What makes Boohoo stand apart in the crisis while other Retailers are failing during this crisis?
It is a viral strategy tool and used by millions of businesses all over the world because it takes into account every facet of the business. It represents a clear visual of all the moving parts and how a change to one aspect of the business model affects another.
The Business Model Canvas breaks your business model down into easily-understood segments: Key Partners, Key Activities, Key Resources, Value Propositions, Customer Relationships, Channels, Customer Segments, Cost Structure, and Revenue Streams.
Let us briefly look into elements.
To Optimise operations and reduce risks cultivate a partner-network: buyer-supplier relationships, co-operations with competitors, etc.
Who are your key partners/suppliers?
Identify the type of relationship you want to create with your customer segments. Various forms of customer relationships include Personal Assistance, Dedicated Personal Assistance, Self Service, Automated Services, Communities, Co-creation.
What relationship that the target customer expects you to establish?
Your most important activities in executing your company's value proposition:
What activities are important the most in distribution channels, customer relationships, revenue stream?
What key activities does your value proposition require?
The collection of products and services your business offers to meet the needs of your customers. The value proposition is what distinguishes the company from its competitors.
What core value do you deliver to the customer?
Which customer needs are you satisfying?
How can you integrate that into your business in terms of cost and format?
Customers can be segmented into distinct groups based on needs, behaviours and other traits that they share. A customer segment may also be defined through demographics such as age, ethnicity, profession, gender, etc or on their psychographic factors such as spending behaviour, interests, and motivations. An organization can choose to target a single group or multiple groups or multiple groups through its product or services.
What resources are important the most in distribution channels, customer relationships, revenue stream
The resources that are necessary to create Value for the customer; they could be human, financial, physical and intellectual.
What key resources does your value proposition require?
Which channels work best? How much do they cost? How can they be integrated into your and your customers' routines?
Identify the ways how your company delivers its value proposition to its targeted customers. Effective channels will distribute the value proposition fast, efficient and cost-effective.
Through which channels that your customers want to be reached?
For what value are your customers willing to pay?
Describe the most important monetary consequences while operating under different business models.
What are the most cost in your business?
Which key resources/ activities are the most expensive?
Describe the way a company makes income from each customer segment. Several ways to generate a revenue stream: Asset Sale, Usage Fee, Subscription Fees, Lending/Leasing/Renting, Licensing, Brokerage Fees, Advertising.
Coming back to Boohoo, why did its revenue increase in the recent weeks despite the Corona crisis? During this crisis, like all other retailers, it suffered poor sales in late Feb/March. But it quickly understood that customer needs had changed for clothing choices as they were no longer going out.
It did not make significant changes to any of the elements of the business model like Key Partners, Key resources, Cost structure, Revenue stream, Customer segments, Revenue streams, Channels or Customer Relationship but Boohoo changed its Value Proposition.
The value proposition is what distinguished it from its competitors.
It looked at its current products and examined whether it meets the current customer needs.
What core value does it deliver to its customer?
Customers still want to deliver a great customer experience – give customers the experience they want, not what the company wants.
Which customer needs was it satisfying?
They liked to look smart on Zoom calls, and they needed something comfortable to wear all day long.
How could it integrate this into your business in terms of cost and format?
Boohoo has already an infrastructure that is agile and where the rest of the nine elements supports to bring in a matter of weeks to their customers across the world. They can test products and quickly pivot or progress according to customer reception.
E.g. the lockdown face masks were a disaster, and they were able to withdraw this product whereas the comfy wear range like joggers and top were a big hit and their supply chain was nimble enough to make it a success.
Is your Business Model setup for success? What elements of your business model will you change to adapt to the current situation?