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Why You Need A New Bussiness Model

Why You Need A New Bussiness Model


new business model

During the recent years especially the recent two years, there has been a fierce completion between the traditional business model and e-commerce. Does your business stand it?

In the 2017, this war will become a life-and-death struggle
The completion will be more intense!
In fact, in recent years the traditional business has been struggling in such a situation: to change or to die. There is 50% survival rate if changes have been made, or just wait to die.

In traditional business mode, everyone in the manufacturing to sale chain is tired. The manufacturers are faced with high tax, high labor costs, too many competitors, low profit, and other problems; the retailers and distributors have to pay high shipping cost, rents, and then, add the costs to the price, making the price less competitive, in addition, they need to pay a lot for stock in traditional business models as per the manufacturers’ policies. In the end, discounts in shops and stores make reduce the profit dramatically. Less discount, less sales.

What makes the traditional business model unsustainable?
“Stock” and “discount” lead to this problem. Stocks cause low efficiency use of funds and discounts reduce the profit.

Why traditional business model needs stock
To be short, if someone needs to order some products, he have or some certain quantity so he can enjoy a lower price. Then, his retailer and distributor have to follow suit. This is why stock is important in the traditional business model.

Why discount is necessary in traditional business model
Stock affects the return and use efficiency of funds, so, everyone has stock want to get them money back soon. Then, discounts start between all the sellers. And therefore, the prices become lower and lower, the profit become less and less.

How to solve these problems
The ideal new business model is to let the manufacturer to give a fixed price, and ship all products to the customers, all the retailers and distributors only need to promote and sell the products. In this way, they do not need to spend money in stock, or discount the product to lower the price.