Jesse Mustonen

Vili Raunola
 Agenda
- What is Verkkokauppa.com
- Business model of Verkkokauppa.com
- Value creation component
- Customer demand component
- Strategic component
- SWOT analysis
- Conclusion
Verkkokauppa.com

Size Visitors Founded Assortment

The largest and Over 80 million Founded in 1992 Over 90 000
most popular yearly site visits and is one of the different products
eCommerce in oldest
eCommerse sites
Finland
in Finland
 Why we chose Verkkokauppa.com
Is the most
popular
eCommerce in
Finland

They had a lot of Operates mostly in

public information for Finland making it
us to use unknown in other
countries
Has both B2C and B2B
sales
 Business model
Finance Model Revenue Model

Procurement Model Value Creation Model Market Offer Model Customer Model
Performance
Products
● In-house IT team - Services
● Over 800 ● Customized B2B - Products
Payment ● Wide production ● Public sector
suppliers to buy services - Distribution of
selection
products from Efficiency goods ● Individuals
● Online customer ● Own financial
● AutoStore robots
experience
● Wholesale
Payment service
● e-ville.com Interaction ● Small and
● Tailored services ● Omnichannel
acquisition medium sized
Investments for businesses experience - Feedback
● Investors businesses
Returns - Product returns
- Customization of
services
Revenue
- Interest
- Purchases
- Fees

Strategy model Resource model Network model

● Automation
● Personalized experience ● Sister companies
● Improve in-house technologies
● Competitive pricing for vast product ● In-house technologies ● Vast supplier network
selection ● Industry experience ● Delivery service partnerships
Value creation component
Procurement model
- Has over 800 suppliers
- Uses suppliers to buy the electronics and other products sold by them
- Acquisition of e-ville.com
- Better negotiation power with larger volumes
- AutoStore robots for controlling one of its warehouses in Helsinki
 Finance model
Capital structure
- The company is owned mostly by Finnish
households and Finnish pension and
insurance companies
- Banks finance via loans
- Issue shares in the stock market
Cost structure
- Materials and services combined
add up to 84.1% of the total costs
for Verkkokauppa.com
- Consists of advertisement costs
and buying products from
suppliers
- The fixed costs include rents,
electricity, salaries etc.
Value creation model
- In-house IT team
- Superior technological background system
- Advanced technology platform
- Widest variety of core product categories in Finnish consumer electronic market
- Own private labels
- Excellent online customer experience
- Online customer service for B2C and B2B customers
- AI chatbot
- Personalized product recommendations
- One day delivery to 70% of Finnish population made possible by their own warehouses
- For B2B customers, Verkkokauppa.com offers multiple additional services:
- Integration to existing procurement systems
- Tailored services
- Different wholesale benefits including large product categories and single unit orders
Customer demand component
 Market offer model

Brand recognition, competitive Foreign businesses to compete in

1 2
prices and customer service in the Finnish eCommerce market since
both B2C and B2B online and they don’t have the distribution
offline channels. network the same way built

4 Own billing financial service

and lenient payment options
Offers maintenance and
installation services. Businesses
3 can add their IT acquisitions to be Customized services for B2B
part of Apple’s or Samsung’s
Enrollment program
5 such as personalized pricing and
negotiate company-specific
prices from suppliers
 Customer model
Private Finnish
customers
Small and
medium-sized Web and retail
Finnish business stores

Wholesale
Public sector
companies
Revenue model

Installations of products Their own billing financial

service “Tili”

Selling consumer products and

services to businesses and
Extended warranty and individuals through their
insurance options brick-and-mortar stores and
eCommerce site
Strategic component
Strategy model
- Mergers and acquisitions among the local eCommerce companies
- Efficient order delivery process
- Transitioning from brick-and-mortar stores to online
- Competitive pricing for vast product selection
- Improve their in-house technologies and website for the greatest customer
experience
- Moving towards warehouse automation
- One-day deliveries to 70% of Finnish population

“Probably always cheaper”

Resource model
Long-term experience in Strong brand recognition
the Finnish eCommerce with 70 NPS score
market with over 115k
monthly active users
The widest and most
Automated local exciting assortment in
warehouses chosen categories

In-house technology
development for their An omnichannel personalized
own needs experience for their customers
 Network model
- Have multiple sister companies which offer them access to Chinese suppliers
- Swisslog for AutoStore robots
- 62 000 active B2B business partners
- 800 other suppliers and wholesalers
- Apple, LG, etc.
- Integrated with some of the purchase-to-pay systems on the market
- Basware, Coupa, Handi and OpusCapita
- Finnish delivery services
- Posti, Wolt and Matkahuolto
Swot analysis
Strengths
- Long experience in the industry
- Strong brand recognition in Finland
- Fast delivery times to most locations in
Finland
- Vast product selection compared to
- Competitive pricing
- Cost effective with low margin
- Own suppliers in China
- Autostore warehouses and packaging
automation
- Inhouse development of technologies
Opportunities
- B2B sales increase
- Profitability improvement program
- Consumer behaviour shifts to more
online shopping
- Better leverage on negotiations with
suppliers as their buying volume
increases
Weaknesses
- Dependency on the economic outlook of
Finland
- Dependent on suppliers
- High debt
- Dependent on the undisturbed
functioning of their web services
- Sells are seasonal
- Dependent on postal companies
Threats
- Increase competition in the Finnish
consumer electronics market
- Uncertain macroeconomic outlook
- The decline in consumer buying power
due to high inflation
- B2C sales decreasing
- High-interest rates make new
investments difficult
Conclusion
- Verkkokauppa.com’s eCommerce business model is quite successful
- Future increase of B2B sales, new product categories and automated warehouses,
help expand business even further
- Consumer push towards online shopping offers Verkkokauppa.com to be at the
centre of this with their vast product selection and refined online shop experience
- Most of the larger threats toward the business model impact the entire industry, such
as uncertain macroeconomic outlook, and thus are not only relevant for
Verkkokauppa.com.
- With the use of the superior brand and website, excellent customer experience, new
website improvements, advanced in-house technology platform and profitability
improvements Verkkokauppa.com’s future looks promising.
Questions?