Business Model Deconstruction and Analysis: Jet E-commerce Report

This report provides a comprehensive deconstruction of Jet E-commerce's business model. It begins with a succinct description of the company, its industry (e-commerce), the market it serves (USA), and the products it offers (groceries, household supplies, electronics, etc.). The analysis then delves into the business model canvas, outlining key partners (Walmart, third-party developers), activities (building e-community, seller education), resources (Walmart backbone, CEO), value proposition (real-time price algorithm, JetCash), customer relationships (online support, seller education), channels (social media, mobile app), customer segments (sellers, buyers), cost structure (platform development, salaries), and revenue streams (membership fees, sales). The report explains the interrelationships between the nine building blocks of the canvas. It identifies critical success factors, such as DemandStream integration, user-friendly interface, and service-oriented approach. Furthermore, it evaluates potential downside risks, including competitive market conditions and declines in value. Finally, the report suggests changes to the business model, emphasizing improvements in logistics, seller networks, key activities, value proposition (fast delivery), and customer relationships (automated service, social networking) to increase market share. The report concludes by highlighting the importance of these elements for operational and strategic management.

Running head: BUSINESS MODEL DECONSTRUCTION
Business Model Deconstruction
Student’s name:
Name of the university:
Author’s note:

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Table of Contents
Introduction......................................................................................................................................2
1. Providing a succinct description of the business Jet E-commerce, the industry, the market it
serves, and the products it provides.................................................................................................2
2. Describing the business model canvas of the selected business using the nine building blocks.3
3. Explaining the key relationships that exist across the nine building blocks................................5
4. Identifying and discussing the critical success factors the business has to get right to achieve
sustainable success...........................................................................................................................6
5. Evaluating what will contribute to downside risk.......................................................................7
6. Discussing the changes would make to the business model........................................................8
Conclusion.......................................................................................................................................8
Reference List..................................................................................................................................9

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Introduction
A business model describes the process and rationale of how a firm delivers, creates and
captures values in external environment contexts. The making of appropriate business model
construction can be defined as the business strategy of the management. As stated by Wang,
Wang & Liu (2016), the business model canvas is a management strategy and lean start-up
method for developing new or existing business model; it consists the organisation's value
proposition, customers, infrastructure and finances. The aim of this study is to highlight and
deconstruct the business model of Jet e-commerce which is successfully using the business
model to survive in the market.
1. Providing a succinct description of the business Jet E-commerce, the industry, the
market it serves, and the products it provides
Jet E-commerce: Jet.com is the subsidiary of Walmart and this e-commerce was
founded in the year 2014. The owner of the business is Walmart and it is an American company.
Jet e-commerce has it's headquartered in Hoboken, New Jersey. This e-commerce was co-
founded by Marc Lore, Nate Faust and Mike Hanrahan (Jet.com, 2018). Marc Lore sold his
previous owned organisation Diapers.com to Amazon.com and the owners raised $820 million
for Jet e-commerce business. This site was launched for the public in the year 2015, July. It has
currently more than 1500 employees and in the year 2016, August Walmart acquired the
company.
Products and services of Jet E-commerce: Jet e-commerce sells grocery, household
supplies, and health & beauty products. Electronics and computers, furniture, home-based

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products, baby products, women fashion clothing, pet supplies, appliances, books, music, toy &
games, arts, crafts, men's fashion and sports, fitness and outdoors.
Industry: Jet e-commerce is in the e-commerce industry in the US.
Market: In 2017, in the USA, e-commerce sale grew by 16.03% (Jet.com, 2018). Most
importantly, B2C business through e-commerce has been flourishing and retail e-commerce sales
in the USA in Q4 2017 were 119.02 billion USD. Amazon is the major player in the USA and it
takes the market share of almost 47%; others in the market are e-bay (6.8%), Best Buy and
Macy’s.
2. Describing the business model canvas of the selected business using the nine building
blocks
Figure 1: Business Model Canvas of Jet e-commerce

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(Source: Self-developed)

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Partners: Government and business alliances; however for Jet e-commerce, main partner
is Walmart as it is the subsidiary of it. Third party developer who has made the website and
mobile app. Local organisations and businesses that provide sell-through Jet e-commerce.
Key activities: Building e-community and seller education. Jet e-commerce wants to
develop the platform to increase the sale process. Jet Partner programmes allow the companies to
sell their products through Jet e-commerce by opening an account through Application
Programming Interface (API)
Key resources: Jet e-commerce's main resource is the backbone of Walmart. The high-
quality benchmark is another resource. The CEO of the business is another resource with the
quality business model. The technological advancement in the field of pricing and using the
DemandStream integration can help to come closer both merchants and sellers.
Value proposition: ‘Real-time price algorithm' that helps to gauge the true marginal cost
of the products for the customers. Jet e-commerce has a direct link to their customers through
websites such as Sony store and TigerDirect.com. Users can spend money on other venue and
they can earn JetCash. Some of the partner sites are Nike, Hotels.com and Ann Taylor.
Customers can purchase a $50 annual membership to get the lowest prices on 10 million items.
Customer relationship: Online support through chat. The customers can have call
support from the executives. Seller education support is also there. Jet e-commerce hosts events
to share knowledge to increase the knowledge of the sellers. The customers of the business can
get the support through chat and posting queries.

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Channels: Social media and online community. Word-of-mouth publicity is another
channel. The customers can purchase through mobile app and website. Partner’s programme can
be helpful.
Customers: There are two types of customers for Jet e-commerce. Sellers are the large
and small merchants. The sellers are from various industry electronics, jewellery, grocery and
furniture. The buyers purchase those products and the product must be unique and less priced
than the competitors in the market.
Cost drivers:
 Platform development, website and mobile app
 Seller education initiative
 Salaries of the staffs
Revenue streams: Jet e-commerce will not make a profit from the individual transaction
rather than the company charges a modest membership fee that would lead to the market share.
Sales of the e-commerce are the source of the revenue.
3. Explaining the key relationships that exist across the nine building blocks
Customer building block defines the customer segment aimed at the organisation and in
case of e-commerce; the customers are mainly two types, sellers and buyers. Their needs are
different and they require various types of relationships and they can pay different aspects of the
offer. Value proposition building block must be innovative and it makes the organisation
separates from the other organisation. The value proposition can solve the problem of the
customers (Chiu et al., 2014). Channels building block mainly delineates the communication

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mode to the customers and channels help to raise the awareness of the company's products.
Customer relationship is another important element and it helps to customer retention,
acquisition and boosting sales. Revenue streams in e-commerce results from a one-time payment
of the customers and recurring revenues from on-going payments. Key-resources of the
organisation is physical, financial, intellectual and human resources. In e-commerce
technological resource is very important and key activities of the organisation help to work the
business model successfully. Activities and resources help the business to do the key activities.
Key activities of the business can come from the partners as well (Ayala & Manazno, 2014). A
partnership can be formed through alliances, joint venture or just suppliers and buyers
relationship.
4. Identifying and discussing the critical success factors the business has to get right to
achieve sustainable success
Jet e-commerce announced DemandStream integration and it is the enterprise cross-
channel successful demand solution. This technology has been helping Jet e-commerce to work
with notable brands that now have their products assortment on Jet e-commerce. Jet e-commerce
tries to connect the brands and the retailers in the most efficient way. The profit percentage does
not come to Jet e-commerce from individual transaction but from the membership.
DemandStream integration can help the sellers to manage the order and fulfil it with the
comparative rate. DemandStream helps in product catalogue quickly and accurately on both
mobile and desktop (Commercehub.com, 2018). If the prices of the products change with
inventory and assortment, the technology will automatically update the price of the products.

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Critical success factor of the business depends on the newness of the value proposition. The
performance of the products and services must be good and Jet e-commerce has made tied up
with the online brands and the customers can automatically go to the products links. The
customers can collect the JetCash from purchasing the products of other brands and they can use
this for value creation. The interface of the mobile app and the desktop version must be user-
friendly so that the customers can easily browse the products and make payment through this.
Customisation of the products for specific customer segment can help the organisation to create
value (Emerick et al., 2016). Jet e-commerce currently has only 4% market share in the USA
market and they are trying to improve the market share through service-oriented approach.
5. Evaluating what will contribute to downside risk
As stated by Konchitchki et al., (2016), downside risk can be defined as the estimation of
potential to suffer a decline in the worth if the market condition changes. Jet e-commerce can
face the amount of loss that could be sustained as a result of a decline in the market. Jet e-
commerce raised the amount of $800 million and downside risk describes the worst case scenario
for the investment. The investor can lose the $800 million if the downside risk occurs. Jet e-
commerce can face the downside risks with the finite amount and the investor will not lose the
entire amount. Downside risks can come from the competitive marketing condition and decline
of value. Increased downside risks will automatically enhance the chance of reward. Jet e-
commerce can face the downside risk because of the downside risk measure and the negative
market return.

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6. Discussing the changes would make to the business model
In a business model, Jet e-commerce needs to improve the key partners of the business
mainly; the business should make some logistic partners so that the products and services deliver
very easily. Jet e-commerce can improve the network of sellers so that the product categories can
improve.
In addition, Key activities need to improve in product merchandising and designing of the
service and products. API can be changed into merchandising as it would help Jet e-commerce in
development of the customer base.
The value proposition is mainly based on the DemandStream technology of Jet e-
commerce. The pricing will be different based on the delivery address of the products. Jet e-
commerce can improve the value proposition of the business based on the fast delivery of the
products.
In addition, the customer relationship must be improved through automated service and
using social networking. Apart from posting queries, Jet e-commerce can solve the issue using
emails and social networking. The customer segment can be improved through individual
leverage and USA based consumer market.
Conclusion
This study has been put strive to outline several prescriptions that form the building
blocks for each of the activities to focus on both operational and strategic management. It has
been observed that Jet e-commerce is new in the market and it mainly focuses on the value
proposition in order to attract the customers. The performance management team of Jet e-
commerce can drive maximum sales growth through optimising the campaign of DemandStream.

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The organisation needs to improve in key partnership, key resources and channels to
communicate with the customers to increase market share.

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Reference List
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modelling: Modularity and manipulation. In Business models and modelling (pp. 151-
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Ayala, J. C., & Manzano, G. (2014). The resilience of the entrepreneur. Influence on the success
of the business. A longitudinal analysis. Journal of Economic Psychology, 42, 126-135.
Chiu, C. M., Wang, E. T., Fang, Y. H., & Huang, H. Y. (2014). Understanding customers' repeat
purchase intentions in B2C e‐commerce: the roles of utilitarian value, hedonic value and
perceived risk. Information Systems Journal, 24(1), 85-114.
Eisend, M., & Schuchert-Güler, P. (2015). Journal publication success of German business
researchers: does gender composition and internationality of the author team
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Emerick, K., de Janvry, A., Sadoulet, E., & Dar, M. H. (2016). Technological innovations,
downside risk, and the modernization of agriculture. American Economic Review, 106(6),
1537-61.
Jet e-commerce (2018). Retrieved 26 March 2018, from http://jet.com/
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.
Konchitchki, Y., Luo, Y., Ma, M. L., & Wu, F. (2016). Accounting-based downside risk, cost of
capital, and the macroeconomy. Review of Accounting Studies, 21(1), 1-36.