Essay: 3 innovative online e-businesses which have impacted the internet market era

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  • 3 innovative online e-businesses which have impacted the internet market era
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1. Executive summary
This document provides information by exploring 3 innovative online e-businesses which have impacted the internet market era. The companies selected for our analysis are Zopa (a peer to peer lending platform), houzz (a home remodeling and design community platform), and Amiando Xing(an event management platform) which are all existing companies but have greatly impacted the online market place. In analyzing the following companies, our criteria of analysis shall be drawn from: their corporate strategy, business models and overall strategy.
The emergence of the internet and the proliferation of digital and smart devices have both transformed some societies in to information based cultures by facilitating consumer’s accessibility to information. Consequently reducing consumer’s dependability on the mass media as a major source of information. The impact of the internet and these devices have greatly influenced consumer’s lifestyles and behavior thus creating opportunities for organizations to adopt their products and services in function of consumer preferences and taste.
Insights from studies conducted by researchers and scholars like Amit and Zott, 2001 suggest that, E-business provides tremendous opportunities with high return on investments through entrepreneurial start-up and corporate ventures. Moreover, researchers like Basu and Muylle (2007), Ayo 2006, Castelluccio (2000) in their empirical findings suggest that the fundamental key success factors in the adoption of an e-business depends on the following; ability to create value across efficiency, innovation, novelty, IT infrastructure, pricing, operational management, localization(regarding cultural, political, economic issues), multi-channel integration, complementarities and lock-in. On the other hand, researchers like Navid Nikakhtar (2012) in his finding rather outlines some of the major obstacles and difficulties in implementing e-business which are: difficulties in establishing trust, high cost, requires a lot of expertise for IT infrastructure relating to security and privacy, accessibility, lack of governmental laws to support e-business (culture, economic, political issues relating to languages, shipping, tariffs, custom duties, tax…etc),
In the paragraphs below, we present 3 unique innovative online e-business models.
a. Concept
The concept Zopa was created to facilitate money borrowing and help fight the high interest rates, low return on investments banks, credit unions and other loan institutions charged to their customers. Zopa is an agency which has specialized in providing lending services online enabling borrowers and lenders to by-pass the big high-street banks. In other words, Zopa is a peer to peer lending service rewarding people by providing low rate loans to borrowers and high return interest to lenders.[11] Zopa was founded in the UK in 2005 by Richard Duvall, James Alexander and David Nicholson with a staff team of about 105 employees having its head office in London. [4]
Zopa has lent over £956 million to UK consumers and provides a match by establishing a relationship between those people who are lending and people who are borrowing. The loan packages are allocated for the following purposes; car purchase, home construction, credit card pay-off, debt management, growing business…etc According to the financial times report, Zopa was reported to have had 300members when it was launched and 26 000 within the next 4 months. [3]
b. Services
Lending and borrowing [12],[13].
For lenders
Zopa enables them;
 Lend at an average rate of 3.8% in 2 and 3 year loans
 Lend at an average rate of 5.0% in 4 and 5 year loans
For Borrowers
Zopa enables them borrow money at;
 Low rates
 With no early repayment fees (flexibility in payments)
 Borrow between £1,000 and £25,000
 Loans available over 1, 2, 3, 4 or 5 years
 Most trusted loan provider
c. Core Value proposition
Zopa’s core value proposition is more off customer-driven and stresses on cost reductions aiming at adding value to consumers by eliminating the need to work with traditional financial institutions for obtaining credit. It eliminates the requirement for the many face-to-face interactions and manual processes that have traditionally been part of borrowing. [1]The value provided area;
 High interest rates for lenders.
 Low return interest rates for borrowers.
 Flexibility in payment.
d. Target markets
Zopa targets British and foreign residents living in the UK and they are subdivided as follows:
 Principal Targets: (Young Market and borrowers) persons of ages ranging from 20 to 45years -Having a current bank account and a good record history.
 Heart Targets: (Lenders and Free Formers) are persons of ages ranging from 25 to 60years. -Self-employed and are generally consultants and entrepreneurs.
-Having a regular lifestyle; they value control over their time and money
-Have a good assets and income.
 Secondary targets:
– SME (Small and medium enterprises) and Large businesses.
e. Sources and Methods of Revenue
i. How does Zopa generates profit to run her business?
 Zopa charges a 1% fees (or based commission) to both lenders and borrowers.
 Zopa equally earns money by selling an insurance protection payment to borrowers with a bad record.
ii. Revenue structure
Zopa has created the Zone Safeguard Trust designed to protect their customers from any potential losses. Safeguard is a 100% track record of protecting lenders from defaults since launch and is funded from fees paid by borrowers.
f. Zopa’s Overall strategys
Functional aspects Elements Strategies and policies Purpose and objectives
SWOT ANALYSIS Strengths Weaknesses
– Gained a good reputation
– Offers quality services
– Practices low prices
– Low interest rates
– High credit rate
– Secured risk management
– Market leader
– Loyal customers -Commission based
– Defaulters
– Lack of marketing
– Require creativity
Opportunities Threats
– Franchising, Licensing
– Expansion and growth
– Social connectivity innovations
– Diversification
– Larger number of borrowers and lenders
– Unexploited markets – Social media
– Easily imitable
– Acquisition threats
Mix Marketing Prices Penetration by low prices -Offering low prices to differentiate herself form competitors and attract customer across her pull strategies
Diversification and innovative -Offering a variety of highly adapted and personalized service to her customers
-High flexibility and speed in processing compared to banks and other credit loan organizations.
Push and pull strategies Word of Mouth, Search engine marketing, Mass Media(TV, social media), Advertising, public relations
Undifferentiated strategy Concentrating on a niche market which is the UK only
Marketing strategy Differentiation Strategy: Zopa appeals to the minorities who are those customers who have difficulties in obtaining bank loans. Across her lender and borrower platform, numerous policies have been implemented to control their cash flows
Competition Major competitors Banks, Funding circle, Rate Settle, Prosper, Lending Club, Kiva, Society One.
Key Partners Key Activities Value Proposition Customer relation Customer segment
-Major seekers -Problem Solving -Cost reduction
– Customer services
– Easily accessible -Self-service and personal assistance
-Niche market
UK only
Key resources Channels
– IT infrastructure -Search Engine
-Advertising(Social media)
Cost structure Revenue streams
-Cost driven
-Value driven
-Operating cost(Platform management, recruitment, communication) -Commission based
-Charged fee
g. Justification
Innovations tending to improve the financial services systems remains a big challenge to most companies, agencies, researchers, and innovators. The driven changes in the financial industry lies between the flow in transaction and exchange of information, technology, geographic landscape, regulatory policies and laws, consumer changing needs, preferences and demands. The financial sector comprises the following insurances, pensions, leasing, credit loans and banks. [1] Mis-selling remains one of the major barrier and obstacle to the financial industry. The creation of zopa could also be associated to financial mis-selling from banks, insurance companies on pensions, investments, lending, credit loans, PPI…etc.
Zopa is a breakthrough and disruptive innovator who created opportunities to serve underserved customers in the financial sector. According to bank of England, 70% of bank loans in the UK are accounted and reserved for the real estate sector, the industrial sector and large organizations whereas only 30% is scheduled for individual loans and SME’s. Most often, consumers and SME’s are ignored and underrated given the little value or poor record of their credit [6]. Zopa exploited this weakness and deficiencies and created a borrower and lender platform enabling those with poor and little credit to access finance in a simple manner, rapidly with favorable rates.
‘’The underserved customers comprises “free formers” who are self-employed, project-based or freelance workers that are not in a full time employment with irregular incomes and lifestyles’’ [1]. Many researchers, scholars, and newspapers, in the cause of their studies pin-point Zopa as the most innovative online e-business in the financial sector of the UK. Zopa is the first company to have introduced the peer to peer lending service in the UK and this has greatly impacted the Uk’s financial sector causing many consumers to boycott banks and rather turn to peer2peer lending services for loans.[6] Articles and newspapers like (Lending memo, Forbes[8], the economist[9], the international banker[7]…etc) report that, the introduction of peer to peer lending services have greatly disrupted and decreased banks efficiency in loan lending.[6] Zopa has set the pace
Zopa adds value to consumers by eliminating the need to work with traditional financial institutions for obtaining credit. It eliminates the requirement for the many face-to-face interactions and manual processes that have traditionally been part of borrowing. The company also raises flexibility and transparency for customers well above the industry standard, as customers can borrow smaller amounts over shorter periods and are not charged additional fees if they repay early. [1]
a. Concept
The concept Houzz was created to provide assistance to couples and people wishing to live in the homes of their dreams. Houzz is an online community and website that connects and matches her clients with designers to provide ideas, reflections on how to improve their homes across different interior designing templates, demos and ideas, architectural designs, decorations, and other landscape designs.[10] Houzz was created in 2009 by Adi Tatarko and Alon Cohen with its headquarters located in Palo Alto, CA, USA and has specialized in remodeling and home designs. Houzz started as a side project and became a community of with more than 30 million homeowners, home design enthusiasts and home improvement professionals around the world. She has also partners with some retailers and merchants like home bargains, Ikea, to directly sell their products to her online users. [15]
Houzz is reported by the guardian newspaper to have the largest residential database designs which serve as guidance to her clients as they can browse photos of room styles and save them in their customized idea books. Today Houzz has an estimated audience of about 20 million monthly users and 15 million mobile app downloads. In addition, Houzz offers a wide variety of targeted audiences to advertisers and marketers who wish to reach users of this site. Both SME’s and national brands can benefit from the high exposure, given that about 92% of the users are homeowners and also there are 450.000 local professionals who are all connected on the platform.
b. Products and Services
i. For consumers
Sales of Home furniture’s
• Home furniture’s
• Bath products
• Kitchen and dinning
• Kids Outdoor décor
• Home gym products
ii. Services
For consumers and professionals
• Home staging and styling
• Design consultation and orientation
• Art arrangement and installation
• Space planning and furniture placement
• Individual client and group education
• Original art and fine art prints
For Advertiser and marketers
• Opportunities to reach about 20million home users on a daily bases
• Customized targeting
• Enables them promote their brand image and brand awareness
c. Core value proposition
Houzz core value proposition is more off customer-driven and focuses on the following;
 Products for the entire home
 Integrated shopping experience
 High brand exposure
 Large and active community
d. Target Markets
Houz targets two audiences who are Consumers and professionals
Heart Targets: Consumers
-Young couples, Individuals, Adults
-Of Age range varying from 18years to 75
-Owning or sharing a home
For her customers, Houzz shows galleries of inspirational photos that can be bookmarked, tagged, and shared, a forum where questions and design dilemmas are answered, and a database of local designers and remodeling professionals complete with reviews and ratings from other users in the Houzz community. Mbaros (2013) ‘Houzz: Remodeling goes digital’, Foster school of Business university of Washington, 3 October.
Principal Targets: Professionals, Retailers and Merchants
-Professionals (home designers and other related experts, home decorators, architects) wishing to make their artistic talents known to the users of the site
– Retailers and Merchants (Home bargains, Ikea)
– Wishing to make their products known to her users
As for her principal targets, Houzz provides an advertising platform from which they can showcase their services and talents, as well as a pool of engaged and targeted customers who are currently, or will likely soon be, in need of their services. Mbaros (2013) ‘Houzz: Remodeling goes digital’, Foster school of Business university of Washington, 3 October.
e. Revenue structure and profit Potential
i. How does Houzz make Profit to run her business
Researchers like George Anders 2014 highlights 3 ways Houzz generates profit which are as follows;
Firstly, Houzz makes a profit from her advertising platforms on her site web where retailers and merchants like IKEA, Home Bargain deliver their messages to users or audiences of that site web.
Furthermore, Houzz generates profits from her premium listing revenue from home decorators, designers, architects, etc. who want to make their services known and be discovered to the users of the site who potential clients.
Lastly, Houzz makes a percentage or based commission on any recommendations she offers to her clients who purchase from the above merchants and retailers. In other words, they charge a 15% commission fee for any sales originated from her site.
ii. Houzz overall strategy
Functional aspects Elements Strategies and policies Purpose and objectives
SWOT ANALYSIS Strengths Weaknesses
-Quality in processing and procedures
– Strong brand presence and awareness
-Dynamic team – Requires creativity
Opportunities Threats
-Home decoration sector still growing
-Unexploited markets
-New market segments
-Speed and growth mobile market – Easy imitable concept
Mix Marketing Prices Skimming prices -High value
Differentiation and innovative -offering a variety of highly adapted and personalized service to her customers
-High value
Promotion Push strategies Search engine marketing and Advertising on social media(facebook, twitter, you tube,)
Distribution Mass marketing strategy Concentrating on the mass market (worldwide).
Marketing strategy Differentiation Strategy: Houzz appeals to consumers seeking value. Through her high pricing,
Key Partners Key Activities Value Proposition Customer relation Customer segment
-Retailers -Building and maintaining IT infrastructure
-Partnership and community management
-Local sales
-Large and active community
-Products for the entire home
-Integrated shopping experience
-High brand exposure
-Easier access to customers
-Online community
-Webinar and tutorials
-Pro Center – resources for profile optimization and website building tools for professionals
-People who like to remodel or decorate their homes
-Vendors and brands
-Home-related service providers such as architects
-Home designers
-Home decorators
Key resources Channels
-Online platform
-Online community
-High-class content
-Search Engine
-Social media platforms(Banners, in video lay outs, squares(pop ups)
-Worth of Mouth
Cost structure Revenue streams
-IT infrastructure
-Human resource -Commission based
iii. Business Model
iv. Justification
According to Michael Carney (2013), Houzz is the greatest home design e-business innovator offering inspirational guidance’s to her customers across transparency. The ideology of Houzz innovativeness lies in between her core value which is unique and credible; which is by linking consumers with home design experts across the world enabling
Houzz has disrupted and attracted the cumulated TV audiences of home design TV programs like ‘’Design on a Dine’’, ‘’The Old House’’, ‘’Renovation’’. [16]
a. Concept
The concept Amiando is a b2b and b2c platform created to provide management assistance event services to businesses and professionals in the planning and organization of their events. Amiando was established by Dennis Von Ferenczy, Sebastian Barhold, Felix Haas and Armin Bauer P. Bernegger and Markus Eicginher in 2006 with its headquarters located in Munich Germany. Amiando is an online event management platform providing Business events service (organizing, planning and managing of conferences, corporate events and networking events) and entertainment events(sports tournaments, concerts, and parties) to her customers. Amiando was acquired by Xing in January 2006 which is an online event platform and both integrated to enable businesses promote their events using viral marketing, emailing, social media (facebook and twitter, google search engine), sales promotion(promotional codes) and affiliated programs. Amiando and Xing have a total audience of 13million from Germany, Switzerland, and Australia.
b. Product and services
c. Core Value Proposition
Amiando’s core proposition is customer driven because it offers Customization and on the following:
 Efficient registration, ticketing and billing
 Customization services
 Connection of events through the aid social media
 Secure payment system
d. Target Markets
Amiando targets the following audiences
Heart targets; Businesses from all sectors (Tech, music, automobile, beverage, Agriculture, Transport, Internet, Telecommunication foods, Maintenance industries…etc)
World wide
Principal targets; Professionals around the World
e. Revenue and structure
i. How does Amiando generate revenue?
Amiando’s major source of revenue and profits are made through the following:
Firstly, they are paid for organizing events.
Secondy, they receive a ticket commission during the sales of tickets for the events they organize
f. Operations strategy
Functional aspects Elements Strategies and policies Purpose and objectives
-Wide audience
-Strong brand recognition
-Dynamic team – Network Effects
– Tailored to local needs
– Local privacy low
-New markets
-Growth from the mobile evolution
– Increasing competition
-Saturated markets
Operational and Financial Operational goals;- Increase membership activities
-Maintain net member growth rates
-Push conversation to baseline membership
Financial goals;- Improve operating cash flow and increase shareholders dividents.
Mix Marketing Prices Penetration strategy Flexible and low prices
Differentiation and innovative
Promotion Push strategies Social media, search engines, sales promotion(Scan QR codes), Viral marketing and emailing.
Distribution Mass marketing strategy
Marketing strategy Differentiation Strategy:
Competitors Event Zilla, Brown papers, Event tickets, Event XL, Ticket leap, Picatic, Regonline, Evite…etc just to name a few.
Positioning Expand their leadership to other countries and become a leader in this sector
Key Partners Key Activities Value Proposition Customer relation Customer segment
– Xing and Facebook
– Event organizers
-Venue owners
– Investors
– Service providers for application development -Product development
-Marketing & Sales
-Customer service
-Payment process
-Efficient registration, ticketing and billing
-Customization services
-Connection of events to social media
-Secure payment system
-Support center
-Business events such as conferences or seminars
-Entertainment events such as concerts or parties
Key resources Channels
-Maintenance -Website
-Social media (Xing, Facebook)
-Existing customers’ websites
Cost structure Revenue streams
-Technological maintenance
-Human resource -Percentage of ticket sales:
-Fee per registration
-Payment processing fee
Iv. Business model
The rapid advancement in technology and development of the internet has rendered the e-business environment more complex and competitive. With rapid advancement of technology, companies can’t only rely on differentiation and overall cost in creating a competitive advantage. The above companies are Knowledge innovators who have used their ‘’savoir-faire’’ in creating value across efficiency. Major sources of innovation come from the observation of societal problems
5. References
[1] E. L ̈ uftenegger 1 , S. Angelov 1 , E. van der Linden 2 , and P. Grefen (2010) ‘The state of the art of innovation-driven business models in the financial services industry’, School of Industrial Engineering, Eindhoven University of Technology 2 De Lage Landen Financial Services, Eindhoven, The Netherlands, March.
[2] M. Kupp and J. Anderson, “Zopa: Web 2.0 meets retail banking, “Business Strategy Review, vol. 18, no. 3, pp. 11—17, 2007.
[3] Dave Chaffey (2002) E-Business and E-Commerce Management, 3rd edition, England: Pearson Education Limited and Zopa (2015) History, Available at: (Accessed: 7/23/2015).
[4] Zopa (2015) History, Available at: (Accessed: 7/23/2015)
[5] Army Cortes (201Army Cortes (2014) ‘Loans that Avoid the Bank? Maybe not’, The New York Times, 3 March.
[6] Bank of England (2014) Trends in Lending, England: Bank of England
[7] Samantha Barnes (2013) ‘Peer-2-Peer Lending -Disruption of the banking sector?’ International barker, 3 March
[8] Forbes (2014) The disappearance of peer-to-peer lending Available at (Accessed: 4/08/2015).
[9] The economist (2013) The Good Bank, Available at: (Accessed: 4/08/2015).
[10] Simplease (2013-2014) How does the business model work?, Available at: (Accessed: 4/08/2015).
[11] Zopa (2015) About us, Available at: (Accessed: 4/08/2015).
[12] Zopa (2015) loans, Available at: (Accessed: 4/08/2015).
[13] Zopa (2015) lending, Available at: (Accessed: 4/08/2015).
[14] Course hero (2015) Zopa targets an under-served market people, Available at: (Accessed: 4/08/2015)
[15] Houzz (2015) About us, Available at (Accessed: 4/08/2015)
[16] C, written on August 27, 2013 (August) ‘The numbers say Houzz has lit a fire under the home remodeling market’, Pando, 27 2013

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