Business Model Analysis of Afterpay Touch Group Ltd
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This report analyzes the business model canvas of Afterpay Touch Group Ltd and recommends changes to enhance its competitive advantage. It offers an insight into enhancing consumer relationship marketing that enhances business productivity.
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Running head: BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD Business Model Analysis of Afterpay Touch Group Ltd Name of the University: Name of the Student: Authors Note:
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1BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD Executive Summary After pay Touch Group Ltd offers a unique service and the business was found to address consumers’ best interest when it comes to make certain retail purchases. From analyzing the canvas, it is evidenced that the focus of its after pay’s major business is on provision of retail and financial services to the upper and middle income groups. After attempts to offer better consumer relationships through its value propositions such as quality services and additional payment benefits after completing a purchase all over Australia. Certain changes must also be considered regarding merging the visa with other cards together for enhancing the organization’s financial services along with enhancing efficiency of customers that visit the store and purchase from its store.
2BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD Table of Contents 1. Introduction and Business Description............................................................................3 2. Business Model Canvas...................................................................................................3 9 building blocks..............................................................................................................3 3. Interrelationships among Nine Building Blocks..............................................................7 4. Analysis of Critical Success Factors................................................................................8 5. Aspects Resulting in Downside Risks.............................................................................9 6. Estimated Changes in Business Model..........................................................................10 7. Conclusion.....................................................................................................................10 References..........................................................................................................................11 Appendix............................................................................................................................13 Business Canvas Model.................................................................................................13
3BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD 1. Introduction and Business Description Effectivebusinessplanningfacilitatescompaniesinproperimplementationofthe business conducts. Taking into account such scenario, business models proficiently shapes the management and marketing (Antikainen, Aminoff, Paloheimo & Kettunen, 2017). The report is focused on offering an insight to enhance the consumer relationship marketing that enhances the business productivity. In addition, the assignment also offers certain advantages that can be attained through consideration of the business idea. After pay Touch Group Ltd offers a unique service and the business was found to address consumers best interest when it comes to make certain retail purchases (Cheng & Yu, 2015). After pay offers an exceptional service of “buy now, pay later” that can facilitate consumers to complete purchases at identical prices and for them over four equal fortnightly installments are to be paid. After pay business has been developed to support Australian’s budget without needing to enter into a credit product or traditional loan. 2. Business Model Canvas The business canvas model forms an integral part of the organization and tends to help a business in understanding the different strengths as well as the weaknesses of the enterprise. 9 building blocks The business canvas model comprises of nine different building blocks whereby each of them help in the analysis of a different component of the business model. The different blocks will be elaborated on as follows: Key Partners
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4BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD The key partners in a business can be described as those corporations which go a long way in assisting the enterprise to become successful in the long run of the business. Hence, the key partners of the company Afterpay are the ones which assist it in the retail dealings which it is required to incur in order to ensure that the enterprise is successful and that the operations run smoothly. For After pay the key partners of the business are as follows: Westfield Touch Corporation These two organizations help the After Pay Company to deal with after pay delivery payment methods. The companies help After Pay in dividing the risk between the different parties. Key activities The key activities of the company are the primary operations of the organization which assist the business organization to produce and provide service offerings for the different customers. They different activities for After Pay are: 1.Creation of user accounts and online payment methods The company helps the different users to create their accounts with After Pay which will then assist them to help paying in installments (Mentink, 2014).Moreover, Afterpay also pays the different retailers on behalf of the company which will then assist the customers to purchase the items. Customer Segments
5BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD The customer segments can be described as the target market of the firm. These are the customers which the company aims to target and aims to ensure that the organization is successfully able to carry out its operations. The customer segment which the organization caters to has been given as follows: Online shoppers: The majority of the customers of the firm include the online shoppers who like to shop from the different e-commerce websites. Working professionals:The working professionals who do not get time to engage in different activities will be the primary customer segments. Value proposition The value propositions aspect in the business model can be described as the manner in which the offerings of the organization are unique for the enterprise. The value which the organization creates for the customers is essentially described in the given aspect. The value proposition which the company aims to offer to the customers are as follows: Easy purchases: The customers who have been running on a strict budget will be able to incur easy purchases and can make the payments later. Review of services: The Company helps the customers to review the services being purchased. Constantly updated websites: Lastly the organization continuously upgrades the websites so as to ensure easy usage (Mentink, 2014). Customer Relationships
6BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD The customer relationships form a crucial part of the organization and any company who aims to ensure that the company is successful in the long run will be required to see to it that the company has strong relationships with the different customers. The company takes in the following activities to maintain strong relationships Website Chat support: The Company uses website chat support in order to ensure that customer relationships are maintained. Direct marketing: The Company also engages in direct marketing activities. Social media marketing:The Company also engages in social media platforms to maintain sound relationships with the different consumers. Cost structure The cost structure of the organization can be described as the costs incurred to run the various aspects of the business canvas model. The different costs as incurred by the business are as follows: Application and website development prices are a major portion of the costs incurred by the organization (Cheng & Yu, 2015).It goes a long way in assisting the company to ensure that the operations run smoothly. The human resource costs also add up to an essential aspect of the organization as it goes a long way in assisting the individual to ensure that they achieve success in the long run. Advertisement- The advertisement costs also add up to the costs of the organization Channels
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7BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD The channels can be essentially described as the medium of exchange between the customers and the company. The company makes use of the following channels: Advertising by means of direct and marketing channels. The company tends to make use of both the direct marketing techniques as well as the physical marketing techniques to make the service poplar. Key Resources The key resources of the firm can be described as the resources the firm makes use of to carry out its operations. The key resources of After Pay are as follows: The 180 staff members are the primary assets of the organization which tend to assist it in achieving success in the long run (Lüdeke-Freund & Dembek, 2017). Moreover, the website also forms an essential resource for the company. Revenue stream The revenue stream can be described as the sources of the revenues for the firm: As per the annual report, 80% of the revenues come from the commission as paid by the retailers by facilitating their sales 20% of the revenues comes from the late payment fees as made customers when they fail to make payments 3. Interrelationships among Nine Building Blocks Pay Company indicates the business performance by means of nine interrelated blocks explained within the business model (Díaz-Díaz, Muñoz & Pérez-González, 2017). From
8BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD analyzing the canvas, it is evidenced that the focus of its after pay’s major business is on provision of retail and financial services to the upper and middle income groups. After attempts to offer better consumer relationships through its value propositions such as quality services and additional payment benefits after completing a purchase all over Australia. Afterpay offers exceptional services of “buy now, pay later” that can facilitate consumers to complete purchases at identical prices and for them over four equal fortnightly installments are to be paid. Afterpay Company employs all its major business partners along with activities for enhancing the business profitability and for being cost effective. The cost structures and channels of Afterpay are observed to be linked together for obtaining increased revenues from wide consumer segment. Afterpay makes sure that its hardship policy offers consumers with benefits those are unable to make their repayments in order to apply for extended terms of payments devoid of interests and penalties. The business model of Afterpay encourages responsible consumer behavior. In such scenario, in case the consumers have payments overdue the system will restrict them to make another purchase till their accounts are clear of dues. 4. Analysis of Critical Success Factors The business has attained numerous critical success factors that have facilitated Afterpay Touch Group Ltd to attain better competitive advantages (Dohrmann, Raith & Siebold, 2015). The service features that acts as critical success factors are explained under: Afterpay service does not require extra charges as long as consumers are focused about making payments in alignment with their schedule of payment. Average orders employing Afterpay are approximately $150 that is aimed at offering consumers a tool for budgeting for spreading all its payments with time (Kajanus, Iire,
9BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD Eskelinen,Heinonen&Hansen,2014).Moreover,unlikeattainspecificfinancial businesses, Afterpay is focused and attains advantages from consumers those are not going within default (Lüdeke-Freund & Dembek, 2017). Afterpay service ensures that before all the orders being approved, it employs its proprietary fraud along with checking of repayment ability. Communication with the consumers are maintained on a regular basis through email and SMS “in advancements” of payments that remain due. 5. Aspects Resulting in Downside Risks After Company has focused its attention in decreasing some type of risks that arises in operating its business all across its business locations (Lüdeke-Freund et al., 2017). Risk is observed to be diverse along with the manner in which it might add vulnerability to its situation within the market. Certain strategic aspects which result in downside risks for After pay is necessary to be monitored for eliminating the environmental pressures as well as promoting social responsibility. Downside risks are also observed to be present in case of Afterpay Company that includes operational factors (Matusiak, 2016). This might result in certain uncertainties that are associated with the events and are not confined to the failures in meeting people product based safety standards. Not dealing with such factors efficiently can lead to cause industry disputes, interruptions in supply chain or technology collapse (Maurya, 2017).
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10BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD 6. Estimated Changes in Business Model From analyzing the business model canvas of Afterpay it has been recommendations can be offered to the organization that can facilitate it in attaining certain competitive advantages. Relied on these aspects of the company’s business model canvas it can also be stated that changes must be implemented focused on low priced strategy and growth strategy (Mentink, 2014). For the customers to believe that the organization provides services of exceptional quality, price might be a bit increased than usual. This can also focus on offering a value-added service in consideration with the input expenses (Rayna & Striukova, 2016). Changes can also be considered in the regarding the safety strategy, financial services along with stop shops. Certain changes must also be considered regarding merging the visa with other cards together for enhancing the organization’s financial services along with enhancing efficiency of customers that visit the store and purchase from its store (Türko, 2016). 7. Conclusion The report was focused on offering an insight to enhance the consumer relationship marketing that enhances the business productivity. It was gathered after completion of the report that Afterpay Touch Group Ltd offers a unique service and the business was found to address consumer’s best interest when it comes to make certain retail purchases. Afterpay is focused and attains advantages from consumers those are not going within default. This can also focus on offering a value-added service in consideration with the input expenses.
11BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD References Antikainen, M., Aminoff, A., Paloheimo, H., & Kettunen, O. (2017, March). Designing circular business model experimentation-Case study. InThe Proceedings of The 2017 ISPIM Forum, Toronto, Canada(pp. 19-22). Cheng, G., & Yu, C. (2015). E-commerce Model Canvas in 3D Virtual Space: An Application in British Museum. InLISS 2013(pp. 17-28). Springer, Berlin, Heidelberg. Díaz-Díaz, R., Muñoz, L., & Pérez-González, D. (2017). Business model analysis of public services operating in the smart city ecosystem: The case of SmartSantander.Future Generation Computer Systems,76, 198-214. Dohrmann, S., Raith, M., & Siebold, N. (2015). Monetizing social value creation–A business model approach.Entrepreneurship Research Journal,5(2), 127-154. Kajanus, M., Iire, A., Eskelinen, T., Heinonen, M., & Hansen, E. (2014). Business model design: newtoolsforbusinesssystemsinnovation.ScandinavianJournalofForest Research,29(6), 603-614. Lüdeke-Freund, F., & Dembek, K. (2017). Research and practice on sustainable business models: Emerging field or passing fancy.Journal of Cleaner Producfion. Lüdeke-Freund,F.,Freudenreich,B.,Schaltegger,S.,Saviuc,I.,&Stock,M.(2017). Sustainability-OrientedBusinessModelAssessment—AConceptualFoundation. InAnalytics, Innovation, and Excellence-Driven Enterprise Sustainability(pp. 169-206). Palgrave Macmillan, New York.
12BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD Matusiak, B. E. (2016). Local balancing system from the business model canvas perspective. InE3S Web of Conferences(Vol. 10, p. 00055). EDP Sciences. Maurya, A. (2017). Why Lean Canvas vs Business Model Canvas? LeanStack. 2017. Mentink, B. (2014). Circular business model innovation: a process framework and a tool for business model innovation in a circular economy. Rayna, T., & Striukova, L. (2016). 360° Business Model Innovation: Toward an Integrated View of Business Model Innovation: An integrated, value-based view of a business model can provide insight into potential areas for business model innovation.Research-Technology Management,59(3), 21-28. Türko, E. S. (2016). Business Plan Vs Business Model Canvas in Entrepreneurship Trainings: A Comparison of Students’ Perceptions.Asian Social Science,12(10), 55.
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13BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD Appendix Business Canvas Model Key Partners Westfield and Touchcorp for afterpay delivery payment method Key Resources 180 skilled and effectiv e IT staff and employ ees User friendl y website based portfoli o of numero us Value Proposition Ensuring review of services before purchasing Constantly updated websites that is simply used Consumer Relationship Through website, social media an direct marketing Consumer Segments Has attaine d an increa sing consu mer base with maxi mum consu mers involv ed in online shoppi ng.
14BUSINESS MODEL ANALYSIS OF AFTERPAY TOUCH GROUP LTD payme nt service s Key Activities Creation of user accounts and online payment methods Channels Advertising by means of direct marketing and mobile applications Cost Structure Premium method of pricing Application development Cost of advertising Cost of partnerships Fraud payments received. Revenue Streams 80% is from the commission received from retailers 20% is from the late fees charged from the customers.