A good idea is not enough. What distinguishes a business that takes off from another that runs out of steam is often its economic model. In other words: the way she earns money. It is this choice, sometimes invisible to the consumer, who determines the growth, agility and even the identity of a society.
The power of a well thought out model
An economic model is not just a sale price. It is the set of mechanisms that make a company profitable: its way of producing, distributing, retaining and financed. Changing this model can upset everything: a deficit company can become flourishing, a saturated market can find vitality.
In France, several companies have shown that it is not always the technology or the product that makes the difference, but the way of selling it and monetizing it.
Example 1: Blablacar and the collaborative economy
When Frédéric Mazzella launches Blablacar, carpooling already exists. Online classifieds have long allowed drivers to offer places on their car. What changes everything is the platform and above all its economic model.
Blablacar does not sell a transport service: it organizes a connection. The driver is not a professional driver, but an individual who shares his costs. The company is remunerated by taking a commission from each reservation.
This model made it possible to align the interests of all: the driver pays his journey, the passenger travels at a lower cost, and Blablacar affects an income with each transaction. Result: more than 100 million members today and a profitable activity in several countries.
This model also reassured the authorities by avoiding frontal competition with taxis, unlike Uber which has experienced strong tensions in France.
Example 2: Michel and Augustin and the “Love Brand
The two founders of Michel and Augustin did not invent the cookies. But their economic model has transformed their SME into an iconic brand. Their bet: sell not a banal food product, but a joyful, almost community universe.
Their model is based on an original combination: slightly premium prices, very embodied marketing and assumed proximity to consumers. They organize events, open the doors of their premises to the public, and create an almost friendly relationship with their customers.
Result: a consumer product becomes an object of attachment. Consumers agree to pay more because they buy more than a cookie: they buy a story, a tone, a personality. This model allowed them to get into the shelves of the largest distributors while keeping an artisanal image.
Example 3: back market and the circular economy
Back Market, founded in 2014, upset the way the French consume electronic products. Its model is based on reconditioning: it does not make anything, it relates to reconditioners certified with consumers in search of cheaper devices.
This model made it possible to create a mass market for products which were once considered as second zone. Thanks to a systematic guarantee, careful shopping experience and competitive prices, Back Market has transformed the perception of the reconditioned.
The company is remunerated via a commission on each sale, which allows it to grow without supporting heavy production costs. Today, it weighs several billion euros and stands out as a world leader in the “second life” of electronic devices.
Why change model can save a business
Examples abound by companies that have changed trajectory by modifying their economic model. Some restaurants have gone from à la carte sale to a weekly meal subscription system delivered to your home. Media, long dependent on advertising, chose the subscription to regain editorial independence.
Changing the model requires rethinking the relationship with the customer. This can mean targeting a new audience, reviewing its fixed costs, or focusing on the use value rather than property.
Risks and resistances
However, changing the model is not without risk. Customers may not follow, internal teams may have trouble adapting, and the funding necessary for the transition can weigh heavy.
Several French ready-to-wear brands have tried to move to a “Direct to Consumer” model by closing shops to sell exclusively online. Some have succeeded, others have lost their base of loyal customers attached to physical contact.
A question of survival
For today’s businesses, reflection on the economic model is not a secondary option. It can determine survival on a market where consumption habits are changing quickly.
Subscription, functionality economy (pay for use rather than possession), collaborative or circular economy: all these models open up new perspectives. The question is not only to know which product launching, but in what form to offer it and how to create a lasting relationship with the customer.
