MGMT20143: Think Big

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MGMT20143: Think Big Term 1, 2020
Assessment 1: Business Model Deconstruction
Sujan Adhikari
12116604
Submission date: 2020-04-13
Word count: 1810
Campus (tick one): MEL  SYD  BNE  DST  Other (write): ____________
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Executive Summary
The following discussion has explored the business model of Jet.com, Inc. by deconstructing
its business model using the Business Model Canvas. All the elements that have been detailed
in the canvas have been employed with respect to the case of Jet.com. Based on the
discussion, the key risk factors were identified and the following have been recommended for
the firm.
1. Inclusion of efficient network security systems and options
2. Inclusion of efficacious cyber security measures for maintaining and managing the cloud
storage system
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Table of Contents
I. Introduction ………………………………………………………………………………………………….5
A. Company Overview – Jet.com, Inc. ………………………………………………………………5
II. Business Model …………………………………………………………………………………………6
A. Building Blocks ………………………………………………………………………………………….6
1. Customer Segments ……………………………………………………………………………….6
2. Key Partners ………………………………………………………………………………………….6
3. Value Propositions …………………………………………………………………………………7
4. Key Activities …………………………………………………………………………………………7
5. Channels……………………………………………………………………………………………….7
6. Revenue Streams …………………………………………………………………………………..8
7. Cost Structure ……………………………………………………………………………………….8
8. Key Resources ……………………………………………………………………………………….8
9. Customer Relationships ………………………………………………………………………….8
B. Interrelationships………………………………………………………………………………………9
C. Critical Success Factors ………………………………………………………………………………9
D. Downside Risks …………………………………………………………………………………………9
E. Business Model Changes…………………………………………………………………………..10
III. Conclusion……………………………………………………………………………………………..10
IV. Recommendations ………………………………………………………………………………….10
References……………………………………………………………………………………………………..11
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Appendix ……………………………………………………………………………………………………….13
Appendix 1: Business Model Canvas of Jet.com, Inc. ……………………………………….13
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I. Introduction
The developing globalization, amalgamated with the advancing technologies, have
been offering the organizations from the global arena with varied prospects with respect to
business expansion. As a result of the same, there has also been a rise in the competition
(Narula, 2014). So as to be able to survive as well as compete in the modern competitive
market, it has become vital that the organizations should develop efficacious business models
which would facilitate in maintaining the sustainability of their businesses (Narula, 2014). Due
to the technological advancement, several of the organizations are now focused on innovative
e-commerce businesses and gaining success in the online mode of business (Ho, Kauffman &
Liang, 2011). Of the different successful ecommerce retailers, Jet.com, Inc. is one such
enterprise that gained its popularity in very limited period from its launch, prior to its
acquisition by Wal-Mart Stores, Inc. that aimed at expanding its online reach (Fortune, 2016).
The business model that is followed by Jet.com shall be explored and deconstructed in the
following discussions.
A. Company Overview- Jet.com, Inc.
Jet.com, Inc. was made launched for the public in the year 2015 and was co-founded
by Marc Lore who had introduced the firm with the idea to provide the consumers with lowest
priced retail products (D’Onfro, 2016). The company offers fee based subscription
memberships to the consumers so that they are able to purchase the retail products by being
at the place of their convenience (jet.com, 2018). Jet.com was developed with the idea of
delivering products at the convenient price that was earlier not considered by the previously
established e-retails, who were majorly focused on providing these features of quick and free
delivery at the kind of price that mostly the rich people were able to access these services
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(D’Onfro, 2016). Understanding the potential that Jet.com possess, Wal-Mart Stores, Inc.
acquired the ownership at $3.3 billion in the year 2016 (Fortune, 2016).
II. Business Model
An organizational Business model possess the potential of making the business a huge
success or can lead to failure as well (Greenwald, 2012). Better understanding regarding any
organizational business model can be achieved with the help of the Business Model Canvas
that was proposed by Osterwald & Pigneur (2010), which is based on nine fundamental
business blocks. The application of the model on Jet.com can be detailed as follows.
A. Building Blocks
1. Customer Segments
Jet.com has gained a massive market, which is primarily facilitated by its focus on the
customers that are price sensitive. The organization has been targeting those consumers that
are looking for options that offer one-point shopping experience at competitive and
affordable prices.
2. Key Partners
The key partners that Jet.com possess comprises of its investors, associates, the
financial institutes, acquisitions and the shipping companies. The different distributors and
suppliers along with manufacturers and logistics partners are also the key partners of Jet.com.
the online commerce platform, facilitated by credit card purchase service providers, the
network of sellers and the parcel companies are also vital. Most important partners of the
firm are the customers, along with the media promoting the organization, the payment option
supported by Wal-Mart Pay and the collaboration that it has developed with the NGO agencies
and government.
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3. Value Propositions
The value propositions that are offered by Jet.com comprise of the pricing strategy,
financial services, the option of one stop retail shopping, the innovative solutions that are
offered for a more personalized shopping experience, the unwavering commitment that is
offered for saving the finances of the consumers and the promise of low prices that are offered
on the everyday products. However, the organization is mainly focused on the US buyers and
therefore, have also collaborated with the US sellers. The organization also offer the provision
for reviewing and commenting on the products so that the buyers are able to make better
decisions regarding their purchases.
4. Key Activities
The key activities that are performed by Jet.com comprise of the procurement,
logistics, supply chain practices, distribution of the products, negotiating with the vendors,
marketing of the services, providing customer services, processing of the payment and pricing
processes. The company is also required to conduct the activities of shipping the products,
managing the human resources, campaigns, the operations on the e-commerce platform,
maintaining innovation in the business, while processing the customer data. The activities of
the firm also comprise of development and maintenance of the application. The company also
conducts the activities of development of new digital projects related to their firm.
5. Channels
The major channels that are used by Jet.com comprise of the digital store, the
supercenter, the corporate website, discount stores, the online fulfilment store, the mobile
applications, the media, blogs, social network, Walmart Pay and the retail channels. The other
channels comprise of the shipping companies, logistics network and the internet platform.
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6. Revenue Streams
The revenue streams of Jet.com comprise of the online sales, the subscription fees,
pre-order transaction fees, discounts offered, advertising fees and the value added services
that are offered by the firm.
7. Cost Structure
The cost structures that are associated with the business of Jet.com comprise of the
costs of goods, the distribution cost, logistics cost, IT maintenance, shipping cost, advertising,
technology used for maintenance and deliverance, human resources, the payment processing
modes, the taxes that are required to be paid, and the investments that are made n the
software development and R & D.
8. Key Resources
The key resources that are required by Jet.com for the business comprise of the
employees that it possess, the acquisition by Wal-Mart, excellence in supply chain, the ability
of selling more for less, logistics assets, own brand of groceries, the focus on innovation, big
data, the network of brands and the processing of payments.
9. Customer Relationships
The customer relationships are achieved via the membership based services that it
offers, along with the benefits that are available specifically to the members. The different
shipping options available for the consumers, online purchases, online listings, rewards, real
time order tracking, convenience, reputation and wide range of selection. Customer
relationships are also developed with the help of the recommendations, tips and ideas that
are offered to the consumers, automated services and the complete digital solution which is
backed up by Wal-Mart Pay.
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B. Interrelationships
The different elements of the business model canvas of Jet.com reveal that the
innovative strategy that the company employs for providing affordable price to the customers
on the retail goods in the form of subscription provided company with more benefit.
Moreover, the pricing strategy employed has been the attraction factor amongst the US
consumers, which also allowed Wal-Mart to surpass Amazon by acquiring Jet.com. Moreover,
the customer service and the product ranges that the company offers has also attracted a
large number of the target customers (Bentonville & Hoboken, 2016). Jet.com also focuses on
providing the customers the option that enables them to select the kind of subscription that
would fulfil their requirements and therefore has arranged the products in that manner on
their online store. As a result of the same, the consumers are able to select the products as
per the subscription package that has been selected by them (Jones, 2018).
C. Critical Success Factors
The targeted approach that has been employed by Jet.com has allowed it to capture
the appropriate customer segment and the same has resulted in the success that has been
achieved by the organization, particularly in the area of online retail sector. Amalgamated with
that is the pricing strategy that has been employed by the firm which facilitated Jet.com to
gain the popularity within limited period of time and among the targeted customers
(Wainewright, 2018). The innovative business model in combination with the pricing strategy
allows Jet.com to surpass Amazon in the US market (Duryee, 2015). The acquisition by WalMart facilitated in expansion of the customer base along with the business.
D. Downside Risks
As Jet.com is an online based retail organization, the most fundamental downside risk
is the security risk associated with the big data that is possess comprising of the confidential
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client database and it has also been determined to be the source of risk by Tikk (2011). As the
company has to maintain a record of the confidential client data like their personal details,
the sensitive payment information and so on, which get stored on the cloud network, hence
the same is threatened by the cyber-attacks and require security.
E. Business Model Changes
The changes that can be recommended with respect to the business model of Jet.com,
Inc. would comprise of enhancing the cloud security system that would secure the confidential
client data.
III. Conclusion
To conclude, it can be stated that the innovative business model that Jet.com, Inc.
possess, amalgamated with the technological advancements have been the key foundational
aspects. This has been the factors that facilitated the success of the company and further
enabled Wal-Mart to surpass Amazon, upon its acquisition of Jet.com.
IV. Recommendations
The following can be recommended to Jet.com, Inc.
1. Inclusion of efficient network security systems and options
2. Inclusion of efficacious cyber security measures for maintaining and managing the
cloud storage system
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References
Bentonville, A., & Hoboken, N. J. (2016). Deal positions Walmart for expanded e-commerce
growth and customer reach. Retrieved from
https://news.walmart.com/2016/08/08/walmart-agrees-to-acquire-jetcom-one-ofthe-fastest-growing-e-commerce-companies-in-the-us
Cain, A. (2017). Walmart’s Jet.com is offering employees outrageous perks in the talent war
with Amazon. Retrieved from http://www.businessinsider.sg/walmart-jet-employeeperks-2017-11/
D’Onfro, J. (2016). Jet, a buzzy startup that raised $225 million to take on Amazon, just
officially launched. Retrieved from https://www.businessinsider.in/Jet-a-buzzystartup-that-raised-225-million-to-take-on-Amazon160just-officiallylaunched/articleshow/48164445.cms
Duryee, T. (2015). Jet.com E-Commerce Takes Aim at Amazon & Costco. Retrieved from
http://www.supplychain247.com/article/jet_com_ecommerce_takes_aim_at_amazo
n_costco
Fortune. (2016). Walmart has completed its acquisition of Jet.com. Retrieved from
http://fortune.com/2016/09/20/walmart-acquisition-jetcom/
Green, D. (2017). How Walmart turned its $3.3 billion acquisition of Jet.com into its greatest
weapon against Amazon. Retrieved from https://www.businessinsider.in/HowWalmart-turned-its-3-3-billion-acquisition-of-Jet-com-into-its-greatest-weaponagainst-Amazon/articleshow/60885555.cms
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Greenwald, T. (2012). Business Model Canvas: A simple tool for designing innovative business
models. Retrieved from
https://www.forbes.com/sites/tedgreenwald/2012/01/31/business-model-canvas-asimple-tool-for-designing-innovative-business-models/#153e916116a7
Ho, S. C., Kauffman, R. J., & Liang, T. P. (2011). Internet-based selling technology and ecommerce growth: a hybrid growth theory approach with cross-model inference.
Information Technology and Management, 12(4), 409-429.
jet.com. (2018). You’ve never seen this many ways to save. Retrieved from
https://jet.com/why-shop-jet
Jones, C. (2018). Walmart’s online sales growth slips, rattling investors. Retrieved from
https://www.usatoday.com/story/money/business/2018/02/20/walmart-appearsbeating-amazon-its-own-game/353120002/
Mohammed, R. (2015). The problems with Jet.com’s pricing model. Retrieved from
https://hbr.org/2015/07/the-problems-with-jet-coms-pricing-model
Narula, R. (2014). Globalization and technology: Interdependence, innovation systems and
industrial policy. New Jersey: John Wiley & Sons.
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries,
game changers, and challengers. New Jersey: John Wiley & Sons.
Tikk, E. (2011). Ten rules for cyber security. Survival, 53(3), 119-132.
Wahba, P. (2017). Walmart’s Jet.com is launching its own grocery brand to take on Amazon.
Retrieved from http://fortune.com/2017/09/29/walmart-jet-grocery-amazon/
Wainewright, P. (2018). An inside view of the engineering Jet.com is bringing to Walmart.
Retrieved from https://diginomica.com/2018/01/10/inside-view-engineering-jetwalmart/
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Appendix
Appendix 1: Business Model Canvas of Jet.com, Inc.

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Table 1: Business Model Canvas of Jet.com, Inc.
(Source: Wainewright, 2018; Mohammed, 2015; Duryee, 2015; Cain, 2017; Wahba,
2017)

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