business model canvas example zara

In the 1980s Zara disrupts the fashion industry by radically reconfiguring the supply chain and creating the fast-fashion category. It is able to almost instantly react to fashion trends by vertically integrating its supply chain.

Zara is a global fashion retailer whose success stems from its ability to reduce lead times and react to trends almost instantaneously. Zara is owned by Inditex, the world’s biggest fashion group.

The company was not afraid to go against conventional wisdom, vertically integrate its supply chain, and move its production to Europe (near-shoring), while many players  in the fashion industry chose to outsource production to lower-cost factories in Asia.

Zara disrupted the fashion industry by shortening the time to market to less than three weeks from inspiration to retail. Zara created a new category of affordable fast fashion. This model allowed the company to become a heavyweight in the highly competitive fashion industry: as of 2018, Zara was active online and in 96 countries, managed 2,238 physical stores and €18.9 billion annual revenue.

1. Radically reconfigure activities for speed

Zara decides to produce more than half its fashion items locally and in its own facilities to achieve speed. At the time, most large fashion players rely on outsourcing production to Asia for cost reasons. This activity differentiation allows Zara to effectively react with lightning speed to fashion trends.

2. Develop time-critical value proposition

Zara’s value proposition focuses on keeping up with fast-changing fashion trends. Its activity configuration allows it to spot trends and launch new pieces in less than three weeks. Competitors show two collections per year and take over nine months to get items to stores. Zara ships only a few items in each style to its stores, so inventory is always scarce. This leads to constantly changing collections and customers tend to “buy it when they see it,” because the clothes won’t be around for long.

3. Embrace a new cost structure

Higher labor cost was the price to pay for flexibility, full control, and the required speed in its design and production processes. Zara reserves 85% of its factory capacity for in-season adjustments and over 50% of its clothes are designed and manufactured mid-season.

+ Trends, data, and communication

Zara trains its retail employees to relay customers’ preferences and real-time sales data to designers through effective communication systems. The latest designs and production forecasts are adjusted accordingly. Because Zara manufactures only a limited supply of items, it doesn’t have to deal with excess inventory or constant markdowns.

+ Pricing power

Each store has a limited inventory of items in each style that are replenished based on demand. New styles based on latest trends arrive constantly. As a consequence Zara rarely discounts clothes, contrary to most fashion houses.

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Why zara's business model is so successful.

Zara business model canvas

Zara’s Company Overview

Trendy Zara is the flagship brand for Europe's fastest-growing apparel retailer, Industrial de Diseño Textil (commonly know as Inditex). Zara, the cheap-chic subsidiary of the Spanish fashion giant, runs about 2,350 stores in major cities worldwide, as well as some 165 Zara Kids shops in some 75 countries. Zara boasts about 125 shops across Canada, the US, and Mexico. The chain sells women's, men's, and children's apparel and also offers plus-size and maternity lines to clothe its larger customers. Zara Home, which sells home fashions, has about 390 stores in 25 countries. Zara, launched in 1975, is Inditex's principal chain and accounts for more than two-thirds of its total sales.

Country: Spain

Foundations date: 1975

Type: Private

Sector: Consumer Goods

Categories: Retail

Zara’s Customer Needs

Social impact:

Life changing: affiliation/belonging

Emotional: rewards me, design/aesthetics, badge value, attractiveness, provides access

Functional: organizes, integrates, quality, reduces cost, variety, sensory appeal, saves time, avoids hassles

Zara’s Related Competitors

Zara’s business operations.

Augmenting products to generate data:

Due to advancements in sensors, wireless communications, and big data, it is now possible to collect and analyze massive quantities of data in a wide range of settings, from wind turbines to kitchen appliances to intelligent scalpels. These data may be utilized to improve asset design, operation, maintenance, and repair or improve how an activity is carried out. Such skills, in turn, may serve as the foundation for new services or business models.

Best in class services:

When a firm brings a product to market, it must first create a compelling product and then field a workforce capable of manufacturing it at a competitive price. Neither task is simple to perform effectively; much managerial effort and scholarly study have been dedicated to these issues. Nevertheless, providing a service involves another aspect: managing clients, who are consumers of the service and may also contribute to its creation.

Brands consortium:

A collection of brands that coexist under the auspices of a parent business. The businesses in this pattern develop, produce, and market equipment. Their strength is in copywriting. Occasionally used to refer to a short-term agreement in which many companies (from the same or other industrial sectors or countries) combine their financial and personnel resources to execute a significant project benefiting all group members.

Cash machine:

The cash machine business model allows companies to obtain money from sales since consumers pay ahead for the goods they purchase, but the costs required to generate the revenue are not yet paid. This increases companies' liquidity, which they may use to pay off debt or make additional investments. Among several others, the online store Amazon often employs this business model.

Collaborative production:

Producing goods in collaboration with customers based on their input, comments, naming, and price. It represents a new form of the socioeconomic output in which enormous individuals collaborate (usually over the internet). In general, initiatives based on the commons have less rigid hierarchical structures than those found on more conventional commercial models. However, sometimes not always?commons-based enterprises are structured so that contributors are not compensated financially.

Combining data within and across industries:

How can data from other sources be integrated to generate additional value? The science of big data, combined with emerging IT standards that enable improved data integration, enables new information coordination across businesses or sectors. As a result, intelligent executives across industries will see big data for what it is: a revolution in management. However, as with any other significant organizational transformation, the difficulties associated with becoming a big data-enabled company may be tremendous and require hands-on?or, in some instances, hands-off?leadership.

Cross-subsidiary:

When products and goods and products and services are integrated, they form a subsidiary side and a money side, maximizing the overall revenue impact. A subsidiary is a firm owned entirely or in part by another business, referred to as the parent company or holding company. A parent company with subsidiaries is a kind of conglomerate, a corporation that consists of several distinct companies; sometimes, the national or worldwide dispersion of the offices necessitates the establishment of subsidiaries.

Culture is brand:

It requires workers to live brand values to solve issues, make internal choices, and provide a branded consumer. Developing a distinctive and enduring cultural brand is the advertising industry's holy grail. Utilizing the hazy combination of time, attitude, and emotion to identify and replicate an ideology is near to marketing magic.

Customer relationship:

Due to the high cost of client acquisition, acquiring a sizable wallet share, economies of scale are crucial. Customer relationship management (CRM) is a technique for dealing with a business's interactions with current and prospective customers that aims to analyze data about customers' interactions with a company to improve business relationships with customers, with a particular emphasis on retention, and ultimately to drive sales growth.

Channel aggregation:

Consolidating numerous distribution routes into one to achieve greater economic efficiency. A business model for internet commerce in which a company (that does not manufacture or warehouse any item) gathers (aggregates) information about products and services from many competing sources and displays it on its website. The firm's strength is in its power to create an 'environment' that attracts users to its website and develop a system that facilitates pricing and specification matching.

Channel per purpose:

Creating separate channels for selling and purchasing current goods and services. A marketing plan is a vendor's plan for distributing a product or service to the end consumer through the chain of commerce. Manufacturers and retailers have a plethora of channel choices. The simplest method is the direct channel, which involves the seller selling directly to the consumer. In addition, the vendor may use its own sales staff or offer its goods or services through an e-commerce website.

Demand then made:

Early applications in distribution, production, and buying combined to form the supply chain. However, due to investments in information technology, cost analysis, and process analysis, traditional supply networks have been converted into quicker, cheaper, and more dependable contemporary supply chains. The second side of the value chain is marketing, sales, and service, which generate and maintain demand and are referred to as the market then made.

Demarketing:

Excluding current clients that are unprofitable or who do not adhere to company principles. Efforts directed towards reducing (not eliminating) demand for a product that (1) a company cannot provide in sufficient quantities or (2) a firm does not want to sell in a particular area due to prohibitively expensive distribution or marketing expenses. Increased pricing, less promotion, and product redesign are all common demarketing tactics.

Digital transformation:

Digitalization is the systematic and accelerated transformation of company operations, processes, skills, and models to fully exploit the changes and possibilities brought about by digital technology and its effect on society. Digital transformation is a journey with many interconnected intermediate objectives, with the ultimate aim of continuous enhancement of processes, divisions, and the business ecosystem in a hyperconnected age. Therefore, establishing the appropriate bridges for the trip is critical to success.

Direct selling:

Direct selling refers to a situation in which a company's goods are immediately accessible from the manufacturer or service provider rather than via intermediate channels. The business avoids the retail margin and any extra expenses connected with the intermediaries in this manner. These savings may be passed on to the client, establishing a consistent sales experience. Furthermore, such intimate touch may help to strengthen client connections. Finally, direct selling benefits consumers by providing convenience and service, such as personal demonstrations and explanations of goods, home delivery, and substantial satisfaction guarantees.

Electronic commerce, or e-commerce (alternatively spelled eCommerce), is a business model, or a subset of a larger business model, that allows a company or person to do business via an electronic network, usually the internet. As a result, customers gain from increased accessibility and convenience, while the business benefits from integrating sales and distribution with other internal operations. Electronic commerce is prevalent throughout all four main market segments: business to business, business to consumer, consumer to consumer, and consumer to business. Ecommerce may be used to sell almost any goods or service, from books and music to financial services and airline tickets.

Experience selling:

An experience in the sales model describes how a typical user perceives or comprehends a system's operation. A product or service's value is enhanced when an extra customer experience is included. Visual representations of experience models are abstract diagrams or metaphors derived from recognizable objects, actions, or systems. User interfaces use a range of experience models to help users rapidly comprehend what is occurring in the design, where they are, and what they may do next. For example, a software experience model may depict the connection between two applications and the relationship between an application and different navigation methods and other system or software components.

Fashion sense:

In any customized sense of style, the golden guideline is to buy garments that fit correctly. Nothing ruins an ensemble more than an ill-fitting jacket, shirt, or trouser, regardless of the dress code or the cost of the clothing. Personal Values Sharing as a Brand Identity A significant component of developing a company that fits your lifestyle is growing a business grounded in your beliefs.

Fast fashion:

Fast fashion is a phrase fashion retailers use to describe how designs travel rapidly from the catwalk to catch current fashion trends. The emphasis is on optimizing specific supply chain components to enable these trends to be developed and produced quickly and affordably, allowing the mainstream customer to purchase current apparel designs at a reduced price.

From push to pull:

In business, a push-pull system refers to the flow of a product or information between two parties. Customers pull the products or information they need on markets, while offerers or suppliers push them toward them. In logistics and supply chains, stages often operate in both push and pull modes. For example, push production is forecasted demand, while pull production is actual or consumer demand. The push-pull border or decoupling point is the contact between these phases. Wal-Mart is a case of a company that employs a push vs. a pull approach.

Ingredient branding:

Ingredient branding is a kind of marketing in which a component or ingredient of a product or service is elevated to prominence and given its own identity. It is the process of developing a brand for an element or component of a product in order to communicate the ingredient's superior quality or performance. For example, everybody is aware of the now-famous Intel Inside and its subsequent success.

Integrator:

A systems integrator is an individual or business specializing in integrating component subsystems into a unified whole and ensuring that those subsystems work correctly together. A process is known as system integration. Gains in efficiency, economies of scope, and less reliance on suppliers result in cost reductions and may improve the stability of value generation.

Layer player:

Companies that add value across many markets and sectors are referred to be layer players. Occasionally, specialist companies achieve dominance in a specific niche market. The effectiveness of their operations, along with their economies of size and footprint, establish the business as a market leader.

The long tail is a strategy that allows businesses to realize significant profit out of selling low volumes of hard-to-find items to many customers instead of only selling large volumes of a reduced number of popular items. The term was coined in 2004 by Chris Anderson, who argued that products in low demand or with low sales volume can collectively make up market share that rivals or exceeds the relatively few current bestsellers and blockbusters but only if the store or distribution channel is large enough.

Micro-segmentation:

Micro-segmentation is a more sophisticated type of segmentation in which a small number of consumers are classified into very accurate categories based on various variables, including behavioral forecasts. Customer micro-segmentation is the process of segmenting a firm's customers into groups based on their relationship with that business. The purpose of segmenting customers is to determine how to relate to each segment's customers to optimize each customer's value to the company.

Niche retail:

A marketing strategy for a product or service includes characteristics that appeal to a particular minority market segment. A typical niche product will be distinguishable from other goods and manufactured and sold for specialized purposes within its associated niche market. Niche retail has focused on direct-to-consumer and direct-to-business internet sales channels. The slogan for niche retail is Everything except the brand.

Online marketplace:

An online marketplace (or online e-commerce marketplace) is a kind of e-commerce website in which product or service information is supplied by various third parties or, in some instances, the brand itself, while the marketplace operator handles transactions. Additionally, this pattern encompasses peer-to-peer (P2P) e-commerce between businesses or people. By and large, since marketplaces aggregate goods from a diverse range of suppliers, the variety and availability are typically greater than in vendor-specific online retail shops. Additionally, pricing might be more competitive.

Regular replacement:

It includes items that must be replaced on a regular basis; the user cannot reuse them. Consumables are products utilized by people and companies and must be returned regularly due to wear and tear or depletion. Additionally, they may be described as components of a final product consumed or irreversibly changed throughout the production process, including semiconductor wafers and basic chemicals.

Shop in shop:

A store-within-a-store, sometimes known as a shop-in-shop, is an arrangement in which a retailer leases out a portion of its retail space to another business to operate another independent store. This arrangement is prevalent with gas stations and supermarkets. In addition, numerous bookstores collaborate with coffee shops since consumers often want a spot to relax and enjoy a beverage while browsing. Frequently, the shop-within-a-store is owned by a manufacturer who operates an outlet inside a retailer's store.

Spectrum retail:

Utilizes a multi-tiered e-commerce approach. The firm first focused on business-to-consumer connections with its customers and business-to-business ties with its suppliers. Still, it later expanded to include customer-to-business transactions after recognizing the importance of customer evaluations in product descriptions. It now also enables customer-to-customer transactions by establishing a marketplace that serves as a middleman for such transactions. The company's platform enables nearly anybody to sell almost anything.

Supply chain:

A supply chain is a network of companies, people, activities, data, and resources that facilitate the movement of goods and services from supplier to consumer. The supply chain processes natural resources, raw materials, and components into a completed product supplied to the ultimate consumer. In addition, used goods may re-enter the distribution network at any point where residual value is recyclable in advanced supply chain systems. Thus, value chains are connected through supply chains.

Take the wheel:

Historically, the fundamental principles for generating and extracting economic value were rigorous. Businesses attempted to implement the same business concepts more effectively than their rivals. New sources of sustained competitive advantage are often only accessible via business model reinvention driven by disruptive innovation rather than incremental change or continuous improvement.

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Your clothing Retail business, our proven guide.

Dissecting Zara’s Business Model Canvas and Value Proposition Canvas: A Closer Look

Zara, the renowned Spanish fashion retailer, has revolutionized the fashion industry with its unique business model and compelling value proposition. To understand the inner workings that have contributed to Zara’s success, we will delve into the details of Zara’s Business Model Canvas and Value Proposition Canvas. These frameworks shed light on how Zara operates and how it delivers value to its customers.

Zara’s Business Model Canvas

Key partnerships.

Zara collaborates with suppliers, manufacturers, and logistics providers to ensure a seamless supply chain and efficient production process. These partnerships enable Zara to maintain control over its operations and respond quickly to changing fashion trends.

Key Activities

Zara’s key activities revolve around design, manufacturing, distribution, and retailing. With in-house designers and a vertically integrated supply chain, Zara has the ability to rapidly translate fashion trends into new designs, manufacture them quickly, and distribute them to its stores worldwide.

Key Resources

Zara’s key resources include its design team, manufacturing facilities, distribution centers, and its vast network of retail stores. The company heavily invests in its design capabilities and infrastructure to ensure agility and speed in bringing new fashion collections to market.

Value Proposition

Zara’s value proposition lies in its fast-fashion model, offering customers the latest fashion trends at affordable prices. By continuously refreshing its collections with new designs, Zara creates a sense of urgency and exclusivity, appealing to fashion-conscious customers who seek current styles without breaking the bank.

Customer Relationships

Zara maintains a customer-centric approach by fostering direct relationships with its customers. The company encourages customer feedback, leverages social media platforms for engagement, and provides a personalized in-store shopping experience to build brand loyalty.

Zara’s distribution channels primarily consist of its extensive network of physical stores strategically located in prime retail locations worldwide. This allows customers to have a hands-on shopping experience, while online channels complement the in-store experience by providing convenience and accessibility.

Customer Segments

Zara caters to fashion-forward individuals who appreciate affordable, trendy clothing. Its target customers span various age groups, from teenagers to adults, with a focus on urban, style-conscious individuals who value the latest fashion offerings.

Cost Structure

Zara’s cost structure is driven by its vertically integrated supply chain and its emphasis on efficiency. By shortening lead times, minimizing inventory holding costs, and optimizing production processes, Zara maintains a cost-effective model while delivering high-quality fashion products.

Revenue Streams

Zara generates revenue primarily through the sale of its clothing and accessories. Its revenue stream is bolstered by the constant introduction of new collections and the ability to respond quickly to customer demands, driving repeat purchases and brand loyalty.

Zara’s Value Proposition Canvas

Zara’s Value Proposition Canvas unveils the secrets behind its remarkable success in the fashion industry. By deeply understanding its target customers, identifying their needs and desires, and addressing common industry pains, Zara has crafted a compelling value proposition. Through a combination of affordability, on-trend offerings, inclusivity, and a fast-fashion model, Zara empowers customers to express their personal style and stay ahead in the ever-changing world of fashion.

To truly understand the magic behind Zara’s success, we will delve into the intricacies of Zara’s Value Proposition Canvas, which highlights the key elements that make their offerings so compelling.

Customer Profile

Zara’s value proposition begins with a deep understanding of its target customers. The brand caters to fashion-conscious individuals who value staying up-to-date with the latest trends without breaking the bank. Zara’s customers are style-savvy, seeking to express their personal fashion choices, and appreciate a wide range of options to choose from.

Customer Jobs

Zara recognizes that its customers have specific “jobs” they need to fulfill. These jobs include staying fashionable, feeling confident in their clothing choices, and staying ahead of the fashion curve. Zara’s value proposition revolves around meeting these needs by consistently providing on-trend fashion that empowers customers to express their individual style.

Customer Pains

Zara addresses common customer pains in the fashion industry. One pain point is limited access to trendy clothing, as many retailers struggle to keep up with rapidly changing fashion trends. Zara’s value proposition tackles this by swiftly translating runway trends into affordable, ready-to-wear collections available to customers in a matter of weeks.

Another pain point Zara addresses is the high prices associated with fashionable items. Zara’s value proposition disrupts traditional notions by offering affordable fashion without compromising on quality. This approach allows customers to access the latest trends at a fraction of the cost compared to high-end fashion brands.

Customer Gains

Zara’s value proposition is designed to provide customers with significant gains. By shopping at Zara, customers gain access to the latest fashion trends, enabling them to meet their desire for style and self-expression. Zara’s collections are constantly refreshed, creating a sense of exclusivity and urgency that appeals to fashion-conscious individuals.

Additionally, Zara offers a wide range of options, catering to diverse tastes and preferences. The brand embraces inclusivity, providing clothing for various body types, sizes, and styles. This approach ensures that customers can find pieces that align with their individual fashion sensibilities.

Zara’s ability to consistently deliver value to its customers has cemented its position as a global fashion leader. Aspiring retailers can draw inspiration from Zara’s Value Proposition Canvas by focusing on customer-centricity, agility, and a deep understanding of their target audience’s needs and aspirations. By continuously adapting and refining their value propositions, retailers can create a competitive edge and build lasting relationships with their customers, just like Zara has done so successfully.

Zara’s Business Model Canvas and Value Proposition Canvas shed light on the key elements that have propelled the company to success in the fashion industry. By leveraging a vertically integrated supply chain, maintaining agility in design and production, and delivering affordable, on-trend fashion to its customer segments, Zara has captured the hearts of fashion-conscious individuals worldwide. Understanding and appreciating the intricacies of Zara’s business model and value proposition can inspire other retailers to innovate and create compelling offerings in their respective industries.

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The Zara Business Model

Explore the innovative strategies of the zara business model in our comprehensive guide. discover how zara transformed the retail industry with its unique approach to design, production, and customer engagement..

Zara, a Spanish multinational company, has transformed the global fashion industry with its unique and compelling business model. The brainchild of Amancio Ortega Gaona, one of the world’s wealthiest men, and Rosalía Mera, Zara is the flagship brand of the Inditex Group. Today, it stands as an inspiring testament to entrepreneurship, innovative strategies, and astute business modeling.

Amancio Ortega, the son of a railway worker and housemaid, launched Zara in 1975 with a distinct vision – to create high-street fashion that is affordable, fast, and responsive to the evolving tastes of customers. Rosalía Mera, Ortega’s then-wife, played a significant role in shaping Zara’s early success. Their shared journey started with a humble bathrobe manufacturing business, Confecciones Goa, in 1963, which later gave birth to Zara.

Ortega’s aim was not just to manufacture clothes but to redefine the fashion retail market. He set out to challenge the industry’s status quo by responding swiftly to consumer demands. His vision, strategy, and execution led to a revolutionary approach, aptly named “Fast Fashion.”

We will now dissect Zara’s unique business model using Alexander Osterwalder’s Business Model Canvas (BMC) to understand how it became a global fashion behemoth. The BMC is a strategic management and lean startup template that divides business models into nine segments: Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships, and Cost Structure.

Business Model Canvas applied to Zara

• Customer Segments: Zara’s customer base primarily consists of style-conscious individuals who keep up with the latest trends but are budget-conscious. The brand effectively caters to men, women, and children across a broad age range and different fashion preferences. Zara’s ability to respond rapidly to changing fashion trends means that its customer base is wide-ranging, global, and incredibly diverse.
• Value Propositions: Zara offers its customers ‘fast fashion’ — that is, affordable, on-trend clothing that is available almost as soon as trends emerge. Zara does this by keeping a close eye on fashion developments and customer preferences, designing new styles swiftly, and shortening the supply chain to speed up production and delivery. Its scarcity model creates a sense of urgency among customers to purchase as items may not be available for long, adding to its value proposition.
• Channels: Zara uses a multi-channel approach to reach its customers. Its meticulously designed physical stores are located in prime shopping districts globally, creating a high-street boutique experience. In the digital age, Zara has also made significant inroads into e-commerce, with a user-friendly website and mobile app that allow customers to shop online. The brand maintains a seamless omni-channel experience, wherein customers can order online and pick up or return items in-store.
• Customer Relationships: Zara’s customer relationships are built on understanding and responding quickly to their needs. This approach has helped the company develop strong relationships with its customers, who appreciate the brand’s quick turnover of styles and regular stock refreshes. The relationships are further enhanced by effective after-sales services, both in-store and online.
• Revenue Streams: Zara’s primary revenue comes from its clothing sales, spanning across various categories like women’s, men’s, and children’s wear. It includes the sale of accessories, footwear, and cosmetics. Zara also earns revenue from its online platform, contributing a significant proportion to its total income. The company uses a ‘high turnover, low margin’ approach to pricing, keeping prices affordable to sustain high volume sales.
• Key Resources: Zara’s key resources include its design team that keeps up with the latest fashion trends and designs new styles, its logistics system that ensures fast and effective distribution, and its global network of suppliers who can respond quickly to production demands. Zara’s IT infrastructure, both for inventory management and e-commerce, is also a critical resource. Importantly, Zara’s retail staff are a vital resource, providing customer service and valuable feedback on customer preferences.
• Key Activities: Zara’s key activities include trend spotting, designing, manufacturing, distribution, marketing, and retailing. The company excels at quick response to fashion trends, agile manufacturing processes, and efficient distribution, all of which enable it to refresh its stock with new designs every few weeks.
• Key Partnerships: Zara’s key partners include its network of suppliers, logistics providers, and third-party manufacturers. The company’s close relationship with its suppliers, especially, enables it to maintain its fast-fashion model. Zara’s collaborative approach to partnerships allows it to have a responsive and flexible supply chain, critical to its business model.
• Cost Structure: The major costs for Zara include production costs, logistics and distribution costs, marketing and sales expenses, and retail store operating costs (including rent for prime locations). Additionally, the brand incurs costs for its design and creative team, IT infrastructure, and staff salaries. Despite these costs, Zara maintains profitability through high sales volume and efficient operations.

Understanding the Zara Phenomenon

While applying the Business Model Canvas to Zara’s operations, it becomes clear that the company’s success is not merely attributable to a single factor, but rather a finely tuned blend of strategic elements that together contribute to its unique business model. From the customer-centric approach to trend identification to the agility in product design and delivery, each aspect plays a critical role in making Zara a phenomenon in the global retail industry.

As we delve deeper into Zara’s approach to each of the BMC segments, it’s essential to understand how these strategies and practices fit into the broader context of Zara’s industry environment, corporate culture, and leadership vision.

The Strategy of Scarcity

Zara’s innovative ‘scarcity strategy,’ which forms a core part of its Value Proposition, plays a psychological trick on consumers, making products appear more desirable because they’re less available. This approach not only creates a sense of urgency among customers but also lowers the risk for Zara. The strategy ensures the company doesn’t end up with large stocks of unsold inventory, a problem often faced by other retailers. It also encourages frequent store visits, as customers know that collections change regularly.

The Power of Data

In the digital age, data is king, and Zara knows this well. The company uses data analytics to understand its Customer Segments better and to create designs that sell. Sales data from each store is analyzed in real-time, providing feedback to the design team. This data-driven approach helps Zara to keep its finger on the pulse of changing consumer preferences, contributing to its ability to keep up with fast-moving fashion trends.

Sustainability and Ethics

As consumer awareness about sustainability and ethical manufacturing grows, Zara has adapted to meet these new demands. The company has made significant commitments towards reducing its environmental footprint, such as aiming for 100% sustainable fabrics in its collections by 2025 and zero landfill waste from its facilities. Zara has also launched a recycling program where customers can drop off their old clothes at the store. These initiatives not only contribute to its Value Proposition but also help build more profound, more meaningful Customer Relationships.

Zara’s story is a fascinating study of how an entrepreneurial vision, coupled with innovative strategies, can disrupt an entire industry. It underscores the power of understanding customer needs and swiftly responding to them. Zara has broken the mold of the traditional fashion industry, and its business model holds valuable lessons for businesses in other sectors as well.

While Zara’s success is undeniable, it also presents a challenge: maintaining this level of innovation and customer responsiveness as the company grows. For Zara, the key to future success lies in staying true to its fast-fashion model while evolving to meet changing customer demands and environmental considerations.

By leveraging Alexander Osterwalder’s Business Model Canvas, we can clearly see the synergistic effects of Zara’s strategies across different areas of its business. It’s a powerful illustration of how well-aligned business strategies can create a brand that resonates with customers worldwide and stands out in a competitive industry. The Zara case shows us that a well-crafted business model is a strategic tool that can drive growth, innovation, and success in any business.

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How Zara’s strategy made her the queen of fast fashion

Table of contents, here’s what you’ll learn from zara's strategy study:.

• How to come up with disruptive ideas for your industry.
• How finding the right people is more important than developing the best strategy.
• How best to address the sustainability question.

Zara is a privately held multinational clothing retail chain with a focus on fast fashion. It was founded by Amancio Ortega in 1975 and it’s the largest company of the Inditex group.

Amancio Ortega was Inditex’s Chairman until 2011 and Zara’s CEO until 2005. The current CEO of Zara is Óscar García Maceiras and Marta Ortega Pérez, daughter of the founder, is the current Chairwoman of Inditex.

Zara's market share and key statistics:

• Brand value of $25,4 billion in 2022
• Net sales of $19,6 billion in 2021
• 1,939 stores worldwide in 2021
• Over 4 billion annual visits to its website
• Inditex employee count of 165,042 in 2021

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Humble beginnings: How did Zara start?

Most people date Zara’s birth to 1975, when Amancio Ortega and Rosalia Mera, his then-wife, opened the first shop. But, it’s impossible to study the company’s first steps, its initial competitive advantage, and strategic approach by starting at that point in time.

When the first Zara shop opened, Amancio Ortega already had 22 years of industry experience, ten years as a clever and hard-working employee, and 12 years as a business owner. Rosalia Mera also had 20 years of industry experience.

As an employee , Ortega worked in the clothing industry, first as a gofer and then as a delivery boy. He quickly demonstrated great talent for recognizing fabrics, understanding and serving customers, and making sound business suggestions. Soon, he decided to use his insights to develop his own business instead of his boss’s.

As a business owner , he started  GOA Confecciones  in 1963, along with his siblings, his wife, and a close friend. They started with a humble workshop making women’s quilted dressing gowns, following a trend at the time Amancio had noticed. Within ten years, that workshop had grown to support a workforce of 500 people.

And then, the couple opened the first Zara shop.

Zara’s competitive positioning strategy in its first year

The opening of the first Zara shop in 1975 wasn’t just a new store to sell clothes. It was the final big move of a carefully planned vertical integration strategy.

To understand how the  strategy was formulated , we need to understand Amancio’s first steps. His first business, GOA Confecciones, was a manufacturing business. He was supplying small stores and businesses with his products, and he wasn’t in contact with the end customer.

That brought two challenges:

• A lack of insight into market trends and no direct consumer feedback about preferences.
• Very low-profit margins compared to the 70-80% profit margin of retailers.

Amancio developed several ideas to improve distribution and get a direct relationship with the final purchaser. And he was always updating his factories with the latest technological advancements to offer the highest quality of products at the lowest possible price. But he was missing one essential part to reap the benefits of his distribution practices:  a store .

So, in 1972 he opened one under the brand name  Sprint . An experiment that quickly proved unsuccessful and, seven years later, was shut down. Although it’s unknown the extent to which Amancio put his ideas to the test, Sprint was a private masterclass in the retail world that gave Amancio insights that would later turn Zara into a global success.

Despite Sprint’s failure, Amancio didn’t abandon the idea of opening his own store mainly because he believed that his advanced production model was vulnerable and the rise of a competitor who could replicate and improve his system was imminent.

Adding a store to his vertical integration strategy would have a twofold effect:

• The store would operate as a direct feedback source. The company would be able to test design ideas before going into mass production while simultaneously getting an accurate pulse of the needs, tastes, and fancies of the customers. The store would simultaneously reduce risk and increase opportunity spotting.
• The company would have reduced operating costs as a retailer. Since the group would control all aspects of the process (from manufacturing to distribution to selling), it would solve key retail challenges with stocking. The savings would then be passed on to the customer. The store would have an operational competitive advantage and become a potential cash cow for the company.

The idea was to claim his spot in prime commercial areas (a core and persistent strategic move for Zara) and target the rising middle class. The market conditions were tough, though, with many family-owned businesses losing their customer base, giant players owning a huge market share, and Benetton’s franchising shops stealing great shop locations and competent potential managers.

So the first Zara store had these defining characteristics that made it the successful final piece of Amancio’s strategy:

• It was located near the factory = delivery of products was optimized
• It was in the city’s commercial heart = more expensive, but with access to affluence
• It was located in the city where Ortegas had the most customer experience = knowing thy customer
• It was visibly attractive = expensive, but a great marketing trick

Amancio’s team lacked experience and expertise in one key factor:  display window designing . The display window was a massive differentiator and had to be bold and attractive. So, Amancio hired Jordi Bernadó, a designer with innovative ideas whose work transformed display windows and the sales process.

The Zara shop was a success, laying the foundations for the international expansion of the Inditex group.

Key Takeaway #1: Challenge your industry’s conventional wisdom to create a disruptive strategy

Disrupting an industry isn’t an easy task nor a frequent occurrence.

To do it successfully, you need to:

• Understand the prominent business mode of your industry and the forces that contributed to its development.
• Challenge the assumptions behind it and design a radically different business model.
• Develop ample space for experimentation and failures.

The odds of instantly conquering the industry might be low (otherwise, someone would have already done it), but you’ll end up with out-of-the-box ideas and a higher sensitivity to potential disruptors in your competitive arena.

Recommended reading:   How To Write A Strategic Plan + Example

How Zara’s supply chain strategy is at the core of its business strategy

According to many analysts, the Zara supply chain strategy is its most important innovative component.

Amancio Ortega and other senior members of the group disagree. Nevertheless, the Inditex  logistics strategy  is extraordinarily efficient and plays a crucial role in sustaining its competitive advantage. Most companies in the clothing retail industry take an average of 4-8 weeks between inception and putting the product on the shelf. The group achieves the same in an average of two weeks. That’s nothing short of extraordinary.

Let’s see how Zara developed its logistics and business strategy.

Innovative logistics: how Zara’s supply chain evolved

The logistics methods developed by companies are highly dependent on external factors.

Take, for example, infrastructure. In the early days of Zara, when it was expanding through Spain, the company considered using trains as a transportation system. However, the schedule couldn’t keep up with Zara’s needs, which had the goal of distributing products twice a week to its shops. So transportation by road was the only way.

However, when efficiency is a high priority, it shapes logistics processes more than anything else.

And for Zara, efficient logistics was – and still is – of the highest priority.

Initially, leadership tried outsourcing logistics, but the experiment failed and the company assigned a member of the house with a thorough knowledge of the company's operating philosophy to take charge of the project. The tactic of entrusting important big projects to employees imbued with the company’s philosophy became a defining characteristic.

So, one of Zara’s early strategic decisions was that each shop would make orders twice a week. Since the first store was opened, the company has had the shortest stock rotation times in the industry. That’s what drove the development of its logistics methods. The whole strategy behind Zara relied on quick production and distribution. And the proximity of manufacturing and distribution was essential for the model to work. So Zara had these two centers in the same place.

Even when the brand was expanding around the world, its logistics center remained in Arteixo, Spain, despite being a less-than-ideal location for international distribution. At some point, the growth of the brand, and Inditex as a whole, outpaced Arteixo’s capacity, and the decentralization question came up.

The debate was tough among leadership, but the arguments were strong. Decentralization was necessary because of:

• Safety and security.  If there was a fire or any other crippling disaster there (especially on a distribution day), then the company would face serious troubles on multiple fronts.
• Arteixo’s limitations.  The company’s center in Arteixo was reaching its capacity limits.

So the company decided to decentralize the manufacturing and distribution of its brands.

Initially, the group made the decision to place differentiated logistics centers where the management of its chain of stores was based, i.e. Bershka would have a different logistics center than Pull&Bear, although they were both part of the Inditex Group. That idea emerged after Massimo Dutti and Stradivarius became part of Inditex. Those brands already had that geographical structure, and since the group integrated them successfully into its strategy and logistics model, it made sense to follow the same pattern with its other brands.

Besides, the proximity of the distribution centers to the headquarters of each brand allowed them to consolidate them based on the growth strategy and purpose of each brand (more on this later).

But just a few years after that, the group decided to build another production center for Zara that forced specialization between the two Zara centers. The specialization was based on location, i.e. each center would manufacture products that would stock the shelves of stores in specific locations.

Zara’s  supply chain strategy  is so successful because it’s constantly evolving as the group adapts to external circumstances and its internal needs. And just like its iconic fashion, the company always stays ahead of the logistics curve.

Zara’s business strategy transcends its logistics innovations

Zara’s business strategy relies on four key pillars:

• Flexibility of supply
• Instant absorption of market demand
• Response speed
• Technological innovation

Zara is the only brand in the Inditex group that is concerned with manufacturing. It’s the first brand in the clothing sector with a complete vertical organization. And the production model requires the adoption or development of the latest technological innovations.

This requirement is counterintuitive in the clothing sector.

Most people believe that making big investments in a market as mature as clothing is a bad idea. But the Zara production model is very capital and labor intensive. The technological edge derived from that investment gave the company, in the early days, the capability to manufacture over 50% of its own products while maintaining an extremely high stock rotation frequency.

Zara might be one of the best logistics companies in the world, but that particular excellence is a supporting factor, or at least a highly contributing factor, to its successful business strategy.

Zara’s business strategy is so much more than its supply chain strategy.

The company created the “fast fashion” term and industry. When other companies were manufacturing their collections once per season, Zara was adapting its collection to suit what people asked for on a weekly basis. The idea was to offer fashionable items at a fair price and faster than everybody else.

Part of its cost-cutting strategic priority was its marketing strategy. Zara didn’t – and still doesn’t – advertise like the rest of the clothing industry. Its marketing strategy starts with choosing the location of the stores and ends with advertising that the sales period has started. In the early years of the brand’s expansion, Amancio would visit potential store locations himself and choose the site to build the Zara shop.

The price was never an issue. If the location was in a commercial center, Zara would build its store there no matter how high the cost was because the company expected to recoup it quickly with increased sales.

Zara’s marketing is its own stores.

The strategy of Zara and her Inditex sisters

Despite Zara’s success (or because of it), Amancio Ortega created – or bought – multiple other brands that he included in the Inditex group, each one with a specific purpose.

• Zara  was targeting middle-class women. ‍
• Pull&Bear  was targeting young people under twenty-five years old with casual clothing. ‍
• Bershka  was targeting rebel teens, especially girls, with hip-hop-style clothing. ‍
• Massimo Dutti  was targeting both sexes with more affluence. ‍
• Stradivarius  was competing with Bershka, giving Inditex two major brands in the teenage market. ‍
• Oysho  was concentrating on women's lingerie. ‍
• Zara Home manufactures home textiles and decor.

Pull&Bear  was initially targeting young males between the ages of 14 and 28. Later it extended to young females of the same age and focused on selling leisure and sports clothing. It has the slowest stock turnaround time in the group.

Bershka’s  target group was girls between 13 and 23 years of age with highly individualized tastes. Prices were low, but the quality average. Almost a fiasco in the beginning, it underwent a successful strategic turnaround becoming today one of the biggest growth opportunities for the group. And out of all the Inditex chains, Bershka has the most creative designs.

Massimo Dutti  was the first retail brand Amancio bought and didn’t create himself. Its strategy is very different from Zara, producing high-quality products and selling them at a high price. It’s an extension of the group’s offer to the higher end of the price spectrum in the fashion industry. It’s also the only Inditex chain brand that advertises regularly.

Stradivarius  was the second acquired brand, with the purchase being a defensive move. The chain shares the same target group with Bershka, making it, to this day, a direct competitor.

Oysho  started as an underwear and lingerie company. Its product lines evolved to include comfortable night and homewear along with swimwear and a very young children’s line. The brand’s strategy was aggressive from its conception, opening 286 stores in its first six years of existence.

Zara Home  is the youngest brand in the Group and the only one outside the clothing sector, though still in the fashion industry. It was launched with the least confidence and with immense prior research. An experiment to extend the Zara brand beyond clothing, it was based on the conservative view that Zara could extend its product categories only to textile items for the home. But it turned out that customers were more accepting of Zara Home selling a wide variety of domestic items. So the brand made a successful strategic pivot.

Key Takeaway #2: The right people are more important than the best strategy

It might not be obvious in the story, but a key reason for Zara's and Inditex’s success has been the people behind them.

For example, a vast number of people in various positions from inside the group claim that Inditex cannot be understood without Amancio Ortega. Additionally, major projects like the development of Zara’s logistics systems and the group's international expansion had such a success precisely because of the people in charge of them.

Zara’s radically different model was a breakthrough because:

• Its leadership had a clear vision and a real strategy to execute it.
• People with a deep understanding of the company’s philosophy led Its largest projects.

Sustainability: Zara’s strategy to make fast fashion sustainable

Building a sustainable business in the fast fashion industry is a tough nut to crack.

To achieve it, Inditex has made sustainability a cornerstone of its business model. Its strategy revolves around the values of  collaboration ,  transparency,  and  innovation . The group’s ambition is to make a positive impact with a vision of prosperity for the planet and its people by transforming its value chain and industry.

Inditex’s sustainability commitments and strategy to achieve them

Inditex has developed a sustainability roadmap that extends up to 2040 with ambitious goals. Specifically, it has committed to

• 100% consumption of renewable energy in all of its facilities by 2022 (report pending).
• 100% of its cotton to originate from more sustainable sources by 2023.
• 100% of its man-made cellulosic fibers to originate from more sustainable sources by 2023.
• Zero waste from its facilities by 2023.
• 100% elimination of single-use plastic for customers by 2023.
• 100% collection of packaging material for recycling or reuse by 2023.
• 100% of its polyester to originate from more sustainable sources by 2025.
• 100% of its linen to originate from sustainable sources by 2025.
• 25% reduction of water consumption in its supply chain by 2025.
• Net zero emissions by 2040.

The group’s commitments extend beyond environmental issues to how its  manufacturing and supplying partners conduct their business . To bring its strategy to fruition, it has set up a new governance and management structure.

The Board of Directors is responsible for approving Inditex’s sustainability strategy. The  Sustainability Committee  oversees and controls all the proposals around the social, environmental, health, and safety impact of the group’s products, while the  Ethics Committee  makes sure operations are compliant with the rules of conduct. There is also a  Social Advisory Board  that includes external independent experts that advises Inditex on sustainability issues.

Finally, Javier Losada, previously the group’s Chief Sustainability Officer and now promoted to Chief Operations Officer, will be leading the sustainability transformation of the group. Javier Losada first joined Inditex back in 1993 and ascended its rank to reach the C-suite.

Inditex is dedicated to its commitment to reducing its environmental impact and seems to be headed in the right direction. The only question is whether it’s fast enough.

Key Takeaway #3: Integrating sustainability with business strategy is a present-day necessity

Governments and international bodies around the world are implementing more stringent environmental regulations, forcing companies to commit to ambitious goals and developing a realistic strategy to achieve them.

The companies that are impacted the least are those that always had sustainability as a  high priority .

From the companies that require significant changes in their operations to comply with the new regulations, only those who  integrate  sustainability into their business strategy and model will succeed.

Why is Zara so successful?

Zara is the biggest Spanish clothing retailer in the world based on sales value. Its success is due to its fast fashion strategy that is based on a strong supply chain and quick market feedback loops.

Zara's customer-centric approach places a strong emphasis on understanding and responding to customer needs and preferences. This is reflected in the company's product design, marketing, and customer service strategies.

Zara made fashionable clothes accessible to the middle class.

Zara’s vision guides its future

Zara's vision, as part of the Inditex Group, is to create a sustainable fashion industry by promoting responsible consumption and production, respecting the environment and people, and contributing to the communities in which it operates.

The company aims to offer the latest fashion trends to its customers at accessible prices while continuously innovating and improving its operations and processes.

Growth by numbers (Inditex)

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

Written by Raquel Alberdi

Business | entrepreneurship, 16 comments(s).

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

“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.

Table of Content

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.

K ey Partners

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, it’s a great resource to play around with and test some of your business ideas, with the option to dive into further detail if you see fit.

Canvanizer is a free, easy-to-use web tool that allows you to share links between team members who are brainstorming ideas for a business model canvas, but working remotely.

Like Strategyzer, there are several business model canvas templates provided to help you get started with your analysis. The strength of this platform is its accessibility. Much like a Google Doc., several people can brainstorm on the same canvas simultaneously with changes being synchronized automatically.

Business Model Canvas Tool

A ThePowerMBA alumni, impressed by the simplicity and effectiveness of the tool, went ahead and created the free application Business Model Canvas Tool .

It’s an incredibly intuitive, and easy-to-use tool that allows you to create templates simply by clicking the + button in each building block.

Each business model canvas created can be downloaded and shared as a pdf. with the rest of the team.

Would You Like to Learn More about Business Models?

If, after going through our 9-step guide on how to use the Business Model Canvas you’d like to learn more about different business model analysis tools , take a look at our alternative MBA business program .

As you’ll see, the course gives students a 360-degree view of business and management practices – such as engines of growth, segmentation and targeting, and value propositions.

I highly recommend you go check it out.

Regardless, I’d love to hear what you thought about this guide. Was it helpful? Would you like to see additional business cases analyzed from your industry?

Let us know in the comments below.

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16 Comments

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Well explained with practical business case

Wow, this article was incredibly helpful! I’ve heard about the Business Model Canvas before, but I wasn’t sure exactly how it worked or how to use it for my own business.

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Zara: Exploring the Business Model and Revenue Streams

Delve into the world of fashion retail giant Zara and uncover the secrets behind its innovative business model and diverse revenue streams.

Zara, the popular fashion retailer, has garnered attention for its unique business model and impressive revenue streams . In this article, we will take a deep dive into the inner workings of Zara's operations and examine how the company has achieved such remarkable success.

Understanding Zara's Unique Business Model

At the heart of Zara's success lies its revolutionary fast-fashion approach . Unlike traditional fashion retailers, Zara embraces the idea of delivering trendy clothing quickly and at affordable prices. This approach allows Zara to stay ahead of fashion trends and cater to the ever-changing tastes of its customers.

One key factor that sets Zara apart from its competitors is its unparalleled supply chain efficiency . By closely aligning its design, production, and distribution processes, Zara has managed to shorten the production cycle significantly. As a result, new clothing designs can reach the shelves within a matter of weeks, instead of months.

In addition to its supply chain efficiency, Zara also stands out due to its in-house design and production capabilities. Unlike other brands that outsource these functions, Zara handles everything internally. This vertical integration gives the company more control over its product quality, enabling them to swiftly respond to market demands and consumer preferences.

Zara's supply chain efficiency is a result of its meticulous planning and coordination. The company has a team of skilled designers who closely monitor fashion trends and create designs that resonate with their target audience. Once the designs are finalized, Zara's production team springs into action. They work closely with suppliers to source high-quality fabrics and materials, ensuring that the final product meets the company's standards.

Once the production is complete, Zara's distribution network comes into play. The company has strategically located warehouses and distribution centers around the world, allowing them to quickly transport the finished products to their retail stores. This efficient distribution network minimizes the lead time between production and availability on the shelves, giving Zara a competitive edge in the fast-paced fashion industry.

Another aspect that sets Zara apart is its ability to gather and analyze customer feedback in real-time. The company encourages its customers to provide feedback on their shopping experience, product preferences, and overall satisfaction. This valuable information is then used to make data-driven decisions, such as adjusting inventory levels, introducing new designs, or improving customer service. By leveraging customer insights, Zara ensures that it remains in sync with its target market and continues to deliver products that resonate with its customers.

Zara's in-house design and production capabilities play a crucial role in its success. By keeping these functions within the company, Zara has complete control over the entire product development process. This allows them to quickly respond to emerging fashion trends and adapt their designs accordingly. Additionally, having their own production facilities enables Zara to maintain high-quality standards and ensure that the products meet customer expectations.

Furthermore, Zara's vertical integration gives them the flexibility to experiment with new designs and styles. They can swiftly prototype and test new ideas without relying on external partners, reducing the time and cost associated with product development. This agility allows Zara to introduce a wide variety of clothing options, catering to different customer preferences and ensuring that there is something for everyone.

In conclusion, Zara's unique business model revolves around its fast-fashion approach, supply chain efficiency, in-house design and production capabilities, and customer-centric mindset. By staying ahead of fashion trends, optimizing their supply chain, and listening to their customers, Zara has managed to create a successful and highly adaptable brand in the competitive fashion industry.

Dissecting Zara's Revenue Streams

Zara's revenue streams are multi-faceted , with each component contributing to its overall success. The primary source of revenue comes from retail store sales. Zara has a vast network of flagship stores and outlets worldwide, attracting a diverse customer base and generating substantial sales revenue.

In recent years, Zara has also leveraged the power of e-commerce to drive its sales. The company's online sales and digital expansion have allowed it to reach a wider audience and tap into the growing trend of online shopping. With a user-friendly website and seamless online shopping experience, Zara has successfully capitalized on the digital realm.

Moreover, Zara's success can also be attributed to its innovative supply chain management. The company has implemented a fast-fashion model, which enables it to quickly respond to changing fashion trends and deliver new products to its stores at an unprecedented speed. This agile supply chain not only ensures that Zara's stores are always stocked with the latest fashion items but also minimizes inventory costs and reduces the risk of unsold merchandise.

Additionally, Zara's collaborations and limited edition collections have become a significant revenue driver. The brand collaborates with renowned designers and influencers, creating exclusive collections that generate buzz and increase customer engagement. These limited edition pieces often sell out quickly, creating a sense of urgency and boosting sales.

Furthermore, Zara's commitment to sustainability has also played a role in its revenue streams. The company has implemented various eco-friendly initiatives, such as recycling programs and the use of sustainable materials. This resonates with environmentally conscious consumers, who are willing to pay a premium for ethically produced fashion items. By aligning its brand with sustainability, Zara has not only attracted a new segment of customers but also enhanced its reputation and brand loyalty.

Moreover, Zara's international expansion strategy has contributed to its revenue growth. The company has strategically entered new markets, tailoring its products and marketing strategies to suit local preferences. This approach has allowed Zara to establish a strong global presence and tap into the purchasing power of diverse consumer markets.

In conclusion, Zara's revenue streams are diverse and interconnected. The combination of retail store sales, e-commerce, collaborations, supply chain management, sustainability initiatives, and international expansion has propelled Zara to become a leading player in the fashion industry. By continuously adapting to changing consumer preferences and embracing innovation, Zara has successfully maintained its position as a revenue-generating powerhouse.

Zara's Unique Business Model

When it comes to successful fashion retailers, Zara's business model stands out from the crowd. The company has developed a unique approach to the fashion industry that has allowed it to thrive in a highly competitive market.

Fast Fashion Strategy

Zara's key to success lies in its fast fashion strategy. The company is able to quickly respond to changing fashion trends and customer demands by designing, producing, and distributing new styles in a matter of weeks. This allows Zara to stay ahead of the competition and keep its customers coming back for the latest styles.

By constantly refreshing its inventory with new and on-trend items, Zara creates a sense of urgency and excitement for its customers, driving them to make frequent purchases to stay on top of the latest fashion trends.

Vertical Integration

Zara's business model also relies on vertical integration, meaning the company owns much of its supply chain, from design and production to distribution and retail. This allows Zara to have greater control over the entire process, resulting in faster turnaround times and the ability to quickly adapt to changing market conditions.

By owning its production facilities, Zara is able to produce smaller quantities of each style, reducing the risk of overstock and allowing the company to quickly respond to customer feedback and demand.

Investor Report Data and Financial Highlights

According to Zara's most recent investor report, the company has continued to experience strong financial performance. In the past fiscal year, Zara reported a revenue increase of 8%, reaching a total of $18.2 billion. Additionally, the company's net income grew by 12% to $2.3 billion, showcasing Zara's ability to effectively leverage its unique business model for sustained success in the fashion industry.

Zara's commitment to innovation and adaptability within its business model has not only driven its financial success but has also solidified its position as a leader in the fast fashion market.

The Role of Innovation in Zara's Business Model

Throughout its journey, Zara has embraced innovation as a driving force behind its success. Technological advancements play a crucial role in streamlining Zara's operations and enhancing customer experiences. From implementing automated inventory management systems to utilizing data analytics for trend forecasting, Zara continuously harnesses technology to stay competitive.

In recent years, Zara has invested heavily in research and development to explore new ways of incorporating cutting-edge technology into its business model. One of the notable innovations is the use of RFID (Radio Frequency Identification) technology in its stores. By tagging each garment with a unique RFID chip, Zara is able to track inventory in real-time, ensuring that popular items are always in stock and reducing the risk of overstocking. This not only improves operational efficiency but also enhances the overall shopping experience for customers, as they can easily find the items they desire.

Furthermore, Zara has embraced the concept of "fast fashion" and leveraged technology to enable rapid production and delivery of new designs. Through the use of advanced manufacturing techniques , such as 3D printing and automated sewing machines, Zara is able to quickly bring new designs from concept to store shelves. This agile approach to fashion allows Zara to respond swiftly to changing trends and customer demands, staying ahead of its competitors.

In addition to technological advancements, Zara is also committed to sustainable practices. The brand actively seeks ways to reduce its environmental impact, from using organic and recycled materials to implementing energy-efficient processes. Zara's commitment to sustainability extends beyond its production processes and materials. The brand also encourages customers to participate in its recycling program, where old garments can be returned and repurposed, reducing textile waste and promoting a circular economy.

Moreover, Zara's customer-centric strategies have been instrumental in establishing a loyal customer base. The brand employs various tactics, such as personalized marketing campaigns and responsive customer service, to ensure that it meets the individual needs and preferences of its customers. By leveraging data analytics and customer insights, Zara can tailor its offerings to specific target segments, delivering personalized recommendations and promotions. This personalized approach not only enhances the shopping experience but also fosters a sense of loyalty and connection with the brand.

Furthermore, Zara has embraced the concept of "omnichannel retailing," seamlessly integrating its online and offline channels. Customers can browse and purchase items through the brand's website or mobile app, and have the option to pick up their orders in-store or have them delivered to their doorstep. This omnichannel approach provides customers with convenience and flexibility, allowing them to shop whenever and wherever they prefer. Zara's commitment to innovation in this area is evident in its investment in state-of-the-art e-commerce platforms and logistics systems, ensuring a seamless and efficient shopping experience across all channels.

In conclusion, innovation is at the core of Zara's business model. Through technological advancements, sustainable practices, and customer-centric strategies, Zara continues to stay ahead of the curve in the fast-paced fashion industry. By embracing innovation, Zara not only enhances its operational efficiency but also delivers exceptional shopping experiences to its customers, solidifying its position as a leader in the global fashion market.

Challenges and Opportunities in Zara's Business Model

While Zara's business model has proven successful, the company also faces its fair share of challenges. Adapting to market changes is paramount for Zara to stay relevant. With consumer preferences constantly evolving, the brand must continuously monitor trends and adapt its designs and strategies accordingly. This adaptability is crucial to remaining ahead of the curve in the fiercely competitive fashion industry.

Maintaining a competitive advantage is another challenge Zara must navigate. As other retailers strive to replicate its fast-fashion model, Zara must continuously innovate to stay ahead. By investing in research and development, exploring new markets, and nurturing talent, Zara can reinforce its position as a market leader and fend off competition.

One of the key opportunities for Zara lies in its ability to leverage technology. With the rise of e-commerce and the increasing popularity of online shopping, Zara can tap into this digital landscape to reach a wider customer base. By investing in a seamless online shopping experience, Zara can attract and retain tech-savvy customers who value convenience and accessibility.

Furthermore, Zara can capitalize on the growing demand for sustainable fashion. As consumers become more conscious of the environmental impact of the fashion industry, Zara can position itself as a leader in sustainable practices. By implementing eco-friendly manufacturing processes, using ethically sourced materials, and promoting recycling initiatives, Zara can appeal to the growing segment of environmentally conscious consumers.

Looking ahead, Zara's business model presents significant growth prospects. The emerging markets offer untapped potential, providing an opportunity for expansion and further market penetration. By strategically analyzing these markets and tailoring their offerings to local preferences, Zara can continue its trajectory of growth and success.

Moreover, Zara can explore collaborations with influential fashion designers and celebrities to create limited-edition collections. This strategy can generate buzz and excitement among fashion enthusiasts, driving foot traffic to Zara stores and boosting online sales. By partnering with renowned names in the industry, Zara can enhance its brand image and attract a wider audience.

In conclusion, Zara's unique business model and revenue streams have propelled it to the forefront of the fashion industry. Whether through its fast-fashion approach, in-house capabilities, or innovative practices, Zara has consistently demonstrated its ability to meet the demands of a dynamic marketplace. By embracing challenges, adapting to change, and remaining customer-centric, Zara has positioned itself as a trailblazer in the world of fashion retail.

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Analysing Zara’s business model

Zara’s parent company Inditex has created one the best business model in apparel and over the last few years has regularly delivered double-digit earnings growth. In this article I attempt to deconstruct Zara’s business model into its main parts:

Who is the customer?

Zara’s target market is young, price-conscious, and highly sensitive to the latest fashion trends. They have an advantage over traditional retailers because they do not define their target by segmenting ages and lifestyles giving them a much broader market.

They segment their product line by women’s (60%), men’s (25%) and the fast growing children’s (15%) department.

Zara started operations in Spain in 1975, and now operates in 74 countries worldwide.

What is the value proposition?

Fashionable, affordable clothes.

Zara’s strategy is to offer cutting edge fashion at affordable prices by following fashion and identifying which styles are “hot”, and quickly getting the latest styles into stores. They can move from identifying a trend to having clothes ready for sale within 30 days (where as most retailers take 4-12 months). This is made possible by controlling almost the whole garment supply chain from design to retail.

Large choice of styles

Zara produces around 12,000 styles per year (compared to the retail average of 3,000), which means that fresh fashion trends reach the stores quickly. A typical Zara’s customer visits the store 17 times a year compared to the average of 3 times per year. This high number of styles also means that the commercial teams have more chances to find a winning style.

By reducing the manufactured quantity of each style, Zara creates artificial scarcity and lowers the risk of having stock it cannot sell.

Scarcity in fashion increases desirability, which means shoppers need to buy quickly as the item may not be available next week. Lower quantities also mean there are not much to be disposed when the season ends; Zara only discounts 18% of its stock in sales, which is half the industry average.

Prime locations

Zara spends relatively little on advertising (0.3% of revenue) compared with traditional retailers (3-5%), instead they reach their target market by locating their stores in prime town-centre locations.

How do they deliver it?

Most retailers outsource production to low-cost Asian countries. In contrast Zara is vertically integrated with the majority of production carried out in owned or closely controlled facilities in Spain. This gives a lot more flexibility and speed however it means higher costs.

Stores place orders twice per week and the supply of finished goods is matched to store demand. Production is then increased or decreased in the flexible production facilities. Demand based production means there is very little inventory in Zara’s supply chain, which results in much lower working capital requirements.

Deliveries typically arrive one to two days after ordering with most deliveries arriving by truck from the Spanish factories. Clothes are then put straight onto the sales floor and are available to purchase.

Business model risks

Just-in-time manufacturing relies heavily on production in Northern Spain. Any weather, labour or terrorist disruption to the area will have a serious impact to sales, as there are no alternative supply centres in Europe.

As production is carried out in Spain where average wages are higher than low-cost Asian countries so factory wage costs will be higher than competitors, which will affect margins.

Zara is also vulnerable to financial vulnerabilities in the Euro as most of its cost-base is denominated in Euros.

Finally increased oil prices will affect profits as twice-weekly deliveries means higher transportation costs.

13 thoughts on “ Analysing Zara’s business model ”

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Hi, great article however where did you get your pieces of information? Such as percentage of Zara customer gender’s and how many times the typical Zara customer visits the store. What are the sources of these?

Would really help with my dissertation for university. Thank you 🙂

Thanks Laura. The sources were from a Harvard Business Review case study that we found.

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Hi, is there any chance you could provide the title of the Harvard Business Review Case Study? I am hoping it can help with my University project on Zara’s segmentation strategy.

Sure James. It is called ZARA: Fast Fashion – https://hbr.org/product/zara-fast-fashion/703497-PDF-ENG

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Zara’s ‘Fast Fashion’ Business Model

In honor of New York Fashion Week, KWHS explores the business model of one of the world's most successful fashion retailers. … Read More

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A few weeks back, the publication Business Insider ran a story that had two intriguing themes: money and mystery. The headline: “Inside the World of Amancio Ortega, a Spanish Billionaire You’ve Probably Never Heard of Who Is Actually Europe’s Richest Man.” Who is this magnate whose net worth of more than $65 billion tops even Berkshire Hathaway’s Warren Buffett? He is the founder of Zara, a worldwide seller of clothing that has been described as a company that is “changing retail forever.”

From a business perspective, that is truly saying something. Of course, teens like Leticia Sáez Viadero, a third-year student at the Colegio San Agustin secondary school in Santander, Spain, are fans of Zara less for its business strategy and more for its fashion appeal. Sáez Viadero, who is 15, likes to shop at Zara with her mom because the store gets new merchandise every two weeks. “When you go to Zara, you know you’re always going to find something. You don’t go home empty-handed,” says Sáez Viadero. These days, she goes to Zara whenever she needs to buy birthday presents for friends. Most of them like clothes – especially from Zara.

Still, Sáez Viadero is curious about why and how Zara is transforming the world of retail. To better understand the business behind the fashion, she needs to consider a key business concept that helps drive success at companies like Zara: the business model . A business model, offers Sáez Viadero, refers to “a business that is very well organized [to serve its customers], and establishes the standard [for quality] within the industry .” She is correct in thinking that companies with a business model, especially in retail, have a plan that takes their customers’ needs into consideration. What’s more, a business model is the strategy that a company uses to generate revenue and make a profit from operations . In other words, a strong business model will help a company use the resources it has to make money.

Zara’s business model – which retail analysts say has to do with two fundamental strategies: stocking less merchandise and updating its collections often – seems to be working. Since it was founded in 1975 in the city of Coruña in northeast Spain, Zara has managed to win over new customers of practically ever age on every continent around the world. Nowadays, the chain operates a network of more than 2,000 retail outlets in 88 markets located in the central shopping districts of large cities.

Zara has revolutionized the world of fashion by bringing out a large number of collections each season, instead of the same old two collections every year – one for spring-summer, and another for fall-winter – which has been the norm in the fashion industry. Zara has, in effect, set the standard for the fashion sector because it manages to “design, produce, distribute and sell its collections in [only] four weeks; a record-brief period if you take into account that its competitors take several months to complete this same process,” notes José Luis Nueno, professor of commercial management at the IESE Business School in Spain.

The key to the process lies in Zara’s skill at tuning into the personal tastes of its customers so that it can give them what they want even before they ask for it. To do that, more than 200 designers located at the company’s central headquarters in Spain constantly collect information about the decisions made by consumers in each of the chain’s stores. They also probe the latest trends, which their own scouts observe in the streets and malls around the world, for inspiration when they are designing their latest creations. Beyond the process of design, the production and logistics of Zara’s products also take place inside the company. The advantage of that approach is that it gives Zara a lot of flexibility to adapt to the changing tastes of fashion consumers.

In reality, Zara is all about timing. Its products wind up on the shelves and clothing racks of its shops because Zara produces them by itself and only continues to manufacture those products that sell the best within its stores. As a result, “customers of Zara know that if they like a garment, they have to buy it right away, because it can go out of stock and never come back,” says Nueno. Sáez Viadero is well aware of that fact, so she likes to go shopping “quite frequently, in order to look at the newest items.” She does that in an effort to differentiate herself from others in a world of fashion that is becoming more and more uniform and globalized. “I look for something different, so I don’t have the same clothing as the rest of the girls my age; that’s because all fashions are generally quite similar.”

Another one of Zara’s business-model strengths is that it has limited production seasons and a high turnover of products; they change every 15 days. So Zara manages to save on its warehousing and inventory costs in every shop worldwide. Those sorts of savings are very important for any business, not just because of the savings themselves but because if the business knows pretty much which items it is going to sell, it manages to reduce its business risks. These days, Zara’s continued record of success is conveyed by its sales figures. In 2014 – the latest published figures – Zara’s sales reached 11.594 billion euros, or 13.073 billion [U.S.] dollars, an increase of 7% over the previous year.

The extraordinary thing about all this is that Zara’s success has been achieved without resorting to any advertising campaigns. To spread the word about the company, it depends on word of mouth and on its landmark retail outlets in high-end locations, such as Fifth Avenue in New York City, and Oxford Street in London. It depends a great deal on getting people to talk about its brand . When it comes to beating out the competition , Zara believes that it is vital to have your ears wide open to listen to the needs and perspectives of your consumers.

The greatest risk for Zara is that the products that it creates more quickly than other retailers do not find a market; that they do not fit in with shoppers’ current tastes. Nevertheless, Nueno stresses that the advantage that the company has is “its capacity for adaptation.” For example, he explains that “before getting into a market, [Zara] analyzes the tastes of people, along with current trends, and adapts the fundamentals of its style to each country.” This approach has enabled Zara to become a winner in the Near East (Western Asian countries like Armenia, Iran and Iraq), where it has adapted its offerings to a different culture, in which long skirts and luxurious garments are appealing.

Nowadays, it seems that none of its main competitors – the manufacturers of so-called ‘fast fashion’ items that are quickly designed and sold mainstream from the latest high-fashion trends — including Sweden’s H&M, Spain’s Mango and America’s The Gap – have a more flexible and efficient model than Zara when it comes to offering the latest in fashion, at the lowest possible price, and in the shortest possible time. How long will that last? The crowded world of retail can be fickle. Zara will no doubt continue to assess its business model and, if needed, adjust it to meet the changing needs of its customers.

Related Links

• New York Times: How Zara Grew into the World’s Largest Fashion Retailer
• Business Insider: Inside the World of Amancio Ortega
• New York Fashion Week Live
• Inc.: How to Know When to Change Your Business Model
• NPR: In Trendy World of Fast Fashion, Styles Aren’t Made to Last

Conversation Starters

What is a business model? How does Zara’s business model set it apart from other retail competitors?

Zara does not use advertising to promote its brand, which is uncommon in the retail world. How, then, might it get people to “talk about its brand?”

Think about your favorite restaurant or retail store. What is that company’s business model? What are some aspects of the business that set it apart? Now research the actual business model for that company. What did you learn?

4 comments on “ Zara’s ‘Fast Fashion’ Business Model ”

I believe that this is such a creative way for the company to go about budgeting. They are able to keep the public’s attention with ever changing clothes, while still keeping the money the intake as #1. Even though they don’t use advertisement, they still must get people’s attention via deals. Fashion is heavily communicated through word of mouth, as people constantly ask about where they shop at or where they found a certain article of clothing. With Zara constantly updating, their newest pieces would constantly be in the spotlight.

Zara definitely implements a wise business model “Fast Fashion”. What I am more interested in is the idea behind the model. Instead of following the trend, they are actually creating a trend. This is not only about inventing a new business strategy, but also showing the company’s objective. This novel idea demonstrates that Zara does not only want to be the top, but also the unique one. Its perseverance and determination are the elements that truly make the company successful.

It has been four years since the publication of this article, and now more than ever topics such as sustainability are concerning the world. It’s estimated by Forbes’ study “The State of Consumer Spending: Gen Z Shoppers Demand Sustainable Retail,” that about 62% of Generation Z that’s entering the work force this year prefer to buy from sustainable brands in comparison with their parents, Generation X, 34% result. This information regarding the change of paradigms that generations are going through right now, should make INDITEX (Zara’s owner firm) to reconsider their business model approach in order to still be the top of mind for Generation Z.

Based on their business model, they should definitely aim to maintain the quick response and creation of fashion trends, but also find a better way of handling the production of scrap and unsold stock resultant of this high product turnover. An innovative possible solution would be the implementation of an online pre-order retail system. This strategy would Zara to keep designing new clothes every two weeks, but will encourage them to only produce the items that they will actually sell. The weakest point of this strategy would be that Zara’s competition will be able to see the designs they’ll offer, and will have the possibility of copying and distributing them before they do. On the counter part, each day eCommerce is growing more and more, being an enormous opportunity area for Zara.

In conclusion, Zara should maintain its business model essence, but redirect it towards a more environmental-friendly in order to keep being competitive brand in the retail industry. As Mia Hamm once said, “it is more difficult stay on the top than to get there”.

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Business Model of Zara: The Fast Fashion Retail Leader

Roshni Tamta

Zara is a Spanish fashion retailer with headquarters in Arteixo, Galicia. Apparel, jewelry, footwear, swimsuits, grooming, and fragrances are among the company's products, which include fast fashion. It is the biggest business in the Inditex group, which is the largest garment retailer on the planet. Zara is one of the most popular retail clothing brands in the world, if not the most popular. It strives to foster a sustainable enthusiasm for fashion across a broad range of customers, distributed across many regions and different ages, with its stunning debut of the notion of "quick fashion" shopping since its founding in 1975 in Spain.

Zara - History Zara - Products Zara - Business Model Conclusion FAQs

Zara - History

Amancio Ortega and Rosalia Mera launched Zara, the world's most famous fashion retail firm , in 1975 in Spain with a capital of 30 Euros. They intended to call their store Zorba after the movie Zorba, but there was also a pub with that name on the same street. As a result, they chose Zara because having two Zobra within the same neighborhood would only create confusion. Zara used to sell low-cost knockoffs of famous, high-end apparel and style in the beginning.

Zara's strategy for fashion and operating model gained popularity with Spanish customers during the next eight years. As a result, nine additional outlets have opened in Spain's major cities.

Inditex was founded in 1985 as a trading corporation, laying the groundwork for a supply system responding fast to changing market trends. Ortega coined the term "instant fashion" to describe a revolutionary design, manufacturing, and distribution approach that could shorten lead times and respond to new styles more quickly. This was fueled by significant expenditures on computer technology and the use of organizations rather than solo artists for the essential "design" component.

Zara - Products

• Men’s Clothing
• Women’s Clothing
• Children’s Clothing (Zara Kids)
• Accessories

Zara - Business Model

Zara's business strategy is precisely designed, effectively incorporating all of the aspects that leads to the improvement of this global undertaking. There really is no single commercial operation that is directly liable for this company’s success. Joint venture, growth strategy, efficient supply chain management, and other unconventional actions and ideas all contribute to the growth of this kind.

The firm is known for its expertise in promptly providing fresh merchandise to stores. Zara uses a tight program in order to accomplish this. Supervisors buy goods twice per week at specified times, and fresh clothes come twice a week on schedule. Zara's success is built on this ethic.

Fast Fashion is one of Zara's main concepts. The concept of a fast manner is comparable to that of FMCG (Fast-moving Consumer Goods) . Fast fashion is typically employed to appeal to a younger and middle-aged demographic. This type of clothing does not go out of trend; rather, it runs out of stock. The quick fashion cycle is basic to comprehend. A young individual purchases a simple set of clothes that can be used 6-8 times before the material begins to fray. It causes the person to buy new clothes, which leads them back to that place, and the cycle repeats. The foregoing are some of the primary strategies of Zara:-

1. Vertical Integration is the key Vertical integration is a value or supply chain control method in which a corporation owns or manages its manufacturers, resellers, or store outlets . Industry profits from vertical integration because it allows them to regulate operations, cut costs, and enhance efficiencies. Vertical integration, on the other hand, has drawbacks, such as the considerable financial expenditure necessary.

Zara's vertically integrated supply chain allows it to maintain direct oversight while also providing speed and flexibility to their clients. Zara employs cutting-edge techniques to ensure that they can quickly bring new concepts to market that are exactly what clients want, whenever they want it.

2. Centralization Zara has a profound, consistent, and swift pace that revolves around quick shop delivery. Every Zara store places two orders per week on particular days. Carriers depart at precise times, and supplies reach at particular times in shops. When clothes arrive at their destination, they are already labelled and priced, making them ready to sell right away.

Because of this well-established pattern, every employee in the production process – from design through sourcing, manufacturing, transportation, and retail – is aware of the timing and how their actions affect other departments. This applies perfectly to Zara buyers, who exactly know when to go shopping for brand new clothes.

Zara's dependence on centralized order fulfilment allows businesses to run extremely efficient operations, from early strategy to execution to shops. Further illustration as to why continuous improvement and supply chain management are crucial to revenue and scalability is the business's strategy.

3. Inventory management Zara can supply more frequently and in limited volumes during the season because of the fast turnover from manufacturing plants adjacent to its marketing headquarters in Spain. If Zara's swiftly created style in an effort to follow the current fashion fails to sell successfully, there is little harm done. Because the amount is low, there aren't a lot of unsold copies to get rid of. And, since this failed experiment was short-lived, there may still be time to attempt another style, and then another.

Zara prides itself on remaining on top of the latest trends and radiating an upscale vibe, but its production process is the real show-stealer. These industry-leading procedures elevate it from a mere clothing store to a market leader in fast fashion executed well. Zara excels at guaranteeing that everything goes as planned, as it has more control over its production and business network than most of its competitors. Zara's main strategy is to diversify through various vertical integrations in order to develop.

Where does Zara get their clothes made?

Zara manufactures its most fashionable items in Spain, Portugal and Turkey.

Where is the biggest Zara store in the world?

The biggest Zara store is in Madrid, Spain.

What is Zara most famous for?

It is most famous for its Fast Fashion.

Who are the founders of Zara?

Amancio Ortega and Rosalia Mera are the founders of Zara.

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Top 8 Business Model Canvas Examples in 2024

Published: 03 January, 2024

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Innovation experts agree that the Business Model Canvas is the best tool for understanding the intricacies of how a business functions. That makes understanding how to use the Business Model Canvas a top priority for anyone looking to spur the growth of their current business or plan the beginning of a new one.

The Business Model Canvas (BMC) Serves as a visual and comprehensive snapshot of an organization’s entire business model, the BMC facilitates a holistic understanding of how different components interact. We provide   business model strategy service   as a catalyst for fostering innovation and adaptability within the  Business Model Canvas.

At our organization, we recognize the pivotal role of the BMC and go beyond its representation by offering specialized business model strategy services. By integrating our business model strategy services with the BMC, we empower organizations to navigate the dynamic business landscape with resilience, ensuring their models are not only robust but also adaptable to change. As an initial step to assist businesses in selecting tailored services that align with their specific needs and objectives for innovation, we offer an   Innovation Blueprint   to evaluate current innovation practices.

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In this article, we discuss the various pieces of the Business Model Template and how they can be used to reflect on a company’s advantages and potential challenges. We’ve also included some sample templates completed to match the business models of some well-known, successful companies.

Business Model Canvas

The Business Model Canvas serves as a strategic management and entrepreneurial tool, enabling the description, design, challenge, invention, and potential pivot of your business model. Derived from the bestselling management book, Business Model Generation, this methodology finds application in leading organizations and start-ups globally.

The Business Model Canvas consists of nine essential building blocks that collectively shape a comprehensive view of a business model. It starts with identifying the target “Customer Segments” and defining the unique “Value Propositions” that cater to their needs. The “distribution Channels” through which these propositions are delivered are detailed, accompanied by a description of the type of “Customer Relationships” established. “Revenue Streams” elucidate how the company generates income, while “Key Resources” and “Key Activities” outline critical assets and operations. “Key Partnerships” acknowledge external collaborations contributing to the business, and the “Cost Structure” delineates the associated expenses. This visual framework provides a holistic and structured approach for entrepreneurs and business leaders to strategize, communicate, and refine their business models efficiently.

For a comprehensive exploration of the Business Model Canvas (BMC), delve into our book, “ How to Create Innovation. “ This resource not only provides detailed insights into the intricacies of the Business Model Canvas but also offers practical guidance on leveraging this powerful tool to foster innovation within your business. Whether you’re a seasoned entrepreneur or just starting, our book equips you with the knowledge and strategies to effectively employ the Business Model Canvas for sustained innovation and success in today’s dynamic business landscape.

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Real-Life Business Model Canvas Examples

The general public doesn’t have access to major companies’ official Business Model Canvas , of course, but it can be beneficial to consider how representatives from those companies might complete one.

You may consider completing an entire Business Model Canvas for a company of your choosing as practice for completing your own. Another exercise to consider is completing two canvases for two different companies, one that’s been successful and one that failed. Listed below are four famous companies and a discussion of how some sections of a Business Model Canvas might be completed for each.

Example (1): Apple

At the simplest level, Apple is dedicated to selling its products – computers, iPhones, etc. – and its services. Most of their revenue comes from phone sales.

But most tech-savvy people understand that Apple’s brand placement is vital to the company’s success. They’ve positioned their products as desirable, fashionable, and cutting-edge. Keeping their products connected to “cool” is important to their overall business model.

Example (2): Airbnb

Airbnb generates revenue by facilitating a service that lets people access another service. The company’s money comes a little from the host and a little more from the guest. The platform connecting the two different groups is the entire business, which means their technology infrastructure is vital to their operations.

Example (3): Uber Business Model Canvas

Like Airbnb, Uber uses the platform service model to connect customers to providers, in this case, drivers. Their technology infrastructure makes their business operations possible.

In both platform service examples, both companies can look to their technology to expand their products and services. They would both benefit from leveraging their massive rolls of service providers and customers to find new options to deliver revenue generation.

Example (4): Netflix Business Model Canvas

Netflix has always used a subscription-based business model, starting with physical DVDs and then transitioning to the streaming platform with which most of us are familiar. Recently, Netflix has begun to leverage its success as an entertainment distributor to try its hand at becoming an entertainment creator.

An important element of their business model is the customer experience. As such, improving and developing that experience attracts a lot of the company’s attention and resources.

Example (5): Amazon Business Model Canvas

By employing the Business Model Canvas, Amazon has created a dynamic and scalable business model that continuously evolves to meet changing market demands and technological advancements. This adaptability has contributed to Amazon’s success as one of the world’s leading e-commerce and technology companies.

• Amazon targets a diverse range of customer segments, including online shoppers, book lovers, tech enthusiasts, and businesses through its Amazon Business platform.
• Amazon provides a vast selection of products, competitive prices, fast and reliable delivery through Amazon Prime, and an efficient online shopping experience. Additionally, services like Amazon Web Services (AWS) offer cloud computing solutions.
• The primary distribution channel is the online platform (website and mobile app). Amazon also utilizes physical stores, Whole Foods Market, and third-party sellers to expand its reach.
• Amazon emphasizes customer-centricity by offering personalized recommendations, efficient customer service, and hassle-free returns. Prime membership fosters loyalty through exclusive benefits.
• Amazon generates revenue through various streams, including e-commerce sales, subscription fees from Prime memberships, fees from third-party sellers, and AWS cloud services.
• Key resources include the vast product catalogue, distribution centres, technology infrastructure, data analytics capabilities, and a global network of suppliers and sellers.
• Amazon engages in a range of activities, from e-commerce operations and logistics management to cloud computing services. Continuous innovation and technology development are integral to its operations.
• Amazon collaborates with various partners, including suppliers, third-party sellers, delivery services, and content providers. Partnerships enhance its product offerings and delivery capabilities.
• The major costs for Amazon include fulfilment and shipping, technology and content expenses, marketing, and administrative costs. Investments in technological infrastructure and innovation contribute to its cost structure.

Example (6): Tesla Business Model Canvas

Tesla’s business model is characterized by innovation, sustainability, and a direct-to-consumer approach. The company has disrupted the automotive industry by combining electric vehicles with cutting-edge technology and autonomous driving capabilities. Its success is evident not only in vehicle sales but also in its impact on shaping the future of sustainable transportation and energy.

• Tesla targets environmentally conscious consumers, tech enthusiasts, and luxury car buyers looking for high-performance electric vehicles.
• Tesla’s value proposition includes electric vehicles with cutting-edge technology, long-range capabilities, sustainability, and performance. The Autopilot feature adds an innovative aspect.
• Tesla primarily sells through its online platform, Tesla stores, and galleries. Additionally, it uses showrooms and service centers for customer engagement.
• Tesla fosters direct relationships with customers through online sales, personalized customer support, and community engagement. The brand encourages customer loyalty through continuous updates and improvements.
• The main revenue streams come from the sales of electric vehicles, energy products (solar panels and Powerwall), and Full Self-Driving (FSD) software subscriptions.
• Tesla’s key resources include manufacturing facilities (Gigafactories), a network of Supercharger stations, technological expertise, and a strong brand image.
• Manufacturing electric vehicles, developing software and hardware for autonomous driving, and continuous innovation in battery technology are key activities for Tesla.
• Tesla collaborates with suppliers for components, charging network partners for Supercharger stations, and has partnerships with other automotive manufacturers for regulatory credit trading.
• The major costs include research and development for new technologies, manufacturing expenses, sales and marketing, and the maintenance of the Supercharger network.

Example (7): Google Business Model Canvas

Google’s business model stands out for delivering complimentary, user-focused services while utilizing targeted advertising as its central monetization approach. With its dominance in the online search sector, a varied product portfolio, and well-planned acquisitions, Google solidifies its position as a leading technology behemoth with a worldwide impact.

• Google caters to a diverse set of customer segments, encompassing everyday internet users seeking information, businesses in search of advertising solutions, and developers leveraging Google’s APIs and platforms.
• Google’s value propositions revolve around delivering an intuitive search engine, a suite of productivity tools (G Suite), advertising platforms (Google Ads), and a wide array of internet-related services.
• The primary channel is the Google search engine, complemented by platforms like YouTube, Android, and its expansive advertising network, collectively ensuring broad user outreach.
• Google cultivates customer relationships by offering widely-used and free products such as Search, Gmail, and Maps. For businesses, it extends customer support for advertising solutions and cloud services.
• The primary revenue source for Google is advertising, encompassing pay-per-click ads on its search engine, display advertising across platforms, and subscription-based services like G Suite and YouTube Premium.
• Essential resources include sophisticated search algorithms, extensive data centres, a robust technology infrastructure, software development expertise, and a substantial team of skilled professionals.
• Google’s key activities involve continuous refinement of its search algorithms, technological innovation (e.g., artificial intelligence), provision of cloud services, and expansion of its advertising ecosystem.
• Google collaborates with businesses and websites through its advertising network, forms partnerships with device manufacturers for Android, and engages in strategic alliances, particularly in the realm of cloud computing.
• Major costs for Google encompass research and development, the maintenance of data centres, marketing efforts, and investments in acquiring traffic through partnerships. The company consistently allocates significant resources to innovation and technology advancement.

Example (8): Zara Business Model Canvas

Zara’s business model is defined by its capacity to swiftly transform runway trends into affordable, ready-to-wear fashion. The brand’s vertically integrated supply chain, efficient production practices, and commitment to in-store experiences contribute significantly to its triumph in the competitive fashion landscape.

• Zara predominantly caters to fashion-savvy consumers seeking stylish and budget-friendly clothing, spanning across men, women, and children.
• Zara’s value proposition centres on fast fashion, delivering the latest trends at affordable prices. The brand distinguishes itself by swiftly bringing new designs from concept to store shelves.
• Zara’s distribution channels encompass an extensive network of physical stores globally, complemented by an online platform for e-commerce, providing customers with both offline and online shopping options.
• Zara nurtures customer relationships through immersive in-store experiences, personalized shopping interactions, and responsive customer service. The brand encourages repeat visits by frequently refreshing its inventory.
• Zara derives its primary revenue from the sale of fashionable products. Its fast fashion model encourages regular consumer purchases by rapidly introducing and cycling through new styles.
• Key resources for Zara include its creative design team, efficient production facilities, a well-structured supply chain, and an expansive network of retail stores.
• Zara’s pivotal activities encompass the design, manufacturing, and distribution of fashion products. The brand’s emphasis on a nimble and responsive production cycle ensures it stays agile in the ever-evolving world of fashion trends.
• Zara collaborates closely with suppliers, manufacturers, and logistics partners to optimize its supply chain. Additionally, the brand engages in strategic partnerships for exclusive collections or joint ventures.
• Major costs for Zara include raw materials, manufacturing processes, distribution logistics, and marketing endeavors. The brand strategically invests in maintaining an agile and responsive supply chain.

Steps to Draft Your Own Business Model Canvas

“A love for bad drafts” is one of Digital Leadership’s most important principles. Most people find it easy to criticize a draft, but they often struggle to come up with a draft in the first place and are afraid to share it until they think it is really “finished.”  Our “love for bad drafts,” therefore, has the goal of getting to a first version very quickly, which then allows iteration. Depending on the complexity of the task, we typically allow between 20 minutes and 2 hours to come up with an initial version. Then, improving the “bad draft” is easy, and a cycle of iteration begins.

Step One: Define the Business’s Purpose

Begin with your overall business purpose (Reason) for existing. Don’t worry about reaching people yet, and don’t worry about making money. Think big and broad. What will you champion?

Related: Identifying your Business Purpose | Why are you even here?

Step Two: Define Customers and the Value Proposition

List your ideal customers: who are they and what do they need? In your Value Proposition Canvas , sketch out how your business’s services and products will impact your customers’ lives. How are you going to make something easier or meet their needs in a new way?

Step Three: Define the Experience You Provide

Consider how your customers will perceive interacting with your company. List where and how customers will find you and use what you’re offering. What overall feeling are you hoping your customers get by experiencing your products and services?

Step Four: Define Key Resources and Partners

Move into drafting a list of the materials and vendors you’ll rely upon for your operations. You probably will already be recognizing which resources you need for your core operations. What can be trimmed away? What is too important to leave to someone else?

Related Articles:

• Key Resources Building Block in Business Model Canvas
• Key Partners Building Block of the Business Model Canvas

Step Five: Track the Money Coming in and Going Out

Before completing any leftover sections of your canvas, consider where you’ll generate revenue and where you’ll incur costs. Don’t forget: not all revenue streams are money (and neither are all costs!). How is your revenue collected? What are the plans for developing repeating income?

Overview of Business Model Canvas Building Blocks

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You can now access the complete Business Model Canvas Package, including a full presentation, related models and instructions for use.

The UNITE Business Model Canvas

The Business Model Canvas is a complex diagram of all the different pieces of your company, but that complexity is deliberate. It pushes you to consider elements and areas of your business that often go unnoticed until it’s too late.

Below are the building blocks you’ll find in the Business Model Canvas, along with the sub-sections within each one.

(1) Operating Model

The concept of an Operating Model Canvas was originally developed by Andrew Campbell and his colleagues. We have developed an iteration of it that will consider additional aspects and that is more geared towards innovation. If you want to learn more on the topic, please consider their book entitled Operating Model Canvas .

Download the Complete Value Proposition Canvas Package, including instructions for putting it to work for you today.

The UNITE Value Proposition Canvas

• Value Proposition: Here you list the value you bring to your customers, partners, and stakeholders. Consider individual customer segments and the products or services you offer to each of them.
• Product System: This section asks you to think about possible complementary products and services that you could offer that would enhance the value you provide. Think of the possibility of building an entire ecosystem that connects your company more deeply to customers while fending off competitors.

(3) Experience Model

The Experience Model defines the ways in which your customers experience your Value and Service Models. It is wise not to leave this to chance; experience often generates the bulk of the value, whether due to convenience (Netflix) or luxury (Rolex). The Experience Model covers your brand, customer relationships , customer engagement, and marketing.

• Brand: In this section, you describe your brand architecture and how a customer would experience your brand across everything you offer. Think about how you see yourself along with how others see you.
• Customer Relationships and Engagement: Describe the relationship you have with your customers and how they interact with your company. Think about options such as self-service, personal assistance, communities, or Single Points of Contact.
• Distribution Channels: List the ways you are currently reaching customers, along with the ways you wish you were reaching customers. Think about how much each channel costs, and where you can get the most return on your investments.

(4) Service Model

A Service Model defines the differentiating, core, and supporting services delivered by an organization. When working on your Service Model, think about your service strategy and your core competitive and differentiating services. Also consider Service-Level Agreements, service channels, and possible self-service.

(5) Cost Model

Your operations drive your efforts and thus costs. Once you understand your Value Chains, Key Resources , and Key Partners , it should be relatively easy to identify the key cost drivers and potential Opportunity Spaces for innovation. For any Business Model, managing costs is critical, but some Business Models are designed entirely around low-cost structures.

• Key Activities – Value Chain Building Block in Business Model Canvas
• Cost Structure in the Business Model Canvas

(6) Revenue Model

Revenue Streams outline how you earn money. In this section, consider the price you think customers are willing to pay for your products or services. Pricing can often be a source of differentiation! Pricing mechanisms can include auctioning, bargaining, fixed-list prices, market- or volume-dependent prices, or yield management.

A Business Model can also involve transactional revenues resulting from one-time customer payments (e.g., a sale) or recurring payments (e.g., a subscription). In the context of the Revenue Model , think also about any other benefits you may be getting. Not all value is monetary!

Related: Revenue Streams in Business Model Canvas

We find that the power of a Business Model Canvas lies in its ability to force us to re-vision how our business will work. Because a business has so many moving parts, it can be difficult to isolate and analyze each one. As a result, opportunities for development and innovation are easily overlooked. The Business Model Canvas ensures that you’re taking proper advantage of all your opportunities.

Related: Identifying Hidden Market Opportunities for Innovation through JTBD

Frequently Asked Questions

The Business Model Canvas helps you describe, challenge and innovate the Business Model of an organization, and it does this quite well, at least on a high level. When you design a Business Model, it is useful to lay out the assumptions or hypotheses that animate your business in a structured way. A Business Model Canvas helps you to do just that. The canvas helps you to easily understand your current Business Model, design a new one, see if you have missed anything important, and compare your model to others.

A Business Model clearly describes how a company will make money by bringing value to its customers. Typical Business Models include target markets, market needs, and how a company will meet those needs. Its purpose is to serve as a tool for quickly explaining how a business’s many pieces will successfully serve its customers’ needs.

When you analyze a business model, you should evaluate a number of things: How will the business generate income? How will the business solve a customer’s needs? Can solutions be delivered at acceptable costs? What resources are necessary for the business’s core activities? What happens to the business if circumstances change? A Business Model Canvas can help you analyze a business model because it clearly visualizes the answers to these important questions.

The UNITE Business Model Framework : A Framework for Innovation Success

How to Create Innovation  includes a number of canvases that focus on value creation and finding the right business model to meet your   customer segment and customer needs . The framework is built to inspire drastic changes that help you find a competitive advantage . Our hope is that your company grows through business model innovation, and so we again encourage you to look deeper into our website and the book.

Here is a summary of the key ingredients of the Business Model Framework:

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Business Model Canvas: Explained with Examples

Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas.

In this guide, you’ll have the Business Model Canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online.

What is a Business Model Canvas

A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.   

The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business.  

The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business.

The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers.

The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘ Business Model Generation ’ as a visual framework for planning, developing and testing the business model(s) of an organization.

What Are the Benefits of Using a Business Model Canvas

Why do you need a business model canvas? The answer is simple. The business model canvas offers several benefits for businesses and entrepreneurs. It is a valuable tool and provides a visual and structured approach to designing, analyzing, optimizing, and communicating your business model.

• The business model canvas provides a comprehensive overview of a business model’s essential aspects. The BMC provides a quick outline of the business model and is devoid of unnecessary details compared to the traditional business plan.
• The comprehensive overview also ensures that the team considers all required components of their business model and can identify gaps or areas for improvement.
• The BMC allows the team to have a holistic and shared understanding of the business model while enabling them to align and collaborate effectively.
• The visual nature of the business model canvas makes it easier to refer to and understand by anyone. The business model canvas combines all vital business model elements in a single, easy-to-understand canvas.
• The BMC can be considered a strategic analysis tool as it enables you to examine a business model’s strengths, weaknesses, opportunities, and challenges.
• It’s easier to edit and can be easily shared with employees and stakeholders.
• The BMC is a flexible and adaptable tool that can be updated and revised as the business evolves. Keep your business agile and responsive to market changes and customer needs.
• The business model canvas can be used by large corporations and startups with just a few employees.
• The business model canvas effectively facilitates discussions among team members, investors, partners, customers, and other stakeholders. It clarifies how different aspects of the business are related and ensures a shared understanding of the business model.
• You can use a BMC template to facilitate discussions and guide brainstorming brainstorming sessions to generate insights and ideas to refine the business model and make strategic decisions.
• The BMC is action-oriented, encouraging businesses to identify activities and initiatives to improve their business model to drive business growth.
• A business model canvas provides a structured approach for businesses to explore possibilities and experiment with new ideas. This encourages creativity and innovation, which in turn encourages team members to think outside the box.

How to Make a Business Model Canvas

Here’s a step-by-step guide on how to create a business canvas model.

Step 1: Gather your team and the required material Bring a team or a group of people from your company together to collaborate. It is better to bring in a diverse group to cover all aspects.

While you can create a business model canvas with whiteboards, sticky notes, and markers, using an online platform like Creately will ensure that your work can be accessed from anywhere, anytime. Create a workspace in Creately and provide editing/reviewing permission to start.

Step 2: Set the context Clearly define the purpose and the scope of what you want to map out and visualize in the business model canvas. Narrow down the business or idea you want to analyze with the team and its context.

Step 3: Draw the canvas Divide the workspace into nine equal sections to represent the nine building blocks of the business model canvas.

Step 4: Identify the key building blocks Label each section as customer segment, value proposition, channels, customer relationships, revenue streams, key resources, key activities, and cost structure.

Step 5: Fill in the canvas Work with your team to fill in each section of the canvas with relevant information. You can use data, keywords, diagrams, and more to represent ideas and concepts.

Step 6: Analyze and iterate Once your team has filled in the business model canvas, analyze the relationships to identify strengths, weaknesses, opportunities, and challenges. Discuss improvements and make adjustments as necessary.

Step 7: Finalize Finalize and use the model as a visual reference to communicate and align your business model with stakeholders. You can also use the model to make informed and strategic decisions and guide your business.

What are the Key Building Blocks of the Business Model Canvas?

There are nine building blocks in the business model canvas and they are:

Customer Segments

Customer relationships, revenue streams, key activities, key resources, key partners, cost structure.

• Value Proposition

When filling out a Business Model Canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise.  

Let’s look into what the 9 components of the BMC are in more detail.

These are the groups of people or companies that you are trying to target and sell your product or service to.

Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them.

After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments.

There are different customer segments a business model can target and they are;

• Mass market: A business model that focuses on mass markets doesn’t group its customers into segments. Instead, it focuses on the general population or a large group of people with similar needs. For example, a product like a phone.  
• Niche market: Here the focus is centered on a specific group of people with unique needs and traits. Here the value propositions, distribution channels, and customer relationships should be customized to meet their specific requirements. An example would be buyers of sports shoes.
• Segmented: Based on slightly different needs, there could be different groups within the main customer segment. Accordingly, you can create different value propositions, distribution channels, etc. to meet the different needs of these segments.
• Diversified: A diversified market segment includes customers with very different needs.
• Multi-sided markets: this includes interdependent customer segments. For example, a credit card company caters to both their credit card holders as well as merchants who accept those cards.

Use STP Model templates for segmenting your market and developing ideal marketing campaigns

Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation.

In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company.

There are several types of customer relationships

• Personal assistance: you interact with the customer in person or by email, through phone call or other means.
• Dedicated personal assistance: you assign a dedicated customer representative to an individual customer.  
• Self-service: here you maintain no relationship with the customer, but provides what the customer needs to help themselves.
• Automated services: this includes automated processes or machinery that helps customers perform services themselves.
• Communities: these include online communities where customers can help each other solve their own problems with regard to the product or service.
• Co-creation: here the company allows the customer to get involved in the designing or development of the product. For example, YouTube has given its users the opportunity to create content for its audience.

You can understand the kind of relationship your customer has with your company through a customer journey map . It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers.

This block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company.

Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support.

There are two types of channels

• Owned channels: company website, social media sites, in-house sales, etc.
• Partner channels: partner-owned websites, wholesale distribution, retail, etc.

Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions.  

A revenue stream can belong to one of the following revenue models,

• Transaction-based revenue: made from customers who make a one-time payment
• Recurring revenue: made from ongoing payments for continuing services or post-sale services

There are several ways you can generate revenue from

• Asset sales: by selling the rights of ownership for a product to a buyer
• Usage fee: by charging the customer for the use of its product or service
• Subscription fee: by charging the customer for using its product regularly and consistently
• Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset for a fixed period of time
• Licensing: customer pays to get permission to use the company’s intellectual property
• Brokerage fees: revenue generated by acting as an intermediary between two or more parties
• Advertising: by charging the customer to advertise a product, service or brand using company platforms

What are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work.

These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue.

There are 3 categories of key activities;

• Production: designing, manufacturing and delivering a product in significant quantities and/ or of superior quality.
• Problem-solving: finding new solutions to individual problems faced by customers.
• Platform/ network: Creating and maintaining platforms. For example, Microsoft provides a reliable operating system to support third-party software products.

This is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition.

There are several types of key resources and they are

• Human (employees)
• Financial (cash, lines of credit, etc.)
• Intellectual (brand, patents, IP, copyright)
• Physical (equipment, inventory, buildings)

Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources.

Types of partnerships are

• Strategic alliance: partnership between non-competitors
• Coopetition: strategic partnership between partners
• Joint ventures: partners developing a new business
• Buyer-supplier relationships: ensure reliable supplies

In this block, you identify all the costs associated with operating your business model.

You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners.  

Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer).

Value Propositions

This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment.

A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes.

Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design).

What to Avoid When Creating a Business Model Canvas

One thing to remember when creating a business model canvas is that it is a concise and focused document. It is designed to capture key elements of a business model and, as such, should not include detailed information. Some of the items to avoid include,

• Detailed financial projections such as revenue forecasts, cost breakdowns, and financial ratios. Revenue streams and cost structure should be represented at a high level, providing an overview rather than detailed projections.
• Detailed operational processes such as standard operating procedures of a business. The BMC focuses on the strategic and conceptual aspects.
• Comprehensive marketing or sales strategies. The business model canvas does not provide space for comprehensive marketing or sales strategies. These should be included in marketing or sales plans, which allow you to expand into more details.
• Legal or regulatory details such as intellectual property, licensing agreements, or compliance requirements. As these require more detailed and specialized attention, they are better suited to be addressed in separate legal or regulatory documents.
• Long-term strategic goals or vision statements. While the canvas helps to align the business model with the overall strategy, it should focus on the immediate and tangible aspects.
• Irrelevant or unnecessary information that does not directly relate to the business model. Including extra or unnecessary information can clutter the BMC and make it less effective in communicating the core elements.

What Are Your Thoughts on the Business Model Canvas?

Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate.

What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs About the Business Model Canvas

• Use clear and concise language
• Use visual-aids
• Customize for your audience
• Highlight key insights
• Be open to feedback and discussion

More Related Articles

Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

10 Business Model Canvas Examples You Should Never Miss

Published on May 26, 2023, updated on Mar 15, 2024

A business model canvas is a tool designed for the strategic management of your company. It is a visual representation of a company’s business plan, featuring various building blocks that describe all the elements that influence the brand’s operation. The term first appeared in 2005 by Alexander Osterwalder in his PhD work.

As you may understand, this is a very useful tool to maintain your startup’s vision to mind at all times. For instance, an example of business model canvas for food can help you recognize the items on the menu that are the best for your brand. Below, we will get into more details about the business model canvas and see some examples. Keep reading.

Business Model Canvas Components

However, before you start studying a business model canvas, it is important to understand its components. Since the its appearance in 2005, business model canvas consists of nine building blocks that go through all the company’s operations.

Once you get a good grasp of these nine components, you can start studying a business model canvas example of coffee shop or any other industry that interests you. Below, we will explain in more detail what these nine building blocks indicate:

• Key Activities – in this section, you must write down all the activities that make your value proposition possible. For example, one key activity for a business model canvas example of coffee shop would be to roast the beans.
• Key Resources – this is another section that refers to the infrastructure of the company. In reality, this component includes all the resources needed to produce what the business offers. In the previous example of the coffee shop, the key resources would include the coffee beans and the trained baristas.
• Key Partners – this network includes all the other businesses that the company has cultivated relationships with. This could be suppliers, manufacturers, and other service providers.
• Value Propositions – this component includes all the products and services that the business is offering to its customers. It is the main product they sell and the reason why customers will keep returning.
• Customer Segments – this section of the business model canvas examples explains the company’s intended audience. This is crucial to its success, regardless if it’s a startup or an older company.
• Channels – in this section of the diagram, you should write down all the channels that customers can use to reach your value proposition. In the example of business model canvas for food, the channels can be the actual restaurant or a food delivery app.
• Customer Relationships – this part in all business model canvas examples shows how a company plans to attract new customers, how to convert them to returning customers, and how to increase the revenue they get from them.
• Cost Structure – the component breaks down the business costs. Of course, you shouldn’t neglect the variable costs that might be different from month to month.
• Revenue Streams – as the name suggests, this section includes all the possible ways that the business becomes profitable.

10 Business Model Canvas Examples

Creating a business model canvas sample from scratch might seem like a daunting process at first. That’s why, you will find several examples below to get inspiration from, whether it’s an example of business model canvas for food or a business model canvas example of coffee shop.

1. Business Model Canvas of Coffee Shop

First of all, we will begin with a business model canvas example of coffee shop. This is one of the most straightforward business model canvas examples since a café is a business with a fairly limited scope. This means that you can easily keep track of the products offered in-store, as well as all the other key components.

As you can see in this example, the main value propositions of a café are the drinks and food on the menu, as well as the inviting ambiance. The rest of the canvas focuses on how the company’s processes boost these value propositions to contribute to the revenue streams.

2. Business Model Canvas for Food (McDonald’s)

An example of business model canvas for food can start comparatively small, just like the business model canvas example of coffee shop we have seen above. However, as the business expands, so does the business model canvas sample. This can easily be seen in the case of McDonald’s.

Here in this example, there is no longer a single restaurant, but a fast food chain. This means that its most profitable revenue streams are licensing and the restaurant locations since the organization has expanded all around the globe. Apart from that, this example of business model canvas for food needs to constantly change to meet the dietary requirements of its target audience. For instance, the addition of healthy items on the menu will approach a new customer segment that will boost McDonald’s existing revenue streams.

3. Business Model Canvas of Apple

Departing from the food industry, it is also important to see business model canvas examples from other industries. In this case, you can check and analyze Apple’s business model canvas sample.

The tech giant offers a powerful value proposition, which is a high-end smartphone, accompanied by numerous apps and accessories. These products attract tech enthusiasts that remain loyal to the brand. This creates an interesting loop that keeps on generating sales and profit for the company.

One interesting element that we didn’t see in the previous example of business model canvas for food is that Apple keeps the operational costs low by having control over its manufacturing partners. This allows the company to have and maintain a high profit margin over the years.

4. Business Model Canvas of Uber

Another business model canvas sample worth studying is that of Uber. When this company was first established it caused a stir in the industry. Therefore, it comes as no surprise that the organization has quickly become the giant it is today with a presence in countries all over the world.

The thing that distinguishes this diagram from the other business model canvas examples is that the value proposition and the customer segment contains two separate groups. If you take a look at these sections, you will notice that it tries to cater to both customers and drivers.

5. Business Model Canvas of Netflix

Netflix hasn’t always been the company that we know today. After launching its subscription-based platform, its business model canvas sample has also been modified significantly. Right now, the brand’s value proposition is to offer on-demand entertainment from anywhere and on any device.

An interesting element while studying this business model canvas is the company’s customer segment. While it states movie lovers, we know that Netflix has attracted an even wider audience due to its immense catalog. This fact increases its main revenue stream, which you can see that it is subscriptions.

6. Business Model Canvas of Google

Out of all the business model canvas examples, Google offers a distinct approach that we have also seen in Uber. That is the clear distinction between the company’s user segments. Each one of them seeks a different value proposition that generates a different revenue stream.

Another thing that is worth mentioning is that in this particular business model canvas the customer relationships and channels segments are empty. This is probably because one of Google’s main key partners is OEMs. This collaboration keeps on bringing more and more new users to the existing ones.

7. Business Model Canvas of Zara

The next business model canvas sample that we will take a look at is that of Zara. This brand is one of the biggest names in the fashion industry, being one of the top names in fast fashion. In fact, we can see that the business model has women, men, and children as its customer segment. This explains the wide range of clothing items that you can find in Zara stores.

One of the most interesting elements in this diagram that make it stand out from the rest is the key resources section. In this instance, we see that Zara lists as its main key resources the stock (which is expected), but also the large network of stores and the supply chain infrastructure. If you consider the speed that the brand is releasing new collections, it is easy to see why these elements are part of the brand’s resources.

8. Business Model Canvas of Tesla

Another business model canvas that you should seek inspiration from is that of Tesla. One of the distinctions that you will notice here is that this tech giant tries to attract a particular user segment. The green buyers are eco-conscious consumers that are willing to invest in new technologies that will be gentle to the environment. This is why Tesla’s key activities are super important. Electric power technologies are more sustainable compared to other vehicles. Moreover, the company has a strong research and development department that constantly tries to find improvements.

9. Business Model Canvas of Amazon

Taking a look at Amazon’s business model canvas, you will notice that it’s basically one that you would find in an online store. Of course, the business model canvas is much more expanded in Amazon’s case since it’s one of the biggest organizations in the world.

As we’ve seen in other cases, Amazon has multiple customer segments. In more detail, it aims to attract both retail customers and business partners. This is also apparent in its revenue streams that come from different sources.

10. Business Model Canvas of Airbnb

The final business model canvas example that we are going to take a look at is that of Airbnb. This is another brand that has two separate customer segments, the hosts and the travelers. The brand offers a platform where the two types of its customer can communicate and interact. The revenue comes from the commissions that Airbnb takes from each booking.

How to Draw a Business Model Canvas

All of the above business model canvas examples were created with Boardmix . This online whiteboard tool provides you with an infinite canvas to create any type of diagram you might need. In fact, the app gives you a variety of ready-made templates to make the task even easier, such as an example of business model canvas of coffee shop. And once you are ready, you can share your business model canvas sample via a sharing link. This way, all of your team gains access to it from any device.

The steps for designing a business model canvas sample with Boardmix are the following:

Step 1. Choose the business model canvas template from the template center.

Step 2. Identify the nine key components and divide them into the appropriate sections. The templates you will find at Boardmix already divide the board into the necessary building blocks.

Step 3. Create virtual post-it notes and place them on the most suitable component. In Boardmix, you can simply drag them around.

Step 4. Edit the business model canvas sample until it meets your requirements. Click Share to allow the rest of your team members to access it.

The Bottom Line

In this article, we have seen multiple business model canvas examples that will inspire you. No matter if your requirements are that of the example of business model canvas for food, the business model canvas example of coffee shop, or the business canvas model of Tesla, you will find creative ideas to implement to your own one. Then, you can create your Boardmix account to start designing a business model canvas, as well as a variety of other diagrams.

How to Make a Business Model Canvas: Methods and Tips

Amazon Business Model (2023) | How Does Amazon Make Money

Zara Business Model (2023) | How Does Zara Make Money