1BUSINESS MODEL CANVAS OF AFTERPAY Executive Summary The report is mainly based on the detailed analysis of the business model canvas that has been developed by Afterpay. The nine building blocks of the business model have been analysed in the report in detail. The analysis is mainly based on the ways by which the building blocks have supported the operations of Afterpay. The interrelationships that have been formed by building blocks and critical success factors are also discussed in the report. The risks that are faced by Afterpay in its operations in the financial industry have also been analysed. The recommendations are mainly based on the future operations of Afterpay in the industry.
2BUSINESS MODEL CANVAS OF AFTERPAY Table of Contents I. Introduction.................................................................................................................3 II. Business model..........................................................................................................3 A. Building blocks.........................................................................................................3 1. Customer segments................................................................................................3 2. Key partners...........................................................................................................3 3. Value proposition...................................................................................................4 4. Key activities..........................................................................................................4 5. Channels.................................................................................................................4 6. Revenue streams.....................................................................................................5 7. Cost structure.........................................................................................................5 8. Key resources.........................................................................................................5 9. Customer relationships...........................................................................................5 B. Interrelationships.......................................................................................................6 C. Critical success factors..............................................................................................6 D. Downside risks..........................................................................................................6 E. Business model changes............................................................................................7 III. Conclusion................................................................................................................7 IV. Recommendations....................................................................................................7 Appendices.....................................................................................................................9 Appendix 1 – Table 1 – Business model canvas........................................................9 Appendix 2 – Table 2 – Income statement...............................................................10 References....................................................................................................................11
3BUSINESS MODEL CANVAS OF AFTERPAY I. Introduction Afterpay is a digital service providing organization of Australian origin that mainly provides support related to the purchase of retail products from different organizations with the help of small instalments. The consumers are provided with the option to pay the money within fourteen days of purchasing the product. Afterpay has been able to gain major levels o popularity in the industry with help of services that are offered to the consumers. Afterpay was founded in the year 2014 in Sydney and the company had changed the spending patterns of customers in Australia (Afterpaytouch.com. 2020). II. Business model Afterpay has been able to form the business model with respect to the efficient and effective services that are offered to consumers through small instalments that are related to products which are purchased. The organization thereby aims at charging late fees based on failure of the consumers to clear the instalments within the stipulated amount of time. A. Building blocks 1. Customer segments Customers segments of an organization like Afterpay mainly includes, the merchants, various retailers, individual shoppers and business organizations as well. The organization mainly tries to provide the payment related services to various customer segments with respect to their demands and needs (Bekhradi, Yannou & Cluzel, 2016). 2. Key partners The third party merchants, payment providers like Mastercard are considered to be the key partners of Afterpay who are able to support the organization in proper improvement of the services that are offered to the consumers. The banks and different other financial
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4BUSINESS MODEL CANVAS OF AFTERPAY institutions have also been able to become the key partners who have supported the operations of Afterpay. The physical and online stores of Afterpay are also considered to be major parts of the operations developed by the firm (Gonçalves & da Silva, 2017). 3. Value proposition Value proposition developed by Afterpay is mainly related to the multi-payment, multi-currency and secure transaction based facilities that are provided to the consumers who are a part of various online platforms. The organization mainly aims at effective elimination of costs which are related to development of many stores in various parts of the country. The proper enhancement of user-friendliness of the app or website of Afterpay is also an important part of value proposition (Hruska & Maresova, 2019). 4. Key activities Key activities which have been performed by an organization like Afterpay are mainly based on the levels of security offered to merchants and different partners of the firm as well. The proper formation of the effective levels of research and development is considered to be a major aspect that can influence operations developed by Afterpay. The organization thereby aims at offering 24/7 support to merchants and the customers of the firm (Joyce & Paquin, 2016). 5. Channels The channels which have been implemented by Afterpay are related to the website that is used by the firm for the purpose of reaching the customers. The online purchasing and digital activities are also an important part of the channels that are used by the firm. Social media has also proved to be a major channel that has been implemented by Afterpay in order to offer its products to consumers. The programs and advertisements that are developed by
5BUSINESS MODEL CANVAS OF AFTERPAY Afterpay can also have an impact on growth levels of the organization (Keane, Cormican & Sheahan, 2018). 6. Revenue streams Revenue streams that have been developed by Afterpay are mainly related to the commissions that the organization has received from the partners and various transactions that are made as well. Afterpay is mainly able to gain the incomes with respect to the interests related to the payments and late fees based on lack of proper timing of paying the instalments (Kristensen & Ucler, 2016). 7. Cost structure Costs that have been incurred by Afterpay are mainly related to the development of the online platform of the form and amounts of operating costs as well. Major costs are also faced by Afterpay with respect to the levels of security that have been formed by the firm with respect to transactions completed by the organization. The firm also has to make investments on process of acquiring the customers (Micieta et al., 2020). 8. Key resources Afterpay has been able to gain major resources that are considered to be interactive and effective in nature with respect to service levels that are offered to customers. Afterpay has also been able to gain its position in the industry with respect to the significant methods that are implemented for the purpose of communicating with the customers. Partnerships have also been developed by Afterpay in order to provide a major resource related to the growth of the organization (Murray & Scuotto, 2016). 9. Customer relationships Afterpay has been able to develop effective relationships with consumers by offering different benefits that have enhanced the loyalty of the consumers towards the firm. Major
6BUSINESS MODEL CANVAS OF AFTERPAY opportunities that are offered by Afterpay to consumers are also related to the payment that is offered for the products that are purchased from retail firms (Onken & Campeau, 2016). B. Interrelationships Afterpay has been able to develop its operations in the industry with the help of the nine building blocks that are a part of the business model canvas of the firm. Key partners of the organization can have an impact of the consumers and the shopping based activities as well. Afterpay has also maintained the relationships with consumers in order to enhance the levels of revenues that have been gained in the industry. Afterpay also has to face major costs with respect to development of the services of the firm and instalments offered to the consumers as well. Major amounts of resources have also been gained by Afterpay are able to influence the services which are provided by the organizations to consumers in Australia (Stenn, 2017). C. Critical success factors Afterpay has been able to gain success in the financial industry with the support that is provided by the easy services and payment options offered to the consumers as well. The organization has also been able to form the partnerships with retail firms in an effective manner and this has enhanced the operations of Afterpay. The retail organizations that have developed partnerships with Afterpay mainly include Mimco, Rebel, Icebreaker, Recreate Yourself and Running Bare (Woo et al., 2016). D. Downside risks Afterpay will face major levels of risks that are related to the levels of trust that the organization has to gain of the customers in order to offer the services in an effective manner. The importance of trust and security levels are quite high for the purpose of maintaining the effective operations of Afterpay. The effective formation of partnerships have also become
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7BUSINESS MODEL CANVAS OF AFTERPAY highly important and have an impact on the risk levels that Afterpay can face in its future operations. The organizations which have their operations in financial industry have to form the partnerships with various retail firms. The competition levels in the industry have also been increased with the support provided by the number of partnerships made by the organization in order to offer effective services (Murray & Scuotto, 2016). E. Business model changes Afterpay can aim at implementing changes in the business model with respect to the enhancement of number of partnerships that can be formed with the retail organizations in the industry. The innovativeness of the business operations of Afterpay can also be improved in order to enhance the value offered to the consumers. Revenue streams of Afterpay will be increased with respect to partnerships formed by the organization with the big retail brands (Gonçalves & da Silva, 2017). III. Conclusion The analysis of the business model canvas of Afterpay has been able to depict that the operations of the firm have been maintained with the help of effective partnerships formed with the retail organizations. The changes that can be made in the business model can enhance the profitability levels of Afterpay in the future and this will also help the firm to maintain its customer base. The enhancement of competition levels in the industry can also have an impact on profitability levels of the organization. Afterpay will be successful in maintaining its position in the financial industry with the help of partnerships formed with large retail companies. IV. Recommendations The recommendations that can be offered to Afterpay for future operations are as follows,
8BUSINESS MODEL CANVAS OF AFTERPAY Afterpay can aim at increasing its customer base by offering more innovative services. Afterpay can increase the number of partnerships that have been made with the retail organizations in order to enhance the services offered to consumers.
9BUSINESS MODEL CANVAS OF AFTERPAY Appendices Appendix 1 – Table 1 – Business model canvas Key Partners Third party merchants. Payment providers. Key Activities Security in transactions. Research and development. Value Proposition Multi currency secure transaction platform. Customer Relationships Loyalty Customer Segments Business organizatio ns. Merchants. Key Resources Interactive online platform. Channels Website of the organizatio n. Cost Structure Operating costs. Security costs. Revenue Streams Commissions. Interests and late fees.Source – Created by Author
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10BUSINESS MODEL CANVAS OF AFTERPAY Appendix 2 – Table 2 – Income statement Source – (Afterpaytouch.com. 2020)
11BUSINESS MODEL CANVAS OF AFTERPAY References Afterpaytouch.com.(2020).AfterpayTouch.Retrievedfrom https://www.afterpaytouch.com/who-we-are Bekhradi, A., Yannou, B., & Cluzel, F. (2016). Importance of problem setting before developing a business model canvas. InDS 84: Proceedings of the DESIGN 2016 14th International Design Conference(pp. 907-916). Gonçalves, R. F., & da Silva, M. T. (2017, March). System Thinking and Business Model CanvasforCollaborativeBusinessModelsDesign.InAdvancesinProduction Management Systems. Initiatives for a Sustainable World: IFIP WG 5.7 International Conference,APMS2016,IguassuFalls,Brazil,September3-7,2016,Revised Selected Papers(Vol. 488, p. 461). Springer. Hruska, J., & Maresova, P. (2019). Design of business canvas model for social media. InEmerging Technologies in Data Mining and Information Security(pp. 63-69). Springer, Singapore. Joyce, A., & Paquin, R. L. (2016). The triple layered business model canvas: A tool to design more sustainable business models.Journal of cleaner production,135, 1474-1486. Keane, S. F., Cormican, K. T., & Sheahan, J. N. (2018). Comparing how entrepreneurs and managers represent the elements of the business model canvas.Journal of Business Venturing Insights,9, 65-74. Kristensen, K., & Ucler, C. (2016, June). Collaboration Model Canvas: Using the Business Model Canvas to Model Productive Collaborative Behavior. In2016 International ConferenceonEngineering,TechnologyandInnovation/IEEElnternational Technology Management Conference (ICE/ITMC)(pp. 1-7). IEEE.
12BUSINESS MODEL CANVAS OF AFTERPAY Micieta, B., Fusko, M., Binasova, V., & Furmannova, B. (2020). Business model canvas in global enterprises. InSHS Web of Conferences(Vol. 74, p. 02010). EDP Sciences. Murray, A., & Scuotto, V. (2016). The business model canvas.Symphonya. Emerging Issues in Management, (3), 94-109. Onken, M., & Campeau, D. (2016). Lean startups: Using the business model canvas.Journal of Case Studies,34(1), 95-101. Stenn, T. L. (2017). Focus on the business model canvas. InSocial entrepreneurship as sustainable development(pp. 55-89). Palgrave Macmillan, Cham. Woo, C. R., Cho, M. J., Choi, H. R., Lee, K. B., & Kim, D. H. (2016). The Business Model for the Sharing Economy between SMEs based on Business Model Canvas.Journal of the Korea Industrial Information Systems Research,21(5), 41-54.