Discuss about the Influence On The Success Of The Business.
A business model describes the process and rationale of how a firm delivers, creates and captures values in external environment contexts. The making of appropriate business model construction can be defined as the business strategy of the management . As stated by Wang, Wang & Liu (2016), the business model canvas is a management strategy and lean start-up method for developing new or existing business model; it consists the organisation’s value proposition, customers, infrastructure and finances. The aim of this study is to highlight and deconstruct the business model of Jet e-commerce which is successfully using the business model to survive in the market.
Jet E-commerce: Jet.com is the subsidiary of Walmart and this e-commerce was founded in the year 2014. The owner of the business is Walmart and it is an American company. Jet e-commerce has it’s headquartered in Hoboken, New Jersey. This e-commerce was co-founded by Marc Lore, Nate Faust and Mike Hanrahan (Jet.com, 2018). Marc Lore sold his previous owned organisation Diapers.com to Amazon.com and the owners raised $820 million for Jet e-commerce business. This site was launched for the public in the year 2015, July. It has currently more than 1500 employees and in the year 2016, August Walmart acquired the company.
Products and services of Jet E-commerce: Jet e-commerce sells grocery, household supplies, and health & beauty products. Electronics and computers, furniture, home-based products, baby products, women fashion clothing, pet supplies, appliances, books, music, toy & games, arts, crafts, men’s fashion and sports, fitness and outdoors.
Industry: Jet e-commerce is in the e-commerce industry in the US.
Market: In 2017, in the USA, e-commerce sale grew by 16.03% (Jet.com, 2018). Most importantly, B2C business through e-commerce has been flourishing and retail e-commerce sales in the USA in Q4 2017 were 119.02 billion USD. Amazon is the major player in the USA and it takes the market share of almost 47%; others in the market are e-bay (6.8%), Best Buy and Macy’s.
Partners: Government and business alliances; however for Jet e-commerce, main partner is Walmart as it is the subsidiary of it. Third party developer who has made the website and mobile app. Local organisations and businesses that provide sell-through Jet e-commerce.
Key activities: Building e-community and seller education. Jet e-commerce wants to develop the platform to increase the sale process. Jet Partner programmes allow the companies to sell their products through Jet e-commerce by opening an account through Application Programming Interface (API)
Key resources: Jet e-commerce’s main resource is the backbone of Walmart. The high-quality benchmark is another resource. The CEO of the business is another resource with the quality business model. The technological advancement in the field of pricing and using the DemandStream integration can help to come closer both merchants and sellers.
Value proposition: ‘Real-time price algorithm’ that helps to gauge the true marginal cost of the products for the customers. Jet e-commerce has a direct link to their customers through websites such as Sony store and TigerDirect.com. Users can spend money on other venue and they can earn JetCash. Some of the partner sites are Nike, Hotels.com and Ann Taylor. Customers can purchase a $50 annual membership to get the lowest prices on 10 million items.
Customer relationship: Online support through chat. The customers can have call support from the executives. Seller education support is also there. Jet e-commerce hosts events to share knowledge to increase the knowledge of the sellers. The customers of the business can get the support through chat and posting queries.
Channels: Social media and online community. Word-of-mouth publicity is another channel. The customers can purchase through mobile app and website. Partner’s programme can be helpful.
Customers: There are two types of customers for Jet e-commerce. Sellers are the large and small merchants. The sellers are from various industry electronics, jewellery, grocery and furniture. The buyers purchase those products and the product must be unique and less priced than the competitors in the market.
Cost drivers:
Revenue streams: Jet e-commerce will not make a profit from the individual transaction rather than the company charges a modest membership fee that would lead to the market share. Sales of the e-commerce are the source of the revenue.
Customer building block defines the customer segment aimed at the organisation and in case of e-commerce; the customers are mainly two types, sellers and buyers. Their needs are different and they require various types of relationships and they can pay different aspects of the offer. Value proposition building block must be innovative and it makes the organisation separates from the other organisation. The value proposition can solve the problem of the customers (Chiu et al., 2014). Channels building block mainly delineates the communication mode to the customers and channels help to raise the awareness of the company’s products. Customer relationship is another important element and it helps to customer retention, acquisition and boosting sales. Revenue streams in e-commerce results from a one-time payment of the customers and recurring revenues from on-going payments. Key-resources of the organisation is physical, financial, intellectual and human resources. In e-commerce technological resource is very important and key activities of the organisation help to work the business model successfully. Activities and resources help the business to do the key activities. Key activities of the business can come from the partners as well (Ayala & Manazno, 2014). A partnership can be formed through alliances, joint venture or just suppliers and buyers relationship.
Jet e-commerce announced DemandStream integration and it is the enterprise cross-channel successful demand solution. This technology has been helping Jet e-commerce to work with notable brands that now have their products assortment on Jet e-commerce. Jet e-commerce tries to connect the brands and the retailers in the most efficient way. The profit percentage does not come to Jet e-commerce from individual transaction but from the membership. DemandStream integration can help the sellers to manage the order and fulfil it with the comparative rate. DemandStream helps in product catalogue quickly and accurately on both mobile and desktop (Commercehub.com, 2018). If the prices of the products change with inventory and assortment, the technology will automatically update the price of the products.
Critical success factor of the business depends on the newness of the value proposition. The performance of the products and services must be good and Jet e-commerce has made tied up with the online brands and the customers can automatically go to the products links. The customers can collect the JetCash from purchasing the products of other brands and they can use this for value creation. The interface of the mobile app and the desktop version must be user-friendly so that the customers can easily browse the products and make payment through this. Customisation of the products for specific customer segment can help the organisation to create value (Emerick et al., 2016). Jet e-commerce currently has only 4% market share in the USA market and they are trying to improve the market share through service-oriented approach.
As stated by Konchitchki et al., (2016), downside risk can be defined as the estimation of potential to suffer a decline in the worth if the market condition changes. Jet e-commerce can face the amount of loss that could be sustained as a result of a decline in the market. Jet e-commerce raised the amount of $800 million and downside risk describes the worst case scenario for the investment. The investor can lose the $800 million if the downside risk occurs. Jet e-commerce can face the downside risks with the finite amount and the investor will not lose the entire amount. Downside risks can come from the competitive marketing condition and decline of value. Increased downside risks will automatically enhance the chance of reward. Jet e-commerce can face the downside risk because of the downside risk measure and the negative market return.
In a business model, Jet e-commerce needs to improve the key partners of the business mainly; the business should make some logistic partners so that the products and services deliver very easily. Jet e-commerce can improve the network of sellers so that the product categories can improve.
In addition, Key activities need to improve in product merchandising and designing of the service and products. API can be changed into merchandising as it would help Jet e-commerce in development of the customer base.
The value proposition is mainly based on the DemandStream technology of Jet e-commerce. The pricing will be different based on the delivery address of the products. Jet e-commerce can improve the value proposition of the business based on the fast delivery of the products.
In addition, the customer relationship must be improved through automated service and using social networking. Apart from posting queries, Jet e-commerce can solve the issue using emails and social networking. The customer segment can be improved through individual leverage and USA based consumer market.
Conclusion
This study has been put strive to outline several prescriptions that form the building blocks for each of the activities to focus on both operational and strategic management . It has been observed that Jet e-commerce is new in the market and it mainly focuses on the value proposition in order to attract the customers. The performance management team of Jet e-commerce can drive maximum sales growth through optimising the campaign of DemandStream. The organisation needs to improve in key partnership, key resources and channels to communicate with the customers to increase market share.
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