We try to identify specific characteristics of Startup Business Models and identify some companies that use those Business models.
We look into different types of Business models and classify them according to their position in value chain:
| O | C | S | B | P |
| Owners | Creators | Sellers | Builders | Pricing Strategy |
| S No | Business Model | Description | Examples | ||
1 | Bricks And Clicks | Sell products via both the online and physical stores | Pizza Hut | s | |
| Dominos | |||||
| Apple | |||||
2 | Collective | Involves participation of a large number of likeminded professionals, traders related to each other by means or some other business interest. | Trade Associations | ||
| co-operatives | |||||
| Franchise | |||||
3 | Cutting out the Middleman | Cut out the middlemen in the value chain to pass on benefits to the consumers | Myntra | s | |
| Amazon | |||||
| Netflix | |||||
| Warby Parker | |||||
4 | Direct Sales | Producer directly meets and sells to the consumer | Tru Maker | s | |
| Stella & Dot | |||||
| Amway | |||||
| Tupperware | |||||
| Tesla Motors | |||||
5 | Franchise | Franchiser offers its business concept for expansion with the resources of franchisee whereas franchisee enjoys reduced risks and established brand and business processes | McDonald’s | s | |
| Pizza hut | |||||
| Starbucks | |||||
| Subway | |||||
| KFC | |||||
6 | Freemium | Offer some basic services for free and charge for the more advanced products | Flickr | s | |
| Dropbox | |||||
| Tinder | |||||
| Hulu | |||||
7 | Pay what you can | The consumers are free any renumeration for the service used as they desire | OpenBooks | s | |
| PRYDA | |||||
8 | Auction | Online auction where the highest bidder gets the product | E-Bay | s | |
| Rakuten | |||||
| Etsy | |||||
| NewEgg | |||||
10 | Reverse Auction | A setup where multiple sellers offer the same product at different but comparable prices to the consumer. | Squeezify | s | |
| MyHammer | |||||
| FedBid | |||||
| Priceline | |||||
| Amazon | |||||
11 | Premium | Offer high-end products and services appealing to targeted customers for high profits. (Basically charging for the brand value) | Rolex | s | |
| Gucci | |||||
| Chanel | |||||
| Louis Vitton | |||||
12 | Affiliate | Partner with other sellers to market or sell their products and earn a cut out of every succesful sale | Shopzilla | s | |
| BabyGizmo | |||||
| Gawker Media | |||||
| Groupon | |||||
13 | Subscription | Charge users a periodic fee for a range of services that may avail | Netflix | s | |
| Spotify | |||||
| Skillshare | |||||
| Skype | |||||
| Mailchimp | |||||
14 | Monoplistic | Create a monopoly in a particular product or market segment and use that advanrtage to drive revenue and profits | S | ||
| Youtube | |||||
| Monsanto | |||||
| Motion Picture Association of America | |||||
15 | Razor and Blades | Offer a basic product at a low profit or even a loss and earn majorly through the sale of complimentary products | Gillette | P | |
| HP Printers | |||||
| Sony | |||||
| Xerox | |||||
16 | Inverted Razor and Blades | Offer the basic product at a premium and the complimentary products at a lower cost | S | ||
17 | On Demand | Offer instantaneous but desired services to the user | Washio | S | |
| Spothero | |||||
| Postmates | |||||
| Glamsquads | |||||
| Uber | |||||
18 | Marketplace | Become a platform where buyers and sellers interact | AirBnB | S | |
| Amazon | |||||
| Flipkart | |||||
| Alibaba | |||||
| Snapdeal | |||||
19 | Middleman (Warby Parker Model) | Cut out the middlemen in the value chain to pass on benefits to the consumers | Warby Parker | S | |
| Casper | |||||
| Brideside | |||||
| audiside | |||||
| Scarosso | |||||
20 | Virtual Good | Sell ‘Virtual Goods’.Virtual goods are online only products users pay for normally in games or apps such as upgrades, points, gifts, or weapons. | Candy Crush | S | |
| Clash of Clans | |||||
| FarmVille | |||||
| WeeWorld | |||||
21 | Multi level Marketing | encourage the existing distributors to recruit new distributors by paying the existing distributors a percentage of their recruits’ sales | Avon | S/P | |
| Medifast | |||||
| Tupperware | |||||
| Young Living | |||||
| Sunrider | |||||
22 | Landlord | Owner of an asset charges the users for a temporary use of that asset | ZoomCar | O | |
23 | Advertising | Earn revenue by selling advertisement spots to other business on your platform | S | ||
24 | Pay As You Go | Charge users as per their usage of the service | Psonar | S | |
| Bharti airtel | |||||
| Vodafone | |||||
25 | Data | Earn revenue by analyzing or selling huge amounts of user data available with you. | S | ||
| Amazon | |||||
| Zomato | |||||
26 | Merchant | Wholesalers and retailers of goods and services sell directly to consumers online. | Amazon | S | |
| iTunes | |||||
| Zara | |||||
| Argos | |||||
27 | Brokerage | Facilitate the interaction between the buyer and the seller and charge a fee for that service. | S | ||
| Paytm | |||||
| PAypal | |||||
| eBay | |||||
| Orbitz | |||||
28 | Commission | Charge commission for attracting customers or fulfilling transactions for other sellers. | Groupon | S | |
| Paytm | |||||
| Orderella | |||||
29 | Manufacturing | Assemble or build products a large level (thus at cheaper prices) for yourselves or for others. | Foxconn | B | |
| Richelieu Foods | |||||
| Printing-In-A-Box | |||||
30 | Crowdsourcing | Crowd thinks, delivers, chooses | Wikipedia | C/S | |
| P&G Connect | |||||
| Cisco | |||||
31 | Hotel California Model | Create a must-have product that traps customers into buying unrelated high-profit items | Amusement Parks | S/P | |
| Sports Events | |||||
| Multiplexes | |||||
32 | Network Effect | Users benefit if more customers start using the product | S | ||
| StackExchange | |||||
| YouTube | |||||
33 | Loss Leader | Offer some products at very low profit or a loss to attract consumers in hope that consumer buys additional services (which usually are more profitable) | Flipkart | S/P | |
| Jio | |||||
34 | Flat Fee | Offer unlimited services for a fixed price | Netflix | S | |
| Spotify | |||||
| BookMyShow | |||||
35 | Nickel and Dime | Price your niche product with the most basic features the cheapest and then charge for every extra feature | Porsche | S/P | |
36 | License | License an intellectual property to other firms for commercialization. (usually works for patents, trademarks and copyrights) . | Mickey Mouse | O | |
| IBM | |||||
| ARM Limited | |||||
| BASF | |||||
37 | Open Source | Products are built by community, Revenue doesn’t come directly from the product, but from the services around it | Linux | C/S | |
| Wikipedia | |||||
| Android | |||||
38 | Peer to Peer | Company enables business transactions between private persons | eBay | S | |
| OLa | |||||
| Uber | |||||
| Upwork | |||||
| Freelancer | |||||
39 | RobinHood | Earn more from privileged customer segment, but supply more to unprivileged customer segment which may not otherwise afford the offer | Aravind Eye Care | S | |
| TOMS Shoes | |||||
40 | Revenue sharing | Strategical partnership and collaboration to increase revenues in a win-win situation | iTunes | S | |
| Groupon | |||||
| CDNow | |||||
41 | E-Commerce | Business transactions and communications via ICT | Alibaba | S | |
| Graze | |||||
| Ebay | |||||
| Grainger | |||||
| Flipkart | |||||
42 | Target the Poor | Offers are targeted to the bottom of income pyramid, they are usually designed to cover minimal, but still essential needs of customers | Grameen Bank | S | |
| HUL | |||||
| Walmart | |||||
| Freedom 251 | |||||
43 | Two sided Market | Platform concept where the suppliers and customers are brought together | Ebay | S | |
| Groupon | |||||
| Diners Club | |||||
| Zappos | |||||
44 | Ultimate Luxury | Offers are targeted to the top of income pyramid, they are usually unique and suit for self-realisation needs of customers, Focus on branding, events, highest quality standards associated with large investments which are covered with high margin of sales prices | Hermes | S | |
| Rolls Royce | |||||
| Lamborghini | |||||
| Abbott Drowning | |||||
| Apple | |||||
45 | User Designed | Gives consumers the ability and infrastructure to design, produce, sell and market their own custom products | Spreadshirt | ||
| Lego Factory | |||||
| Ponoko | |||||
| Dreamheels | |||||
| CreateMyTattoo | |||||
46 | Solution Provider | Offering not only a product, but also a turn-key solution around customer’s problem, so the customer can focus on its own core business | Wurth | S | |
| Tetra Pack | |||||
| 3M Services | |||||
| Geek Squad | |||||
47 | Shop in Shop | Opening a business or a store (rent or franchise) inside another business or store | Bosch | S | |
| Amazon | |||||
| Tschibo | |||||
48 | Self Service | Customer is actively involved in the delivery process of the offer, so thanks to the saved costs the company can further invest or reduce its prices | Ikea | S | |
| Backwerk | |||||
| Ibis Budget | |||||
49 | Cross Selling | Sell additional products to your existing customer | Amazon | S | |
| flipkart | |||||
| Life Insurance Companies | |||||
50 | Add ons | the core offering is priced competitively but there are numerous extras that drive the final price up so the consumer is not getting the deal they initially assumed. | Apple | S/P | |
51 | Crowdfunding | Crowd invests for a sample product | Pebble | ||
| Music Record | |||||
52 | Digitalization | Physical Products and Offers become immaterial | Speigal Magazine | S | |
53 | Experience Selling | Offers exclusive and unique product and service experience combined with positive emotions | Starbucks | S | |
| Ikea | |||||
| Nespresso | |||||
| Marlboro | |||||
54 | From Push to Pull | Put customers as the central driving factor in every operation and decision, Produce only what the customer is ready to buy and do it as efficient as it is possible without waste | Toyota | S | |
| Zara | |||||
| Geberit | |||||
55 | Guaranteed Availability | Provider offers uninterrupted availability instead of ownership, Provider is responsible for achieving this including timely repair, replacement and maintenance | IBM | S | |
| Otis | |||||
| Hilti | |||||
56 | Hidden Revenue | Offers free or cheap service to customers, but generates revenue from ads | S/P | ||
57 | No Frills | Cheapest prices by offering unusual, but still essential version of products | Southwest Airlines | S | |
| Indigo Airlines | |||||
| Aldi | |||||
| spicejet | |||||
58 | Lock-In | Offering products and services which are attached to intensive costs, time and learning if the customer wants to move to another provider | Microsoft Windows | S/P | |
| Gillette | |||||
| Apple | |||||
| Nespresso | |||||
59 | Long Tail | Offering a large portfolio of products, not only the ones most people buy, but also niche products | Amazon | S | |
| eBay | |||||
| iTunes | |||||
| Netflix | |||||
60 | Customization | Deliever services customized to the exact needs and demands of the customer for an extra personalized touch. | AppyCouple | S | |
| Normal | |||||
| Lumosity | |||||
| CafePress | |||||
| Zazzle | |||||
61 | Orchestrator | Company focuses only on its core competence, everything else is provided by third parties, but the company is also excelled to administer and integrate the activities of third party providers | Nike | ||
| Bharti Airtel | |||||
| Li&Fung | |||||
62 | Reverse Engineering | Detailed Analysis of competitor’s products, services and business models to exploit the gained knowhow for its own business | |||
63 | Reverse Innovation | Innovation and R&D are executed in developing countries to meet the extreme needs of developing countries, and then the offer is brought to developed countries | Nokia | C | |
| Haier | |||||
| Samsung | |||||
| General Electric | |||||
64 | Product to Service | Instead of selling the product, sell the service it offers | ZoomCar | S | |
65 | Leasing | Leasing out the products to the consumer for a fixed period in exchange of a fee | Zoomcar | O | |
| ZipCar | |||||
66 | Negative Operating cycle | Accept the payments before delievering the products or services | Amazon | S | |
67 | Fractionalization | Customer owns a specific portion or usage rights of a product | NetJets | ||
| Sefage | |||||
68 | Bundling | packaging together complementary goods and/or services into a single offering. | iTunes | S | |
| McDonald’s | |||||
| Microsoft (in MS Office) | |||||
69 | Affinity Club | Pay royalties sto some large organization to sell products directly to their customers. | MBNA | S | |
70 | SaaS | Stands for ‘Software as a Service’ : A software usually hosted on a central system is licensed to the users to be used on subscription basis | Oracle | S | |
| Salesforce | |||||
| Intuit | |||||
| Adobe | |||||
| Dropbox | |||||
71 | Barter | Sponsoring and Value Exchange | P | ||
72 | Cash Machine | Collect Money from customers, but pay later to suppliers | Amazon | S | |
| Dell | |||||
73 | Performance Based Contracting | Client is charged based on the monetary benefit it received from the offer or based on successful delivery of complex/risky offers | Xerox | S | |
| BASF coatings | |||||
| Rolls Royce Airplane Motors | |||||
74 | Rent instead of Buy | Customer rents the product instead of buying it which frees the customer to do capital intensive investments to use the product | Xerox | S | |
| Saunders Systems | |||||
75 | SuperMarket | Offers a large spectrum of product to fulfil many requirements of the customer at one place | Walmart | S | |
| Merill Lynch | |||||
| MediaMarkt | |||||
| BigBazaar | |||||
76 | Content Producer | Production of content or material that is designed to inform or explain | C | ||
77 | Make more of It | Offering core competencies to others externally | S | ||
| Zomato | |||||
| Porche Consulting | |||||
78 | Ammmortization | Buy up an asset for a large value and then rent it out at small cheaper prices per month, per year types. | O | ||
79 | Trash to Cash | Exploit recycled material to build new products with reduced costs, Give the customer good conscience to use your product | Emeco | S | |
| Greenwire | |||||
80 | Sponsorship | helps reduce costs, marketing for sponsors | |||
81 | Bulk Pricing | Bulk domain/hosting buy | |||
82 | Per Transaction | money transfer | |||
83 | Increased discounting model | As the billing grows, discount increase | |||
84 | Retail Arbitrage | buy items at retail stores for lower price and sell them online at higher prices | Sellers on amazon | ||
| Local grocery stores | |||||
86 | Day and Night | Shift 1 in day and shift 3 in night | co-working for day and night | ||
87 | Contrast | Leverage for complteley different purpose | Co-working conference for Movie screening | ||
Future Work:
- The financial and social performance of companies who follow different business models
- Case studies of widely used Business models and the rarely used ones and identify why that is the case.
- Study division of Business models between B2B vs B2C start-ups
- Study division of Business models between Product vs Service Startups
This research can be used by startups who are developing/experimenting with their business models, trying to identify alternate revenue streams. It can be used to evaluate the viability of information aggregation initiatives.
