A new business model for baby prams based on leasing and product remanufacturing

Abstract

A shift in business thinking from selling products to providing service solutions to customer needs is becoming noticeable. It is driven by increasing competition and the need to identify new profit centres for producers of mature products. This paper identifies a new product group that could be interesting from the product-service system perspective – baby prams. The study presents a new business model based on selling the function that baby prams provide through leasing prams. It discusses potential barriers and necessary changes in product design and the supply chain to make it work. The product-service system in this case could include the organisation of a reverse logistics system with different levels of refurbishment and remanufacturing of prams, partially by retailers. The new model may provide customers with a high quality pram in a “like new” condition for the period they need it, and may help avoid transaction costs of having to sell the pram on the second-hand market. Economic estimations point to a significant potential for increased profits, while the environmental potential should be further investigated.