I’m fascinated by business models that bring value to customers through unique marketing approaches.
Thrive Market is an online retailer whose mission is to make healthy living easy for everybody. 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.
- 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. 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.
Could you use help thinking through how you could disrupt your market segment with alternative business models? I can help. Let’s talk. Text me at 919 720 0995.
Photo Credit: Thrive Market and Business Model Generation.
