I’m strange. I like to study business that brings value to customers through unique marketing approaches. What I’m particularly curious about is their business model.
Thrive Market is an online retailer whose mission is to make healthy living easy for everybody. Thrive Market is an American e-commerce membership-based retailer offering natural and organic food products. It was founded by Nick Green, Gunnar Lovelace, Kate Mulling, and Sasha Siddhartha. By 2016 they had raised $141 million across three rounds of funding following their launch in November 2014.
The founders looked at Costco’s club membership approach and Whole Foods organic products markets and smashed them together.
What if you pay a membership fee but could buy healthy foods and products for 25% less than Whole Foods charges? And they arrive at your front door?
Business Model 101
Business models are how you organize the sale of your products and services through different channels of distribution. Thrive could have:
- Opened a door on Main Street and sold to consumers who walk in the store. They would mark up products like any specialty food retailer.
- They could sell online and charge retail prices – just without the brick and mortar.
- Or, they could charge membership fees for being a club member and sell above cost to cover modest expenses.
Costco makes almost 70% of its profits from membership fees. 70%!
They sell billions of dollars’ worth of goods and only 30% of the profit is from the sale of those goods. That means they are really in the business of providing amazing value to members. Their metric of success is people who sign up year after year.
Inventive Approach to Your Business
How could you alter the way you go to market? Is it possible that a membership approach could shift the industry dynamic?
- Membership is an appealing model because you are creating exclusivity and a community. If you deliver tremendous value, everyone in your community will want to share that story.
- Membership fees within businesses like Amazon Prime have made buying so easy that half of all online goods are now sold through Amazon!
- Old school businesses could consider reinventing themselves by offering a membership model. In other words, imagine if instead of buying various home improvement services, someone offered membership into a business where you pay an annual fee and get 50% off the price of services like painting, plumbing, and electrical work?
The best book on business models is called Business Model Generation by Alexander Osterwalder.
You can order a copy on Amazon here. This book is only for visionaries, game-changers, and people looking to challenge the status quo. Don’t order it if you don’t want to be disruptive in your industry.
You will not be disappointed. The video below will show you how to use the mapping tool to create your business model.
Need to create a new business model?
I can help. You can set up a time chat with me about your marketing challenges using my calendar. Our initial conversation is free. You talk, I listen. Email me jeffslater@themarketingsage.com or call me. 919 720 0995. Visit my website at www.themarketingsage.com Let’s explore working together today.
Photo Credit: Thrive Market and Business Model Generation.
