Hybrid business: Definition, advantages, risks, and examples of this business model
With the passing of the years and the advances in technology, many things have changed. For example, there is currently the talk of hybrid businesses, which are now a trend in different industries. These, in a few words, are projects or companies that diversify to offer more services.
In this article, we will explain in more depth what hybrid businesses are about and some examples of these.
What is a hybrid business?
These are the business concept that combines different services in the same place to offer. After knowing what the definition of hybrid businesses is, it is important to point out that the main objective of this model is to offer a different and more complete consumption option for customers.
In addition, among its main goals is reaching the client from all angles. Thus, consumers will have it as their first option, since that is where they will find the greatest number of services to avoid going from one place to another.
It is important to mention that the satisfaction of the needs of that client can be tangible or intangible. In the first group, for example, it could be through drinks, clothing, accessories, or technology, while the second could be a better structure for reading, working, music, or activities.
In other words, hybrid businesses seek to merge everything they want to sell to their customers in one place. Of course, the latter is essential because you should always think about the target audience or buyer person to develop a sales strategy.
The characteristics of hybrid businesses can be highly variable because, as we mentioned before, it is created under the idea of a particular client. In general, a service, a product, and a space for developing both are offered.
This model does not consist, therefore, in having a star service or product that can drag others down. What is sought is to have a strategic plan for the conversion or income of money for everything offered.
Advantages of hybrid businesses
After knowing what they are about, it is time to learn about the benefits or characteristics of hybrid businesses. Among some of the most important are the competitive advantages that companies that apply this model can have.
Source of permanent innovation
- To offer different services in the same company, hybrid businesses require constant development. Therefore, reinventing itself every day requires permanent innovation to offer customers the best solutions for their needs. This type of project generates that businessmen are aware of all the news to be at the forefront in their sector.
Hybrid businesses are not a new concept, rather they are a trend that comes and goes cyclically. What this indicates is that it is something proven and that it has been successful, so it is not such a risky bet if you want to see it that way. Since time immemorial, company owners have sought to add value to them and have tried to pamper their customers with different services.
High market penetration
Building customer loyalty is easier when you offer them several things at the same time in the same place. What client is going to prefer to move between two places to contract two services when they can find both in only one? Users will keep your hybrid service in mind every time they think they need to solve a need, be it any of the two.
Economy of scale
For a hybrid business strategy to develop in a good way, the consumer to whom they are directed must want to differentiate themselves. Once the consumer is on the premises, the business itself will be in charge of offering other proposals that he may need. A great advantage is that one service can be fed from another and when you advertise you get an economy of scale at cost and advertise as many products as you can at the same time.
Less price sensitivity
It is clear that nobody wants to set prices so high that they cause no customer to want to buy their products or services, but several factors must be considered. After you manage to differentiate yourself from your competitors with a hybrid business model, you can raise your prices. The client will no longer worry so much about the cost of the service or product, but about the differentiation that it provides.
Increases the prestige of the company
Hybrid businesses always go into detail about what their customers want or need because their highest priority is to give them all possible solutions. When a user sees that a company strives to serve him in the best way and help him solve his needs, he will get the best image of the project. Making life easier for people is something they will appreciate and recommend to their social circle.
There are many advantages that hybrid business ideas represent, but like everything in life, there are risks that must be taken to embark on this path.
Risks faced by hybrid businesses
You already know what they are about, and what their advantages or benefits are, and now we will show you some of the risks of creating a hybrid business model. This is not to say that this model is negative, but it does suggest that it requires great responsibility:
More expenses for the employer
This does not always happen, but in some cases, the staff that the owner has contracted can take care of all the services. If this does not happen, as an entrepreneur you will have to hire specialized personnel to help cover the extra work. Remember that if you use your collaborators to do all kinds of tasks, they will end up “burning out” or melting down and will not be productive.
The bad image of one of the services
This is a risk that will depend on the number of services or businesses you have at the same time. What you should keep in mind is that if you make mistakes in one or neglect another, your customers will notice and the bad image will cover the entire company. For this reason, you must be clear about the main service without neglecting the secondary ones
Unaffordable prices for customers
If what you offer are complementary products, this should not happen, in principle. But you must be clear that if you go to a segment of the market whose spending capacity is not high, it will be difficult for them to acquire both items. Most likely, they will only buy one, and thus the other will be left in limbo, so you must do a good market study and your target audience.
Hybrid businesses are characterized by going beyond their brand and generating a very defined identity. Remember that the moment someone imitates your model, the differentiation of your product will be much more damaged than if you only provided a service. That is one of the great risks that you must take care of for your project, beyond the fact that at some point this may be unavoidable.
Loss of identity
You already know that in a hybrid economy, you will provide different services through the same company or business. When you offer a range of options on your menu, you likely have several trademarks and one of these can overshadow the others. The most common and also the most definitive solution is to maintain a single commercial brand and under it everything that you offer in your venture.
Poor distribution of efforts
At the moment you start the company, you must make sure that you are clear about all the needs that each of its tentacles will have. Remember that not all of them will require the same effort, much less the same investment. Consciously plan what resources you are willing to commit to so that each service or product you offer does not lose its quality.
- The above were six risks that can arise when starting a hybrid business. Sure there will be more, but these are some of the keys that you should take into account in your project.
Hybrid Business Examples
You already know what they are, as well as the advantages and risks of the different types of hybrid businesses. Now, it’s time to put all this into something tangible through 5 examples of hybrid business strategy :
Nike store in Beijing
It may be one of the most recognized brands in the world and this is thanks to its constant innovation. The American sports brand Nike is one of the most iconic regardless of the industry and of course, it also perfectly handles hybrid business ideas. The best example is the store it has in Beijing (China), which was an art gallery and is now used for the sale of sports products, as well as having a gym and a rest area.
Located in Ghent (Belgium), it is a space where customers can have a drink with friends, get a haircut, or play the piano while doing their laundry. Yes, Wasbar is a laundromat, but it has other services which make people want to stay longer. On one side are the washers and dryers, while on the other side is the bar counter, making it a great representation of hybrid businesses.
La Jerónima is located in Seville, a hybrid business that presents the increasingly traditional combination between bookstore and cafeteria. This store offers publications such as fanzines and artzines, as well as works published by different independent publishers. Craft beer is one of its favorite drinks among consumers, who can also enjoy a fashion showroom in some seasons and exhibitions by plastic artists.
The Doger Cafe
Also in Spain, but this time in Madrid, is The Doger Café, a cafeteria that welcomes abandoned dogs and allows their adoption. This opened a few years ago but has succeeded due to its innovative concept and admirable work. In this place, you can also buy products for your pet and enjoy a 100% vegan menu.
Railing Clothes & Bar
Lastly, and without going too far, is Barandana Ropa & Bar, a hybrid between a clothing store and a bar located in the Retiro neighborhood in Madrid. With a retro style, this space has its mini stage to enjoy live music. Nothing better than having a drink, after a shopping session in which you take good quality clothes for your wardrobe.
Cafes, bars, bookstores, laundries, and even clothing stores, you have seen all of this in the previous examples and even combined in one place. This speaks to the creativity of entrepreneurs and the flexibility that hybrid businesses allow.
The different types of hybrid businesses are a trend that is not new, but that does bring great innovations. There are thousands or even millions of people in the world who benefit from this, either because they are owners or because they are users of these projects.
Although it has important benefits, this model represents a fair amount of risk, like every venture you want to have. However, the essential thing here is that if you intend to enter this industry, carry out a complete market study and have a well-structured idea.
So, don’t miss out on more opportunities, and let hybrid businesses make your life easier!