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Another new start for Pieter Pot?

At the beginning of this week, it became possible again to purchase products from Pieter Pot. The packaging-free supermarket has reopened its online doors after being declared bankrupt at the end of 2023. A bankruptcy that was partly a result of the company’s success. And that might sound strange. However, it happens more often than you think, as we at Stay Future Proof observe. This has everything to do with the business model. Successful companies have a well-designed and validated business model, one that is desirable, feasible, viable, and responsible. And one that interacts with the context. Designing such a business model is what we call sustainable business design. In this blog, I’ll take you through the importance of this process and tell you more about the challenges Pieter Pot has faced with its business model.

 

Sustainable business design

Let’s start at the beginning. A business model describes how a company creates, delivers, and retains value. The Business Model Canvas is a tool for designing a business model. This Canvas, conceived by Alexander Osterwalder, consists of nine building blocks, including the value proposition, customer relationships, and key partners. By filling in all these building blocks, you make all the important elements of a company instantly visible. The building blocks do not stand alone but interact with each other in a well-designed business model.

 

Creating value for an organization goes beyond realizing profit; it also involves making a positive impact on people and the environment. Many of us were educated in a time when it was believed that these two objectives were at odds: it was ‘doing good’ versus ‘doing business’. I want to dispel this limiting belief. Business models can indeed be profitable and have a positive impact. In fact, research from sources like McKinsey and the University of Berkeley has shown that sustainable business models outperform less sustainable ones. We refer to this as Triple Value: business models that add value not just financially, but also for people and the planet. Consequently, at Stay Future Proof, we’ve added two building blocks to the original business model canvas: the negative impact on people and the environment, and the positive impact on both.

 

Success criteria

There are four criteria for designing a successful sustainable business model: it must be desirable, feasible, viable, and responsible. When designing a new business model, you start by researching the desirability of the solution. You want to find out if people are actually waiting for your solution. After all, scarce resources are wasted when you develop something for which there is no demand. Through experiments, you can validate whether the solution you offer is relevant and solves a real problem for your customers.

 

Next, you validate the feasibility of your business model. Can you deliver on the promise you’ve made? It’s crucial to consider the scalability of your solution at this point. You need to know in advance how you can continue to deliver your solution when demand grows exponentially. Failing to deliver what you’ve promised can break your business model and often leads to going out of business.

 

After validating the feasibility, you proceed to test the viability of your business model. Does your business model have longevity? Customers might be excited about your solution, but it’s crucial to validate whether the investment of their time, data, and money is worth the value you’re providing them.

 

Finally, it’s important to consider the responsibility of your business model. Is your solution sustainable, and is it produced and offered in a sustainable manner? In this criterion, the question from the book “Net Positive” by Paul Polman is central: is the world better off because your business exists?

 

Pieter Pot’s business model

Let’s transition to the business model of Pieter Pot. The company entered the market in 2019 as the first packaging-free supermarket in the Netherlands. Consumers can order their groceries through the Pieter Pot app, with all products packaged in reusable pots and bottles and delivered to their doorstep. Is the product finished? Then you give the empty jars and bottles back to the delivery person. A good example of a sustainable business model.

 

The desirability of Pieter Pot’s business model was validated almost immediately after its market launch, with a significant demand for its products. The start was so successful that revenue grew to 10 million euros within just 2.5 years, making Pieter Pot’s business model seem like a perfect fit. However, a number of contextual changes occurred that the business model couldn’t withstand. The end of the COVID-19 period saw consumers regaining confidence in shopping at physical supermarkets. Additionally, Pieter Pot was affected by higher inflation, rising interest rates, and political unrest in Eastern Europe. These changes led to a decrease in demand and an increase in costs, negatively impacting the viability of the business model.

 

Changing the building blocks of the business model

Another crucial factor contributing to Pieter Pot’s setback was one of its key activities. Initially, Pieter Pot managed its operational processes in-house, leading to high fixed costs regardless of the number of products sold. This approach is not cost-efficient when product demand decreases. As a result, Pieter Pot faced challenges regarding the feasibility of its business model.

 

When you notice your business model no longer meets the four criteria for success, it’s crucial to make adjustments. As I mentioned before, a business model must adapt to its context, requiring occasional modifications. This is precisely what Pieter Pot did after its restart. The company chose to outsource one of its core activities, the operational processes, to partners, paying per product instead of incurring high fixed costs. Additionally, the company opted for a smaller product range, resulting in lower inventory costs.

 

A bright future

This example of Pieter Pot vividly demonstrates that a business model evolves with its context. Therefore, staying informed about contextual changes is crucial. Simultaneously, you must continually validate whether your business model meets the four essential criteria: is it desirable, feasible, viable, and responsible? If you find your business model doesn’t or no longer meets these standards, it’s time to adjust the building blocks. Make minor tweaks, experiment, validate, and iterate. Start small, just as Pieter Pot has done post-restart. Consumer confidence in Pieter Pot appears strong, and with adjustments to the business model, Pieter Pot could very well achieve significant success.

 

Do you also want to get started with sustainable business design? Let’s grab a coffee and explore the possibilities. Stay Future Proof is happy to help you create future value.

about the author
Carolijn Coolen
Thanks for reading, I hope you’ve gained some valuable insights from the article! I’m Carolijn Coolen, Strategy Designer at Stay Future Proof. Want to learn all about strategy, innovation and transformation? Reach out and let’s talk!
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