By Brian Laung Aoaeh February 20, 2012 Leave a Comment

Build A Store Everywhere, Online – RetailTower’s Business Model[i]

 
If this is your first time reading this column you may get caught up on my “What Is Your Business Model?” series by reading this compilation. We have built on that foundation by considering a number of business model case studies. So far we have discussed;

 

 

Today, we will dive straight into studying RetailTower’s business model. Similar to last week, we will not spend time with background and explanations on the approach that we have adopted for this case study. The articles on Skype, Apple and Facebook provide examples of what a more extensive discussion might entail.

 

RetailTower is a software company based in Accra, Ghana.  Its founders are graduates of the Meltwater Entrepreneurial School of Technology[ii], which is also based in Accra.

 

What problem does RetailTower solve?

RetailTower provides an online solution to enable online merchants easily publish inventory that is carried in their stores on comparison-shopping engines by providing a single point of integration between existing e-commerce platforms and shopping comparison engines.

 

The company will handle the complex challenge of listing products across the various online marketing channels for medium to small-scale retailers that sell goods online, but do not have the resources to dedicate an entire team to the task of listing the goods they offer through various online e-commerce discovery and marketing channels.

 

RetailTower’s clients can export information such as product name, product description, image, and price from the clients’ e-commerce systems to marketing channels like Google Product Search, Bing, Amazon, Shopping.com, Shopzilla and others by means of RetailTower’s web-based application – there’s no software to install.

 

How does RetailTower make money?

RetailTower operates a freemium revenue model; its basic product is available for free. Retailers with inventory volumes that exceed the threshold set for freemium services pay a monthly subscription fee.

 

The Business Model Canvas – The Building Blocks of RetailTower’s Business Model

 

Customer Segments

  • Small to medium sized online retailers that seek an easy to use solution to market their products. So far RetailTower has focused on merchants that sell consumer goods and products.

Value Proposition

  • RetailTower makes it easy for small and medium sized online retailers to market their goods across online e-commerce marketplaces and shopping comparison engines in order to reach millions of potential customers.
  • Instead of creating proprietary systems like that offered by RetailTower, e-commerce solution providers can partner with RetailTower in order to create a seamless advertising channel for their clients’ online stores.
  • Online e-commerce marketing channels that work with RetailTower gain the benefit of acquiring new customers for free, no cost integration and product data that is pre-formatted according to each marketing channel’s specific requirements.

 

Channels

  • retailtower.com

Customer Relationships

  • Slightly customized to meet each premium customers requirements; email and telephone support.
  • Switching costs – this is probably not insignificant for the merchants that have a lot of inventory that stays relatively uniform over time.

Revenue Streams

  • Subscriptions – RetailTower’s premium customers subscribe to its services on a monthly basis.

Key Resources

  • Software
  • People

Key Activities

  • Building the software product, discovering and building features its customers value
  • Business development, marketing, forging industry partnerships and alliances

Key Partners

  • E-commerce solution providers like Shopify, Magento and osCommerce
  • Online marketing and advertising channels like Google Product Search, Amazon Product Ads, Bing, Become, Pricegrabber, Shopzilla, TheFind, GoShopping etc.

Cost Structure

  • Employees and staff
  • Technology
  • Servers and software licenses

RetailTower began operations in June 2010. It reports that it has had an average of 5 new signups a day since its service became available. Currently it reports 1280 online retailers as clients. All its clients are international, with representation mainly from the United States, Canada, Europe and Asia. The company has accomplished this with no investment in advertising of any kind. As a sign of how early things are in RetailTower’s life, the company is not generating revenue yet. It has been working on a pricing plan and expects to roll that out in the very near future.

 

Let’s talk again in two weeks. On deck? Facebook. We will revisit our analysis of its business model in light of disclosures the company made in its S-1 filing with the United States Securities and Exchange Commission in the lead-up to an initial public offering later this year.


[i] Blaise Bayuo and Isaac Nortey were kind enough to provide me with information that has served as background for this article.  Blaise, Isaac and two other graduates of MEST co-founded RetailTower. Blaise acts as CEO while Isaac is responsible for business development and marketing.

[ii] Full disclosure: I hold a volunteer position with MEST. RetailTower obtained seed funding from The Meltwater Foundation and began its existence in the startup incubator and accelerator at MEST.

About

Brian Laung Aoaeh is a partner at KEC Ventures. Before KEC Ventures he worked at Watson Wyatt, UBS AG and Lehman Brothers respectively. He holds a BA with a double major in Mathematics and Physics from Connecticut College, and an MBA from New York University's Leonard N. Stern School of Business. He is presently a participant in the CFA Program.

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