Business models – what can be monetised?

Within the CIM qualifications there are many elements which refer to the business models used by organisations, with the Driving Innovation module from the Diploma in Professional Marketing particularly focussed on this. Driving Innovation considers alternative business models and how they can be used to gain long term competitive advantage for an organisation.

Making news today is UK online grocery retailer and delivery company Ocado, they have licenced their technology to Kroger in the US – one of the worlds largest grocery companies. Shares in Ocado have increased massively on this news showing that it is a deal that markets feel will increase profitability of Ocado, an organisation often given as an example of a start up that didn’t generate profit.

The deal is essentially about Ocado having recognised what their unique capabilities are and leveraging them – the technology was developed for their own use to compete against existing UK supermarkets, and particularly the home delivery offers they have. But now it is the technology itself that Ocado are using to grow the business, with the licence to utilise it agreed with Kroger following similar, although smaller, deals with Casino in France, Sobeys in Canada, ICA in Sweden and operating the online shopping facility of Morrisons in the UK.

The business model is changing from being a grocery retailer to being a technology provider – quite a difference but based on a capability of Ocado it is a good move.

Details of the story are here with Krogers news release about the deal here

For insights into how the technology Ocado have is applied this is an interesting article