Trunk Club provides style experts to help men select and buy clothes. A year ago it was a retail chain opening new stores in Portland, Seattle and Dallas.
Today is it a virtual service offering expert advice and clothing to fashion challenged men (talk about a huge target market) via the Internet. Trunk Club uses webcams and web conferencing to connect their style experts with clients.
Their business is booming as men discover the advantages of expert fashion advice coupled with the ease of having clothing specifically selected for them delivered directly to their home.
Trunk Club is a great example of business model innovation. Examples of business model innovation include taking a new approach to a business, targeting new customer segments with an existing product or, like Trunk Club, redefining how an offering is provided.
While this sounds simple, it is not. Successful business model innovation requires identifying new, previously uncovered opportunities and changing how a firm operates.
Large corporations struggle with business model innovation. Corporate bureaucracies, aversion to risk and entrenched ways of doing business make it hard for them to identify and pursue new ways of doing business.
Small businesses, however, are much more agile and tend to be better at business model innovation. With few management layers and involved, market-savvy owners, bureaucracy rarely gets in the way. And because of their smaller size, business model experimentation and change is easier for small businesses.
Like many other small businesses, Trunk Club changed their business model in response to the recession. Raising the capital and enduring the short-term losses of a brick and mortar retail start-up simply was not viable.
Using webcams and video conferencing in place of retail stores substantially lowered Trunk Club’s capital and operating costs. It also greatly expanded their addressable market. They can now serve anyone, anywhere with a broadband Internet connection.
In our research we are seeing lots of examples of small businesses innovating with business models. Often motivated by the economic downturn, small businesses are adapting and changing their business models to beat the recession.
Thanks to Tim Berry for pointing me to Trunk Club.
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