Many new business models have taken shape in past one decade, specifically after the advent of ecommerce platforms like Magento, Shopify, YoKart that made launch of startups easier.
Presently we have plentiful options from proprietorship to partnerships to LLP (limited liability partnership), and few unconventional models such as network models, multilevel marketing, pyramid schemes and such. Among all top models of 21st century, an innovative business model- a model that gave the idea of “how to do business” and “how much investment one needs” the much-needed makeover, has become a bit more popular.
The idea evolved a few years ago was to keep the capital assets less in comparison to the operations. This meant the costs of investment and running the business would be less, while the revenue and profits were assumed to be proportionally on a higher scale. Let’s know how this works in the real world.
To understand the concept of the asset-light business model, you have to forget the traditional business models first.
Suppose a person wants to start a business and needs land to build an office for it. Instead of paying a hefty amount of money to purchase the land, the business owner makes an agreement with the landowner, sharing a certain percentage of profit. This is it.
The asset-light business model is also known as the capital-light business model, as it doesn’t require a lot of money to put a venture into action.
Be it the manpower, the infrastructure, R&D or even the network; instead of spending tons of money to “own” all, you pay a certain amount of capital to get things done and share the profit.
Of course, it does. And that’s because shared economy is the backbone of asset-light business model. How else would an entrepreneur expect to move ahead on the success path faster?
The success of a venture is measured in terms of investment made and the eventual returns. This is why the shared economy has become a hot trend is expected to stay that way for many years to come.
Uber is probably the most common example of a business running on an asset-light model. It offers a platform that brings a cab driver and a passenger together and takes a percentage from the revenue generated from rides. The company owns the platform, but it neither owns the cabs nor the drivers.
Airbnb lets you book accommodation using their website/app, pay as you want and you can stay at the place for a pre-decided duration. In the end, Airbnb gets a certain percentage of the amount, and all users (buyers, sellers who use this platform) constitute a marketplace. Airbnb wouldn’t have been such a success in the given short time had they planned on building or buying hotels. They are tying up with people and enjoying the revenues.
Formerly known as Spinlister, this interesting venture is exclusively meant for people who want to rent a bicycle.
Lyft is not a taxi booking service like Uber. Rather, it’s a ride-sharing service. The service providers are not drivers, but regular people who just happen to have the same destination as that of the seeker. Or maybe the seeker’s destination is on the way of the car owners.
Yes, Lyft is a marketplace, and no, they don’t charge you anything. They do accept “donations” and that keeps Zimride, the parent company, up and running.
With kennels and dog hostels charging a lot of money to keep your pampered pooch with them while you are going somewhere, DogVacay came as a sigh of relief for all the dog lovers. There are other portals like DogVacay that connect a service seeker with a provider, pay for the service. And just like DogVacay, these pet care sites takes the cut. All that without having to build a kennel or renting one.
Learn more about of pet care marketplace features.
Zipcar chooses its areas of operations and parks its fleet named ‘Zipcars’ at certain convenient locations in those areas. They ask for an annual membership fee from their members called Zipsters and allow them to reserve cars on an hourly basis. Along with the car, the service includes parking, gas, maintenance, and insurance. Members can use Zipcard, an access card that automates access to Zipcars to unlock the door if the keys are inside the car.
Getaround is an asset-light business that lets people rent/borrow a car from other people. The company taps into a pre-installed car base owned by people. If a car owner is going out of town, Getaround takes their car, cleans it up, rents it to people and returns it to the owner in the same state as it was at the time of lending.
In such a marketplace, the company need not own or renew any cars, nor do they face any parking, logistics or scaling issues. Besides, an active inspection of suppliers helps renters trust the company.
With million-dollar insurance from Berkshire Hathaway, Getaround turns out to be a safe bet for car lenders and borrowers alike.
Disrupting the asset-heavy hospitality sector, OYO Rooms began with the idea of tying up with local hotels and taking a percentage of their profits as commission. Through an app, the brand markets various hotels and special offers in different cities without investing anything in the construction of those hotels.
Undoubtedly, the savings are huge with the risks less and growth exponential.
Bengaluru-based RentSher is a market leader in short-term rentals, where its inventory is owned and managed by the sellers. The platform is easy to operate and uses the latest technology to ensure efficient operations.
Another great example is Swiggy, which only invests in the operations infrastructure and delivery vehicles. Everything that is bought from Swiggy is procured from various restaurants in the company’s operational areas. Swiggy charges commissions from the restaurants on every order. In return, it gives them wide exposure and allows customers to buy food from their preferred restaurant.
HungerBox brings technology to its corporate clients for digital cafeteria management. It helps various food vendors connect with employees of companies such as Capgemini, Qualcomm, Accenture, and Genpact through a tailored mobile app. The brand, acting as an efficient F&B provider for employees has become the most technology-focused foodservice agency since its launch in 2016.
With CoLive, homeowners get a marketplace that attracts people who need affordable and fashionable housing near their educational institutions or workplaces. Homeowners can provide their developed homes for co-living, which together constitutes community-based, stress-free living with all expenses covered such as electricity and water bills.
Grofers is an on-demand grocery delivery app, which first emerged to save consumer’s time spent on grocery shopping. Grofers connects consumers to the nearest delivery personnel, who go to the physical marketplace of the vendor and deliver the ordered item to the consumer. What’s exceptional about Grofers is that consumers have the option to get their orders delivered on their preferred time.
RentTheRunway partners with designers for renting out clothes and accessories. Additionally, designers are provided with data on trending designs, fabrics and colors, on the fitting and comfort of their dresses.
RentTheRunway’s own website runs on a simple business model and features new designers along with their special collections that are specially designed for the brand.
RentThe Runway benefits by displaying the latest styles and designs at wholesale pricing and exclusive discounts.
The primary advantage of an asset-light business model is its scalability. Given the fact that the investment made on the startup and operations is less in comparison to the profit harvested.
Growth proportion and prospects are higher in the case of the asset-light business model. As more partners keep adding to the network, and starting service in a new location is as easy as a click of a button, business expansion is not difficult.
However, there is a downside to this model. If the outsourcing business fails, operations suffer a massive blow. So, it becomes necessary to do thorough research and enough brainstorming before deciding which service provider you should opt for.
Any and every business model has its own set of specific pros and cons, and it is important for all the aspiring entrepreneurs to make sure they take each and every factor into account before beginning such a venture.
That being said, nobody can ignore the fact that the asset-light business model is enjoying increasing popularity. And considering its global adaptability and scalability, and the ever-increasing usage of internet, we can say the flaws are easily workable.
Technology will always evolve; that’s the way it is, and that’s how it should be. Asset light business model thrives on technology, and so should you.
Launching your own asset-light business in your preferred industry with FATbit’s various ecommerce marketplace platforms, such as:
Use Yo!Kart and start your own online grocery supermarket like Grofers today, where product and order management is a piece of cake.
Yo!Rent is a completely customizable marketplace system that helps you build an asset-light online rental marketplace with unique features that turn into increased profits.
Yo!Yumm makes it easy to build a marketplace like Foodpanda & Grubhub, where users can search for restaurants and order food from their phones at their desired time.
VivoCabs helps you start an asset-light taxi booking venture exactly like Uber, but in fewer steps and with exceptional user experience.
Yo!Care is a readymade solution designed for building care services marketplace like DogVacay or for offering other care services such as senior care.
Using Yo!Gigs, you can launch a service seeking marketplace for professionals, which is quick to setup and easy to scale and monetize.
FunAway makes it easy to establish a business in adventure travel activities booking services.
PaperWeight lets you build an asset-light model-based marketplace for freelance writers.
With Yo!Meals, you can quickly establish an online meals & recipe (meal-kit) ordering & delivery business.
Disclaimer: The Blog has been created with consideration and care. We strive to ensure that all information is as complete, correct, comprehensible, accurate and up-to-date as possible. Despite our continuing efforts, we cannot guarantee that the information made available is complete, correct, accurate or up-to-date. We advise - the readers should not take decisions completely based on the information and views shared by FATbit on its blog, readers should do their own research to further assure themselves before taking any commercial decision. The 3rd party trademarks, logos and screenshots of the websites and mobile applications are property of their respective owners, we are not directly associated with most of them.