Choosing the right Online Business Model in Nigeria
Part of the most interesting question I experience while consulting for Nigerians setting out to start-up an Online business is the business model to employ.
The truth is, there isn’t much magic to it, business models are already defined, the trick is to use the right one or the right combination of models for a business and integrate it in the operational work flow of the business.
A business model consists of two things: – 1.) what the business does and 2.) how the business makes money doing these things.
Below are some common B2C (business to consumer) business models:
Bringing buyers and sellers together to facilitate a transaction
Brokers charge a fee or a commission for each transaction they enable
Fee: percentage of the transaction / flat fee
Paid by the buyer / paid by the seller
Brokers do not take possession of goods and services
Virtual Mall: a site that hosts many online merchants
Auction Broker: http://www.dealdey.com/, www.ebay.com
Transaction Broker: provides a third party payment mechanism for buyer and seller to conduct a transaction (e.g. https://simplepay4u.com/,https://www.cashenvoy.com/, https://www.paypal.com/)
Search agent: an agent used to search out the best price for a good or service specified by the buyer (http://text2fly.com.ng/)
A wholesaler or a retailer of goods and services, selling them at some mark-up.
The merchant is taking a certain amount of business risk(e.g. inventory).
Dealing with distribution: handling products, matching them to customer orders, shipping
Huge investments, it takes time to start generating profits (Amazon.com, founded in 1994, profitable in 2001)
Virtual Merchant or e-tailer: a retail merchant that operates only over the web e.g. www.konga.com and www.jumia.com.ng
Click and mortar establishment with web storefront(e.g. http://www.slot.ng/)
Bit vendors selling digital products and services (iTunes)
Print, newspaper, magazines, radio, TV => online.
The broadcaster produce or distribute content and look for businesses that will pay to place advertisements within the content (e.g. entertainment supported by advertising).
High volume of traffic is needed.
Banner advertisement => clicking through
Paid placement approach (http://lindaikeji.blogspot.com/, http://www.bellanaija.com/, pulse.ng, www.nairaland.com etc.) of advertising within search and the placement of links within various kinds of websites.
Portal: a search engine that may include several content or services
– niche portal – Job sites (http://www.jobberman.com/, careers24.com), Real Estate (http://www.lamudi.com.ng/, http://tolet.com.ng/), Cars (http://www.carmudi.com.ng/, http://www.checki.com.ng/),
Classifieds: list items for sale or wanted for purchase (e.g. http://www.olx.com.ng/, http://jiji.ng/)
The customer is charged a periodic fee (daily, monthly, annual, etc.) regardless of actual usage rates.
From product to services => subscription (e.g. software).
e.g. http://www.jobberman.com/, http://www.checki.com.ng/
Some of these businesses run multiple online business models.
We will pull the plug on this post here and attempt to continue with the rest of the models in a subsequent post.
Contact us if you need help with your business model.