The development of digital business models—— a case study of Lookfantastic

The current world economic trend is digital technology and close integration with business. In recent years, with the development of information technology and economic level and the popularity of mobile devices, cross-border e-commerce has become a popular consumption form. This is a great example to understand how business models work in a digital background. In many cross-border e-commerce, the UK website lookfantastic is an example.

Cross-border e-commerce refers to the conduct of transactions between two parties in different countries based on the Internet (Liu, 2018). They complete the payment of funds through the network and realize the delivery of goods through the cross-border logistics system.

Lookfantastic is a well-known British cosmetics shopping website with large number of users. This website is not only popular with British users, but also a good choice for consumers across the globe to purchase cosmetics. The business model of this website is a cross-border direct purchase model. In order to better learn about digital business models, this article analyzes the consumption patterns of Chinese consumers using this website.

Operating model

The cross-border direct purchase model eliminates the complicated process and provides consumers with a convenient purchasing experience.

Process: First, domestic consumers place orders directly through the website in China. Then the platform delivers the goods to customers through the cooperation of two overseas courier companies through international direct mail.

The profit model of cross-border e-commerce is to earn the difference. There is no middleman method to make consumers and merchants a win-win situation.

Logistics model

Step 1: Domestic buyers submit orders on the platform.

Step 2: Overseas merchants will transport goods in the form of postal parcels or commercial express mail.

Step 3: The express delivery company contracting logistics services is responsible for customs declaration.

Step 4: Parcels need to be cleared after they arrive in China. After customs clearance, the postal agency will collect it, which is a postal express.

Step 5: Consumer receives package.

Payment model

The payment model of lookfantastic is the purchase of foreign exchange. In the foreign exchange purchase payment model, buyers select products on cross-border e-commerce platforms, and third-party payment platforms provide consumers with RMB payment methods. After payment, the third-party payment platform exchanges capital flow and information flow with the partner bank, and informs overseas merchants, and notifies overseas merchants of timely delivery.    

SWOT analysis

Strengths

1 Price advantage. The price of direct mail products is much lower than domestic counters. Websites often offer promotions to attract customers.

2 Convenient returns and refunds.

3 Low postage price. Orders over £ 40 are free of postage, and orders under £ 40 are priced at £ 7.50, which is a relatively low price.

Weaknesses

1 Customer service response is not fast enough.

2 The logistics takes a long time, ranging from one week to four weeks, and there is also the risk of goods being seized by customs.

Opportunities

The website has a complete range of products, and there are many professional and regional niche brands to meet the individual needs of different customers.

Threats

1 Platforms of the same type, such as feelunique and mankind, seize the market and compete fiercely.

2 Tax policies and changes in various countries will affect business.

Digital contribution

Digital technology has affected almost all steps in the overall operation of this website. From the perspective of consumers, they choose to purchase goods and query logistics information through the Internet. When face-to-face transactions with merchants are not possible, the web is their only contact tool. From a website perspective, they need to do a good job of managing and linking up every link. In the process, powerful digital technologies have played a key role. A powerful server can keep your website up and running. The convenient online transaction process can provide customers with high-quality services.

Unlike other industries, cross-border e-commerce is more dependent on digital technology due to time and space factors (Lai, 2019). Outstanding digital business model is essential for the development of e-commerce (Jiuru, 2018). Digital model is the main business process of e-commerce, and it is also a method of making profits. Online operation reduces human resource costs and office land costs, which can increase profitability.

Conclusion

Cross-border e-commerce is a product that conforms to the trend of the world economy and has great development prospects, but there are still many limitations in its operation. For example, the emergence of different business models has intensified competition among established e-commerce companies. In addition, deepening services and strengthening supply chain management also deserve attention. In the future, managers should main study how to strengthen the brand effect and enhance consumers’ shopping experience.

References

Liu, H., & Wang, X. (2018, March). Study on the application of big data in accurate marketing of cross-border e-commerce in China. In 2018 IEEE 3rd International Conference on Big Data Analysis (ICBDA) (pp. 24-27). IEEE.

Jiuru, Z. (2018, June). Influential factors and strategic analysis on the development of cross-border E-commerce between China and Russia under” the belt and road” initiative. In 2018 Chinese Control And Decision Conference (CCDC) (pp. 1521-1525). IEEE.

Lai, J. (2019, September). Research on Cross-Border E-Commerce Logistics Supply Under Block Chain. In 2019 International Conference on Computer Network, Electronic and Automation (ICCNEA) (pp. 214-218). IEEE.