Business Model is a key factor for success in the business field. This article provides an overview of popular business models in Vietnam to help enterprises choose the appropriate model that suits their needs.
Business model is a way of organizing, establishing and managing elements to generate value and profit. It includes decisions about products/services, target markets, customer approach, financial structure, and operations This model provides opportunities to generate revenue and profits through business operations.
Popular business models in Vietnam:
1. B2B model
B2B (Business to Business): Understood as business between enterprises, mainly through e-commerce platforms, websites or e-commerce channels of each business. Currently, there are 4 popular B2B models:
- Supplier Centric Model
Enterprises that own e-commerce will provide their products and services to agents, retailers, and manufacturers.
- Buyer Centric Model
This model is not common in Vietnam but is well-developed in foreign countries. In this model, enterprises play a major role in importing products and goods from manufacturers. The manufacturing company then accesses the website to quote and distribute the products.
- Intermediary Centric Model
This is the most common model today. It involves transactions and exchanges between enterprises through an e-commerce trading platform. With this model, the seller uploads products to the e-commerce platform for buyers to search, select, and purchase.
- Collaborative commercial B2B model
This model is similar to Intermediary Centric Model but is centralized and owned by many enterprises.
This model is often expressed in the form of electronic trading floors such as:
- Internet exchanges
- Trading communities
- Trading exchanges
The benefits of this model include helping enterprises save market research costs while increasing brand recognition and collaboration opportunities with other enterprises. All transactions are transparent, fast and help enterprises reduce marketing and product distribution costs.
2. B2C model
B2C (Business to Consumer) is understood as a business between enterprises and consumers. The B2C model is a retail model, where enterprises provide services and products to the end consumers, such as shopping at stores, websites, grocery stores, supermarkets, etc..
Top 5 popular B2C models today:
- B2C direct sales
This model has been around for a long time, starting from buying and selling activities and transactions between buyers and sellers. This model essentially involves direct sales from retailers. Particularly, the supplier can be a (very) small business or simply an online version of grocery stores.
- B2C online intermediary
B2C intermediary is a model where buyers and sellers connect with each other through e-commerce platforms such as Shopee, Lazada, and Tiki. These enterprises do not directly own the products but are a bridge between customers and enterprises.
- B2C relying on advertising
For this model, owning a quality website is very important. This website needs to have engaging content and at the same time needs to be optimized to rank high on search engines. Visits to the website not only help enterprises reach their target customers directly, but also create opportunities to place advertisements for their products or services.
- B2C relies on community
The business will focus on building online communities on social networking platforms such as Zalo or Facebook. Similarly to the Luxury Car Enthusiasts Association, Gemstone Lovers Association, enterprises can promote their products/services to group members. This form also helps enterprises reach the right target audience based on gender, age, place of residence, etc.
- Fee-based B2C
The fee-based B2C business model is a form of deployment on paid applications, software, websites, such as Netflix, Youtube Premium, Spotify, Coursera,… These websites still have free content , but if users want a better experience without ads, or to unlock all the content, users are required to pay a certain fee.
3. C2C model
C2C (Customer to Customer) is a model of buying and selling transactions between consumers. Typically, transactions are conducted through an auction or sales intermediary website. The typical examples of this business model are eBay and Amazon.
EBay is a leading auction website that allows individuals to list goods for customers to choose and bid on, while Amazon is the world’s largest online retailer. Both of these websites operate both B2C and C2C models simultaneously, allowing enterprises to market goods directly to customers and allowing users to sell goods to each other themselves.
The main activities of this form of e-commerce include:
- Auction: This activity allows individuals to list their products for sale with a minimum price. Those who want to buy will participate in the auction, and whoever offers the highest price will have the right to own the product.
- Exchange transaction: It is the activity of exchanging goods of equivalent value between consumers.
- Support services: Aimed at addressing issues of quality and safety in transactions and the operation of the e-commerce model.
- Virtual asset sales: These assets can be items in online games. Participants in C2C can bring these virtual items for exchange or sale to others.
In Vietnam, the C2C model is growing strongly with prominent e-commerce platforms such as Shopee, Lazada, Tiki… along with the change in online shopping habits of Vietnamese people.
4. Business Model Canvas (BMC)
BMC (Business Model Canvas) is a model that represents a comprehensive business strategy for enterprises that is commonly used because of its intuitiveness . BMC helps enterprises understand and describe how they create value, generate revenue and manage their business operations. Here are 9 key aspects of the business model:
- Key customer segments
- The value that the product or service brings.
- Communication methods and distribution channels.
- Customer relationships.
- Revenue streams.
- Main resource.
- Main partner.
- Main activities.
- Operating cost structure.
Business Model Canvas is a model that describes the interactions between important elements of the business model in an overview, helping enterprises understand and establish business strategies.
Here are some reasons why enterprises should use the Business Model Canvas:
- Clear overview: Business Model Canvas helps organize all the important elements of the business model in a single document, helping to understand the overall structure of the business.
- Flexibility: It allows enterprises to quickly adjust and change business strategies when necessary.
- Element linkage: It helps enterprises identify relationships and interactions between different elements in the business model.
- Dialogue and consensus: Canvas creates favorable conditions for teams to work together to dialogue, understand and reach consensus on strategy.
- Visual tools: With charts and images, it helps present the business model easily and attract interest.
Above is an overview of popular business models in Vietnam. Hopefully, enterprises can easily identify and choose the right model for their products and services to develop business activities in the digital economic age.