Business Model Innovation and Design

This assignment delves into the world of e-commerce business models, focusing on the innovative strategies employed by companies such as Jet.com. The document examines the emergence of new e-commerce models, including the use of retail networks and smart cart technologies, and discusses their potential impact on competitors like Amazon. Additionally, it explores the role of business model innovation in driving sustainable development, leveraging research from journals like Journal of Cleaner Production and Journal of Management Information Systems. The assignment also touches upon the importance of effective financial risk management for small businesses, as well as the six core elements of business process management. Overall, this document provides a comprehensive analysis of e-commerce business models, highlighting key trends and strategies for companies looking to stay ahead in the digital age.

Business Model

Table of Contents
Description of Industry 2
The Products/Service 2
Describe the Industry- Business Model Canvas 3
Key Relationship among the Nine Building Blocks (Interlink) 4
SWOT Analysis on each of the Nine Building Blocks 6
Critical Success Factors 7
Downside risks 8
Suggested Improvements on the BM-Critical Thinking 8
Conclusion 9
References 10

Introduction of Jet.com Company
Jet.com, an American e-commerce company is headquartered in New Jersey. The
company was founded in 2014 by Marc Lore with Nate Faust and Mike Hanrahan. The
entrepreneur old diapers on Amazon. The consumers who are into sports, fitness, home
decoration and maybe housewives or working professionals are targeted due to the wide
availability of products. Moreover, it targets the sellers who are willing to partner with the firm
assuring sales visibility (Gamble & Thompson, 2014).
Description of Industry
Jet.com is an American e-commerce company that got all essentials in one place. Jet.com
belongs to the e-commerce industry that involves online buying and selling of products and
services. They offer a large selection of products at low prices and great discounts.
The Products/Service
Jet.com sells different categories of products involving grocery, health and beauty, home
décor, furniture, fitness products, electronics and gaming. The organization targets all age groups
from kids to old age. There are a lot of options available for the customers at low prices. Jet.com
offers free shipping over $35 and delivers within two days. Jet.com has customer service reps,
the Jet Heads who provide 24-hour assistance.
Describe the Industry- Business Model Canvas
According to Alexander Osterwalder’s business model generation canvas, every
organization’s business model can be explained using the below 9 building blocks:

1. Customer Segments- The customer segment building block defines the different groups
of people that may be served by the company. Jet.com targets the middle and upper class
consumers who got experience in the basic technology and do not have time to shop from
physical outlets (Wirtz, Pistoia, Ullrich, & Göttel, 2016).
2. Value Propositions- The value proposition building block defines the bundle of products
and services that is offered to the consumers (Calvo-Mora, Navarro-García, & Periañez-
Cristobal, 2015). Jet.com offers value proposition as an anti-single unit marketplace by
luring consumers to purchase multiple items at once by discounting prices. Jet prioritizes
price rather than balancing selection, price and convenience following the price-first
approach (Rosemann & vom Brocke, 2015).
3. Channels- The channel is defined as the medium through which value proposition is
delivered to the customers. The products at Jet are distributed through online distribution
through internet. The customers are encouraged on social media and other online
channels to purchase products from Jet.com (Rahman, Yaacob, & Radzi, 2015).
4. Customer Relationships- This block refers to the type of relationships of the company
established with the company. Jet.com mainly uses the pricing strategy for maintaining
relationship with customers. For the customers paying online, Jet.com offers savings and
free returns when purchasing multiple items.
5. Revenue Streams- This block represents the revenue chain from the value propositions
offered to the customers. Jet.com operates using “Smart Cart dynamic-pricing model”,
they waive the return and refund where there is no lost payment gateway charges. As
Jet.com encourages the customers to purchase products in bulk where delivery charges
are saved in a single shipment (Baldassarre, Calabretta, Bocken, & Jaskiewicz, 2017).

6. Key Resources- Resources are the most important assets of any organization. Jet.com
has over 7000 employees as a part of the human resources. Moreover, Jet.com is reported
to be valued at $1.3 billion in 2016 contributing to the financial resources. As Amazon
acquired Jet.com, the intellectual resources such as the inherent relationships and human
capital was also held by the company (Peters, Blohm, & Leimeister, 2015).
7. Key Activities- The key activity building block comprises of the number of key activities
performed by the company. Jet.com has supply chain management as their key activity. It
involves arranging for shipment and delivery to the customers after matching the order
from the retailers (Jet.com, 2018).
8. Key Partnerships- This block involves the partners so that the resources are outsourced.
Jet.com partners with Latch that helps people manage everything delivery. The real-estate
technology partnered with Latch on 2017 allowing smooth delivery (Morris, 2018).
9. Cost Structure- This block describes all costs incurred to operate a business model. As
Jet.com offers free delivery for orders over $35, the shipping cost is borne by the
company. Jet also incurs cost while buying goods from the retailers and shipping it to
consumers. It was reported that they earned $242.91 only while incurring a cost of
$518.46 (Monzon, 2015).
Key Relationship among the Nine Building Blocks (Interlink)
The nine building blocks as mentioned in the previous section are interlinked with one
another. The key partners and key activities are interlinked as the key partners such as Latch help
in conducting the key activity of Jet that is supply chain management (Basile & Faraci, 2015).
Value proposition, channel customer segment and customer relationships are interlinked as the
value proposition is offered to the customer segments. The products and services offered help in

building customer relationships. Further, channels are used as the medium through which the
value proposition is offer to the customer segments for managing customer relationships. The
key resources are interlinked with the cost structure as the cost helps in planning and
management of the key resources at Jet (Rauter, Jonker, & Baumgartner, 2017).
Figure 1: Interlink between Nine Building Blocks
SWOT Analysis on each of the Nine Building Blocks
As the nine building blocks business model for Jet has been analysed, several strengths,
weaknesses, opportunities and threats are recognized as under:
Element Strength Weakness Opportunity Threat

Customer
Segments
Customer network
Product variations
Buyers often
complain about
shipping cost
Need for scale of
segmentation
Intense
competition with
same segmentation
Value
Propositions
Authentic payment
process
Top market leader
Confusing website Platform
innovation
New government
rules
Channels Website and
mobile apps
No offline service International
expansion
Virus and hackers
Customer
Relationships
24 hour customer
service
Promotion events
such as savings
and free returns
Customer
relationship
management
budget
Access to
stakeholders and
business
opportunity for
selling products on
Jet
Unhealthy
competition
Revenue Streams Smart Cart
dynamic-pricing
model
No lost payment
gateway charges
Limited working
capital
Large investment
opportunities
internationally
Issues in payment
system
Key Resources 7000 employees Limitation of
knowledge among
Experienced Increasing wage
rates and high

$1.3 billion
financial valuation
employees manpower turnover
Key Activities Supply chain
management
Increasing
shipment cost
Quicker deliveries Delay in deliveries
Key Partnerships Strategic
partnerships with
payment gateway,
delivery company
and media
Limited partners
for outsourcing
activities
New sellers and
retailers
Low customer
trust levels
Cost Structure Funding sources
from financial
institutions
Bearing shipping
cost for orders
over $35
Funding from
international
agencies
Increase in
operating expenses
Critical Success Factors
The critical success factors that the business has to do right for achieving sustainable
success are:
User friendly website- It is important to have a user friendly website for making it easy
for the customers. The pages must have clear headers and easy navigation.
Unique selling proposition- Jet may not just differentiate its products on the basis of
pricing, but also money back warranty and payment flexibilities (Dijkman, Sprenkels, Peeters,
& Janssen, 2015).

Multi-channel marketing- The business shall be successful if there are multiple channels
like social media, blog marketing, email marketing, affiliate marketing and others.
Downside risks
When Walmart acquired Jet.com, it had potential benefit However, there were obvious
downsides. As Walmart follows cost-cutting culture, Jet’s growth shall be slow. Moreover, the
company faces additional cost for combining distribution. This also reduces the profit margin
where the company may lag behind in e-commerce (Carnette, 2016). Moreover, the business
model is flawed as not everyone wishes to purchase bulk products. The site has over 2,200
retailers signed up but only 500 have integrated so far. Therefore, Jet fulfills its customer wishes
at lower rates with a risk of further financial loss (Harpaz, 2017).
Suggested Improvements on the BM-Critical Thinking
It is suggested that Jet.com may expand their business internationally. More customer
segments may be targeted so that revenue can be increased. The website must be improved and
made more user-friendly for easy navigation of students. Funds may be generated from
stakeholders and invested so that international expansion is possible. The human resources must
be trained so that they contribute in organizational effectiveness. The key activity of supply
chain management needs to be enhanced for quicker deliveries and satisfaction of customers.
The customer relationship levels may be enhanced by assuring the customers using promotions
such as money back warranty, 24 hour delivery and so on (Gibson & Jetter, 2014).

Conclusion
Jet.com targets the consumers who are into sports, fitness, home decoration and other
segments. The organization targets all age groups from kids to old age. Jet.com targets the
middle and upper class consumers. Jet.com offers value proposition as an anti-single unit
marketplace by luring consumers to purchase multiple items at once by discounting prices. The
customers are encouraged on social media and other online channels to purchase products from
Jet.com. Jet.com mainly uses the pricing strategy for maintaining relationship with customers.
Jet.com encourages the customers to purchase products in bulk where delivery charges are saved
in a single shipment. Jet.com partners with Latch that helps people manage everything delivery.
The key resources are interlinked with the cost structure as the cost helps in planning and
management of the key resources at Jet. Jet may not just differentiate its products on the basis of
pricing, but also money back warranty and payment flexibilities.

References
Baldassarre, B., Calabretta, G., Bocken, N. M. P., & Jaskiewicz, T. (2017). Bridging sustainable
business model innovation and user-driven innovation: A process for sustainable value
proposition design. Journal of Cleaner Production, 147, 175-186.
Basile, A., & Faraci, R. (2015). Aligning management model and business model in the
management innovation perspective: The role of managerial dynamic capabilities in the
organizational change. Journal of Organizational Change Management, 28(1), 43-58.
Calvo-Mora, A., Navarro-García, A., & Periañez-Cristobal, R. (2015). Project to improve
knowledge management and key business results through the EFQM excellence
model. International Journal of Project Management, 33(8), 1638-1651.
Carnette, J. (2016). The Hidden Risk in Wal-Mart's Acquisition of Jet.com. The Motley Fool.
Retrieved 22 March 2018, from https://www.fool.com/investing/2016/08/11/the-hidden-
risk-in-wal-marts-acquisition-of-jetcom.aspx
Dijkman, R. M., Sprenkels, B., Peeters, T., & Janssen, A. (2015). Business models for the
Internet of Things. International Journal of Information Management, 35(6), 672-678.
França, C. L., Broman, G., Robèrt, K. H., Basile, G., & Trygg, L. (2017). An approach to
business model innovation and design for strategic sustainable development. Journal of
Cleaner Production, 140, 155-166.
Gamble, J., & Thompson, A. A. (2014). Essentials of strategic management. Irwin Mcgraw-Hill.

Gibson, E., & Jetter, A. (2014, July). Towards a dynamic process for business model innovation:
A review of the state-of-the-art. In Management of Engineering & Technology
(PICMET), 2014 Portland International Conference on (pp. 1230-1238). IEEE.
Harpaz, J. (2017). Will Jet.com's 'Smart Cart' Disrupt eCommerce?. Forbes.com. Retrieved 22
March 2018, from https://www.forbes.com/sites/joeharpaz/2015/08/05/will-jet-coms-
smart-cart-disrupt-ecommerce/2/#7f9e40001c7f
Jet.com. (2018). Retrieved 22 March 2018, from https://jet.com/help-center/retail-network
Monzon, T. (2015). E-commerce site Jet.com aims to undercut Amazon prices. UPI. Retrieved
22 March 2018, from https://www.upi.com/Business_News/2015/07/21/E-commerce-
site-Jetcom-aims-to-undercut-Amazon-prices/9491437492561/
Morris, K. (2018). Wal-Mart Company, Startup Latch Pitch NYC Landlords With Systems for
Easier Delivery. WSJ. Retrieved 22 March 2018, from https://www.wsj.com/articles/wal-
mart-company-startup-latch-pitch-nyc-landlords-with-systems-for-easier-delivery-
1500228847
Ojasalo, K., & Ojasalo, J. (2015). Adapting business model thinking to service logic: an
empirical study on developing a service design tool. THE NORDIC SCHOOL, 309.
Peters, C., Blohm, I., & Leimeister, J. M. (2015). Anatomy of successful business models for
complex services: Insights from the telemedicine field. Journal of Management
Information Systems, 32(3), 75-104.

Rahman, N. A., Yaacob, Z., & Radzi, R. M. (2015). Determinants of effective financial risk
management in small business: A theoretical framework. International Foundation for
Research and Development (IFRD), 89.
Rauter, R., Jonker, J., & Baumgartner, R. J. (2017). Going one's own way: drivers in developing
business models for sustainability. Journal of Cleaner Production, 140, 144-154.
Rosemann, M., & vom Brocke, J. (2015). The six core elements of business process
management. In Handbook on business process management 1 (pp. 105-122). Springer
Berlin Heidelberg.
Sekaran, U., & Bougie, R. (2016). Research methods for business: A skill building approach.
John Wiley & Sons.
Sun, B. (2016). Could Jet give Walmart customers a smart alternative to Amazon?. Recode.
Retrieved 21 March 2018, from https://www.recode.net/2016/8/11/12415964/jet-
investor-optimism-walmart-acquisition-amazon-competitor-marc-lore
Wirtz, B. W., Pistoia, A., Ullrich, S., & Göttel, V. (2016). Business models: Origin, development
and future research perspectives. Long Range Planning, 49(1), 36-54.