Customer retention rate. Image source: r-bloggers The margin you make as a retailer on the sale of one telephone or television will. Often not differ that much. But, if the customer orders something from you 5 times a year, and only 2 times from the competition, the differences suddenly become very large. The basis for a huge flywheel is then quickly laid. Many large parties have seen this early on and have acted accordingly in the implementation of their strategy. Amazon promotes retention with Amazon Prime, among other things. Bol does that with Bol.com Select. With these retention programs they are able to retain customers for longer, earn more money from these customers and are therefore able to invest more money in the acquisition costs of a new customer. 13. The battle of the business models continues In fact, we basically only know 4 different business models.
Important Challenge for Retailers Who Are Themselves
Another well-known model is the advisory model, which includes consultancy companies, for example. In addition, you have so-called assetlight models, where the pre-investments for 1 version are very large, but then cost almost nothing more. Salesforce and Microsoft are good examples of this. Finally, you have the model of network orchestration, with platforms such as Amazon, Booking.com, Facebook and Uber. If you look at where value has been created within, for example, the Fortune 500 Shipbuilding Boatbuilding Email List over the past 20 years, it consists of approximately 20% assetlight models and approximately 80% (!) network orchestration models. In many cases, the stock prices of these types of companies just keep growing and growing. The economies of scale and network effects of platforms are so great that they will continue to expand their positions in the coming years.
Challenge for Retailers Who Are Themselves
This provides advertisers with many opportunities, but also brings with it the necessary dilemmas and challenges. Amazon and Bol.com are of course good examples of this themselves. Many other (traditional) retailers are experimenting in this area. Logical, because the place you occupy as a retailer within the total distribution. Chain has undoubtedly become more important online than ever before. One of the major challenges is that the transition from a less flexible model to a network orchestration model is often hugely capital intensive at first. Another important challenge for retailers who are themselves active within these platforms is to offer the distinction within their proposition. That is of great importance. After all, many of these platforms focus on standardized products, so that price quickly becomes important. As a result, a continuous competition can break out in that area, while dependence on the platform has already developed in some cases.