What Is a Hybrid Business?

Malcolm Tatum

A hybrid business is a type of business operation that functions with the use of multiple means of reaching clients. There are two common uses of this term to describe slightly different approaches to the business model. One involves a company choosing to make use of alternative selling methods alongside maintaining a brick and mortar location that customers can visit. A slightly different approach involves diversifying the operation of the company to include related companies that serve different sectors of the marketplace.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

One of the older examples of a hybrid business would involve a company that chose to operate concurrent operations geared toward meeting the needs of two or more consumer markets. In many cases, consumers who are attracted to one set of products will also have use for the goods and services offered by the companion operation. For example, a company may operate a string of family-style restaurants, while also marketing a line of branded sauces, condiments and other food items that are associated with those restaurants. The end result is the ability to not only attract customers who want to dine out, but also tap into the market of consumers who need certain products in order to prepare tasty meals at home.

A more contemporary concept of a hybrid business involves the efforts of a company to market its core products in multiple settings. A business model of this type may involve the operation of a brick and mortar retail location while also maintaining an online store, and using catalog sales to generate orders by way of the post. Typically, the hybrid business will maintain its own warehouses as the means to manage the orders that come in from the online store as well as the orders received through the mail. In some cases, this brick and mortar back end function may be outsourced to order fulfillment services as one way to keep general operating expenses as low as possible.

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One of the benefits of a hybrid business is that there is an opportunity to reach more customers, which in turn means the potential to generate additional revenue. While this type of operation can become somewhat complex, the ability to establish a presence in more than one market means the business is less vulnerable to adverse circumstances that may occur from time to time in either of those markets. In the event that one means of reaching clients begins to lose ground, there is a good chance that the alternative strategies in place will see some sort of increase, allowing the company to remain financially viable.

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Discussion Comments

TTXRaven

One of the biggest or most popular hybrid business that comes to mind is TOMS - combining a nonprofit and for-profit model. Every time a pair of shoes is purchases, TOMS will give another pair to a child in need. They've even expanded their business model to include glasses and coffee, making it even more of a hybrid.

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