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Business Model Assignment: Deconstruction of Shippit Business Model

Question

Task Description:To be completed individually, you are required to prepare a business report that deconstructs an organisation's business model and identifies the critical success factors that make the business sustainable. Your analysis will demonstrate your critical thinking skills and your ability to professionally articulate your findings.

Before commencing, you must seek your lecturer's approval to undertake an analysis of the business you have chosen. The type of organisation that should be identified for study is one that is relatively new, innovative in how they operate, and have most likely been established in the last five years.

To achieve a result that meets your study objectives, please ensure the business report addresses each of the assessment criteria detailed below and which is elaborated in the marking rubric.

Answer

Executive summary: This business model assignment determines the business model of Shippit by utilizing the nine parameters of the business model canvas. This approach is needed in order to determine and recognize the key factors affecting the business process and how it can be improved. This report analyses the key factors of a business process and how each segment cam be designed for better business output.

From this research project, we can deduce that:

  • The target market segmentation of the company is based on demography and behavioural pattern of the consumers
  • The company aims to provide a transparent and swift delivery process for the customers
  • The key partners of the Shippit are Australian Post and BigCommerce
  • The company might face contest from other worthy competitors like Shippo

Business model: The primary aim of the business model assignment is to provide a transparent communication medium between the retail organisations of the country and the consumers. The company aims to present a distinct business structure where the consumers will be provided a wide spectrum of features in order to improve the overall logistics process. Shippit has introduced an idea of product delivery within three hours of booking of the product (Bocken et al., 2014).

Building blocks: The Osterwalder & Pigneur’s (2010) nine building blocks have been referred to in order to segregate the key business parameters and provide an overall view of the business process.

Customer segments: Being a logistics organization the market and customer base will include the populace from all the age groups. The company functions in Australia and thus the market ad customer is segmented depending on their needs and the economic scenario and behavioural patter.

Parameters

Australia

Total population

24.39 million as of 2018

Sex ratio (males per 100 females ratio)

98.5

Average annual Income

$ 80,132

Table 1: present scenario of the possible and present consumers of Australia
Source: (www.indexmundi.com. 2018)

Shippit focuses on both the retailers and the consumers. After introducing a joint venture with Australian post, the company was one of the largest logistics organisations in Australia. The company is now aiming to adopt the idea of global expansion. The company aims to expand its business process in the United States of America and in order to expand in the US, Shippit needs to address the current scenario of the country of expansion (Joyce and Paquin 2016).

Parameters

United States of America

Total population

327,996,618 as of 2018

Male and female percentage

Female 50.8 percent and male 49.2 percent

Average annual Income

$ 100,000

Table 1: present scenario of the possible consumers of the United States of America
Source: (www.indexmundi.com. 2018)

Key partners: The Company was founded in the year 2014, and was an active participant in the logistics market in 2015. In the initial years, the company worked as a delivery and shipping platform for a handful of fashion and homeware boutiques of Sydney. However, in the next two years Shippit has exponentially expanded its business by introducing more than 750 retail organisations in the business process (Yoo 2018). The company now handles more than 250,000 parcels every month (Yoo 2018). One of the key partners that the company has bagged is the Australia Post. Along with Australia post, the company became one of the most active and largest logistics organisations in Australia. Along with this, the Australian sector of BigCommerce is another principle collaborator with the company.

Value proposition: The company aims to present a flawless delivery experience for the customers by introducing the idea of three-hour delivery window. Along with this, the online application that the company presents provides a wide spectrum of features, which includes an improved tracking system. The business policy of the company towards the consumers is quite lenient because the customers can change the delivery location even after the products are shipped (www.shippit.com. 2018).

Key activities: Shippit is a delivery application, which acts as a channel between the retailers and the consumers. The principle business function of the company is to be an online platform of E-commerce where the consumers can purchase products from over 800 retail stores. The company is a delivery medium for the consumers (Yoo, 2018).

Channels: The company aims to reach out to the target customer segments and for that, a suitable distribution channel is required. Being a logistics organisation, the key distribution channel is direct. The company will act as a medium between the retail organisations and the consumers. The online application of the company is the initial communication channel for the customers (Yoo 2018).

Revenue streams: The Australian shipping industry earns revenue of about 13 billion dollars and Shippit contributes a considerable amount in the overall revenue earned (Asa.com.au. 2018).

Cost structure: With increased business process the expenditure on operations and resources has increased exponentially, the shipping industry of Australia has a low profit margin and the overall cost contributes to about 40 percent of the overall income (Asa.com.au. 2018).

Key resources: The principle components necessary for a business process of an organisation includes the value proposition, services, the operations process and the supply chain process of the overall business functions. Shippit being a logistics organisation, the key resources includes:

Physical resources: Warehouse, cold storage hubs, communication mediums (heavy vehicles), security services, production machineries (Swan 2018).

Intellectual resources: Non-physical resources includes marketing parameters, brand, distinct business procedures, copyrights and partnerships with other organisations

Human resources: The workers and the employees are one of the most significant resources for an organisation. The human resources includes, the operations and supply chain mangers, customer service executives, technical support executives and other employees who are an integral part of the company

Financial resources: The overall business capital, the lines of credit and the overall finance of the business process. Being a logistic firm, Shippit needs to have a strong financial base because transportation and delivery is steep.

Customer relationships: The executives of Shippit aim to consider customer relations and engagement as the principle business priority. Regular communication with the present customers via electronic mails and text messages will improve the relationship between the organisation and the customers (Swan 2018).

Interrelationships: All the nine parameters in this Business Model Assignment are interlined with each other and together they make up a successful business process. The most important factor is to determine the present scenario of the functioning country and how it can be referred to in order to align the overall business structure. The value proposition of the organization depends on the overall trade plan of the company and its primary aims and objectives. In order to determine the value proposition, it is necessary to determine the consumer needs and segment the target market eventually. The functioning and process of the business determines the situation of partnerships and merges with other organisations. The overall expenditure of the organization depends on the total revenue earned by the company. The distribution channels of Shippit are one of the determining factors of the overall business revenue and output. Along with this, better and transparent customer relationship will determine the sales and thus the overall business process.

Critical success factors: Shippit was co-founded by Rob Hango-Zada in the year 2014. The initial business process of the company included about a dozen retail organisations. However, in the year 2016, the company handled parcels for more than 800 retail brands spread all over Australia (Swan 2018). After about two years of business initiation, the company merged with Australian post, which turned out to be a considerable factor for its success. Along with this, BigCommerce Australia recently partnered with Shippit.

The most significant parameters of success for the organisation are its distinct approach towards the business process. Compared to other competing organisations like Shippo and Temando, the company has introduced advanced and more user-friendly tracking software and the three-hour delivery assurance is one of the principle reasons for expansion of the customer base (Nußholz 2018).

Downside risks: The most significant risk that can be witnessed for the company is notable competition from other organisations. Organisations like Shippo and Temando are at par with respect to the overall business process and the market scenario. Along with this, the company needs to adopt new ideas and strategies for better market positioning. Shippit aims to adopt the idea of global business expansion and is willing to expand the business process in the United States of America. In this case, the business process and structure of the country might affect the business structure and policies of the company, along with this, the company will be facing severe competition from other logistic giants based in the US (Yoo 2018).

Business model changes: The presented Business Model Assignment for Shippit, focuses on business expansion and enhancing customer base. However, the company needs to focus on introducing new ideas, a more user friendly service approach and better approach towards the customers.

Conclusion: The above presented evaluation of the segmented business process of the company is based on the nine significant parameters of a business model canvas. The presented idea of the company will have an optimistic impact on the overall business process of the company. However, there are certain limitations of the business plan that Shippit follows and these factors if not addressed can have a significant impact on the business.

Recommendations:

  • Introduction of new business policies for better trade
  • Fresh and creative ideas regarding the business process and delivery procedure
  • A more advanced transportation medium needs to be implemented

References:
Asa.com.au. (2018). Retrieved from http://www.asa.com.au/our-organisation/the-australian-maritime-industry

Bellingkrodt, S. & Wallenburg, C.M (2015). The role of customer relations for innovativeness and customer satisfaction: a comparison of service industries. The International Journal of Logistics Management, 26(2), 254-274.

Bocken, N.M., Short, S.W., Rana, P. & Evans, S (2014). A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production, 65, pp.42-56.

DaSilva, C.M. & Trkman, P., 2014. Business model: What it is and what it is not. Long range planning, 47(6), 379-389.

Joyce, A. & Paquin, R.L. (2016). The triple layered business model canvas: A tool to design more sustainable business models. Journal of Cleaner Production, 135, 1474-1486.

Nußholz, J.L. (2018). A circular business model mapping tool for creating value from prolonged product lifetime and closed material loops. Journal of Cleaner Production.

Swan, D., & Swan, D. (2018). Shippit says no to extra cash. Retrieved from https://www.theaustralian.com.au/business/technology/shippit-says-no-to-extra-funding-in-latest-raise/news-story/9049019e1c191fde4603a5bed17ebb14

www.indexmundi.com. (2018). United States vs. Australia - Country Comparison. Retrieved from https://www.indexmundi.com/factbook/compare/united-states.australia

www.shippit.com. (2018). About Shippit | Order Fulfilment & Shipping Automation Platform. Retrieved from https://www.shippit.com/about-us/

Yoo, T. (2018). Why Sydney startup Shippit knocked back more than half of its $5 million series A offer. Retrieved from https://www.businessinsider.com.au/why-sydney-startup-shippit-knocked-back-more-than-half-of-its-5-million-series-a-offer-2017-5

Appendix:

Shippit business model assignment

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