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7 Industries with Disruptive Business Models

disruptive business models

As new industries emerge, new ways to disrupt traditional business models emerge as well.

Many industries are able to develop disruptive business models.  A disruptive business model must create new markets and displace an existing business model. Let us go over some of the most remarkable details about industries that are currently disrupting traditional business models:

1. Real Estate Crowdfunding

Commercial and residential real estate is one of the oldest industries in the world. It is littered with bloated fees and big players who are not ready to adapt to the new technology trends. However, this industry is ripe for disruption and has been for a long time Crowdfunding is changing the face of commercial and residential real estate in a variety of ways:

• Options
When supply is not enough to meet market demand, there is an opportunity for someone to fill in the gap. Although the demand for real estate loans has been rising steadily, traditional lenders are still reluctant in lending money. The emergence of crowdfunding has provided borrowers with more lending options. As well as, more attainable investment options for investors with lower capital.

• Access
For a long time, only select and uber-rich investors have had the opportunity to access high-end investment properties. Crowdfunding provides investors with numerous investment options.  Accreditation standards remain the same. However, many smaller and younger investors are getting access to more superior deals than they would have done before. Thanks to the power of crowdfunding options.

• Savings
If industries are unchallenged for a long time, inefficiencies are bound to arise. Hence, peer-to-peer lending and online crowdfunding platforms have fewer touch points and reduced overhead. They are, therefore, able to offer lower fee structures for their investors.

2. Streaming Live Sports

Netflix, Hulu and Amazon Prime have already kickstarted the decline of cable TV. However, one major thing that has kept many people tethered to cable is live sports. It is next to impossible to legally watch a live sporting event online even if you would be willing to pay for it mostly due to the agreements made between TV networks and sports leagues.

We expect this trend to change in the coming few years. According to The Wall Street Journal, Amazon has held talks about rights to stream games with some of the most prominent sports leagues in the United States. Before this, A.C. Milan, an Italian soccer club signed a deal with Sporcle, a Los Angeles-based sports streaming startup, giving the company rights to broadcast live video exclusively.

3. The Pyramid Business Model

Disruptive Business Models

The pyramid model should not be confused with Ponzi schemes. It enables companies to generate significant portions of their revenue through the many resellers and affiliates. By significantly scaling up the businesses sales force, companies create what appears to be a community. They just sit at the top of the pyramid waiting for revenue to stream upwards without much effort.

Many distributors are already using this pyramid model including Amazon, which has recruited many sellers and partners under its umbrella. Since the sellers and affiliates get paid through commissions, companies using this model can grow their revenue and build their business cost-effectively.

4. The Ecosystem Business Model

Apple is the perfect example of a company that has successfully implemented the ecosystem model. It is one of the most effective, disruptive business models and it hooks customers like a drug. A company creates a universe of products and services where customers will get lost without even realizing it.

The model only works if the company creates enough products and services to trigger a high level of dependence on the customer’s part. The system limits a customer’s choice thus eliminating any competition. They have no choice but to keep on buying the products and services. If an iPhone breaks, for example, a customer will have to buy another one.

5. The Hypermarket Business Model

The most effective way to disrupt is to offer products and services at a lower price. Big companies are using this model to crush their competitors. Amazon pioneered the model. The company will usually operate like a hyper store and offer numerous products and services. Thus, benefiting from massive economies of scale.

When a company like Amazon offers products and services at a lower price, competitors usually have no other option than to exit the market. If they attempt to lower their costs to match that of the hyper store, they would be forced to operate at a loss since they don’t benefit from economies of scale. Other distributors using this model include Zalando and Coolblue.

6. Access Over Ownership

This business model turns products into services. It allows customers access to a product without necessarily having to buy it first. Customers can now use expensive products that they wouldn’t typically afford. Thus, the business is still the actual owner of the products.

The internet plays a vital role in the success of this business model. Zipcar, for example, is one company that successfully implemented it. The business owns a fleet of cars which it shares out to its members who pay a certain fee every year to enjoy the service.

7. Renewable Energy

Disruptive Business Models

86% of America’s energy consumption still relies on gas, coal and nuclear power plants. This dependence is expected to drop in the coming years. The cost of renewable energy has dipped significantly. The price of installing solar has been reduced by half since 2010 in the U.S. The World Economic Forum. They also report that the cost of wind and solar energy is now lower than that of fossil fuels in 30 countries.

Big companies in the U.S. including Google, Apple, and Facebook will soon make a 100% shift to renewable energies. According to Michael Drexler, head of infrastructure and development investing at the WEF, renewable energy is now at its tipping point. Finally, apart from being a commercially viable option, it is also a compelling business opportunity that offers stable, long-term, inflation-protected returns.

The business models outlined above are some of the most disruptive emerging business models with the potential to shake up their respective industries. Our industry, Crowdfunding Real Estate, continues to impress seasoned and young investors due to all the options available. Take a look at our latest offerings clicking here today.

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