps and websites had been integrated with Facebook. Facebook offers

developers an online payment infrastructure that enables developers to receive

payments from the users in an easy-to-use and secure environment.

Facebook is investing heavily into Facebook-owned data centers. This is to

support user growth, increased user engagement, and delivery of new products.

Facebook data centers currently store more than 100 petabytes (100 quadrillion

bytes) of photos and videos. This is going to increase further in the future as

users engage more on Facebook. To support these massive storage and

computing needs, Facebook custom designed and built their software, servers,

and data centers from the ground up.

To increase the user engagement even further, Facebook has partnered with

companies such as Netflix, Hulu, Spotify, Washington Post providing online

movies, TV shows, music, and news. Their apps help users share what they are

watching, listening, or reading with their friends and family.

Amazon

Lines of Business------------

The company itself defines its lines of business in terms of product sales, service

sales, AWS, fulfillment, publishing, digital content subscriptions, advertising, and

co-branded credit cards. For our purposes, I'll define Amazon's lines of businesses

as 1) online retail, 2) internet services, and 3) the Kindle ecosystem.

Online Retail------------

The online retail line of business includes those products sold by Amazon as

a traditional retailer, most commonly as a low-cost retailer. Amazon claims to

have "Earth's Biggest Selection" of products available through its family of

websites, sold at the lowest cost at a small profit. The company started as an

online book seller, rapidly expanding into music and movies, and ultimately into

electronics and household goods.

But Amazon doesn't stock everything that is sold through its website. Another

part of its retail strategy is to serve as the channel for other retailers to sell their

products and taking a cut of every purchase. Amazon maintains its status as a

destination website, but does not have to maintain inventory on slower-selling

products. This strategy has made Amazon a leading long-tail retailer, expanding

its available selection without a corresponding increase in overhead costs.

Extending this long tail retail model further, Amazon introduced the sale of used

products through its seller marketplace. Originally developed to compete with

eBay, the seller marketplace provides another retail revenue stream for the

company without the need to stock products in its warehouses. Advertising and

shipping are handled exclusively by sellers, with Amazon taking a cut of every

sale simply for providing the channel.

Internet Services-----------------

Amazon's internet services cannot easily be discussed as a standalone line of

business because it is deeply intertwined with both its retail business and the

Kindle ecosystem. From the consumer perspective, Amazon has begun to provide

services like Amazon Prime, which provides free two-day shipping on retail

purchases, on-demand video streaming, and free access to the Kindle library, all

for an annual fee. Amazon Prime overlays the subscription and all you can

eat business models with the retail model to provide additional customer value.

Unknown to most Amazon customers, however, are the other internet services

provided by Amazon, referred to as AWS (Amazon Web Services). Originally

developed as a side business, Amazon decided to lease out its own server space

to other companies and individuals. While not a core part of the company's

strategy, Amazon found itself managing a large number of servers and internet

services, and it was a fairly small effort to manage those services for others.

Kindle Ecosystem-------------------

Amazon has expanded its business into manufacturing and distributing the family

of Kindle tablets. Originally designed as an electronic book reader

(supplementing its online book seller business), the Kindle has become a fully

functional tablet and media device. With the Kindle, Amazon serves as

both manufacturer and traditional retailer (and also wholesaler by selling the

device through other retailers).

While the company does not admit as much, it is assumed that the Kindle devices

are sold at a loss, which would more correctly put this line of business into

the razors & blades category of business model. By selling the hardware at a

loss, Amazon is betting that customers will purchase enough electronic books,

games, and videos to justify the initial loss.

Netflix

Netflix has been one of the most successful dot-com ventures. Netflix, Inc. is an

American provider of on-demand Internet streaming media available to viewers in

North and South America, the Caribbean, and parts of Europe (Denmark, Finland,

Ireland, the Netherlands, Norway, Sweden, and the United Kingdom), and of flat

rate DVD-by-mail in the United States, where mailed DVDs are sent via Permit Reply

Mail. The company was established in 1997 and is headquartered in Los Gatos,

California. It started its subscription-based digital distribution service in 1999, and by

2009 it was offering a collection of 100,000 titles on DVD and had surpassed 10

million subscribers.

Netflix was once held up as a major new-economy company with a unique digital

business model. By fully incorporating the internet into its operations, Netflix was able

to quickly overtake its chief rival, Blockbuster, but the company had not developed a

new business model. Instead, Netflix was able to adapt several known business models

and incorporate new digital innovations to quickly gain competitive advantage.

The Video Rental Market------------------

Blockbuster had steadily come to dominate the video rental market, pushing mom-and-

pop rental stores out of business and diminishing the impact of smaller chains like

Hollywood Video. The company built its brand and established operational efficiencies

that made it the most successful contender with an established business model:

the physical landlord. Renting VHS customers on a daily or weekly basis is a perfect

example of the landlord business model, allowing Blockbuster to own a large number of

physical assets and profiting by charging customers for the temporary use of the asset.

This business model continued to be successful as the market evolved beyond VHS

tapes into DVDs, and might have been successful through the transition to Blu-Ray discs

had the industry not experienced disruption from Netflix. Blockbuster seemed to be in a

very good position in the marketplace, and appeared to adapt well to changes in

technology and consumer tastes, even incorporating video game rentals into its stores.

That is, until Netflix began poking holes in the traditional video rental business model

and exposing its weaknesses.

Weaknesses in the Business Model--------------------------

The rise of Netflix exposed a couple of weaknesses in the traditional video rental

business model. First is customer convenience. While, at its peak, Blockbuster had stores

in every major town across the country, making the video rental process reasonably

convenient, the company could not compete with the convenience of the mailbox. The

convenience factor is a fairly common concern with the landlord business model, for

example with car rentals and equipment rentals where the customer is responsible for

picking up and dropping off at designated locations. The sheer number of stores that

Blockbuster had to maintain in order to provide convenience added to the infrastructure

costs associated with the business, something that an upstart like Netflix would not have

to contend with.

A second weakness that Netflix was able to expose is the amount of revenue

Blockbuster earned in late fees. In the view of customers, the late fees that Blockbuster

charged were exorbitant (often higher than the cost of the original rental itself) and

arbitrarily enforced (kicking in within minutes of the deadline with no room for

leniency). Once again, this is a common weakness with the landlord business model,

requiring landlords to enforce late fees and, in Blockbuster's case, spend significant time

on collecting overdue fees. The early marketing efforts on the part of Netflix focused on

the fact that the company didn't charge late fees with unlimited rentals.

Hidden Opportunities--------------------------

Netflix successfully capitalized on the weaknesses of the traditional video rental

business model, but was also able to identify hidden opportunities that were a result of

evolving digital technology. To begin with, in the transition from VHS to DVD videos,

there was a new opportunity to send movies via the postal service at much lower cost.

The cost of mailing and returning a large VHS tape simply wouldn't have made the

Netflix business as profitable. Flatter discs that would fit in with other envelopes made

the transition to mail order rentals much simpler.

Netflix was one of the first companies to successfully develop an online

recommendations engine that helped customers find new movies and TV shows based

on others that they had rated in the past. While much more common today, Netflix's

recommendation engine was extremely innovative when it was first developed. Along

with this, the company created the concept of the movie queue, allowing customers to

build a wish list of movies that they would like to watch in the future, and a list that

drove the order of movies that were sent out to customers.

This combination of a customer movie queue and a strong recommendations engine

allowed Netflix to add one additional layer to its business model: the long tail. In 2006,

Chris Anderson popularized the notion of the long tail, where an online store drives

revenue from a much broader set of products than can normally be done in a bricks-

and-mortar store. Instead of the few thousand products that can be stocked at a normal

retail store (and have to be stocked at multiple locations), online stores can stock

hundreds of thousands of products and sell them to anyone, anywhere.

While Blockbuster certainly could have developed similar shopping tools for its

customers, they just weren't as suited to a bricks-and-mortar experience as they were

to the shop-at-home experience that Netflix offered.

Twitter

Twitter is one of the

most popular Social

Networking Site

(SNS) and Micro-

blogging platforms in

the world. It enables its

users to share text

messages with a length

constraint of 140

characters. These

messages (aka tweets)

are publically visible, by

default. Any user can

subscribe to tweets from

other users by following

them. Users can tweet

through Twitter website or Twitter clients and apps for desktops, tablets, or

smartphones.

While Twitter started as a service to enable an individual share short updates to

a small group, it is now being used for a variety of purposes by different set of

users. Businesses are also using Twitter in several ways. Content and Media

companies are using Twitter to drive traffic to their websites. It is being used by

e-commerce and local businesses for deal promotions. Some businesses are

using it as a customer service channel; while some are using it increase their

brand awareness and monitor their brand perception. Some non-profits are

using Twitter as a fund-raising channel as well.

Twitter started as a service in 2006. It gained immense popularity in 2009-10.

As on 8 Sep 2011, as per Twitter official blog, Twitter had 100 Million active

users. More than half of them logged in each day. As on 26 Jan 2012, as per

Twitter official blog, 1 Billion tweets were send every four days, which means

250 Million tweets were shared every day.

With so many users connected to the platform and using it on a regular basis, it

is becoming an attractive destination for the advertisers. Unlike other SNS

websites, Twitter hasn’t yet started offering the option of ‘Display Ads’ to the

advertisers.

Twitter is an example of a multi-sided platform. Twitter has built an App

ecosystem. Twitter offers APIs that help developers build third party

apps. Twitter for Websites (TfW) allows easy integration of twitter into websites

with Tweet and Follow buttons. Search API allows a user to query Twitter

content and find tweets meeting a search criterion. REST API allows access to

core Twitter objects such as timelines, status updates, and user

information. Streaming API provides real-time access to twitter firehose. It helps

developers with data-intensive needs.

Lulu.com

Lulu (Lulu Enterprises, Inc.

and Lulu Press, Inc. are

collectively called "Lulu") is

a company offering self-

publishing, printing and

distribution services with

headquarters in Raleigh,

North Carolina. Since their

founding in 2002, Lulu has

published over 1.1 million

titles by authors in over

200 countries and

territories, and adds 20,000

new items per month to their catalog. In addition to printing and publishing

services it also offers online order fulfillment. The company's CEO is Red

Hat co-founder Bob Young.

Authors retain the copyright to materials printed/published by Lulu.

Optional services offered by the company include ISBN assignment, and

distribution of books to retailer outlets that requesting specific titles (Lulu does

not accept returns, which limits distribution to physical bookstores). Electronic

distribution is also available.

Lulu Enterprises was founded in early 2002;

Authors are guided by menus and instructions on the website as they upload

files. Material is submitted in digital form for hard publication. Uploaded items

that are not distributed beyond Lulu are immediately available for order and the

author is not required to purchase a copy. However distributed items require the

author to first order a draft and to approve it. In either case uploaded files will

be published verbatim and unedited within the limits of the technology to do so.

A live, online chat-service is available to help customers navigate the

instructions posted on the website. The author is not assigned a contact person

such as an editor.

Potential customers must first create an account with a user name and password

before ordering or paying for any item. Lulu keeps no inventory, instead orders

are placed in a queue at a contracted print-on-demand printer, in a system

referred to as "POD." Printing takes approximately 3 to 7 business days, after

which the finished product is shipped. There can be small variations in

published material when the job is moved from one contract printer to another.