The hybrid business model: the key to success for your e

• Published on August 25, 2014

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Vice-President, Global Sales and Channels at k-eCommerce. Partner

A study published by the OPCE (Organisation for the promotion of e-commerce) in spring 2014 revealed that companies with an hybrid business model have a much better success rate in their ecommerce initiatives than companies who developed an ecommerce division or separate entity within their organisation to do business online.

What is a hybrid business model? In fact, in its simplest form, it’s a model that combines the conventional ways of doing business with the technical means made possible by the internet.

Adopting a hybrid business model should be based on the alignment between your business strategy, its execution plan and your best practice to build exceptional customer experiences.

For example, let’s say your strategy is to become the largest distributor of healthcare products in Canada; to get there, you build an execution plan designed to make your organization a model for logistical efficiency. To execute this plan, you will need to know your customers and their consumption habits and establish the means to meet their expectations.

Let’s take a look at a legacy business model and then we will establish the parallel with an hybrid model. I like to describe the working conditions and strategies developed by the general store owner at the time of colonization Canada.

First the store location; the typical store was at a crossroads and just steps from the meeting place for villagers and residents of the municipality or township…the church.

Second, the products offered and the inventory management practice; having accumulated knowledge of the habits of its customers (growing size of families and their members age, sex and occupations) the selection of goods and quantities ordered and stocked needed to supply its customers should be as precise as possible to ensure profitability since they had to take into account the vagaries of supply (cold winter and impracticable roads and distance) and the space available to store, in optimal conditions, perishable items . Again, the front of the church was the place where the information was exchanged (weddings, births and deaths). Furthermore, the store also played the role of an information broker. Information rich, the merchant could then customize its offer based on consumer habit and every member of their families. Even the payment methods could vary according to the client (his credit, his work, status, etc.). The competition was based on seasonal promotions (the amazing traveling salesman and the regional fairs) and the remoteness of the most accessible village. If reputation and customer service weren’t meeting the villager’s expectations then discussions on the church yard could lead to the collapse of trade.

Therefore the hybrid business model is an extension of the conventional business model and not an invention of a new way of doing business.

Based on the example of the general store, the parallel between the legacy and the Hybrid business model could be describe as follows:

The strategic location (near the church) could be compare to today’s search engine optimization techniques or used as trading communities to facilitate access to your products or services.

Business intelligence platform or Enterprise Marketing automation could be use to tailor your offering to the best possible target market.

Optimization logistics and delivery applications could be deployed to build a lean, just in time provisioning and delivery mechanisms (near real time) to ensure maximum profitability.

Of course the applications of customer relationship management (CRM) could have tremendous impact on your business if you could leverage on a complete understanding of our customer's purchase history, key contacts as well as a depository of all documents related to our business relationship.

Finally, thanks to social media, your e-reputation could be managed to help you build, maintain or improve the value of your image in your target market.

So today, in a global market you cannot afford to isolate and treat it as an isolated village nor our customers as captive entities. We need to adopt a business model that allows us to sustain a growth factor to the scale of our ambitions.

Here are some examples of business models to meet various criteria, prevalent worldwide (not exhaustive list):

Inventory Management Excellence:

Use when product stocks at the stage of convenience and the price and availability are the main element of the purchaser criteria

Excellence in Logistics

When the differentiator is the level of simplicity and accessibility of a product or service

Excellence in Customer Experience:

When you design your offering (product, service and its accessibility) based on your customer preferences, requirements and attributes.

Leveraging communities (buying or selling portal):

Used when sharing of resources, risks and costs is more profitable than individual offerings

As a content aggregator model

When leverage on the reputation or size of an entity can effectively serve the market

Model of social commerce

Several models have been created to serve as open or closed communities to market or acquire by strengths and leverage from a group

Model of mass customization

Model-based product creation on a small scale, but automate through supplier networks for marketing purposes but deliver on a large scale

These models use different technologies and they need to be tailored to your needs, do not hesitate to validate these tools in the context of your business model and your reality. You must be careful in developing your hybrid model to avoid developing inconsistencies between your brand or your legacy and reputation and conventional operations and your e-presence. Your e-commerce customer and your customer in a conventional relationship could very well be the same people so don’t appear like a different entities in his eyes. The customer is in the center of your model but you aren’t the center of their universe.

The tools and technology platforms available today do not reinvent the customer relationship and are by no mean a guarantee of excellence to develop an exceptional customer experience, but leveraging them will allows the flexibility and the possibility to automate tasks that are too complex to be produced on a large scale.

Finally, as in any model development or strategies; planning, testing, measuring success and quickly developing course correction are essential; with a lean approach (agile), this loop can be made much faster (faster error corrected and immediate acceleration of what works well). Be agile, flexible and aim for excellence in customer experience and your business model hybrid bring you the competitive advantage that will ensure success and sustainability.

The author, André Lavigne, co-founder of eCom Montreal and strategist for sale, coach and speaker. He also created programs to build customer engagement optimized cycles. He is the founder and President of the consulting firm KM & T (www.km-t.ca).

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