Breaking apart the value chain - Case Studies

Real World Case Studies

1. Apple's Entry into the Music Industry (Breaking Apart Existing Offerings)

Situation: The music industry was dominated by physical sales and album purchases, making it inconvenient for users who wanted specific songs.

Strategy: Apple introduced iTunes, allowing users to buy individual songs digitally. This unbundled the traditional album format.

Outcome: Apple revolutionized the music industry, making individual song purchases mainstream. However, this model was later overshadowed by streaming services like Spotify, which offered unlimited access to music for a monthly fee.

2. OTAs: Booking.com and TripAdvisor (Breaking Apart the Distribution Networks)

Situation: Travel and hotel bookings were primarily done through physical travel agencies or direct hotel bookings.

Strategy: Online Travel Agencies (OTAs) like Booking.com and TripAdvisor offered a platform to compare hotel prices, view reviews, and book instantly, making physical agencies less relevant.

Outcome: OTAs became the primary method for many travelers to book accommodations, offering convenience, variety, and competitive prices.

3. Birchbox: Subscription-based Cosmetics (Breaking Apart the Value Chain)

Situation: The cosmetics industry was vast, and consumers often found it overwhelming to choose and try new products.

Strategy: Birchbox offered a subscription service delivering samples of pre-selected high-quality cosmetics to customers, simplifying the selection process.

Outcome: Birchbox provided a unique value proposition, allowing users to try various products without the commitment of a full purchase, making the selection process more straightforward.

4. PayPal's Entry into Online Payments (Niche Entry Strategy)

Situation: Online transactions were gaining traction, but there was no dominant, user-friendly method for online payments.

Strategy: PayPal initially targeted a niche – eBay users. It provided a seamless way for eBay sellers and buyers to transact, riding the platform's popularity.

Outcome: PayPal's integration with eBay gained it massive traction. Its success led to eBay acquiring PayPal, and later, it spun off as its own entity. Today, PayPal is a dominant force in online payments, with a market value surpassing eBay.

5. Dollar Shave Club: Disruption in Men's Grooming (Breaking Apart Existing Offerings)

Situation: The men's razor market was dominated by a few major brands with high-priced products.

Strategy: Dollar Shave Club introduced a subscription model, offering quality razors at a fraction of the price through direct-to-consumer sales.

Outcome: The brand quickly gained traction, challenging traditional razor companies and eventually leading to its acquisition by Unilever for $1 billion.

6. Warby Parker: Direct-to-Consumer Eyewear (Breaking Apart the Distribution Networks)

Situation: Eyewear was primarily sold through optometrists or specialized stores, often with high markups.

Strategy: Warby Parker used a direct-to-consumer model, allowing customers to try on glasses at home and offering stylish frames at competitive prices.

Outcome: Warby Parker disrupted the traditional eyewear market, becoming a major player and setting a precedent for other D2C eyewear brands.

7. Blue Apron: Simplifying Home Cooking (Breaking Apart the Value Chain)

Situation: Many people wanted to cook at home but found it challenging to shop for ingredients or follow complicated recipes.

Strategy: Blue Apron provided pre-portioned ingredients with step-by-step recipes, removing the hassle of grocery shopping and meal planning.

Outcome: Blue Apron tapped into a new market of home cooks looking for convenience, though competition in the meal kit sector intensified over time.

8. Slack: Niche Entry in Team Communication (Niche Entry Strategy)

Situation: Team communication was fragmented across emails, messages, and various tools.

Strategy: Slack focused on providing a unified platform for team communication, initially targeting tech startups and niche industries.

Outcome: Slack's user-friendly interface and integrations made it the go-to platform for team communication, eventually expanding to larger enterprises and various sectors.

9. Zoom: Simplifying Video Communication (Breaking Apart Existing Offerings)

Situation: Video conferencing tools existed but were often complicated or required specific hardware.

Strategy: Zoom offered a user-friendly platform that worked seamlessly across devices, focusing on simplicity and quality.

Outcome: Zoom became a favorite for both corporate meetings and personal calls, especially during the COVID-19 pandemic when remote work and virtual meetings became the norm.

10. Direct-to-Consumer Wineries (Breaking Apart the Distribution Networks)

Situation: Wine distribution was primarily through retailers, with significant markups.

Strategy: Several wineries began selling directly to consumers, offering subscription boxes or memberships, and bypassing traditional distribution channels.

Outcome: D2C wineries provided consumers with unique wines at better prices, while also building a loyal customer base.