How To Use Osterwalder’s Business Model Canvas In eCommerce

Inspired by the stories of eCommerce unicorn companies that have achieved incredible success, we do not pay attention to the general dynamics of the e-commerce market development. According to Practical E-commerce, 8 out of 10 online stores cease their activities. The main reason for this is the lack of strategy, vision or competence.

So, for those who run a successful business and want to grow it and those who do not know how to identify their companies’ problems, Swiss business theorist Alexander Osterwalder and Yves Pigneur created the Business Model Canvas tool. 

Osterwalder’s Business Model Canvas

Osterwalder’s Business Model Canvas is a scheme that consists of nine blocks – the key elements of the business.  Using this scheme, you can clearly describe the activities of your company, and find the bottleneck or possible growth points.

 


Promodo specialists developed a template for the Osterwalder’s business model and added key questions to each block. Please copy it to your Google Drive and start filling it out. 


How To Create a Business Model

Everything is as simple as ABC. Alexander Osterwalder‘s business model template consists of nine interconnected modules. You need to fill them out in chain order.

Block 1

Consumer Segments

In the first module of Osterwalder‘s business model, you will have to list one or several segments of your clients. The more accurately you draw the image of your customers, the easier it will be to sell your product to each segment. Consumer segments are groups of people who have common problems that your business is able to solve. 

Try to answer the following questions:

  • Who is your customer?
  • For whom do you create a (profitable) value offer?
  • Which consumer segment is the most important?

Say, you launch an online kids store. Your clients may be parents, teachers or entertainers. Who else could be included in this list?

Block 2

Value proposition

In this section of the Osterwalder’s business model canvas, you need to describe the key reasons why consumers should buy your goods instead of the ones produced by your competitors. The most attractive values are novelty, reliability, convenience, efficiency, personal offer, affordable price, and savings.

At the same time, the value should concern not only the product itself but also communication, all points of contact with your customer. You should not be afraid to shift the focus of activities from the interests of the company to the interests of customers. Due to the transition from promotional and entertaining content to useful and interesting publications on social networks, Rozetka achieved revenue growth of 88%. 

Try to answer the following questions:

  • What value do you provide to your consumer?
  • Which problems of the customer you can solve?
  • Which sets of products and services do you offer to each consumer segment?
  • Which needs of your clients do you satisfy?

To illustrate, you can offer costume sets with masks and corresponding props to entertainers. You can create a section with sets of toys from different series for the client segment of parents. It will greatly simplify the search for the presents before the upcoming holidays. In addition, you can motivate them to buy your products with special price quotes.

Block 3

Sales Channels

Now please try to list all the points of contact through which you interact with your customers in the Osterwalder’s Business Model template.

Try to answer the following questions:

  • How would your customer segments prefer to receive your value proposition?
  • How do they get it now?
  • How are your sales channels integrated?
  • Which ones are the best?
  • Which of them are the most cost-effective?

Naturally, a website is the primary sales channel for any online store. The comprehensive promotion will help to capture a larger number of consumers. This is a great idea to delegate this task to a reliable and professional team.

The next step is to improve or expand delivery options. Perhaps, the exclusive “delivery in 20 minutes to anywhere in the city” service can attract a lot of customers.

Block 4

Customer Relationships

This module of the Osterwalder’s business model canvas template describes the relationships that you build with the clients: how to attract customers, how to retain them, how to interact with them.

This is important not only what you sell, but also the way you present your company. The brand’s voice must correspond to the age, interests, and needs of the audience. Monitoring your customer feedback on social media will be an excellent test of your business development strategy. We’ve already discussed why you should track the reputation of your online store in social networks and how to do it in one of the previous articles.

Try to answer the following questions:

  • What types of relationships are expected from different segments of your customers?
  • What relationships do you have with your customers now?
  • Do they fit into the general scheme of a business model?
  • Are these relations expensive or not?

Contact with your clients is important at all stages of the sales funnel. And this is not only about the site’s user interface which should be improved so that the customer could easily and quickly find the necessary product.

Additional services can also increase your brand loyalty. Say, an online kids store can make a contract with an event agency and place a short application form for ordering entertainment services on the website.

Block 5

Revenue Streams

Describe all your sources of income in detail in the next module of the Osterwalder’s Business Model template.

Try to answer the following questions:

  • What benefits are your consumers willing to pay for?
  • What are they paying now?
  • How are they paying now?
  • How would they like to pay?
  • What is the share of each source in total revenue?

An online store may have several sources of income. This might be not only sales revenue but also income from affiliate programs and banner advertising on the site.

Block 6

Key Resources

Try to create a list of the most important business assets that allow you to exist and enable you to grow. It could be unique products, materials, employees, etc. 

Try to answer the following questions and fill out the Osterwalder’s Business Model template with your answers:

  • What are the key resources that will help you establish sales channels?
  • What are the key resources that can help you increase your revenue stream?

Site is one of the key resources of an online store. Consequently, the main task is the platform development and optimisation.

Do not forget about the training of call-centre operators, expanding the storage facilities, and recruiting new specialists. Certain resources are necessary for the successful development of a particular business. In this module, you need to identify them.

Block 7

Key Activities

In this module of the Osterwalder’s business model, you need to describe the most important actions that bring profit to your company.

Try to answer the following questions:

  • What activities help you establish distribution channels?
  • What activities will help you increase your revenue stream?

An online store needs to establish relationships with suppliers and build a clear interaction process. An important role is played by the continuous support of your platform and updates of your CRM system.

Block 8

Key Partners

In this block of the Osterwalder’s business model, you need to indicate all your suppliers and partners.

Try to answer the following questions:

  • Who are your most important partners?
  • Who are your most important suppliers?
  • What are the most important resources you get from suppliers and partners?
  • In what significant activities are your partners and suppliers engaged?

An online store is rarely able to get all the necessary resources independently. Therefore, it turns to the supplier to purchase the missing goods; to a marketing agency to promote the website; to a third-party call centre to get professional customer service.

Block 9

Cost Structure

In the last block of the Osterwalder’s business model, indicate the most significant costs that cannot be avoided within the existing business model. 

Try to answer the following questions:

  • What costs cannot be reduced within your business model?
  • Which core resources are the most expensive?
  • What are the most expensive activities?

 The main costs of an online store are usually comprised of three variables: staff salaries, advertising, and website maintenance costs.

Let’s Summarize

Osterwalder’s business model canvas is an alternative to the long development and preparation of a business plan for many international companies. The intentionally simplified approach in the Osterwalder’s template helps to see the big strategic picture of the business and make deliberate decisions.

A completed Osterwalder’s business model scheme is not a cure for all diseases. It is a practical guide. The range of problems that may be solved by formalising processes is quite limited. In other cases, only business process optimization in a company can bring substantial changes.

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