online business model

I am fascinated with Gilt Groupe’s business model. Gilt’s About page states they “provide instant insider access to today’s top designer labels, at up to 60% off retail. Become a member and find something new every day for women, men, kids and home as well as exclusive local services and experiences, and one-of-a-kind travel packages. Sign in and see what inspires you today.”

I remember I went to a retail event put together by Chicago Conversations on December 2010. A representative from Gilt Groupe was a panelist at the event. He shared with the audience the changing retail environment, profit margins and mentioned that Gilt had sold an authentic car the day before through its website. I was thrilled to learn more about Gilt and went home and did research on the company. Although I have not used Gilt myself, I know a few friends who have and Gilt has been received very positively in the market.

[youtube=http://www.youtube.com/watch?v=Bx9WjvNGHPE]

As more discount oriented businesses flood the marketplace and even established giants (like Google) are entering the market, I enjoy being a consumer more than ever. Brick and mortar retail stores are facing a new competitive front through the explosion of online coupon merchants. At current, it is an exciting time to be a consumer or an online retailer.

The word “free” strikes a magic cord to people. When something is offered for free, people tend to pay more attention to it or gravitate towards it. In business, the “free” business model brings in traffic and customers. In the online space, businesses have to combine unique content, provide some sort of an experience and even offer something for free to stand out in the crowded marketplace known as the World Wide Web. There is such a thing as free lunch in the online space.

The online world is a competitive arena and free continues to serve as a thriving business model. It’s gold to have customers coming to a website and becoming engaged with the brand. In the last couple of years, businesses have changed drastically and competition for customer attention in the online space has significantly increased. Companies are offering countless opportunities for visitors to interact with them. They are rolling out the red carpet via free trial accounts, invitations to webinars and subscriptions to newsletters for their site visitors.

In a crowded marketplace, a brand needs to stand out. The surest way for brands to do that is to create buzz for its product or service, gain attention and compel consumers to interact with the brand. Companies are going above and beyond in hopes of getting customer’s attention, time and eventually money.

It was monumental to see social media outlets like Facebook, Twitter and LinkedIn grow exponentially in the online world. By giving people simple ways to open accounts and tap into their social network, these social media outlets provide great value by bringing people together. Facebook had 600 million active users as of January 2011 and the exponential growth was mainly due to its free, easy to create accounts. Now with their sheer size in user base, they have started to monetize it by allowing businesses to place Facebook ads.

Offering free content or service brings people to the website thus leading to an increase in traffic and user base. What better way to get people through the door than with an old trick of offering something for free.

Tag: online business model

Feature Story: Gilt Groupe

Subscribe

Nirmal Thapa