Complexity and disruption are two primitive examples that can be used to illustrate the modern-day business dynamic. With companies working day in and out to ensure survival, innovation and constant up-gradation are no longer a choice for them; it has become a necessity and core means of sustainability.
In this regard, many businesses have innovated with products and tweaked their business style as per the demands and requirements of their customers. However, even that is not sufficient.
The current day business dynamic generally guarantees positive results only if businesses are at par with all their service protocols, including service delivery.
Customer facilitation can only be possible if businesses have a clear-cut idea regarding their customers. Therefore, they need to accommodate them to ensure that they get the largest slice of the pie without worrying about competition.
This increases the importance of a flexible business model tenfold. The fractionalization Business Model is one such prime example.
What is Fractionalization Business Model?
The fractionalization Business Model is directed towards ensuring that customers can sell a partial product. In other words, it is giving the customers the option to buy a portion of a product or service.
It gives the customers the opportunity only to buy the chunk of goods and services they require to use, not the entire product.
When not given an option to use partial services, customers are often indecisive about the purchase because it often includes elements they are particularly not interested in.
Therefore, this often results in abandoned purchases, which takes a strain on the business’s financial model, to say the very least.
How does Fractionalization Business Model work 2022?
The fractionalization Business Model is structured to facilitate customers by giving them the option to use a product or service partially.
This acts as a great incentive for the customers because it creates more value.
It is more affordable and convenient for them to use a certain “fraction” (hence the name, fractionalization) of the product, rather than keeping the whole sole product to themselves.
It is different from leasing because leasing typically comprises a single user utilizing the product at a single point in time.
However, with fractionalization, many people can use the product at a single point in time.
This mainly occurs with subscription and bundled services, and they can also be considered part of the fractionalization business model.
If someone does not want exclusive rights to a certain product, then they might accept sharing the platform with others.
This model works best in the case where the consumers want to use or consume the services on a partial basis. In this model, they are going to get the full benefits of using the product (or the service) without having to pay for it in full.
Examples of Fractionalization Business Models
The greatest example of disruption in fractionalization business models is perhaps the multiple-screen idea that Netflix introduced.
Although by default, Netflix is categorized as a subscription-based business model, it can be seen that with the multiple screen option, a number of people use Netflix and watch content at the same time.
The idea works great, especially for families and friends who want to share their screens with other people to split the bill.
On the contrary, if it were not the case, a single user would have to pay the lump sum amount for the entire viewership.
However, within a family, people can share their accounts to split the amount, which can be referred to as a classic example of fractionalization.
Therefore, it can be seen that the fractionalization business model has managed to disrupt the industry (particularly the service industry) because it has greatly facilitated people in terms of being able to use a particular asset without having to pay for the service lump sum.
This has proved to be a double-edged sword for businesses because it has increased their business outreach and has helped them increase revenue on a holistic front.
The ability to inculcate this particular business model might be a challenge for businesses, and this might not be entirely suitable for all business types.
However, there is no denying that it has greatly helped companies with products or services structured around partial usage.