Unlocking The Future
In an era where technology is the lifeblood of innovation, digital business models have emerged as the driving force behind industry disruption and unprecedented growth. These models are not just transforming traditional businesses but they are redefining the very essence of commerce in the digital age. Welcome to a world where agility, scalability and customer centric strategies are the new norms and where the digital revolution is the catalyst for success.
Digital Business Models
Digital businesses have been growing the world over. All offline businesses
also want to move online. The problem is that an online business is not just
an offline business with a website or an app. A successful digital business
demands a clear understanding of digital business models and the digital
way of working.
Digital businesses can be of many types but generally the world over digital
business models fall into 6 broad categories.
- Ads
- Subscriptions
- Paid downloads
- Freemium
- E-commerce
- Uber for X
Ads
Most early internet businesses were ad supported and Google’s ad solutions
really helped such businesses. The reason was that initially, the internet did
not have online payments at scale. Ads are still a big business model for
media related businesses. Ad supported business is viable only when you can
garner an extremely large audience for your content. Once you have a large
audience for your online content you can monetize it through ads. Ads from ad networks can be shown for money or ads can be procured
directly from advertisers. Generally, direct procurement is possible only for
big advertisers and initially most businesses try to source ads from ads
networks. Google runs the most prominent ad network.
Subscription
Many online businesses are now shifting to subscription based business
models. Media businesses are especially exploring subscriptions in a big
way. I have been advising a big media company in India over the years for
their digital business and I have seen that subscriptions are a viable way to
run an online content business. Subscriptions can also be explored in areas
like gaming, EdTech, FinTech and so on. Amazon even allows you to subscribe for
items like detergent powder.
Software as a Service (SaaS) is a big business these days. Subscriptions are
one of the best business models and offer good long term revenue potential
once customers start liking the product.
Paid Downloads
Paid downloads is a popular business model in mobile applications and
games business. The Apple App Store offers rich opportunities to monetize
app downloads. Google Play is also now catching up with the Apple App
Store. In the initial days of the internet most people did not want to pay for
apps but this is now changing. People have become more habitual in paying
for online apps now.
Freemium
Many customers are initially apprehensive in downloading paid apps or
content. A good way to break the ice with such customers is to offer
freemium content. Freemium content means that you offer a part of the
product free and then the user must pay for getting access to the rest of the
product. Mobile games use the Freemium business model extensively. Media
companies these days use freemium extensively.
e-Commerce
e-Commerce is one of the earliest digital business models. Amazon has been
there practically since the start of the consumer internet. E-Commerce has
become big over the years and most countries now have entrenched big E-Commerce players. A big problem in E-Commerce is logistics cost and
complexity. Amazon and many other companies also offer their platforms for
selling goods to 3rd party merchants. This has also become a viable option
for selling E-Commerce stuff in many categories.
Uber For X
Ever since Uber succeeded many online businesses have started taking
inspiration from Uber in various offline business categories. Urban
company in India is one such startup that has been providing high quality
repairing and maintenance services for homes and offices. In this business
model, the main activity is done offline but the app or website acts as an
interface between the offline service provider and the customer. The app
provider also supports offline service providers through various helpful
services. The total user experience is better than pure offline vendors and
thus this business model is a win-win for all concerned if executed properly.
The choice of any of the above business models depends on your offering in
the market and careful business analysis. Generally, subscription is the most
profitable business model as it offers regular money. Also, you can mix and
match various business models.
A good example is Zoho which offers its software products as a subscription
service and allows free usage of some products up to certain limits. Thus,
this application uses subscriptions in conjunction with the Freemium
business model. Amazon allows you to subscribe to E-Commerce products.
Amazon Prime is also a good example of mixed business models. Media
companies these days mix ads, subscriptions and freemium business
models. Some of them also combine E-Commerce in their offerings.
Thus, any startup should not go by fixed notions of business models. It
should try to understand the various available options suitable for its
offerings and try to innovate within available choices. Google was a business
that became super successful due to its highly innovative business model initially. Google was able to give customers free search engine and in
parallel became the biggest ads company in the world. It was able to create such a big competitive advantage through its business model that no
the company has been able to challenge it in its core offering till now.
Conclusion
As we stand on the brink of a new digital frontier, the imperative for businesses to adapt and innovate has never been clearer. Digital business models are more than a competitive advantage, they are the blueprint for sustainable growth in the 21st century. By embracing digital transformation companies can unlock new revenue streams, enhance customer experiences and stay ahead in an ever evolving market place. The future belongs to those who are bold enough to leverage the power of digitalization and visionary enough to redefine their industries.
