Tips To Build The Right Retail Business Model
Retail is an ever-evolving industry. Retailers need to evolve and adapt through the different stages of evolution and change to continue to be relevant in the industry. This is where a retail business model ecosystem proves to be helpful.
What is an ecosystem?
According to the dictionary, any system of interconnecting and interacting parts is an ecosystem.
These days, businesses cannot depend on delivering just one product/service. A business blooms when they achieve the right mix of services and products that work altogether to satisfy the value of every customer. New and complementary services, when offered to existing customers, expand the ecosystem, and make a brand indispensable.
Now, how do you build the right business model and retail ecosystem for your retail business?
Based on an analysis of more than 100 successful and failed ecosystems, BCG finds there are six sequential questions that any retail business model or say ecosystem should address:
- What is the problem you need to solve?
Before you start building your ecosystem, you must be sure that the problem that your ecosystem is going to solve is well defined and clear. It should convince the partners to invest and participate. Next, you should ask yourself if an ecosystem is an answer. Ecosystems are a preferred business model for unpredictable, yet malleable business environments - such as retail.
It is also important to know what type of ecosystem you want to build - this depends on the purpose your ecosystem has to solve.
- Who should be a part of your retail ecosystem?
You should start mapping the blueprint of your ecosystem that shows the flow of goods, services, and money through the ecosystem. This should also define the roles of you and your partners and define the standards and rules that can be used in case of a conflict.
- What should your initial governance model be like? You need to answer three questions here:
1. Access: The partners who are allowed to participate in the ecosystem. The requirements that they will have to fulfill to get access to the platform and the resources.
2. Participation: The scope, detail, and strictness of rules. The partner in charge to distribute value amongst others.
3. Commitment: If partners are exclusive to you and your ecosystems or if they are allowed to invest and partner with others.
- How would you capture the value of your retail ecosystem?
The next step is to define the benefits of the ecosystem that it will create for its customers into value for its participants. This will also define whom and what you should charge. The right monetization strategy is designed where it does not curb the growth but encourages participation and partnerships. A good starting point might be to identify the participants with a high willingness to pay and charge them according to the net excess value that they receive from the ecosystem.
- How would you solve the unknown problems during the launch?
Many retail business models have failed during the launch phase because they cannot solve the unforeseeable problems of the participation of both buyers and sellers. They are not able to achieve the crucial mass to secure the plan.
To avoid such instances, you need to focus not on the number of partners, but on the right partners. Ecosystem growth is critically dependent on the selection of early partners and users. You can experience negative responses from attracting the wrong kind of users.
Launching a successful business ecosystem is a challenge that requires more than a strong initial design. It requires persistence and sometimes, the willingness to follow unconventional and creative approaches that might not seem to be financially sustainable at that time.
However, if you build an ecosystem, it needs to be viable in the long run, so your retail business model also has to have room for evolution.
- How would you guarantee the long-term viability of your retail ecosystem?
This is a way to future-proof your retail business. You need to be prepared for the scalability in demand and supply. Understand the scalability position of your ecosystem and adapt your design and strategy accordingly.
Building the right retail business model for your retail business is a complex, but a very critical job. The six points mentioned in the blog can help you build a well-designed retail ecosystem.
With Bech POS app, you get a ready-made retail business model ecosystem in an app with all the key aspects and partners needed for a retail store - Wholesalers, Logistic teams, Digitalization, etc. It makes the critical job of creating a retail ecosystem very easy -it is free, secure, and reliable. It enables you to leverage the power of technology and helps you to increase your reach, sales, and saves you a lot of time and effort. Download BECH for Android and IOS devices now!