Business Model Canvas - Channels
This article will cover the various types & examples of Channels tailored to digital business models.
Channels are one of the sections of the popular Business Model Canvas tool.
The Business Model Canvas was devised by Alex Osterwalder
Typical types of channels within digital business models shown in the biz model canvas
(1) Types of Channels
The most notable aspect about digital business models is that they are a new channel compared to the traditional business models. They move in-person / brick-and-mortars / face-to-face / paper / physical (media device) into the digital channels. This often affects all types of channels listed below.
The best way to categorise Channels within Digital Business Models is by the following types:
Customer acquisition channels (often includes sales and/or marketing channels)
Sales channels: including support and after sales
Value delivery channels may include also interaction, transaction and intermediation channels, for example between the demand and supply side on platform business models
Customer retention channels
(2) Examples of Channels
Now let’s take a look at examples of Channels. The best way to do so is - as always - by looking at concrete, vertical-specific examples.
eCommerce
Examples of digital businesses in the eCommerce vertical include Amazon, Etsy, Wayfair and thousands of others.
Channel examples Amazon:
Most notably, Amazon is a new digital channel for B2C retail competing with the old brick-and-mortars, in-person channel
Some of their channels are:
Customer acquisition & sales: their websites and its elements, such as product descriptions, a simple checkout, reviews, filter, search and navigation features, etc
Value delivery channels:
Their various apps, incl Kindle (reader) device / app, etc
Their transport and delivery channels for physical goods
Support channels on their website which are functional but probably not award-winning
Content & Media
Examples of digital businesses in the Content & Media vertical include Netflix, YouTube, Spotify, Medium, Apple News and many more:
Channel examples Netflix:
Netflix has started as a DVD-by-mail delivery company and then transformed into a streaming company where content is delivered on-demand and entirely via a digital infrastructure
Their value delivery channels include many types of smart consumer electronics:
Those with a screen, connection and computing capabilities: Smart TVs, smartphones, laptops, tablets and more
And those with connection and computing capabilities, such as game consoles, set top boxes and more
Customer acquisition channels include:
Social media for customer relations / promotion of upcoming shows/movies
Media outlets to spread the word (magazines, etc)
Film festivals for promotion
Sharing economy
Examples of digital businesses in the Asset & Service Sharing (=Sharing Economy) vertical include Uber, DoorDash, Airbnb among others:
Channel examples Airbnb:
Transaction channels:
Most transactions can be managed through the App, including planning, booking, payment, etc
Hosts can manage things through the site / App
Communication between host and guest typically occurs initially through the App
Customer acquisition / marketing & Sales channels include:
Word-of-mouth
Free and ongoing media coverage (supported by their comms team)
It is quite remarkable that Airbnb does not use travel agencies as sales channels
and more
Online Travel
Examples of digital businesses in the Online Travel Agencies (OTA) vertical include Booking.com, TripAdvisor and Expedia:
Channel examples Booking.com:
Sales channels:
The Booking.com webpage
The mobile-optimised webpage
The Booking.com app
Indirect channels, e.g. TripAdvisor (Cost-per-acquisition model)
Customer acquisition channels (performance ads):
Other OTAs: TripAdvisor (Cost-per-click model)
Meta search engines:
Kayak.com
Google Hotel Ads
Social Media & Search
Examples of digital businesses in the Social Media vertical includes Meta’s Facebook, Instagram, X. Examples of Search Platforms include Google, Bing and others.
Channel examples Facebook:
Key interaction channels on the website/app are:
The news feed is the main user channel to get the user (re)engaged
Notifications (about 2 dozen types of notifications that can be customised)
Chat / messages and activity status of friends to stimulate interaction
And much more – see esp the left sidebar (website) and top bar
Most transactions on the user side are automated through the app/website. It allows a ton of settings (e.g. security, privacy, tagging, location, and a lot more)
Help pages, contact, reporting, security / privacy setting, etc
Mail, SMS depending on settings
Software-as-a-Service:
Examples of digital businesses in the Software-as-a-Service vertical include Salesforce, most Adobe products and hundreds of thousands more cloud-based software products:
Channel examples productivity SaaS:
Value delivery channels: website & app instead of software installed on a desktop
Customer acquisition channels:
Freemium or Free Trials
Right mix of single-user and collaborative features in your Freemium layer
Paid ads
Word-of-mouth from collaborating users: bottom-up
Single-sided network effects to achieve better outcomes
Critiquing the Biz Model Canvas (Channels section)
Now that we have covered the Channels section of the Business Model Canvas (BMC), it’s also time to discuss honestly some shortcomings of the BMC relating to this aspect.
The Channels section of the BMC book is actually a bit different than the other sections in that it is somewhat more valuable and shows more distinctions than the other sections. However, it mainly focusses on the different types of sales channels. While, for example, it lists value delivery channels in the beginning of the section, it leaves it at that without any further details. That’s of course way too shallow for us. To some extent, it’s understandable as the BMC is aiming to please all business models. With our focus on digital business models only, we have been able to provide a far more specific list of Channels with many relevant examples that can be transferred to other digital business models.
We hope you enjoyed our coverage of Channels including the differentiation of different types and the extensive list of examples relevant for Digital Business Models.
What we like more than the Business Model Canvas: the B-MAP
We have used the business model canvas for almost 10 years on a very regular basis and to cover many dozen companies. Over time, we have realised that it has its limitations.
That is why we have decided to use a presentation format based on the time-tested Value Chain method devised by Strategy Professor Michael Porter. It is a far better way to grasp key aspects of a digital business model than the canvas.
Prof Porter is the most cited scholar on competitive strategy and digital transformation (with almost 10x more citations than the respectively 2nd ranking scholar).
Our Business Model on A Page (B-MAP) is specifically developed for digital business models and based on the Value Chain.
We have decided to price our B-MAPs super-affordably to give everyone (including our many valued followers from lower-income countries) the opportunity to get kick-started on their innovation journey with this high value resource that includes a B-MAP + walk through video for each of the digital companies that are covered!