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How to Create an Expert Business Model: A Detailed Guide + Templates

Written by: Chloe West

If you’re looking to create your own business, there are two things you need: a business plan and a business model. Your business plan helps you explore your overall business idea; your business model determines how your business will make money.

Creating a business model from scratch can be overwhelming—this is why working with a business model template or canvas is such a great idea.

Throughout this article, we’re going to cover what a business model is, introduce you to different types of business models, show you how to create a business model and share a number of templates you can use to get started with your own business model.

Table of Contents

What is a business model, nine key elements of a business model template, what are the different types of business models.

• Business Models FAQs

A business model provides the overall structure for your new business idea. A business model canvas (BMC) is often used as a starting point for this structure, including nine key elements (that we’ll address shortly) that help you flesh out your business model.

The typical structure for your business model should look something like this:

Image Source

Why Use a Business Model?

Using a business model makes sure you’re ready to launch a successful business. Especially if you’re hoping to pitch investors , you need to have a solid business model and plan to showcase why they should invest and how your business will generate revenue.

A few other benefits of a business model—especially if you use a business model template—include:

• You have a starting structure for your business model so you can simply plug in the key information
• Using a business model template helps you fill in any gaps you may otherwise have missed
• A business model helps you focus exclusively on your value proposition and why your business matters
• Working with a business model template helps you flesh out your business model quickly and efficiently
• Having a business model provides you with a tangible document you can include within your business plan , investor pitch and other important external documents

Essentially, you shouldn’t consider starting a business until you’ve created a business model. However, with a business model template, the process is relatively straightforward. We’ll walk you through each of the elements your business model needs and provide you with a number of templates to help you get started.

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As we’ve mentioned, there are nine key elements that you need to include in your business model. A good business model canvas template will have space for you to input information about each of these sections.

Let’s walk through each one so you can start thinking about how they’ll pertain to your business.

Key Partners

Who are the key partners in your business? This will be the people or companies that your business will rely on for supplies, processes, etc., to succeed.

Some questions to ask yourself here are:

• Who are your key partners and suppliers?
• What are the key resources you receive from these partners?
• What are the key activities (more on this in the next section) your partners will be doing?

Key Activities

Key activities refer to the essential processes your business needs to perform in order to offer its products and/or services to customers. This is what allows you to deliver on your company’s value proposition.

Key Resources

Your key resources are the supplies, equipment and other assets that your business needs in order to operate. For example, a brewery needs brewing equipment and a photographer needs a camera and editing software.

Value Propositions

What sets your business apart from the competition? What is your company offering and what is the value for your customers? Share pain points that your company is solving for its customers along with the specific products and services you’re planning to sell.

Customer Relationships

What kind of relationship will you have with your customers? How will you help them? Will your relationship be fully online? Will you have an in-person location? How will you be accessible to your customers?

Describe the channels you will use to reach your customers—website, social media, retail store, front desk, etc. Also include information on the specific channels you’ll be using to provide your business’s products and services.

Customer Segments

Who are your ideal customers? Build out a user persona for each customer segment you plan to service. For example, you might offer a direct-to-consumer model where you’d list out the specific types of customers who might buy your product directly, while also offering a wholesale model where you’d include customer segments about decision makers in retail stores.

Cost Structure

List out the costs that your business will have based on your key resources and activities. What do you have to pay in order to operate your business?

Revenue Streams

How will your business make money? What are the available areas that your business can use to bring in revenue and stay afloat? For example, an information business might offer paid coaching calls, paid online courses, as well as a few different types of services to generate revenue.

There are many different types of business models, or rather, different ways that businesses can structure themselves to generate revenue.

We’ll walk you through the top 10 types of business models and share a pre-made template for each so you can easily get started fleshing out your own business model.

1. Subscription Business Model Template

Subscription business models are based around regular payments, typically monthly. However, they can also be quarterly or annually, where subscribers input their payment information and automatically have the subscription fee pulled out of their account on the same day each month.

This model has long been popular for service-based businesses, but many product-based businesses selling monthly subscription boxes are getting into this business model as well.

Some examples of businesses using this model include BarkBox, Netflix, Massage Envy, Stitch Fix, QuickBooks, Spotify and Dollar Shave Club.

Subscription-based models are popular because they provide a guaranteed revenue stream from month to month. While yes, a certain percentage of subscribers will likely cancel every month, there isn’t quite as much stress on generating new customers because you know you’ll have $X amount of revenue from month to month.

Use the template above to flesh out your own subscription business. Make it interactive by adding clickable elements to your business plan, financial statements or other documentation.

2. Bundling Business Model Template

A bundling business model offers standalone products while also offering “bundles” or “kits” of multiple products in one for a much more appealing price point. While we all know the most common users of the bundling business model—cable companies—there are actually a lot of ways to make this model work.

Yes, companies like AT&T and Xfinity offer things like internet and cable in a bundled package with a discount. Insurance companies like Geico and Progressive also offer discounts when customers bundle things like home and auto insurance into one.

However, this can also be used for product-based businesses. Men’s grooming brand Harry’s offers standalone products while also offering a bundled starter kit. Some companies might offer some sort of BOGO (buy one, get one) sale that offers 50% off a second item if multiple are purchased.

The bundling business model can be a great idea if offering multiple products or services for a lower price point will still be profitable for your business. Here's a template you can use to explain this model to stakeholders.

3. Freemium Business Model Template

The freemium business model is typically used by online service providers and software companies. For example, Visme utilizes the freemium business model. We offer our software completely free of charge for life, but it comes with limited access. To get access to more premium features, users will need to sign up for a paid plan.

This is a great way to build trust with your customers. By offering part of your product or service for free, users can try it out to see how they like it. If they find that they’re using it often, it only makes sense to sign up for the full version of the product for a one-time or monthly fee.

Other examples of businesses using the freemium model include Grammarly, Notion, Calendly, LinkedIn, Zoom, and even online games that are free to play but offer in-game purchases, like Fortnite or Roblox.

When you create your business model template, you may end up sharing it with potential investors, other co-founders and more. You can also present it in a PowerPoint format using the template below.

With Visme, you can generate a shareable link that also gives you access to analytics , so you’re able to see how many people have viewed your business model and for how long.

4. Product-as-a-Service Business Model Template

The product-as-a-service business model essentially rents out products again and again to customers. This can be a great business model as you only have to purchase a set of products once—then you get paid each time customers want to use them.

City bike or scooter rentals are examples of this. Another is Rent the Runway, a high-scale clothing company that rents out dresses and other formal wear for people needing a one-time outfit for a fancy event. Completing the Puzzle is another example of this (also mixed with a subscription model) that sends out one puzzle at a time to its customers, who do the puzzle and then send it back.

While this business model can have a lot of upfront costs, getting investor funding or early signups can help to alleviate some of that.

With Visme, you can easily collaborate with co-founders and other team members on your business model to ensure you include all pertinent information. Simply invite them as editors to your project and you can work together in real-time .

5. Crowdsourcing Business Model Template

Crowdsourcing has become a popular business model due to the inception of sites like Kickstarter that host business ideas and allow the general public to fund them. As the name suggests, this business model is funded by a crowd of people.

Some very successful businesses and products have started this way, like card games Cards Against Humanity and Exploding Kittens, the now-defunct but once successful Pebble smartwatch, EcoFlow, the Wyrmwood Gaming modular table and video gaming console OUYA.

When editing this detailed business model template , make sure to take advantage of cool icons. Visme’s icon library boasts tens of thousands of different icon designs in several different styles. A business model canvas often uses icons to differentiate the sections anyways, so this is the perfect opportunity to get creative.

6. Franchise Business Model Template

The franchise business model is one of the oldest in the book. Nearly every popular fast-food restaurant chain has dipped its toes into franchising.

A franchise model is when a company allows private individuals to purchase the licensing of their name to create their own branch of a big-name corporation. For example, McDonald’s is one of the most well-known franchises.

Other businesses using the franchise business model include The UPS Store, Dunkin’, Great Clips, Ace Hardware, Planet Fitness, and 7-Eleven.

7. Manufacturer Business Model Template

The manufacturer business model starts with raw materials, like metal and plastic, and uses them to create a new product to sell to the end user. Popular examples of this would be car manufacturers like Ford, Toyota, and Chevrolet.

These businesses may then sell directly to the consumer or ship to a warehouse and sell through a retailer. Examples of manufacturers include Airstream, L.L. Bean, Burt’s Bees, Vitamix and Zippo.

8. Retailer Business Model Template

Speaking of retailers, this is another popular, tried-and-true business model. In fact, one of the most successful businesses of all time, Walmart, uses the retailer business model.

With this model, the company doesn’t actually make any of its own products. Instead, it compiles products from various suppliers and manufacturers to sell in its own storefront. This is one of the most popular business models, and as the last step of the supply chain, it’s one that consumers are most used to.

Examples of the retailer business model include Walmart, Target, Amazon, Barnes & Noble, Kroger, Costco, The Home Depot, Best Buy, PetSmart and GameStop.

If you’ve already created your new business’s brand guide, make sure to utilize those brand fonts and colors within your business model template. It’s never too early to work on brand strength , and incorporating your branding into documentation that gets in front of the eyes of investors is a great idea.

9. Distribution Business Model Template

The distribution business model falls right in between the manufacturer and retailer. This type of business often purchases the products in bulk from the manufacturer to then sell to the retailer for a profit.

Because these guys are the middleman, consumers likely aren’t well-versed with distribution businesses. Instead, they stay focused on the business side of things, building up solid relationships with manufacturers to ensure they get a good deal on bulk products. They then oversee the entire distribution process from the manufacturer until the products are on the shelves.

Use this stunning template to present your business model to partners, investor, suppliers and other key stakeholders.

10. Ecommerce Business Model Template

The last business model example that we’re going to cover is ecommerce. This type of business creates and sells its products exclusively online. It’s an easy type of business to create, especially with platforms like Shopify making creating an ecommerce website easy.

Some examples of ecommerce businesses include Warby Parker, Edloe Finch, Rothys, Day Designer, The Sill, and Beekman 1802.

If you have a product you want to create and sell, an ecommerce business model can be a quick way to get your new business started. Creating a website and shipping your products can have a relatively low overhead, so the only costs you need to worry about are the raw materials for creating your product.

Here's a customizable template you can use to present your e-commerce business model.

Business Model FAQs

Do you have pressing questions about business models? These FAQs are here to help.

What is the most common business model? 

The most common business model is retail, the sale of products or services to an end consumer. A brick-and-mortar store uses the traditional retail model while an e-commerce site uses the online version.

What are the 4 types of business models? 

The four core business models are:

• Suppliers: Focuses on providing products or services to other businesses or consumers.
• Modular Products: Centered around creating customizable or interchangeable components or services.
• Multichannel Businesses: Utilizes multiple distribution channels, such as online, brick-and-mortar and direct sales.
• Ecosystem Drivers: Creates and sustains a network of interconnected products, services or participants.

What is the difference between a business model and a business plan?

A business plan explains your overall business idea including your goals and the strategies you have set in place to achieve them. A business model determines what you’ll do to make your business profitable.

Get Started With a Business Model Template Today

Set your new business up for success by getting started with a business model template from Visme. Take advantage of our professional document creator to create a business model, as well as all your other business needs, like a business plan, sales collateral, pitch decks and more.

Easily visualize your business model with Visme

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About the Author

Chloe West is the content marketing manager at Visme. Her experience in digital marketing includes everything from social media, blogging, email marketing to graphic design, strategy creation and implementation, and more. During her spare time, she enjoys exploring her home city of Charleston with her son.

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The 9-Step Business Model Canvas Explained (2023 Update)

Raquel Alberdi

Nov 17, 2020

“A major mistake made by many start-ups around the world is focusing on the technology, the software, the product, and the design, but neglecting to ever figure out the business . And by “business” we simply mean how the company makes money by acquiring and serving its customers”.

-Reid Hoffman

After meeting with hundreds of entrepreneurs and business owners over the years I believe the LinkedIn co-founder and Blitzscaling author Reid Hoffman’s got it spot on.

People tend to focus on specific parts of their business, such as which software packages are being used, which is the cheapest supplier, how to optimize internal processes...?

They get so bogged down in the details of the day-to-day running that they lose the overall vision of their business.

Without this vision they are unable to scale, they make marginal profits, miss opportunities, struggle to innovate, and end up running “just another” business.

Another handy metaphor in understanding this common mistake is the soldier in the trenches .

Every meter of ground gained comes at a heavy cost, mistakes are made, and progress is hard-fought and slow...a day-to-day experience for 99% of entrepreneurs and businessmen.

But when you do have that 360 vision you see the entire battlefield. Decisions are much clearer, fewer mistakes are made, and progress is fast and methodical.

Fortunately, a business model framework exists that gives you both vision and clarity .

The Business Model Canvas provides entrepreneurs, business owners, and strategists with a tool to analyze, structure, and evolve a business while always keeping the bigger picture front of mind.

So let’s take a closer look at how it works.

What is the Business Model Canvas?

Created by Swiss entrepreneur and Strategyzer co-founder, Alexander Osterwalder, the Business Model Canvas is a visual representation of the 9 key building blocks that form the foundations of every successful business. It's a blueprint to help entrepreneurs invent, design, and build models with a more systematic approach.

Why is it so popular within the business community?

Its simplicity. The business model canvas allows us to carry out a high-level analysis without drilling down and getting lost in the details. You just draw out the 9 building blocks on a blank canvas, fill them in as each concept relates to your business, and hang it somewhere everybody can see.

It’s a visual overview of your entire business on a single canvas.

While the Business Model Canvas is an extremely fluid concept and hyper-specific to individual companies, each canvas is still broken down into these 9 key building blocks:

Customer Segments

Value propositions, customer relationships, revenue streams, key resources, key activities, key partners.

When laid out on the canvas the model will look something like this:

While you’ve probably come across each of the 9 building blocks before, the attractiveness of the Business Model Canvas is that it confines them to a single page , not a traditional 42-page document.

This makes it a lot easier to digest, as well as assess existing business models or map out new ideas.

How do I fill out the Business Model Canvas?

To start your Business Model Canvas you will need to breakdown and analyze each of the 9 building blocks.

A good way to approach this is to gather the heads from marketing, sales, operations, finance, and manufacturing (if product-based) and pencil-in a morning where you can all meet together.

Then, after drawing a mock canvas onto a whiteboard, proceed to dissect and discuss each of the 9 building blocks as they relate to your business. You can use sticky notes to better organize your thoughts around the canvas.

If you are an entrepreneur or new business owner working alone and don’t have a team to bounce your ideas off, not to worry. You can still carry out your analysis before sharing it with a like-minded entrepreneurial community or forum, like those found on ThePowerMBA , to get useful, insightful feedback.

Whichever way you decide to approach it, I recommend you complete each block in the following order:

Cost structure

For continuity, I’m going to use the fashion retail giant Zara when analyzing each of the 9 key building blocks.

If you’d like to skip to another case study similar to your own business, navigate to the table of contents at the top of the page and select one of the other business model canvas examples.

The first block of the Business Canvas Model is about understanding who is the most important customer(s) you’re delivering value to. Or, in other words, who are they? What do they do? And why would they buy your product or service?

Not a single company exists without its clients, making customer segments the best block to start with while drawing out your business model canvas.

A great exercise to define your customer segments is to brainstorm and create your company’s buyer persona (s) .

Buyer personas are fictional depictions of an ideal or hypothetical client. Typically when brainstorming a buyer persona you’d want to define certain characteristics (age, demographic, gender, income, industry, pain points, goals, etc.)

However, remember at this stage we want a snapshot of our customer segment. There’s no need to jump into great detail just yet.

In the case of Zara, there are three distinct customer segments to whom they offer different products.

The products created for each of these customer segments (clothing, shoes, and accessories) are not trans-consumable. That is to say, a woman’s dress is highly unlikely to be worn by a 7-year-old child.

Once we know exactly who it is we are targeting, it's time to look at what we as a company have to offer.

The second phase is about figuring out your company’s value propositions , and importantly, your UVP (unique value proposition). The “what” that makes customers turn to you, over your competitors? Which of their problems are you best at solving?

Each value proposition consists of a bundle of products or services that fulfill the needs of a buyer persona from your customer segment. It’s the intersection between what your company offers, and the reason or impulse customers have for purchasing.

Some popular questions to ask while determining your UVP are:

Which specific customer pain point are you trying to solve?

What job are you helping customers get done?

How does your UVP eliminate customer pain points?

What products or services do you provide that answer this specific pain point?

So let’s try and apply this to Zara. Why do people choose to purchase from them, over their competitors?

Zara’s principal value propositions are fairly clear. They offer various ranges of stylish men’s, women’s, and children’s clothing and accessories at an affordable price.

But there’s more to it than that.

If we dive a little deeper we see Zara's value propositions are more complex, which are behind the success of the brand:

Fast fashion

Zara adds new clothes and designs to its collections every 2-3 weeks, both in its stores and online. It keeps the brand updated, fresh, and modern while maintaining its all-important medium price point

Great eCommerce experience

Once you enter Zara’s online store you’re presented with a clean, easy-to-navigate, and high-end feel. The customer segments are visible on the left navigation bar with a search tab to further aid customers with their online experience.

Localized stores

You can find a store in nearly all major retail locations (shopping malls, retail outlets, airports, etc.) meaning accessibility is not an issue for the majority of consumers.

Flagship stores

Zara demonstrates its aesthetic evolution to customers through its flagship stores. The recent opening of their Hudson Yards , New York City flagship is a great example of this. Customers shop around its vivid, minimalist layout offering them an experience aligned with the brand's deeper, eco-friendly values.

Zara Hudson Yards, New York

The next step is to ask yourself how you are reaching your customers, and through which channels ?

This includes both the channels that customers want to communicate with you as well as how they’ll receive your products or services.

Is it going to be a physical channel? (store, field sales representatives, etc.) Or is it a digital channel? (mobile, web, cloud, etc.).

Zara has 3 primary channels in which they communicate and deliver products to its customers:

Direct sales through their stores

Online (both app and website)

Social media

Customers can go to a traditional “bricks and mortar” store to browse, model, and purchase different items of clothing at one of their retail stores.

Alternatively, they can shop online or through their mobile application and have the product delivered straight to their door or nearest store. The choice is completely up to them!

So that covers Zara's commercial channels, but what about how they communicate with customers?

While they do communicate through their mobile app, their predominant channel is social media.

What’s more, they’re really, really good at it.

For example, did you know that Zara invests less than 0.3% of its sales revenue into advertising?

This is only possible due to an A-rated social media presence . Customer queries are not only dealt with quickly, but recommended re-works are sent back to HQ, forwarded onto in-house designers who then apply the feedback to future collections.

This customer-first approach through fluid communication channels has saved them thousands of dollars in marketing, strengthened their brand, and created a loyal customer base.

You should only step away from this building block once you’ve decided how each of your customer segments want to be reached.

Once you have acquired customers, you will need to think about how you can build , nurture, and grow those relationships.

Now, this can be automated and transactional like large eCommerce brands Amazon or Alibaba. Or, it could be at the complete opposite end of the scale and require a more personal relationship you’d typically have with a bank or your local bike shop.

Zara’s relationship with its customers is threefold, and lies somewhere in the middle of transactional and personal:

Salesperson at store

Brand through social media

Sentimental attachment to a product

Yes, you have the initial transactional touchpoint at the store or online, something relatively impersonal and for many the only interaction they’ll have with the brand.

However, customers (especially in the fashion industry) are encouraged to continue to interact with a brand through social media platforms.

As we mentioned before when discussing channels, Zara has a very effective communication system in place. Not only can people instantly get in touch with the brand, but also engage with new posts, images, and collections uploaded to social media.

This personal approach to customer relationship building can, in some cases, lead to the natural growth of brand ambassadors and communities .

An attachment can also develop between customers and particular garments or accessories from one of their collections. The sentimental attachment to these products also creates another potential form of brand loyalty.

Now that you’ve described how you are going to create real value for your customers, it’s time to look at how you plan to capture that value.

What are your revenue streams? Is it going to be a transactional, direct sales strategy ? Are you going to consider a freemium mode l, where you give a portion of your product or service away for free with the idea of converting later on down the line?

If you’re a SaaS company such as SalesForce or Strava , then it’s likely that a licensing or subscription revenue model will be more appropriate.

At Zara, it's extremely simple. They make their money by selling clothes and accessories either at a store or online.

As you can see, we’ve filled in the entire right-hand side of our business model canvas. We touched upon:

Customer segments

Value propositions

Revenue streams

Distribution channels

Now it’s time to move over to the left side of the business canvas model and look at what we need, internally , to deliver our value propositions.

To start with, let’s take a look at key resources.

The key resources are all things you need to have, or the assets required to create that value for customers.

This could be anything from intellectual property (patents, trademarks, copyrights, etc.) to physical holdings (factories, offices, delivery vans, etc.) right down to finances (the initial cash flow perhaps needed to start your brand).

Another key resource every company needs to consider is its human capital . Are you going to need highly specialized software engineers? Or field-based sales teams?

They are relatively capital-heavy resources that need to be factored into your business model.

In the case of Zara, they are going to need a number of key resources if they hope to deliver their propositions:

Stock management

A large, interconnected network of physical stores

A strong brand

Logistics and supply chain infrastructure

Stock is vital for both online and offline customers.

If they are unable to supply their range of products and meet customer demands, satisfaction levels fall and they have a serious problem on their hands.

A large distribution network of brick and mortar stores combined with a strong brand name help mitigate these factors, as well as reinforce any ongoing marketing activities and communication efforts.

Finally, an efficient logistics process within Zara is critical, especially when you consider the complexities involved with such a large-scale operation.

They will require the necessary technology to analyze data on inventory, storage, materials, production, and packaging, with the staff to execute each of these stages and manage the delivery of the final products.

The next step is to define the key activities - the areas you need to be good at to create value for your customers.

To mix it up a little let’s take a look at a slightly different business in Uber .

Their key activities can be broken down into:

Web and mobile app development

Driver recruitment

Marketing: customer acquisition

Customer service activities : drivers’ ratings, incidents, etc.

They need a fast, clean UX for their customers using the app, drivers to carry out their service, and the ability to both market the product and deal with any customer queries.

Zara’s key activities will differ to those of Uber. Some of the things they need to consider would be:

Manufacturing

Retail process (point of sale and 3rd party management)

Distribution channel / logistics

Design is a key activity as Zara’s value proposition is to provide stylish garments at an affordable price. Their collections need to be constantly updated to follow the latest fashion trends at the time.

To produce their collections Zara will also require manufacturing capabilities. Now Zara doesn't own their own factories (we will get to that in the Key Partners section) but they still need to be involved in the garment manufacturing process.

Everything from fabric selection to pattern making, to detailing and dyeing affects the outcome of the final product which of course they have to then go on and sell.

The effective management of the retail and distribution channels (online, offline, shipping, and communication with providers) is also key. A breakdown in either of these activities, such as a poor relationship with an important provider will have serious consequences for the business.

Most modern business models now require brands to build out and work with various key partners to fully leverage their business model.

This includes partnerships such as joint ventures and non-equity strategic alliances as well as typical relationships with buyers, suppliers, and producers.

A great example of a strategic partnership would be between ThePowerMBA and Forbes . In exchange for exposure of our brand to the magazine’s global audience, we provide expertise and content on high-level business education programs.

As we touched upon when discussing key activities , Zara requires strategic partnerships with many different providers if they are to design and produce their collections.

Another key partner is their major holding company, Inditex .

Inditex has several subsidiaries including Massimo Dutti , Pull & Bear , and Oysho . Being a subsidiary of Inditex means they share a consolidated balance sheet, stakeholders, management and control, and various legal responsibilities.

While as a subsidiary Zara is afforded certain freedoms when it comes to design, delivery, and the general running of the company, the overall strategy will need to be aligned with Inditex and its other subsidiaries.

The final step of the Business Model Canvas is to ask yourself, how much is it going to cost to run this model?

This includes some of the more obvious needs such as manufacturing costs, physical space, rent, payroll, but also areas such as marketing activities.

If you are unsure of exactly what to include in your cost structure take a look at a Profit and Loss statement ( P&L ) from a competitor or company in a similar industry to yours. You’ll find many items overlap such as research and development ( R&D ), cost of goods sold, admin expenses, operating costs, etc.

Once that’s done you should prioritize your key activities and resources and find out if they are fixed or variable costs .

As Zara is such a large, corporate business they are going to have both fixed costs (rent, payroll, point of sales personnel) and variables, such as costs associated with the fluctuating sale of goods, purchase of materials and, manufacturing costs.

Once you’ve completed these 9 steps, your Business Canvas Model should look something like this:

Business Model Canvas Examples

Hopefully, you were able to get a good feel for the effectiveness of the business model canvas with our run-through of Zara.

However, if you found it difficult to follow due to the stark difference between your industries, I’m going to quickly go through 3 more companies to demonstrate the tool’s flexibility:

Netflix (Media service/production)

Vintae (Vineyard)

Even if these business model canvas examples don’t align exactly with your industry, I honestly believe that studying different models gives you a competitive advantage in your professional career regardless.

If you’re currently employed by a company, you’ll better understand how your specific role helps the company achieve some of its “long-term” goals.

Alternatively, if you are a business owner yourself (or perhaps thinking of starting your own business) you’ll have a better understanding of your business and where potential opportunities lay.

I’m sure you’re familiar with our next business model canvas example candidate, Netflix .

The global media company offers an online streaming service of various movies, documentaries, and TV programs produced in-house or licensed 3rd-party content. Their success sparked a revolution in the online media world with the likes of Amazon, Apple, Disney, HBO, and Hulu all rushing to launch their own online video streaming platforms.

Netflix started life as an online DVD rental company, basically a web version of the more popular (at least at that time) “bricks and mortar” Blockbuster.

Co-founder Reed Hastings predicted as far back as 1999 that the future of media was in online streaming, saying “postage rates were going to keep going up and the internet was going to get twice as fast at half the price every 18 months.”

It wouldn’t be until 2007 that Hasting’s prediction would become true when Netflix, as we now know it, was born.

So let’s take a current look at their business model canvas:

As you probably know, there are very few people out there who haven’t subscribed, watched, or at least heard of Netflix. There is content for everybody: wildlife documentaries, sci-fi movies, rom coms, action-thrillers, you name it - it’s there.

That’s why their customer segment can be classified as a “ mass market ” as the base is just so diverse.

All people require is a computer, TV, internet, and/or smartphone and they’re good to go. For most developed markets, that covers just about everybody.

Value Proposition

Whether on the train to work, sitting in the car (if you’re not driving!), or relaxing at home in front of the TV, you can consume their online, on-demand video streaming service.

They also have a huge library of content for consumers to choose from, ensuring that people keep coming back, as well as increasing their mass-market appeal.

They also produce high-quality, original content to differentiate themselves from their competitors.

Most people access Netflix either through their website or mobile/TV App . Another popular channel that you may have picked up on is their affiliate partners .

You’ve perhaps signed up for a mobile, TV, and internet package where the provider offers Netflix as an extra to sweeten the deal, so to speak.

That would be an example of an affiliate partnership between Netflix and mobile service providers.

I doubt many consumers have had direct contact with Netflix unless it’s to resolve a subscription issue or general query. It’s very much a self-automated service - you download the app, select the program you wish to watch, and hit play.

Very simple, very effective.

Again, this doesn’t need much embellishment. Netflix generates money from the different tiers and packages put together in their subscription services.

This varies depending on the region to account for local markets, but on the whole, it’s sold at a low price point.

Originally, Netflix’s Key Resources would have been their unrivaled DVD collection combined with a cost-effective mail-order system.

Nowadays it’s undoubtedly the rights to stream online video content. Netflix has brokered deals with some of the biggest production studios worldwide.

Combined with their huge library of in-house productions , it’s more than enough to encourage customers to renew their subscriptions.

To help sustain interest in their product, Netflix understands they need to serve-up relevant content for each sub-sector of their mass audience. Therefore their machine learning algorithm selects content for consumers based on streaming habits (what they watched, at what time, etc,.) to personalize the customer experience.

This explains why over 80% of all content streamed on Netflix was cherry-picked by this algorithm, making it a Key Resource for their business model.

Also, Netflix accounts for a whopping 12.6% of global bandwidth usage . The literal capacity to stream their services must be met meaning bandwidth must also be included here.

Content procurement is arguably their biggest Key Activity. They need to find people to produce and deliver their original content, including actors, studios, writers, etc. as well as secure the licensing and streaming rights from 3rd party producers such as Sony, Warner Bros, and Disney.

Finally, they need a fast, easy-to-use application to host their online streaming service. This needs to be available for both TV and mobile devices if they are to deliver their “on-demand" value proposition.

Seeing as Netflix’s entire business model is largely based around streaming 3rd party content, key partnerships need to be built with production studios . No content, no Netflix!

Also, as we touched upon earlier Netflix is one of the largest consumers of bandwidth worldwide. If the speed and delivery of their streaming service are to be continued then deals will also need to be made with internet service providers (ISPs).

Netflix’s biggest expenditures come from both their in-house content procurement and 3rd party licensing agreements . The high-quality standard of video streamed on Netflix is only possible due to the speed and performance of its online platform and application , which has additional costs of staff, software, etc.

To show you just how flexible the business model canvas can be, I wanted to throw in a slightly leftfield example. Vintae is a Spanish wine producer who, after a detailed analysis of the business model canvas, was able to innovate and disrupt one of the world’s most competitive industries.

As some of you may know, the wine industry is extremely competitive. It’s also steeped in history and tradition , making it very challenging for newcomers to grab market share, let alone think about year-on-year growth and revenue.

However, CEO “Richi” Arambarri looked at the traditional “ bodega ” business model and saw a chink in its armor.

A "small" innovation in the business canvas model helped them to become one of the region’s most important winery groups, with over 10 installations and a presence across all regional denominations (Rioja, Priorat, Rias Baixas, etc.) with year on year growth of 30% - practically unheard of in such a competitive industry.

So how did Vintae analyze the business model canvas to find a niche in their market?

To answer that question, we must first look at the traditional winery business model .

As you can see, the wine industry has historically been patrimonial. Vineyards and estates are passed down through generations with the winery responsible for all phases of production, clarification, and distribution.

The traditional winery business canvas model suggests you must be the owner of the winery/vineyard where the wine is "manufactured", meaning physical assets are a key resource of the business model.

So, if you wanted to start producing a Rioja, for example, you’d have to set up your vineyard in the region.

This is monumentally expensive as you need to:

Purchase the land

Plant a vineyard

Absorb set-up and installation costs

Deal with maintenance costs

It’s here where Vintae saw their opportunity.

What if we move vineyard ownership across the business model canvas from key resources to key partners ?

By leasing the equipment and space of large wineries (of which there was plenty), they could still produce their wine but reduce the cost and exposure associated with land purchase, crushing equipment, huge storage tanks, vineyard maintenance, and their bottling line.

This enabled them to focus on their sales, marketing, and distribution channels to create a better brand experience for their customers.

Also, it afforded them more flexibility when creating new wines as they were no longer confined to the limitations of grapes grown on their vineyard.

The lightness of this new business model eliminates maintenance overheads, channels energy into personalizing the customer experience, and allows for unprecedented levels of growth in one of the world’s most competitive industries.

Business Model Canvas Software

Although I did mention starting with a large whiteboard, sticky notes, and a pack of colorful sharpies there are several options in which you can digitize the business canvas model production process.

While I still believe the aforementioned process is extremely valuable (it gets your entire team’s input in a single hour-long session) you may decide it more viable for each member of management to pool their ideas digitally before sharing with the rest of the group.

If that’s the case, then take a look at some of the following software tools for creating your business model canvas.

Strategyzer

Created by the founders of the business model canvas Alex Osterwalder and Yves Pigneur , Strategyzer offers a range of business model canvas templates for you to get started with.

If you opt for the paid model (there is a 30-day free trial period) they offer a series of various classes that teach you how to build and test different value propositions and business models.

A real-time built-in cost estimator analyzes the financial viability of some of your business ideas, identifying alternative areas you may wish to explore with your model.

All-in-all,

Looking for something specific?

Programming

Entrepreneurship

Social media.

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Why Business Models Matter

• Joan Magretta

A good business model begins with an insight into human motivations and ends in a rich stream of profits.

The Idea in Brief

The terms “business model” and “strategy” are among the most sloppily used in business. People use them interchangeably to refer to everything —so they mean nothing.

But no organization can afford fuzzy thinking about these fundamental concepts. A business model and a strategy are two different animals. One explains who your customers are and how you plan to make money by providing them with value; the other, how you’ll beat competitors by being different.

A well-thought-out business model also enables you to test and revise your assumptions about customers, think rigorously about your business, and align employees behind your company’s mission.

Sure, the business-model concept unraveled after flagrant misuse by dot bombs. But when you build a sound model that complements your strategy, you equip your company to beat even your toughest rivals.

The Idea in Practice

Powerful business models pass two tests:

1. The narrative test: The business model tells a logical story explaining who your customers are, what they value, and how you’ll make money providing them that value. The story’s plot may turn on one of two links in the generic business value chain:

• making something that satisfies an unmet need; e.g., American Express traveler’s checks gave travelers new peace of mind
• selling something in innovative ways; e.g., Eastern Exclusives distributes restaurant discount-coupon books in bulk to university housing departments, which distribute them free to dorms

2. The numbers test: A business model’s story holds up only if you tie assumptions about customers to sound economics—your P&L must add up. For example, on-line grocery models failed because customers declined to pay substantially more on-line than in stores. E-grocers couldn’t cover their marketing, technology, and delivery costs. Failing either test can prove fatal. Example: 

When EuroDisney opened its Paris theme park, it assumed Europeans were like Americans. But instead of grazing all day at the park’s restaurants, Europeans wanted to eat meals at the same hour. Results? Overloaded restaurants, long lines, frustrated patrons. EuroDisney’s model failed the narrative test because it misunderstood customers’ motivations.

Models passing both tests clarify how your business’s various elements fit together. Example: 

On-line auction giant eBay combined a compelling narrative with major profit potential. This on-line business “couldn’t be done offline” and still provide value to collectors, bargain hunters, and small-business people. Its narrow scope of activities creates a highly profitable cost structure. For example, sellers and buyers handle payment and shipping logistics—so eBay incurs no inventory or transportation costs and avoids credit risk.

A Strategy Complement

Having a solid business model isn’t enough. You also need a strategy, to plan how you’ll beat your rivals—by being different. Example: 

Wal-Mart used Kmart’s business model—but implemented a unique strategy: Rather than trying to be just like its rivals, it promised different value to customers in different markets. It put big discount stores into “little one-horse towns” that competitors ignored. Founder Sam Walton bet—rightly—that if his stores beat city prices by offering name brands (not second-tier, private-label brands), townspeople would “shop [close to] home.”

“Business model” was one of the great buzzwords of the Internet boom, routinely invoked, as the writer Michael Lewis put it, “to glorify all manner of half-baked plans.” A company didn’t need a strategy, or a special competence, or even any customers—all it needed was a Web-based business model that promised wild profits in some distant, ill-defined future. Many people—investors, entrepreneurs, and executives alike—bought the fantasy and got burned. And as the inevitable counterreaction played out, the concept of the business model fell out of fashion nearly as quickly as the .com appendage itself.

• JM Joan Magretta is a senior associate at the Institute for Strategy and Competitiveness at Harvard Business School. She is the author of Understanding Michael Porter: The Essential Guide to Competition and Strategy .

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Ecommerce Business Models: Types and Examples (2024)

How can entrepreneurs build a sustainable ecommerce business and ensure competitive advantage? It all starts with your business model. Learn about the most innovative types of business models, with examples and insights from companies using them.

You have a lot of choices to make when starting a business . Outside of the product you choose to sell or your marketing strategy, one of your biggest decisions is what business model to pursue.

Ahead, get a high-level breakdown of 14 major business model choices so you can make the best decisions right from the beginning.

It’s important to understand each of these methods in order to make the right choice for your small business. There are pros and cons to each business model and, depending on your product, market, and cost structure, one may be more suitable for you and your business than the others.

What is an ecommerce business model?

An ecommerce business model is a company’s core framework for operating profitably and providing value for customers. Features of an effective ecommerce business model explain the customer value proposition and pricing strategy . The model identifies the products and services a company offers, its target market, and future expenses.

Why are business models important?

Business models are essential for both new and established businesses. They help companies understand their customers, keep employees motivated, attract investment, and provide a sustainable competitive advantage by identifying growth opportunities.

Think of your business model as a live asset for your company. It’s healthy to update it regularly to stay on top of upcoming trends and obstacles. If you’re planning to raise capital or partner with someone, active business model innovation shows stakeholders you can adapt and meet changing market demands .

Common business model types for ecommerce

There are four main ecommerce business model types:

• Business to consumer (B2C)
• Business to business (B2B)
• Consumer to consumer (C2C)
• Consumer to business (C2B)

1. Business to consumer (B2C)

The business-to-consumer ( B2C ) business model refers to commerce between a business and an individual consumer, like buying a shirt from a brand’s website. B2C business includes ecommerce and brick-and-mortar.

2. Business to business (B2B)

Business to business ( B2B ) refers to any commerce between two businesses. Wholesale transactions typically fall under this category. You can include business-to-business offerings as either an ecommerce business or a brick-and-mortar. For instance, a coffee brand can sell its beans to shoppers on its website (B2C), but also sell in bulk to coffee shops (B2B).

Sell wholesale and direct to consumers with Shopify

Only Shopify comes with built-in features that help you sell B2B and DTC from a single store or platform. Tailor the shopping experience for each buyer with customized product and pricing publishing, quantity rules, payment terms, and more—no third-party apps or coding required.

3. Consumer to consumer (C2C)

The consumer-to-consumer (C2C), or peer-to-peer, business model is when a consumer sells a product or service to another consumer. Selling a used laptop on Facebook Marketplace falls under this category. Individual sellers often begin selling on online marketplaces then start an online store to build a brand and capture more profits.

4. Consumer to business (C2B)

The rise in the   creator economy led to a spike in consumer-to-business (C2B) companies. This business model refers to when a consumer sells their own products or services to a business or organization. If you want to become an influencer or a photographer   selling photos online , this is the type of business model you’d use.

14 business model delivery methods and examples

Business models can take a variety of forms and involve different manufacturing and shipping methods. Let’s look at some unique business models you can use to start your business.

1. Dropshipping

Dropshipping attracts people who prefer to keep startup costs as low as possible and are less concerned about margins. It is also a great business model for someone who doesn’t want to hold and manage inventory. Dropshipping involves B2C commerce (when a consumer buys a product from your store) as well as B2B commerce (the amount you pay for the dropshipper to provide the product and fulfillment services on your behalf).

Pros of dropshipping

• Low cost to start. Because you’re never carrying inventory, you have no inventory costs—which generally are the most substantial expense for a new ecommerce business .
• Low risk. Since you don’t actually purchase your inventory upfront, you aren’t taking the risk of holding items you can’t sell.
• Streamline sales. Dropshipping suppliers will take on the tasks of picking, packing, and shipping your product for you . This option provides convenience and efficiency, so you can manage your business from anywhere in the world.

Cons of dropshipping

• High competition. Because dropshipping has such low barriers to entry, a lot of people are doing it. Competition is stiff, and it’s hard to set yourself apart from the crowd.
• Low margins. Low margins make it difficult to compete with paid advertising space, which means you’ll have to rely more on building content, service, etc. You also have to sell at significant volume to make a decent profit.
• Inventory syncing (back orders). Because you’re relying on someone else’s inventory, there may be times when you place a shipment request to the wholesaler but the product is sold out. These delays can reflect badly on your business.

A dropshipping success story

Subtle Asian Treats is a top dropshipping business on Shopify selling plushies and cases for AirPods and iPhones. It was founded by Tze Hing Chan , a young Malaysian entrepreneur, to jump on the bubble tea trend happening in Asia. 

The brand attracted thousands of bubble tea fans from the area by giving people a unique selection of products at a fair price. It’s also done a great job of building awareness on social media to share user-generated content (UGC) and appeal to customers with any budget through product diversification.

• How To Start Dropshipping: A 9 Step Guide (2024)
• 150+ Dropshipping Products To Sell for Profit (2024)
• What Is Amazon Dropshipping? How to Dropship on Amazon in 2024

Physical retail is when you sell your products in-person directly to consumers in a B2C business model. This could be in a traditional brick-and-mortar store or through temporary retail activations like pop-up shops , markets, and events.

Some retail may also function as a B2B business model. Wholesale transactions qualify as such, as well as selling any products to businesses. If you sell office furniture, for example, your retail store is likely both B2C and B2B.

Pros of retail

• Make strong customer connections. You get the chance to interact with customers face-to-face, offering unique opportunities to create and nurture relationships.
• Boost sales. Online-only merchants have to reach customers digitally. Physical retail gives you the chance to reach in-store shoppers while also driving online sales to your website. Plus, people get deeper engagement with your products in-store versus looking at pictures online.
• No shipping hassles. When you sell in person, you don’t have to worry about fulfilling orders and all that comes with it—the costs, admin time, and potential for costly returns.

Cons of retail

• High overhead. Opening a physical retail store has tons of upfront costs, not to mention ongoing operating expenses.
• Inflexibility. While an online store offers you the option to make tweaks and adjustments with just a few clicks, such overhauls to your physical retail space require more effort.
• More things to manage. Running an online business is busy enough without the added stress of managing a physical storefront. When you have a retail shop, you’ll need to stay on top of more things than if you were online-only.

A retail success story

Blendily is a thriving nature-based skin care brand with an online store. Founder and chief botanic alchemist Ivy Chuang started the brand from humble beginnings in 2012, shortly after the birth of her daughter. Two years later, she sold her first products at a pop-up shop out of a garden shed. And 2018 marked the first physical Blendily shop.

Now, the brand has expanded online and with two physical shops, one in Seattle and one in Portland. Customers can purchase products online or visit the shops to test them in-person. Visitors can also attend various events and workshops to learn more about the products and the plant-based lifestyle Ivy loves to share.

• How to Open a Retail Store: Your Starter Guide
• 7 Retail Locations to Consider For Your Store
• Shop-in-Shop: How to Capture Existing Foot Traffic with a Pop-In Shop

3. Manufacturing or making

Manufacturing your product is good for those people with a unique idea or a variation of a currently existing idea for a B2C or B2B business model. It’s also suitable for those who’ve already validated the market for their product . You can look at manufacturing through two lenses:

• Private label. A private label product is created by a manufacturer and sold under the business’s name. The business controls everything, including what goes in the product, how it’s packaged, and what the labels look like. Private label manufacturing is best for brands that want to create unique products.
• White label. A white label product is created by one manufacturer and sold to various retailers under their own brand names. They’re generic products that you can sell to wider customer segments.

Manufacturing can also include makers—entrepreneurs who sell handmade products. This is when you really take production into your own hands. It allows for precise control over quality and your brand but comes at the cost of limitations, time, and scalability.

This option is for the do-it-yourselfer—someone who has their own unique ideas, can physically produce the goods themselves, and has the resources to do so. The most important thing to note here though is not all products can be made by hand. Your product choices are limited to your skills and available resources.

Pros of manufacturing or making your own products

• Lowest cost per unit . Manufacturing often garners the lowest cost per unit, giving you the greatest margins on your product.
• More control . You can build your own brand, set your own prices , and control the quality of your final result without any constraints.
• Agility . Making your own products can give you the greatest level of agility for your business. You can adjust quality, features, and even the entire product on the fly.

Cons of manufacturing or making your own products

• Minimum order quantities . The startup costs for initial orders can be quite high. Depending on the costs of your product and the manufacturer, your inventory investment can be thousands or tens of thousands of dollars.
• The perils of outsourcing . Trusting external parties puts you at risk to a lot of challenges outside of your control. Nothing will bring your business to a halt like being scammed by an overseas manufacturer.
• Upfront investment . Both routes require time and money to get up and running. Manufacturing can be a long process of prototyping, sampling, refining, and production. And the primary costs associated with making your own products include the purchasing of raw materials, the storage of inventory, and labor.
• Time-consuming . Depending on your product choice, making your own products can be a time-consuming process, leaving you less time to focus on actually building your business.

A maker success story

Old World Kitchen began as a family-owned business selling products door-to-door in its local area. It went through a period of growth, where Etsy was the best move for getting the business online.

The brand, which specializes in handcrafted kitchen utensils, wanted to expand further, but to do that, it needed full control over pricing, branding, and quality control—things Etsy couldn’t offer.

After moving from Etsy to Shopify, it saw a sharp increase in online conversions. It was also able to partner with relevant brands and increase its prices, all while staying true to selling goods made by hand.

• How I Build and Sell Handmade Products in My Spare Time
• How to Find a Manufacturer or Supplier for Your Product Idea
• The Business of DIY: 24 Things To Make and Sell

4. Wholesale

Purchasing products   wholesale is a good option if you want to get up and running quickly or if you want to sell a variety of products and brands. Wholesaling provides a wide range of opportunities, as there are many products available for wholesale. The purchase of the goods is a B2B transaction, while you can then sell them to consumers in a B2C business model.

Pros of wholesale

• Selling established products.   Buying wholesale is typically lower risk. You’re dealing with brands that are already validated on the market, so you don’t run the risk of wasting time and money developing a product no one wants.
• Brand familiarity.   Selling already established brands can help position your business by creating an aura effect around your own brand.

Cons of wholesale

• Product differentiation.   Selling already established products can work for you as well as against you. Because the products are available from multiple retailers, you'll need to fight extra hard to differentiate yourself and convince potential customers to purchase from you.
• Price control.   Selling other brands means to some extent you have to play by their rules. Some brands will enforce price controls to prevent you from discounting their products.
• Inventory management. When purchasing wholesale you will likely have to purchase a minimum order of each product. The minimum order will depend on the product and manufacturer. However, you will have to stock and hold inventory as well as manage that inventory for re-order.
• Dealing with supply partners. If you’re carrying an array of products, dealing with multiple supply partners can become difficult to manage. Requirements may vary from supplier to supplier.

The wholesale business model might be considered a safe middle ground between manufacturing and dropshipping. Although each case is unique, it’s typical to see a 50% margin on wholesale goods resold at retail pricing.

A wholesale success story

Pernell Cezar Jr. and Rod Johnson founded   BLK & Bold   with the goal of helping local communities through selling coffee. The company pledges 5% of all profits to programs that assist youth programs, improve workforce development, and eliminate youth homelessness.

BLK & Bold leverages wholesale and direct-to-consumer channels to drive sales. The majority of its wholesale partners include coffee shops, restaurants, offices and coworking spaces, and hospitality providers such as boutique hotels, Airbnbs, and classic bed and breakfasts. 

• Wholesale Items to Sell: 2024's Top Product Picks
• How a Beverage Brand Fills the Cups of Many
• Bean to Bar to Business: The Story Behind Soul Chocolate
• Hit the Shelves: 6 Steps to Getting Your Products Into Retail Stores

5. Print on demand

Print on demand   is a way to sell made-to-order products that feature your designs. This is common for B2C businesses, but it also works for B2B—client gifts, conference swag bags, etc. For print on demand, you simply make the design and when a customer orders a product with that design, a third-party printing service creates, packs, and ships the order.

Similar to dropshipping, this model reduces the cost of entry into selling online. You don’t have to pay for a product until you make the sale, so there’s little upfront investment. Plus, everything from printing to packing to shipping is handled by your printing partner.

Print on demand is a great business model for creatives. You can sell products like:

• Duffle bags
• Yoga leggings
• Watch bands
• Canvas prints and posters
• Throw pillows

On demand products typically yield thinner profit margins, depending on your pricing strategy and customer acquisition costs . But it’s a good low-risk business model for those new to ecommerce or who want to test different revenue streams for their existing business.

Pros of print on demand

• Create products quickly. Once you create the design, you can make the product and sell it in your online store in minutes.
• Automated shipping. Shipping and fulfillment is handled by your supplier. After you make the sale, you’re only responsible for providing great customer service.
• Lower cost upfront. Since you don’t hold any inventory, it’s easy to add and remove products, test new   business ideas , and create products for niche markets.

Cons of print on demand

• Less control over shipping. Shipping costs can get complicated, as they often vary for different products. Your options also may be limited if you want to create a standout   unboxing experience .
• Limited customization. What you can customize depends on the vendor and the product. You’ll have to determine base costs, printing techniques, and available sizes when deciding which products to customize.

A print on demand success story

Fanjoy is an online marketplace selling curated print on demand products from a variety of artists and creators. CEO Chris Vaccarino started the company in 2014 after realizing the opportunity through his experiences selling merch on the road with his brother’s band.

Now, it’s a thriving marketplace that connects creators with tools they need to be successful entrepreneurs—and customers ready to buy their designs. It has shipped more than 3 million packages.

Resources: 

• 30x Sales in One Year: Fanjoy’s Journey of Being the Merch Powerhouse Behind Top Social Stars
• What is Print on Demand & How to Start a Business (2024)
• 22 Best Selling Print on Demand Products
• 11 Best Print-on-Demand Companies and Sites (2024)

6. Digital products

A digital product is a nonphysical asset or media type that can be sold and distributed online, repeatedly, without restocking inventory. These products often come in the form of downloadable, streamable, or transferrable digital files, such as MP3s, PDFs, videos, plug-ins, and templates.

The upfront costs of creating a digital product can be high, but the variable costs of selling them is comparatively low. Once you create an asset, it’s incredibly cheap to deliver to customers.

Pros of digital products

• Lower overhead costs.  You don’t hold any inventory or run up any shipping charges.
• Scalability. Orders can be delivered instantly, letting you be hands-off with fulfillment. As the business grows, you can easily convert tasks into automation to free up time.
• Extensive product offerings. There are various routes you can take: a freemium model where you provide products for free with upgradable features, monthly paid subscriptions for access to exclusive content, or licenses to use your digital products. You can build a business solely around digital products or incorporate them into your existing business.

Cons of digital products

• High competition. People can probably find free alternatives to your digital products. You’ll have to consider the niche you target, provide superior products, and know  how to build your brand   in order to succeed. It's helpful to do a SWOT analysis of your competition to find an edge.
• Piracy and theft. You’re at risk of people stealing and reusing your products as their own.
• Selling restrictions. For example, you can only sell physical products through Facebook and Instagram according to their commerce policy .

A digital products success story

Online store Pixie Faire has tons of products for sale, but don’t expect any of them to arrive in a package. Instead, this Shopify merchant has gone all-in on digital products, selling downloadable patterns for doll clothes.

Cinnamon Miles co-founded Liberty Jane Clothing in 2009, selling downloadable patterns. This soon grew into a thriving online marketplace with designs from several contributors, inspiring the name change to Pixie Faire in 2013. Since then, it has sold millions of digital downloads. 

• What are Digital Products? 10 Profitable Products To Sell Online (2024)
• How One Couple Is Making $600,000 per Year Selling Digital Products

7. Direct to consumer

The direct-to-consumer (D2C or DTC) business model means you sell products directly to consumers, without wholesalers or third-party retailers like Amazon. It’s essentially a fancy name for B2C businesses.

Think about some of the biggest trending brands: Warby Parker, Barkbox, Bonobos, Casper. What do they all have in common? A DTC business model. Even brands like Apple and Tesla are leveraging mobile commerce as a main channel for DTC sales.

These brands eliminate the hassle of researching and choosing from hundreds of competing brands, making the entire shopping experience easier for customers.

Pros of direct to consumer

• Own the customer relationship. Selling directly helps you own more relationships and increase customer lifetime value.
• Collect customer data. Selling direct lets you collect first-party data you can use to personalize customer communications and experiences. 
• Higher profits. You don’t have to share profits with any third-party distributors.
• Get feedback faster. Since you can communicate with customers directly, you can easily collect feedback to improve your products and customer experience.

Cons of direct to consumer

• Costs of direct distribution. There’s no sharing of shipping or storage costs. DTC businesses need to invest more upfront to get their business operating smoothly.
• No built-in audience. One advantage of working with retailers is that customers can find your products easier. If you’re a new brand, you’ll have to market yourself. You also don’t benefit from the distributor’s experience or salesforce. 

While it may take time and money to establish reliable distribution channels, selling direct is a smart business model for building a loyal customer base and improving profitability over time.

A DTC success story

Handcrafted leather shoes and “Made in Italy” go hand in hand. Consumers who wear this type of footwear have traditionally accepted its high price tag—thanks to an industry flooded with distributors, agents, resellers, and retailers.

It wasn’t until Velasca , a Milanese footwear startup, stepped into the scene in 2013, with a goal to disrupt the industry by connecting consumers directly to shoemakers. 

Velasca was born out of a casual conversation between co-founders Enrico Casati and Jacopo Sebastio in the back of a taxi. It has since grown into a blossoming DTC brand, selling hundreds of thousands of shoes in over 30 countries.

• What Is Direct to Consumer (DTC) Ecommerce? [Shopify Plus]
• Drinking in The Haus: How Funding Helped This Booze Brand Grow 500% During The Pandemic
• How This Direct to Consumer Brand Disrupted The Handcrafted Footwear Industry

8. Subscription

A subscription business model charges customers a recurring fee—usually monthly or yearly—to access a product or service. Subscription models help businesses capitalize on ongoing customer relationships. If they continue to see the value in your offer, they’ll continue to pay your fee.

It doesn’t matter if you’re an ecommerce business or online educator, you can start a subscription business across many industries, including:

• Streaming services
• Monthly subscription boxes
• Membership communities
• Food services

A recurring revenue model can lead to higher revenues and stronger customer relationships. Though a subscription membership, the longer customers use your product or service, the more valuable it becomes to them.

Pros of subscriptions

• Predictable revenue.   Monthly recurring revenue helps you forecast sales, plan inventory, and understand how much to reinvest for business growth.
• More cash on hand.   Receiving monthly payments upfront means more cash flow (and piece of mind) for your startup.
• Loyal customers.   Regular purchases give you deeper insight into customer behavior, so you can continually improve products and keep customers coming back for more.
• Easier cross-selling and upselling opportunities.   The more customers use your products, the more trust you build with them. This makes it easier to sell additional products to them, because they already know you provide value. 

Cons of subscriptions

• High risk of churn.   One drawback of the subscription business model is churn. You have to constantly keep people interested and engaged for them to keep paying you.
• Varied products.   Products become dull if they don’t change often. Netflix adds and removes movies every month. Trunk Club promises to invest in your changing styles over time. You need to keep products fresh to maintain a subscription business. 
• Small issues, big problems.   Most subscription services give their customers the same thing, at the same time, every month. While this seems simple, if there’s one small kink in your system, it can turn into a big problem fast if you don’t plan for it.

A subscription success story

Subscription businesses come in many forms. B2C ecommerce retailers can include a subscription model in their offering, similar to Clevr Blends , a popular online latte brand. The company, founded in California, has grown into a thriving business since its launch in 2016.

The brand offers a subscription option which gives discounts, early access to new products, and a free scoop in every order.

• How To Start a Subscription Business: A 2024 Guide

9. Fee-for-service

A fee-for-service business is a service-based business model, so the merchant sells its services rather than selling products. This type of business is common across all models, including B2C (like a hair salon), B2B (a corporate cleaning company), C2C (your neighbor’s kid shoveling your driveway), or C2B (that same kid shoveling for an office building).

The service industry is actually the fastest-growing sector in the US, according to the Bureau of Labor Statistics . And while this often indicates hourly workers, there’s also plenty of opportunity for aspiring business owners.

Pros of fee-for-service

• Get paid for your time . While product-based businesses don’t always compensate you for your time, the opposite is generally true for fee-for-service arrangements. You can charge hourly to ensure you’re getting paid for all your time spent working.
• Low startup costs . Depending on the business you want to start, offering services comes with low startup and overhead expenses. Even if your dream is to open a dog grooming salon, you can start small by offering dog-walking services and save up to invest in what you need to fully launch your vision.

Cons of fee-for-service

• Limited scalability. Because a service-based business requires your time, it’s difficult to scale on your own. The main ways to increase your income is to raise your rates or subcontract some of the work to lower-wage service providers. However, these both come with their own challenges—clients may not want to pay more and it takes a lot of time to find and manage subcontractors.
• Justifying your time and rate. Many service-based businesses that charge hourly need to justify how much time a job takes to complete. Even if you’re not charging hourly, service-based businesses often face more pushback or negotiation from customers.

A fee-for-service success story

Many ecommerce businesses need photos edited to make their products shine on web pages. However, not everyone has the skills, time, or software needed to make edits like background removal and color changes. Path is a virtual photo editing studio that delivers those services to other businesses, operating on a B2B model.

Path is a team of more than 300 editors and graphic designers who perform basic but necessary photo edits. Rather than charging an hourly rate, Path applies a flat per-photo editing fee, depending on the complexity of the edits. It also offers faster turnaround times at an additional fee.

• 40 Home Business Ideas for 2024
• 16 Unique Business Ideas for You To Try This Year

10. Freemium

A freemium business is when a merchant offers both a free and a paid version(s) of its product or service. This is typically used for B2C or B2B businesses. Oftentimes, software companies and software-as-a-service (SaaS) businesses use this approach.

The freemium business model allows merchants to create relationships with new customers easily, since there’s no cost or commitment to sign up and try it out. The way freemium businesses earn money is by getting these people to use and love their platform so much that they want access to additional features—features they have to pay for.

Pros of freemium

• Easier customer acquisition. Because there’s no risk to try out your product or service, it can be relatively easy to convert new customers. They don’t need to pay for anything, so it’s easier to convince them to sign up.
• More cross-selling and upselling opportunities. Even free users provide lots of insightful data you can use to your advantage when personalizing promotions and recommendations.

Cons of freemium

• Difficulty to convert. Your free users are likely already happy with their experience. It may be more difficult for them to justify the added expense if they can have a similar, though somewhat downgraded, experience for free.
• Higher risk of churn. Subscriptions are susceptible to high churn rates—even more so if you offer a free alternative to your paid options.

A freemium success story

Spotify is one of the most high-profile freemium businesses. The music-streaming service operates on a subscription-based business model. Users can subscribe to its free—or freemium—plan, which exposes them to ads and limited features. However, paid plans eliminate ads and provide additional features such as offline listening, unlimited skips, and playlists.

11. Affiliate

An affiliate business model is when you earn a commission or referral fee in exchange for driving customers to make a purchase from your affiliate partner. Affiliate marketing is often viewed as a C2C business model, because affiliates are typically regular people who refer the products or services to other consumers. However, C2B may also apply.

There are many ways to use affiliates in a business model. Your brand can also tap into the power of affiliate networks , recruiting a group of brand spokespeople to promote on your behalf.

Get paid by brands you love with Shopify Collabs

Shopify Collabs makes it easy to find brands that match your vibe, build affiliate relationships, get paid for what you sell, and track everything in one place.

Pros of affiliate

• Potential for passive income . Whether you’re the affiliate or the brand, this offers a great opportunity for passive promotion and income. As a brand, you have a network of people promoting on your behalf. As an affiliate, you can set up a website with affiliate links , sit back, and watch it grow.

Further reading:  What is Passive Income: Income Types and Examples

• Opportunity for collaborations. As an affiliate, you can partner with a whole array of brands. This opens you up to new opportunities and exposes you to things you may not have otherwise been exposed to.

Cons of affiliate

• Small profits. Affiliates often generate a percentage of the income generated from the referrals they send. Many affiliate programs offer a small percentage, so you need lots of referrals to convert if you want any sizable payout.
• Requires a network. The most successful affiliates already have their own audience or network. If you haven’t already established one, you’ll need to invest in doing so.

An affiliate success story

QALO sells silicone engagement rings and wedding bands on its Shopify site. To spread the word in its early days, QALO launched an affiliate program, focusing primarily on online communities. “Creating affiliates through people that have organizations and followings online makes things a lot easier instead of having tangible people on the ground trying to move your product around their gym or whatever it may be,” says co-founder KC Holiday .

These affiliate relationships were critical to the brand’s growth shortly after its 2013 launch, and it still has the affiliate program today.

• Instagram Affiliate Marketing: Everything You Need to Know in 2024
• How To Start Affiliate Marketing in 2024

12. Razor blade (and reverse)

The razor blade business strategy is when you sell an affordable item upfront which then requires additional products and recurring future products to be used in the future. These supplemental purchases are priced with higher margins for the merchant, while the initial product may have been sold at a lower markup.

This model is used by razor blade companies, hence the name. The razor blade may be inexpensive to buy at first, but replacement blades are not so affordable and thus earn these brands more revenue.

The reverse is essentially switching it up: the initial purchase may have been a big investment, but you secure recurring revenue with supplemental products. Though they won’t earn a large margin, it keeps customers coming back and offers you opportunities to continue marketing to them.

Pros of razor blade

• Drives repeat purchases. Due to the nature of this business model, customers almost need to become repeat buyers. This is great for boosting customer loyalty and lifetime value.
• Collect customer data. You have more touchpoints with customers, allowing you to collect more first-party data the more purchases they make. Businesses with their own customer data are empowered by these valuable insights without third-party limitations or restrictions.

Cons of razor blade

• Potential for brand dilution . If you sell an inexpensive product upfront and then charge a lot for the required recurring purchases, customers may start to question the quality of your products—and also the reliability of your brand.
• Susceptible to competition and disruption . Many businesses operating with this model aren’t pricing products because they have to price them that way. They’re pricing strategically to manipulate perceived value and inspire repeat purchases. As a result, this also leaves these businesses open to the threat of competition—it won’t be difficult for competitors to jump in with a more affordable or superior product.

A razor blade success story

Katchy Bug is an excellent example of a reverse razor blade success story. It sells UV light bug catcher fans, which come at an affordable upfront cost. To use the product, customers need to also have sticky pads in the bug catcher to capture the pests. Those sticky pads are disposable and need to be replaced fairly frequently, depending on how many bugs you have. This generates recurring revenue for the merchant.

The brand can also market to those customers when it releases new, upgraded versions of its original bug catcher.

13. Franchise

A franchise is a business that uses franchisees to distribute its products and services. Essentially, the franchisor creates the brand and the product, and the franchisees can buy into the franchise and start their own business under the same brand umbrella.

Franchises are B2C business models in the sense that the products and services are often sold directly to consumers, though some franchises operate on a B2B model as well. The relationship between the franchisor and the franchisee also mirrors a B2B business model.

Pros of franchising

• Built-in brand awareness and support . Rather than starting a business, brand, and product from scratch, franchising allows a more approachable way to get into entrepreneurship. You can take advantage of brand awareness and existing resources to get you off the ground.
• Spread the word about your business . If you want to become a franchisor and turn your existing business into a franchise, this offers a great way to expand your geographic footprint without having to physically do so yourself. This also offers you more in-depth local expertise in new markets.

Cons of franchising

• Limited flexibility. When opening a franchise business, you have limited control. You’ll have to adhere to the franchise requirements, including branding, pricing, product displays, customer service, and more.
• Startup costs can be high. It’s not free to become a franchisee. Most franchises require some sort of upfront investment or signup fee. These can be pretty hefty on top of the other startup costs you’re already facing.

A franchise success story

Athletic and outdoor apparel brand Decathlon found success through franchising. The brand refers to its franchise opportunities as “ partnerships .” This business model has allowed the retailer to expand since first opening its doors in 1976. Now, its products are in some of the most recognizable big-box stores, like Target and Walmart.

14. Brokerage

A brokerage is a business model in which the broker connects the customer to the product or service provider, acting as a liaison of sorts between the two. You often see brokerages in B2C and B2B business models, such as real estate or insurance brokerage, but not often in ecommerce.

Pros of brokerage

• Simplify complicated transactions . Brokerages are often used in complicated transactions such as real estate. This is because they often provide additional services that are typically required of such complicated purchases.
• Leverage brand awareness. Some brokerage firms are successful and have brand awareness in their own right. Gaining representation by such a firm also grants you the benefits of being associated with that brand.

Cons of brokerage

• Inflexibility . Much like with franchises, operating under a brokerage firm often requires you to follow the firm’s policies and procedures. This can be frustrating for aspiring entrepreneurs who want to do things their way.
• Fees and commissions . Because brokerages offer services and other advantages, they also take a cut from your profits. This is often paid as a percentage of the transaction value in the form of a commission.

A brokerage success story

The Oppenheim Group is a now-famous real estate brokerage firm with multiple offices and a huge team of real estate agents. Founded in 1889, the firm has earned lots of recognition over the years and it now even has Netflix shows.

How to select an ecommerce business model

Your business idea might come first, in which case you’ll need to select a model that suits it. Or maybe you’re tied to a specific business model and need to work backward, finding an opportunity that suits that model.

Some businesses stick to one business model while others use a combination of business models to execute their vision. Regardless of your route, here’s how to get started:

Understand your audience

Knowing who you want to sell to is an important first step of market research . This tells you there’s enough people out there with the willingness to purchase your product, validating market demand .

Beyond understanding the size of your audience, you’ll also want to look at their background and behaviors to understand what motivates their purchase behavior. You can later leverage this information when devising strategies for pricing, product development, marketing, and advertising.

• The Marketing Research Process in 6 Steps
• What Is a Market Analysis? 3 Steps Every Business Should Follow
• What Is a Focus Group? Definition and Guide
• What Is a Competitive Analysis? (How-To Guide)

Identify the problem you’re solving

Once you’ve gotten to know your audience, you should have a good grasp on their wants and needs. Dive deeper to look at the problem you’re solving. For example, you might sell jewelry—in this case, you may solve your customers’ challenge by finding high-quality earrings at a price point they can afford, or bracelets they can wear in the water without getting destroyed.

When you know the problem you’re solving, you can begin to understand the value you offer to people. This will help you devise a value proposition to help you stand out and stay true to your original vision.

• How To Write a Value Proposition in 5 Simple Steps
• What Is a Unique Value Proposition? How To Create a UVP

Create a business plan

The process of writing a business plan is essentially laying out a blueprint for your business. Your business plan will note what type of business model you’ll use, who your customers will be, where you’ll get funds to launch, the functions of the back end of your operation, and how you plan to promote and grow. A business plan will help you ensure profitability while factoring in expenses, pricing, and other challenges.

When you go through this process, you might realize multiple business models can work for your vision. That’s OK—you don’t have to strictly fall into one category. You can operate with multiple business models under the same business. For example, you may sell clothing in a B2C retail store or on your website, but you might also sell bulk orders to other retail stores with your B2B wholesale business model. Using a variety of business models is sometimes the best way to reach your goals.

• How to Create a Lean Business Plan (2024)
• Free Business Plan Template and Examples for Small Businesses (2024)
• 7 Business Plan Examples to Inspire Your Own (2024)

Find your successful business model

Most products will fall into one of these core business models. Depending on your product or niche, you may not have the option of which ecommerce business model you choose.

Much depends on the type of product you plan to sell. Some products will naturally fall under certain categories. However, the model you end up selling under will partially define and shape your entire business plan going forward.

Use the different business models above as a launchpad you can rely on. Then, continue to innovate how you deliver value to your customers. You’ll soon start to see the impact of a good business model, avoid one of many common business mistakes , and kick off your path to entrepreneurship the right way.

• How To Source Products To Sell Online
• The Ultimate Guide To Dropshipping (2024)
• AliExpress Dropshipping- How to Dropship From AliExpress
• Product Ideas: 17 Places To Find Profitable Products
• How To Make Money on YouTube: 7 Simple Ways (+Video)
• What is Shopify and How Does it Work?
• Upset Customers? Here's How to Stop Customer Complaints Before They Happen
• How To Make Your First Ecommerce Sale—Fast (Tutorial 2024)
• Domain History - How To Check the History of a Domain Name
• How to Transition From a Kickstarter Campaign to a Successful Shopify Store

Business models FAQ

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If you’re looking for ideas to create an innovative business model, look no further! This page has business model examples with a business model canvas designed. The business model describes how an organization creates, delivers, and captures value.

Business Model Examples

Check out 17 different business model types with examples of companies for further insights. Try to adopt these business models in your company or startup .

Multi-Sided Platform Model

The model implies a company provides service to both business parties. To get a better understanding, let’s look at an example – LinkedIn. The site offers a subscription service to candidates looking for employment and companies seeking new hires. Read More about the Multi-sided Platform Business Model .

Companies that use the Freemium Business Model:

Freemium Business Model

The model includes both free and paid services. Typically, a business lures new customers with a free subscription. However, it’s free only for a limited period or with a basic set of features. If customers want to unlock full capabilities, they must pay. The monetization option is ideal for encouraging users to try a product. Usually, freemium is implemented for SaaS or mobile app companies. Read More about the Freemium Business Model .

Subscription Business Model

A business with a subscription business model provides consumers with certain services for a fixed monthly, quarterly, or annual fee. Usually, a company segments the market and makes several offers with different features and prices. These are referred to as tiered offerings. A vivid example is Netflix, with three monthly plans: Basic for $8.99, Standard for $12.99, and Premium for $15.99. The subscription-based business model is suitable for service-based or content websites. The ultimate challenge for a company is to offer valuable content that will make customers return to the vendor constantly. Read More about the Subscription Business Model

Companies that use the Subscription Business Model:

• Amazon with Amazon Prime
• Dollar Shave Club
• Microsoft with Microsoft 365

Peer-to-Peer Business Model

Under a peer-to-peer (p2p) business model, a business serves as an intermediary between two parties. The intermediary takes a commission for driving value for both the demand and supply sides. For example, look at Airbnb: the service charges a commission when a host and hostee make a deal and carry out a transaction. Read More about the Peer-to-Peer Business Model

Companies that use the Peer-to-Peer (P2P):

• Couchsurfing

Razor and Blade Business Model

This model can also be referred to as a printer and cartridge business model. One product is marketed high, while another one – low. The thing is, an expensive product can’t be utilized without a cheap one. Hence, a business drives constant profit from associated inexpensive goods. For example, consumers will always keep buying ink if they have printers. Read More about the Razor and Blade Business Model

Companies that use the Razor and Blade Business Model :

Direct Sales Business Model

A direct sales business model takes place when a company adds a personal touch to a sales process. In other words, a sales representative is selling a product directly to an end-customer. It can be a one-on-one or group meeting. The method that Tupperware widely used is still popular, even though technological advancement promotes remote sales and self-service. Read More about the Direct Sales Business Model

Companies that use the Direct Sales Business Model :

Aggregator Business Model

An aggregator business model is a network model. A business is an aggregator if it provides information about a specific service and sells it. Usually, the service is branded. Typically, a company specializes in a particular niche. Read More about the Aggregator Business Model

Companies that use the Aggregator Business Model :

Wholesale Business Model

A traditional business model in the B2B segment, wholesale, is about the supply chain. Each party involved in the supply chain is a wholesale business. So, we can say those who sell raw materials to manufacturers or suppliers and distributors who then sell goods to retailers fall for a wholesale business model. Read More about the Wholesale Business Model.

Companies that use the Wholesale Business Model:

Long-Tail Business Model

If a company sells goods that generate little sales when marketed individually but there is a significant scope of sales when sold in total, it falls under the long-tail business model. This model appeared not long ago, with the rise of the internet. The internet allows consumers to shop for niche goods that used to be unattractive for retailers. Now, however, the situation changed as brands can use advanced targeting and segmentation to reach a specific audience. So, marketing niche products isn’t difficult anymore, which encouraged the development of a long-tail business model. Read More about the Long-Tail Business Model .

Companies that use the Long-Tail Business Model:

SaaS Business Model

Software as a service (SaaS) is a delivery business model implemented by tech companies that lease the software to customers via central, cloud-based systems. Typically, clients pay a subscription fee to get the license for centrally hosted software. Read More about the SaaS Business Model .

Companies that use the SaaS Business Model:

Dropshipping business model

The  dropshipping business model  is, in short words, a store that doesn’t have stock. It purchases the products from a third-party supplier – commonly a wholesaler or a manufacturer – who ships them directly to the end consumer. So, there is no need for inventory, and the seller doesn’t have to handle the product. It is usually a good option for entrepreneurs, especially beginners, because there is no need to open a brick-and-mortar store, and that normally means smaller investments. So, the drop-shipper is essentially a middleman. It’s possible to build a sustainable business from a simple laptop. Read More about the Dropshipping Business Model.

Companies that use the Dropshipping business model:

Low-Cost Business Model

In short words, the low cost business model is based on a strategy by which the business offers low prices in order to instigate demand thus, gaining market share. This  business model  can be adopted by virtually any company, but it is usually indicated in cases when there is no (or little) competitive advantage or when it is easier to achieve scale with production volumes, so they apply the strategy of cost advantage. Read More about the Low Cost Business Model.

Companies that use the Low-Cost Business Model:

• Dollar General

Franchise Business Model

The  franchise business model  is usually the business model chosen by those who want to start a new business, but do not have much idea how to begin it. That is because the franchising system allows you to acquire a ready-made business, with a consolidated brand and know-how already tested. Virtually, you buy a brand and all the processes. That way, since you don’t have to start from scratch, there is no need to test the entire business model from the beginning. You basically invest in a ready-made business and apply its processes and techniques to the location you choose. On the other side, the business owner benefits from not having to invest in new outlets or units. Instead, they distribute their goods or services through licensed sales points, thus increasing their brand presence. Read More about the Franchise Business Model.

Companies that use the Franchise Business Model:

• McDonald’s

Crowdsourcing Business Model

As the name suggests, the  crowdsourcing business model  refers to when the crowd act as a source for the business – usually some  multisided platform . There are many options of crowdsourcing, but all of them involve opening tasks of issues to a large group in order to receive their input for operation. The “crowd’ of this business model may be made up of customers, ordinary citizens, specialists, other entrepreneurs, and business owners/managers, etc. The company is going to employ their knowledge to benefit your business. For this knowledge to be acquired, the business must create solutions for the user to get interested in collaborating, and, at the same time, earn money as a business. Let’s go a little deeper. Read More about the Crowdsourcing Business Model.

Companies that use the Crowdsourcing Business Model :

Blockchain Business Models

Since Satoshi Nakamoto published the article “Bitcoin: A Peer-to-Peer Electronic Cash System”, in 2008 (and released the open code one year later), blockchain technology seems to have gained life into businesses. More and more companies have started operating with blockchain in their business. There are successful examples of blockchain business models already in course, and innovation seems to evolve quicker and quicker. Read More about Blockchain Business Models.

Ghost Kitchen Business Model

Ghost kitchens are restaurants that use food delivery apps to render services to their customers without the use of dining halls and other features made available by conventional restaurants. It refers to the physical space where fast food service providers make food for off-premises (pick-up or delivery) services. They grant online orders to customers that require food delivery services.  Read More About the Ghost Kitchen Business Model.

Productized Services Business Model

It is obvious to even the most casual observer that the service industry has seen significant growth in the last few decades. With this growth comes a wide range of innovations in various sectors, which have largely been responsible for the rapid development of the industry. One of these innovations is productized services. In this article, we’ll explore how the productized services business model works, its strengths and weaknesses, as well as the opportunities available to this form of business. Read More about the Productized Services Business Model.

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There are a lot of books out there that deal directly or indirectly with business models in general and entrepreneurship in particular. I’ve collected some of the most important works in this area. The  include books and also some papers from researchers and consultants. The library is structured in the following way:

Business Models

Everything that deals with business models in general.

• What is a business model anyhow?
•  Why do I need a business model?
• How does it differ from strategy?

All titles in category “Business Models”

Organizational growth.

Business models and business model innovation are the key factors for organizational growth in the 21th century.

• How do business models and business model innovation contribute to organizational growth?
• Is there such a thing as infinite growth?
• Why are disruptive innovations superior to sustaining innovations when it comes to organizational growth?
• How can I implement the disruptive growth engine in exisiting companies?
• Why do some companies innovate and grow, while others decline?

All titles in category “Organizational Growth”

Entrepreneurship.

Business models are popular especially in the are of entrepreneurship.

• Burn your business plan – business models for the win
• Lean startup methodologies
• Why is it so important to test each and every aspect of your business model?
• Prepare for change – how to get to plan B that work

All titles in category “Entrepreneurship”

The digital economy.

Ah … my favourite! The digital economy changes the way we think, interact and communicate. We’re again in an era of radical change, and the digital economy makes business model innovation not only possible, but necessary. It has never been easier to start a new business with a totally new business model for markets that do not exist yet. If you don’t start your business now, then you probably never will.

• How does the digital economy change society and economy?
• Opportunities and challenges – how to benefit from these changes
• Does the internet really lead to the freeconomy? What pricing models and revenue streams are possible
• Mobile, mobile, mobile – the dawn of a new era

All titles in category “Digital Economy”

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Business Model Canvas: Home

• Value Proposition
• Key Partners/Activities/Resources
• Customer Relationships/Segments
• Distribution Channels
• Cost Structure & Revenue Stream

This guide presents resources based on the layout of the Business Model Canvas.  You will see resources listed in more than one section.

At the top of each box, you'll see a question.  The resources listed will help you answer that question.

• Business Model Canvas Download a copy of the BMC. Overview of the BMC from its creator

This guide is based on one developed by the University of Alabama Libraries.

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• Last Updated: Oct 17, 2023 11:51 AM
• URL: https://libraryguides.missouri.edu/businessmodelcanvas

Business Planning Guide: Business Models

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What is a Business Model?

Business models are a fairly new concept, and a business model differs from a business plan. A business model breaks down the activities, revenue streams, and strategies for customer acquisition into a nine part structure called the "Business Model Canvas." Many of these concepts overlap with a business plan, but business plans cover financial and operational aspects of a business that aren't covered in a business model. Business Models are more commonly used by highly scalable businesses and businesses in industries that change rapidly over time, such as tech businesses. The video below is from Udacity's "How to Build a Startup" course  and explains the "Business Model Canvas" in more detail. 

Business Model Canvas Worksheets

Strategyzer.com has created free downloadable worksheets for the business model canvas. They also have additional free and paid for resources on their website.

• Business Model Canvas
• Value Proposition Canvas

"Business Models for Dummies" in the Gale Virtual Reference Library

Books and eBooks

We have multiple books and ebooks in the Library Catalog on business models and related topics. The popularity of business models, in part, originated from the Minimum Viable Product concept that was outlined by Eric Ries in The Lean Startup. You can find pertinent books in the library catalog by keyword searching business model, lean business, value proposition, or lean business.

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• Next: Pitch Decks >>
• Last Updated: May 1, 2024 3:27 PM
• URL: https://bklynlibrary.libguides.com/planning

Business Model Canvas

The "Business Model Canvas" is a way to think about business model innovation developed by Alexander Osterwalder and Yves Pigneur with co-creator collaboration from many practitioners.  Early on the model was fixed in the book, Business Model Generation and has been built out and further monitized via the Strategyzer website, software, training programs and other books.

The Business Model Canvas (BMC) is a strategic management tool to quickly and easily define and communicate a business idea or concept.  It is a one page document which works throught the fundamental elements of a business or product, structuring an idea in a coherent way.  The right side of the BMC focuses on the customer (external), while, the left side of the canvas focuses on the business (internal).  Both external and internal factors meet around the value propositions, which is the exchange of value between your business and your customer/clients.

Library guides, such as this one, typically list databases that can be used to gather data or sources by topic with tips for their use.  Mapping library business databases to the Business Model Canvas isn't a straightforward exercise because every business is different.  For example one businesses customer could be another entities key partner or one businesses channel for communication could be anothers value proposition.  A company database could be used to find potential partners or customers or data to model the cost structure. Therefore, this guide will not map library databases to the building blocks of the Business Model Canvas, rather it will suggest research approaches with examples to flesh out the building blocks.

Desirability

Value proposition-customer segments-customer channels-customer relationships, cost structure-revenue streams, feasibility, key resources-key activities-key partners.

(Source:  Building Blocks of the Business Model Canvas )

More From Forbes

Cloud-centric business models: pioneering the future of industry.

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Vikas Kaushik is CEO of TechAhead , driving technological excellence and leading innovation in the digital landscape.

Cloud-centric business models rely on cloud computing to deliver products and services. This helps businesses scale operations, reduce costs and enhance flexibility. It’s become abundantly clear that these models have become an essential part of modern operations.

According to Gartner , cloud adoption is expected to become a “necessity” by 2028. With 2024 spending sitting at $679 billion and projections expected to surpass $1 trillion by 2027, it’s easy to see how this will be the case. Agility and innovation are expected at this point, and cloud models help facilitate this.

Case Studies Of Cloud-Centric Disruption

You don’t have to dig deep to find examples of cloud-centric business models making a real impact on the way businesses run in 2024 and beyond. To help illustrate this point, let’s look at a few companies that have used a cloud model to propel their businesses while keeping an eye on how you might use these examples as a guideline for your company’s next move.

Netflix transformed the entertainment industry by leveraging AWS to handle its massive streaming needs. This shift allowed Netflix to scale globally, providing high-quality streaming to millions of users simultaneously.

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Another example is Spotify , which uses Google Cloud Platform to manage its data and machine learning algorithms. In doing so, the company offers personalized music recommendations and maintains a seamless user experience, handling over 574 million monthly users.

And then there’s Kroger, which used a cloud deployment to tighten up store operations in 2023. According to a Chain Store Age article , the grocery chain used cloud management technology to boost in-store infrastructure and provide a better shopping experience for customers. They are also making use of Google Cloud data analytics to improve shopping for customers and “enhance associate productivity.”

Trends In Cloud-Centric Business Models

Cloud-centric business models have paved the way for massive innovation across all industries. But if you’re contemplating jumping on board, it’s helpful to know where this is all headed.

Here’s a look at where cloud models are expected to go and grow in the coming years:

1. Hybrid and Multicloud Approaches

To enhance flexibility, resilience and performance, many businesses are turning to hybrid and multicloud strategies in 2024. These approaches help avoid vendor lock-in and optimize the use of various cloud services.

• Hybrid Cloud: This describes a strategy that integrates on-premises infrastructure with public cloud services. This allows you to maintain sensitive data onsite while enjoying the scalability and cost advantages of public clouds. It balances the best of both environments to manage workloads more effectively and ensure critical data remains secure.

• Multicloud: In contrast, this approach involves using cloud services from multiple providers to meet different business needs. Here, you’re spreading workloads across various cloud environments to enhance redundancy, minimize the risk of service disruptions and take advantage of the unique strengths of each cloud provider.

2. Increased Focus On Security And Governance

With the rise in cloud adoption, security and governance are becoming top priorities. New regulations and advanced security technologies are being developed to address these concerns. This will help ensure cloud services are both secure and compliant with global standards. Although currently a challenge, I believe it will become easier to manage.

One of the most commonly referenced regulations is the General Data Protection Regulation (GDPR) . This regulation, which originates from the EU, continues to enforce strict data protection and privacy rules, with significant fines for noncompliance. This has pushed companies to prioritize data security with haste.

In the U.S., there’s also the California Consumer Privacy Act (CCPA) , which gave California residents rights over their personal data and imposed obligations on businesses handling such data. This move then encouraged other states to adopt similar measures.

Technology is advancing rapidly to keep up with these regulations, which will make it a lot easier to comply. For instance, there are zero-trust architectures , which require continuous verification of all users and devices attempting to access network resources. And AI is increasingly used to predict, detect and respond to potential security threats in real time.

Balancing usability and security is a challenge but not insurmountable. It requires constant monitoring and a willingness to adapt quickly. Allocating proper resources to keep up is a must, too. That might be a challenge for some but it's essential to budget for.

3. Evolution Of Cloud-Native Technologies

Cloud-native technologies, such as Kubernetes and serverless computing, are helping businesses build and deploy applications more efficiently. These technologies offer greater flexibility, scalability and cost savings, which means even more incentive to jump on board to a cloud-centric approach.

Serverless computing reduces costs by charging only for resources used, and Kubernetes optimizes resource use through efficient container orchestration. For instance, Booking.com found that transitioning to a Kubernetes platform allowed the company to decrease the time required to create new services from days to minutes. This greatly improved development speed and made infrastructure management​ easier.

4. Green Cloud Initiatives

With growing environmental concerns, businesses are increasingly focusing on sustainable cloud practices. Cloud providers are taking significant steps to reduce their environmental impact. And they're doing this by investing heavily in renewable energy. But as a bonus, they're also enhancing data center efficiency.

Using renewable energy to power data centers can significantly reduce the cloud provider’s carbon emissions, which helps lower the overall environmental footprint of cloud operations. But the data centers themselves are becoming more efficient, too. Innovations in cooling technologies and improvements in server efficiency reduce the energy consumption of data centers. These advancements not only help minimize energy use but also contribute to the overall sustainability of cloud services. It’s a win-win situation and something worth prioritizing.

All that being said, cloud-centric business models have changed the way companies manage operations. The benefits of cloud adoption can be substantial, and as technology continues to evolve, the potential for cloud-centric models to drive innovation and growth is significant. Now is as good a time as ever to jump in.

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Enterprise maturity model for Microsoft business applications in FS

Early adopters of Microsoft business applications aimed to streamline operations, extract insights from unified data views, and improve customer engagement.

With the expansion of the Microsoft business applications landscape, enterprises shifted their focus from tactical system implementation to a strategic transformation initiative.

Organizations now consider Microsoft business applications a cornerstone for their digital transformation journey, fostering operational excellence, driving innovation, and promoting a culture of data-driven decision-making.  

At Capgemini , we are focused on enabling large as well as niche financial services organizations scale the adoption of Microsoft business applications along with the emerging Al and Copilot features, while staying compliant to the compliance and security landscape across different geographies.

We are pleased to present this paper from Everest Group to share insights on some of the best-in-class enterprises who have succeeded in creating innovative customer experiences with Microsoft business applications. We developed an enterprise maturity model that will help the initial adopters of Microsoft business applications with the attributes and characteristics to focus on their journey to the north star.

In this viewpoint from Everest Group, we examine:

• Microsoft business applications landscape in the financial services industry
• Enterprise maturity model for adoption of Microsoft business applications at scale
• Recommendations for enterprises to become best-in-class and create differentiated business value with Microsoft business applications