Travelling is a great time to explore, learn new things and broaden your perspective. A seemingly simple weekend away to Helsinki via Stockholm led me questioning what makes a good business model.
In Sweden, it’s popular for people (especially exchange students) to go on affectionately-named booze cruises. For super cheap prices (20-30euro), you can have a 3 day 2 night return trip across the Baltic Sea, with a room in an overnight ferry and a day in another city (eg Helsinki, if you’re travelling from Stockholm). However, as one of my local friends told me,
“You don’t go on those cruises to travel. You go on them to drink”.
Sure, travelling is great but the tax-free shopping on these cruises is what people really love. With alcohol prices sky high in Sweden, people go on these cruises to party and to stock up on their alcohol supply. The ticket to get on the boat is dirt cheap, but then the companies make money off what they sell you on board. The prices on board aren’t that cheap, but so long as they’re lower than the products on the mainland which have 25% tax, people will buy. Passengers don’t want to spend their time in their cramped and uncomfortable rooms with poor wifi connection. They’re encouraged to explore the boat – all the restaurants, bars, casinos, saunas and shops that are waiting for their money. The boats go quite slowly – but who cares? More time to spend at the bar on board!
The people running these cruise companies have really designed the whole experience so that they will earn a lot of money out of bored passengers. It’s quite amazing how well they can make money off others.
But can you really call this a good business model? In my opinion, it’s encouraging bad behaviour – such as impulse spending and alcohol abuse. Decisions which aren’t necessarily good for their wellbeing.
On the other hand, after I stepped off the booze cruise from Helsinki, I went to eat at one of my favourite food places in Stockholm – Urban Deli. They have a really good deal for breakfast. For 75kr (approximately 12AUD) I can get a freshly brewed coffee, egg and make my own sandwich from an array of bread, jam and produce choices from their deli. Most of their ingredients are organic, local or fair trade. (I would expect to pay 75kr for a sandwich with low quality ingredients elsewhere.)
In my opinion, they offer such a good deal because their breakfast essentially allows customers to try the produce they sell in their deli. They’re making their money from their deli, not the breakfast. By having a low cost breakfast, it will attract potential deli customers to try their food products. Working at an organic food truck in Sydney, I have seen quite a few customers walk away from us due to a negative preconception that organic food is gross and over-priced. Potential customers who would have initially been put off by the high prices of their organic and fair trade products, can first try it and experience first hand how good their products are.
This is a business model I support! Not only is it profitable for Urban Deli, it encourages good consumer buying decisions. I think more people should buy more local, organic and fair trade produce – it’s good for your health, good for the environment, good for communities and it tastes better! Good on you, Urban Deli, for encouraging people to buy such produce.
So what makes a business model ‘good’? Is it just about the profit of the company? Or can we also consider the consumer purchase decisions and behaviour involved?
Also, what makes a consumer decision ‘good’? Who is to say definitively that buying excessive alcohol is bad and buying organic food is good?
I’m keen to hear your thoughts and discuss further so please leave a comment below or feel free to message me.