Income Models (feedback expert meeting)
At the very beginning, we considered two main solutions to make profit. We either could let the local business participate in our concept by asking for a subscription, and on the other hand, we could buy all the products ourselves from the local shops and then sell it. Both have their advantages and disadvantages, which we listed below. These points were discussed during an expert meeting, and the conclusion can be found below as well.
Subscription model
Local businesses purchase shelf space
Pro
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No risk for the start-up to face left over costs
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The Start-up benefits from the competition about shelf space
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The competition causes the best quality for the buggs to win; problem: The biggest shops that can offer the lowest price might outcompete small shops. However, supporting small shops is a part of the value proposition.
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Con
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The product sevice combination is meant to make it easy for local shops to reach customers. If shops have to take risks with regard to shelf investment, possible left over costs or competition, that highers the bar to cooperate with our business.
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Local businesses have to invest a lot of time into administration and cost calculations.
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What happens if multiple shops offer the same product? How do we guarantee product variety
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The shelf space model neglects the price volume ratio. Some products like milk are expensive but require a lot of shelf space while products like jam are more expensice per volume unit. IN the case of milk there is a bigger demand for milk but products like sald cannot compete if there are no regulations.
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Scaling the business up is difficult when sticking to one van. Increasing the shelf space might exclude small businesses form participating again
Subscription model
Buying products from local shops
Pro
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The start-up can test different products and purchase the best quality
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No rental shelf pace model problems
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The start up can purchases products cheaply because a lot is bought on a regular basis
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The shop owner has no risk of losing money or facing left overs which lowers the participation barrier
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The administrative barrier for local shops is low
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the stat-up has the power to select the products and sell the ones that are desired by the customer
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There is competition between the shops for shelf space but the start-up has the last word. If necessary or desired certain product can be supported.
Con
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Similar to a local market the start-up has to take the risk of facing leftovers
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The start-up has to select the products
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The start-up has to sell the products if there are leftover
Conclusion
We concluded based on an expert meeting that we actually function as a carrier / support for the local businesses, which is also our core value, namely helping these farm shops. Therefore, we should also make it not too difficult for the local businesses. We actually should have our service system in such a way, that we drive to the farm and they can load in all products they have available. Depending on
the type of season, farmers have different products in stock, therefore, you cannot always ask for the same throughout the whole year. Since the type and amount of products can vary, a percentage of each product would be the best solution for making income. This is namely a constant factor throughout the year and does not depend on the amount of products.
