BUSINESS MODEL INVESTIGATION
WILLIAM KHEY
Agriculture not only gives riches to a nation, but the only riches she can call her own. Samuel Johnson
1. INTRODUCTION
INDUCTION/THEME/FOCUS/INSIGHT/FRAMEWORK
2. CHOICE
METHODOLOGY/BMC BREAKDOWN
3. CONCLUSION DISCOVERY
THEME Farms
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What is Farm? what was once called the back bone of a nation, agriculture plays a major role in our existence – from what we eat, use in our offices, classrooms, what we wear, when we go to sleep at night, what we do at any time can be linked/ associated with agricul-ture. It’s also a concept that is very distant in our minds geographically. We distant ourselves from farms during our greatest time of innovation, with the proliferation of urbanization and have lost connection with the sole revolution that allowed our hunter-gatherer ancestors conglomerate into viable societies. With agriculture no longer playing in the forefront of our subsistence, there is opportunity where we can begin to revisit and redefine the way agriculture can shape our everyday lives
My Own
What is My Own? We call our possession our own it may be an object, idea or moment in time, we constantly search and attempt to gain more things that we can call our own. Perhaps it is the natural greed of human nature, but consider it differently and it’s an ultimate pursuit of happiness. My own doesn’t necessarily correlate directly with possession, we don’t necessarily need to physically own it. It is more of a concept of understanding the core value and aligning it with yourself; Finding the things that resonates the most with you.
THEME
Key Insight I approached the concept with some set key insights in mind. I analyzed the trend in food consumption and buying habits of young adults in the city of Toronto. I have discovered two insights which could fill the gap in the current consumer market
[1] Service which separates it self from CPG (Consumer Packaged Goods) and focuses on sustainable local goods
[2] Form a network enabling consumers and growers of agriculture to connect in a viable marketplace, at competitive prices, and in a convenient manner
FOCUS Profound
Induction Now that the framework and the foundation has been identified our team began to look for possible solutions within the current infrastructure of tech-nology and services. We broadened our scope and brought it back focused in to see which route of development was viable.
‌ we no longer are required to step a foot to find what we desire.
INSIGHT Methods
Through research our team has concluded that P2P service was the best to tackle the design challenge ahead of us. We decided that by creating a micro economy of buyers and sellers of food, we can significantly reduce the control of the CPG (consumer packaged goods) in the urban area. This leads to di-versity in species and and a wide range of price points that is not centralized by constraints set by corporate producers.
By chang-ing our behavior we create an interest in food knowledge and educational pursuit. This by product of behavior change was our original underlining goal for the development. We feel confident that this P2P exchange will ultimately benefit the users both academically and financially
METHODOLOGY Forward We began the research by looking at looking at the viability of the application. We researched the zoning by law in Toronto, we discovered that there are current restrictions in commercial urban agriculture, however, we also discovered that Toronto has large potential grounds for urban agriculture to thrive. Our next step was to case study the East Danforth neighborhood and deduce the potential of our viability. We came to an agreement that despite the restrictions, Torontonians are making an effort to continue urban agriculture, therefore our application is the missing
tool to connect these individuals and empower them. By connecting urban farmers to the general consumers, we believe that zoning bylaws can be changed for the betterment of Toronto and its people. Furthermore, we will breakdown the business model into segments to better show the working parts of how this business can affect the market and who will be involved to make some significant changes to the market.
What is Heirloom? Heirloom is a multidisciplinary E-commerce platform which connects urban farmers to buyers through geo-location. Focus of the business will be divided into 3 sections, Farmers, Buyers, Lenders. Farmer will be able to connect through the app to buyers all around the city, this will create a new market which they were once unable to enter due to lack of inventory and size. This application will allow them to be in full control of what they sell and how they sell it. Buyers will able to connect to variety of farmers based on product types, distance and quantity. This new method of consuming will separate the users from the big box stores, therefore creating a micro economy which can be established in any city this application may be applied to. The greatest advantage the buyers will experience from the app is total control of what they consume. Users will now be fully aware of who grew what, how they grew it and when they grew it. This total transparency is the advantage our business will have over all the BBS and CPG.
HEIRLOOM
The most exciting part of the Lender option is that this platform will now create a stream of revenue to any homeowners willing to participate in the system. Much like how Uber took advantage of unused vehicles and convinced users that now they can profit from a possession which in ordinary circumstances would have costed them money. The Lender option allows homeowners to take advantage of the unused backyard spaces. They either have the choice of finding a farmer independently or subscribe to our system and let us provide the expertise in turning their home into a farm. The combination of these three options will provide new option in food shopping and food culture, by creating a dynamic market. The users will now have more control of the behavior of consump-tion.
KEY PARTNER Heirloom will be the center of the operation as a connector mediator and the provider. The infrastructures needed to make this business functional is fortunately in place already in the market. Breaking down the necessary components are: Geolocation services, City of Toronto (health inspectors), delivery system(Uber,Lyft,Foodora), urban farmers, conscious buyers and a payment system (Mastercard, Paypal, Interact). These are the necessary parts to make the busi-ness functional today, how-ever we looked further into who we can partner with to create a more fluid and opti-mized experience. One case study we looked at was drones. The current technology in agriculture has advanced momentously and it is not well known. We researched into the topic and found number of companies
that provide services to the agriculture sector with the drone technology. One company in particular is Sensefly. This organization uses drones to survey, analyze, observe, assess, compile and execute. By using this service along without our platform, we can expect increasing yield of every farmer and growers who subscribe to our business compared to other independent urban farmers. This future scenario is foreseeably the development we would take to improve the experience for the users.
KEY PARTNER Heirloom's key partnership begins with the farmer and the buyer. This business re-quires dedicated farmers and hungry consumers to thrive. Toronto currently has over 100 community garden, 500 rooftop gardens and in total 734,000 sqft of area currently being used as green spaces. From this we can see that there is number of indi-viduals who are willing to farm within the city. Most of these UF (urban farmers) are restricted to what the city zones them to. Residential gardening is a concept not yet developed fully by the council of Toronto. This is where we see a potential partnership, by partnering with city of Toronto, we can change the current bylaws to gear towards residential farming. The stats show that in the East Danforth neighborhood, there are 3,362,500 sq ft farmerable land in backyard spaces in the residential area. These spaces
currently being used as greenspaces with no purpose other than aesthetics. We see massive potential in these spaces and can turn them into a profitable resource for every home owner in Toronto. Delivery system is another key partner we must address to make this business function. The current market in delivery has improved over the past 3 years. With emergence of ride share services such as Uber, Lyft, there is a massive network of vehicles that conveniently facilitate transportation and delivery of services from one point to another. Partic-ular company we found interest in is Uber. Uber has changed their services to better match the user’s needs. Features such as uber eats and uber party shows that they are willing to change with the consumer market. We believe that this partnership is a natural course of Uber’s growth and they would be willing to participate
KEY ACTIVITY Key activities can be divided into two main segments, surveying and managing. T h e main activity of Heirloom will be deciding who to approach in the beginning stage of this business. A key factor to success is to educate our potential farmer clients, and ultimately convince them of the economic potential of their unused farmable lands. This will re-quire surveying and running analysis of the land. This step will also provide us with chain of data we can adapt to inform us, how we can expand into other neighbor-hoods within the city. This sur-veying will also be our key proposal for bylaw amend-ment. With this third party ac-cumulated data, this active analysis of geography will be enough grounds for change of mind.
Managing is the sustaining activity which will keep the business running. This can be divided into 5 sections: Platform Upkeep, data analysis, customer care, Lender Management, and product care. Platform upkeep is necessary in any technology base business, thorough management of content and information is critical in smooth experience for the users, therefore our key activity is ensuring that statement is kept every step of the usage. Data analysis will be an on going effort. Our business will continuously survey year round to accurately record the changing attributes. This yearly record is important especially in a city like Toronto. The volatile weather and change in humidity due to our lakefront location will change the growing environ-ment every year. Therefore
KEY ACTIVITY keeping updated information will be a challenging yet vital part of our business operations. Next focus in business activity is ensuring customers are taken care of. Because, our system will operate mostly on P2P, quick time resolution to customer to customer relation mediation is at the forefront of management. Most of the issue which we foresee is price point dispute. To provide solution to this issue, we will set a floor price and ceiling price on all products, unless special requirements are necessary. This will require around the clock monitoring of price points across the city, raising and lowering the base points to best suit the general demands. Last key activity is product care; this will be to ensure safe products are being provided to the buyers. This activity can either be done by our business or in partnership with the city health inspectors
The farmers will upload the type of seeds with the following information: type of agriculture, presence of cotyledons, basis of botanical, types of germination. The entered data will be analyzed and a health inspector will be dispatched to confirm the legitimacy and integrity of the workable soil. And after the first harvest second inspection will be conducted to ensure the proper measures were taken to harvest clean crops. These activities will provide our business with good foundation, because our business deals with selling products, keeping up with these funda-mentals will ensure safe and efficient place for users to shop.
VALUE PROPOSITION
Heirloom VALUE PROPOSITION CAN BE DIVIDED INTO
8 SEGMENTS OF SATISFACTION
VALUE PROPOSITION
Convenience:
Tailored customization:
Finding what you want with the least amount of effort is critical. Speed and efficiency must be pres-ent in every step of the way in navi-gating through the platform. No matter what season, date or econ-omy Heirloom will make sure it is only few clicks away to find the perfect place for you to find what you want
Product consumers have a very limited variety of choices when they enter a BBS. Often they can only buy one or two types of prod-ucts, unless they travel to specialty stores. The features on the app will list diverse range of products with just one touch. What was once limited farmers market, this business intends to bring the farm to every home
MoreMoneyLessHassel:
Product Traceability
Heirloom tapped into the market of unused space. When surveying 20 homeowners, we discovered that their backyard was used with no real purpose. When we asked the same group if someone was to garden it for them and give them a share of the profit, would they be willing? Almost all of them agreed yes. why wouldn’t someone want to make more money?
Due to the disconnect between consumers and producers, product transparency in agriculture is uncommon. With the increased awareness of healthy and conscious eating in the past decade, Heirloom looks to take it one step beyond. much like how we enjoy our neighbor's food because we can start a conversation about it, and how it was made, this platform allows users to become conscious of what they consuming and interact with the farmers
VALUE PROPOSITION
Chargewhatyoudo:
Toyourdoor:
Heirloom will give significant freedom when it comes to price adjustment. as consumers will learn why there is a price differentiation between products, and learn why one product may be better than another. These prices will eventually stabilize due to competition within the urban marketplace. Allowing farmers charge for their effort is a good business prac-tice overall. Dollar for Dollar:
We order food, we order packages off amazon, why do we not have our grocery delivered? Heirloom will offer delivery service that can be scheduled to fit a customer's daily life. Users can perorderitems so that it can arrive when they arrive home from work.
The true price of an apple represents a small proportion of the price we purchase them for in a grocery store. Price is determined by shipping cost, third party cost, and everything that has nothing to do with the product. The products sold on Heirloom will have no hidden cost, user will buy the fruit for the effort put in.
To be competitive with the BBS, availability needs to match the current market. When BBS offer large quantity in limited locations, Heirloom will offer variety in in small quantities but in many locations around the city. With this service being P2P there will always someone near a buyer growing what they desire when they desire.
On-Demand:
CUSTOMER RELATIONSHIP Because this is a P2P service, customer service and satisfaction will be an utmost priority. Our business will constantly monitor any issues, disputes and infractions to ensure every experience is better than the last. We will empow-er the users who frequent the service. Badges will be assigned so that the users can identify themselves with their achievements. These achievements will result in benefits. For example, after receiving 100 positive buyers review, delivery will be free of charge for 10 transactions. This constant interaction will build loyalty and interest in using our services.
Other relationship that needs to be managed is the lender option. This can happen in two ways, we can provide the gardeners or the lender can provide their own. When they choose us in the lender option, we will undergo a contract either short term or long term. Both of these contracts will include agreement on commission rate, insurable products and scheduling. We will also provide every information necessary so that the lender feels in charge at every stage of the operation.
CUSTOMER SEGMENT Based on the questionnaire we sent out to our focus group, we found many of the millennials are concerned about sustainability and food sourcing. They were concerned that, they were not receiving enough information through the BBS and all the research required to find out about the products they buy is vague and difficult to find. These demographic of people also happened to be tech savvy and current with the technology in the market. Therefore, the information hungry millennials are our main customer segment. We have considered other demographies in the equa-tion. Because the service we provide offers transparency, customizability and variety it can serve anyone with di-etary issues, nutrition consciousness and users in the food desert areas.
Overall goal for this platform is to reach all of Torontonians. We will strive to convert all of BBS shoppers to our services and decentralize the food in-dustry. Once this can happen in Toronto, this can be applied to any city.
CHANNEL CHANNEL Search:
Awareness:
The main channel of communication is through the app, as this is where all the search, order, payment and delivery services will be organized. Payment system will be in conjunction with either Paypal or interact. Later on in development, we proposed our own independent payment system to cut cost for the users. The delivery system will be in partnership with Uber, by using the currently established network of vehi-cles, it will cut down the de-velopment time on our part.
Heirloom will choose nontraditional methods of advertising, and much like many startup companies, we will begin on crowd-funding websites. Through this, we can increase awareness and gauge the public's perception on our services
The communication between users will be through our systems chat box. By unifying all channels of communication, we can mediate during conversation and provide a fast and optimized experience for the both parties.
We hope that once our brand captures some attention, it will multiply through word of mouth and through blog and online advertisements. Because we champion sustainability and sourcing awareness, we believe that it will be easy to gain traction in the P2P market.
KEY RESOURCE
Heirloom’s ingenuity is to tap the market of shared property across many residential properties and become a leader in sustainable food trade markets. With its diverse range of pro-duce and customizability, Heirloom draws resources from all over the city to prolong their operation for the consum-er landscape.
KEY RESOURCE Physical: Heirloom allows any farmers in the city to place their products on the plat-form for sale. This gives us a wide range of items at no cost for trading. We will oper-ate much like a dropship store in some cases. The users can interact directly to each other through the platform, or have us in charge of sales of the product. Therefore, in a storage complex, we will house variety of items that will be delivered anywhere in the city at notice.
Technology: Since Heirloom will be dealing with agriculture, we must be ready for any outcome. Good produc-tion is a very fragile industry and change in weather can bring detrimental effect to the business. We will rely heavily on drone technology to provide us with information so that we can be ready for any circumstances. In case of any instances where the season did not provide enough crop output, we will have price algorithm architecture in place to level out all price difference for every account in the system.
COST STRUCTURE Heirloom’s cost structure will be divided into two parts, physical infrastructure and platform development. Physical infrastructures will include storage unit maintenance and property fees, these will include the regular business expenses such as utility, property tax, and business license. Next big account will be the drone service we will be implementing in later development. This will require acquiring the fleet and constantly maintaining them. After cost will slowly level out as these will bring tremendous amount of advantage to our business. Partnerships will be accounted in our cost structure, with services such as uber. The partnership will bring a contract which will be decided accordingly when both parties can agree on the correct terms.
Platform development is the other aspect of the cost structure. Since the ecommerce market is fiercely com-petitive, we will need to stand out both visually and functionally. With the complex algorithm required to manage wide range of variables, we will need constant updates and adjustments to the system to provide seamless and profitable experience. Therefore, we will keep platform development as our number one priority in our cost structure.
REVENUE STREAM
Heirloom will have two source of revenue stream. First, it will be through the commission fee we will receive from the users. Second, it will be through the subscription fee to our lender option (including the commission fee)
CONCLUSION Heirloom From researching the market, there were 3 key things that needed to be satisfied. First, being convenient, we understood that the more steps you take, less people will be engaged in. We created our platform to be only few clicks to achieve what you desire. Second, was catering to virtually every need; design affordance will be found on every aspect of the platform experience. Third is the cost efficiency. Heirloom will have the most competitive price due to the pricing algorithm while also weeding out production, distribution and corporate costs in grocery-bought agriculture.
HEIRLOOM
CONCLUSION DISCOVERED
Deduction we have taken many steps to discover what attributes are need to satisfy our theme and project scope. The ultimate theme of farm and my own is something that is uncommon in a field where such theme should have been embraced. We believe that this path of consumer behavior is a natural evolution of the buying culture, and because of the IoT, this trend will pick up sooner than later. The market alone in Canada is in multi billions, and because this is the new front of property sharing economy, we need to be the first one to jump into the venture.