Shippit Business Model Deconstruction: A Comprehensive Analysis

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BUSINESS MODEL DECONSTRUCTION
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Table of Contents
Introduction......................................................................................................................................3
About the company..........................................................................................................................4
Business model deconstruction........................................................................................................5
Key interrelationships among nine building blocks of Shippit.......................................................7
Key success factors of Shippit.........................................................................................................8
Factors affecting the success of business model..............................................................................9
Recommended changes in business model....................................................................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................13
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Introduction
The business model provides a foundation for corporate strategy. One of the key success factors
of newly established companies indicates the implementation of a viable business model. This
report aims at deconstructing a business model for an Australian company named Shippit. It will
use the business canvas model of nine building blocks developed by Osterwalder & Pigneur. It
will identify their inter-relationships and critical success factors. It will suggest some changes to
the existing business model for making it more effective.
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About the company
Shippit was introduced in February 2015 in Sydney, Australia. The company established with a
mission of "to simplify the way of getting shipping done in the right manner”. It started working
for homeware and fashion boutiques in Surry Hills of Sydney. Shippit considers as an innovative
company established for providing great shipping experience to online retailers. it provides
services such as packaging & carrier decisions, reserving one or multiple carriers, shipping
tracking system and notifying customers about shipping status and so on. Shippit operates in the
shipping industry of Australia that provides shipping techniques to large and small players with
the time and money-saving process.
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Business model deconstruction
Key Partners
 Online retailers
 Boutiques
(homeware &
fashion)
 Freight
companies
 Software
development
 Australia Post
 BigCommerce
 Mail Call
Courier
 Employees
 Companies such
as Harvey
Norman and
others
Key Activities
 Shipping
platform to
online retailers
 Providing
shipping
solutions of
modern-day
 Marketing
 Generation of
transport
providers
community
 Maintenance of
software
 Operations
 Supply chain
management
(Crotty Yvonne,
et. al., 2017)
Value
proposition
 Great
shipping
experience to
customers
and retailers
 Improved
tracking
system
 Flexibility to
customers in
shipping
 Online
platform for
retailers’
shipping
 Efficient and
safe delivery
Customer
Relationships
 Customer
feedback
 Text messages
and E-mails
 Easy to use
mobile app
 Social media
 Hassle-free
shipping
tracking to
customers
 Partnerships
Customer
segments
 Online
retailers
 Physical
retailers
 Business or
individual
required
shipping
service
Key Resources
 Warehouse
 System of
inventory
management
 Vast retailer base
 Employees
Channels
 Website
 Email
 Telephones
 Online and
physical retailers
 Social media
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 Finance
 Partnerships
 Transportation
system
 Brand awareness
 Packaging
materials
 Sales Workforce
Cost Structure
 Insurances
 Employees
 Taxes
 Transportation cost
 Online platform maintenance
 Marketing & sales
 Activities of security
 Purchasing and maintenance of a fleet
Revenue Streams
 Value-added services
 Service charges & fees
 Bids of transport providers
 Membership/registration fees
1. Key partners: Employees, online retailers, freight companies, transport providers,
software development companies, Australia Post, Mail Call Center, Harvey Norman, and
BigCommerce and so on (Ladd, 2018).
2. Key Activities: Shipping platform to online retailers, providing shipping solutions of
modern-day, marketing, generation of the transport provider community, maintenance of
software, operations, and supply chain management
3. Value Proposition: Great shipping experience to customers and retailers, improved
tracking system, flexibility to customers in shipping, an online platform for retailers'
shipping and efficient and safe delivery
4. Customer relationships: Customer feedback, text messages and E-mails, easy to use the
mobile app, social media, hassle-free shipping tracking to customers and partnerships
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5. Customer segments: Online retailers, physical retailers and business or individual
required shipping service
6. Key Resources: Warehouse, a system of inventory management, vast retailer base,
employees, finance, partnerships, transportation system, brand awareness and packaging
materials
7. Channels: Website, email, telephones, online and physical retailers, social media, and
sales workforce (Ojasalo & Ojasalo, 2018)
8. Cost Structure: Insurances, employees, taxes, transportation cost, online platform
maintenance, marketing & sales, activities of security; and purchasing and maintenance
of the fleet
9. Revenue streams: Value-added services, service charges & fees, bids of transport
providers and membership/registration fees
Key interrelationships among nine building blocks of Shippit
All the nine blocks of the business model canvas are inter-related to each other in Shippit. The
key blocks are key partners, customer segments, value proposition, key activities, customer
relationships, cost structure, revenue streams, channels and key resources. The key resources and
key activities complement each other as without the availability of adequate resources, the
company would not be able to offer its services to customers (Harima & Vemuri, 2015). The key
partners are contributing in providing efficient services to customers and strengthening value
proposition. The number of key partners helps in defining or constructing customer segments.
With a value proposition, the company gets assistance in developing and maintaining sound
relationships with customers that result in high customer loyalty.
The key activities cannot be undertaken without having a specific cost structure and this cost
structure is developed using a budgeting system. Shippit develops its revenue streams based on
the cost structure and this helps in determining profitability for the specific year (Daly, 2017).
The key activities are used for structuring customer segments and these segments contribute to
generating more revenue for the company. As an instance, the key activities are shipping services
and for this, retailers would be the most significant segment as these retailers find shipping a
troublesome task. Shippit provides cost and time-effective shipping services to retailers and other
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customer segments for efficient product shipping to customers. It helps in supporting value
proposition and customers attract in large number when realizes they are receiving high value.
It provides customer feedback facility to customers through websites and they get the
opportunity for improving customer service that encourages great customer relationships. The
company undertakes marketing and promotion through social media and also uses it for
interacting directly with customers (Osterwalder & Pigneur, 2013). Shippit must provide services
at a lower cost that directly impacts the cost structure and profit margins. The employees
undertake all efforts for providing the best services to customers through their skills and
capabilities. These employees help in generating more profitability by identifying key partners
and strengthening customer relationships that make them one of the key resources. It has been
realized that all the nine blocks are interlinked to each other and constitutes a great business
process of Shippit.
Key success factors of Shippit
 Shippit considers as one of the most innovative companies in Australia and this
innovation constitutes a significant success factor for Shippit. For its innovation, it has
been honoured with numerous awards such as the winner of 2018 Westpac Business of
Tomorrow and 2017 Finder Awards for the Best Online Shopping Innovation. It
integrates innovation by providing software solutions in logistics and fulfilment centre.
 The company has a wider customer base which means it has partnered with hundreds of
retailers (online & offline). The key partners of Shippit are major players such as
Australian Post, Mail Call Courier, Harvey Norman, and BigCommerce and so on (Chen,
et. al., 2018). At present, it has more than 800 retail companies that have become a
success factor of Shippit in the shipping industry of Australia.
 Apart from this, Shippit possesses trusted software and integrates simplification in
shipping operations of retail companies. It uses cloud-based software for providing a
shipping platform to customers. This software helps Shippit by offering benefits such as
easy configuration, faster shipping and effective tracking.
 The company enjoys the benefits of employees' talents and capabilities while providing
great customer service. The employee team of Shippit is characterized by diversification
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where employees belong to different diversified backgrounds. All the employees
undertake efforts for keeping their customers happy and providing time and cost-effective
services to customers.
 The strategic focus should be the most significant part of Shippit’s corporate strategy.
Shippit should focus strategically on its major corporate aspects such as management,
leadership and planning (Pourhanifeh & Mazdeh, 2016). It would assist in developing
effective strategies and attaining competitive advantage within the shipping industry.
Factors affecting the success of a business model
 Shippit operates in the Australian shipping industry where exist other competitors as well
including ShipHawk, Temando and Shippo and so on. The existing business model may
get affected by the competition pertaining within the industry. Therefore, it develops the
requirement for dealing with this competition for maintaining business model success.
 It has been seen that Shippit has been operating within limited boundaries only. The
globalization has enhanced competition and due to this, the company should now focus
on global expansion after success in Australia (Omri, et. al., 2015). Otherwise, this
business model will lead to the failure of the company.
 The customer segment of Shippit is confined to retailers only whether online or offline. It
is necessary to integrate new target markets of customers for widening the existing
customer base. Otherwise, it would also limit the company’s profitability in Australia and
other countries.
 The global expansion comes with rules and regulations vary from country to country. It
would affect the existing business model and involved the risk of losing attractiveness
and effectiveness. Therefore, a uniform business model should develop with a certain
degree of flexibility (Alpenidze, et. al., 2019).
 Industrial changes need to implement by Shippit for keeping pace with industry trends.
Resistance to change from employees is natural when a company implements changes.
Therefore, it is necessary to increase the focus on human resource management.
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Recommended changes in the business model
Key Partners
 Online retailers
 Boutiques
(homeware &
fashion)
 Freight
companies
 Software
development
 Australia Post
 BigCommerce
 Mail Call
Courier
 Employees
 Companies such
as Harvey
Norman and
others
 Government
 Customs
services
Key Activities
 Shipping
platform to
online retailers
 Providing
shipping
solutions of
modern-day
 Marketing
 Generation of
transport
providers
community
 Maintenance of
software
 Operations
 Supply chain
management
 Packaging of
products
 Research &
development
Value
proposition
 Great
shipping
experience to
customers
and retailers
 Improved
tracking
system
 Flexibility to
customers in
shipping
 Online
platform for
retailers’
shipping
 Efficient and
safe delivery
 Establishing
green
initiatives
Customer
Relationships
 Customer
feedback
 Text messages
and E-mails
 Easy to use
mobile app
 Social media
 Hassle-free
shipping
tracking to
customers
 Partnerships
 Promotional
offers to
customers
Customer
segments
 Online
retailers
 Physical
retailers
 Business or
individual
required
shipping
service
 Wholesalers
 Importers &
exporters
Key Resources
 Warehouse
 System of
inventory
management
Channels
 Website
 Email
 Telephones
 Online and
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 Vast retailer base
 Employees
 Finance
 Partnerships
 Transportation
system
 Brand awareness
 Packaging
materials
physical retailers
 Social media
 Sales Workforce
 Flagship retail
outlets
Cost Structure
 Insurances
 Employees
 Taxes
 Transportation cost
 Online platform maintenance
 Marketing & sales
 Activities of security
 Purchasing and maintenance of the fleet
 Legal issues
Revenue Streams
 Value-added services
 Service charges & fees
 Bids of transport providers
 Membership/registration fees
 Renting spare space to retailers of
wholesalers
If it was my business, I would establish partnerships with the government as well as customs
services. I would provide services such as product packaging to customer segment and make
research & development, an essential business activity. I would undertake initiatives of making
this business environmentally safe due to the increased environmental awareness of people. I
would establish an additional revenue stream by providing spare space of the warehouse or
others to business customers on rent (Joyce & Paquin, 2016). My business cost structure would
also deal with legal issues and flagship retail outlets of the company would enhance access to
customers. I would target wholesalers, importers and exporters for the business and would offer
promotional discounts to customers on a periodical basis for customer retention.
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Conclusion
Shippit is an innovative shipping company of Australia and its business model has facilitated
great success to the company. The nine parameters of the business model are interconnected and
critical success factors of the company are identified as innovation, wide retailer base, strategic
focus, cloud-based services and skilled employees. There are certain factors identified that can
impact business model success including high competition, global expansion and limited
customer segment. Changes are also recommended for an improved business model such as
packaging of products, government partnership, revenue through renting, and promotional offers
and so on.
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