Internet Marketing

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Internet Marketing
Web Business Models
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Business Models

• Method of doing Business to generate revenue
  streams within the value-chain
• Are there many models out there?, Yes
• Is there a clear recipe for choosing one? No!
• Are e-Business models all new? Of course not!

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Business Models

• Many are traditional, inspired by the bazaar
  economy or the mass media model
• Old world models are rejuvenated
• Auctions (eBay.com), Reverse Auctions with name
  your price (priceline.com, ewanted.com)

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Improvement-Based Biz Models
Use the Net to Improve Products Services
Enhancement
Efficiency

• Build brand
• Build category
• Enhance quality

• Reduce costs
• Free trial

Effectiveness

• Support dealers
• Support suppliers
• Collect information

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Payment Mechanisms
Which Company Bears the Risk?

• Sponsorship least risky fixed payment
• Banner Ads payment depends on impressions
• Prospect Fees Sales Commissions depend on
  success of site and advertiser

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Bargaining Power Determines Who Bears Risk

• Powerful sites shift risk to advertisers and
  demand sponsorships
• Powerful advertisers demand accountability and
  negotiate for prospect fees of a share of
  transaction revenue

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E-Commerce Takes Off
The Personalization/E-commerce Link

• Concept of Mass-Customisation
• Greater personalization leads to even more
  purchases and a higher customer lifetime value

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Do You Yahoo?

• For 50 of US Web users YES!!!
• Yahoo! brand extensions provide value added for
  users
• Yahoo! games
• Yahoo! clubs
• Yahoo! chat
• Yahoo! auctions
• Yahoo! Stores
• Yahoo! leverages its brand and ability to draw
  traffic to generate multiple revenue streams
  Portal strategy

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Yahoo! Brand ExtensionsThe Success of the Yahoo!
Brand
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Business Models, Net History

• Model 1 AOLs content business based on
  connect-time revenue splits
• Model 2 Advertiser-driven build traffic, sell
  eyeballs. Good for portals, bad for all others.
• Model 3 e-Commerce sell real products for real
  money! Assumes cost economies based on
  disintermediation lets be careful here.

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Business Models, Net History

• Model 4 e-Commerce never making a profit out of
  selling real products for real money! Focus here
  is on establishing relationships and estimating
  the lifetime value of a customer.
• Concept of monetising
• Freeonline.com.au, free-PC.com

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Other Biz ModelsBrokerage Model

• Buy/Sell Fulfillment banking, trading, charge
  transaction fee bankdirect.co.nz, e-trade.com
• Buyer Agragator bring together individuals for
  group discounts (mercata, mobshop.com)
• Distributors focus on b2b, same biz model as
  BandM but just more efficient
• Virtual Mall provide a metaphor of the BandM
  world, charge rent! See yahoo! Stores

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Other Biz ModelsBrokerage Model

• Auction Broker e-Bay.com, trademe.co.nz
• Reverse Auction name your price, priceline.com,
  e-wanted.com, mygeek.com
• Classifieds focus on specific area such as jobs
  ( jobs.com, monster.com), real estate
  (abritel.fr, immostreet.fr)

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Other Biz ModelsAdvertising Model

• Portal site Yahoo, Excite etc
• Vortal focus on a very narrow topic, I.e golf,
  food (recipes.com), medical info (webmd.com)
• Free Model give something away, free e-mail,
  free web hosting (hotmail.com), free greeting
  cards (bluemontain.com), wishlist.com.au,
  millemercis.com
• Discounter Sell goods at below cost and draw
  revenue from ad dollars (buy.com)

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Other Biz ModelsMerchant Model

• Virtual merchant amazon, eyewire, onsale.com,
  cdnow.com
• Catalog migrate from mail to web, landsend.com,
  williamssonoma.com, easibuy.co.nz
• Surf-and-Turf combine virtual and bricks,
  gap.com, barnesandnoble.com, woolworths.co.nz
• Bit Vendor Sell digital goods only, I.e.
  software, music (napster.com)

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Other Biz ModelsSubscription Model

• User-pays charge a fee for access to a site
• Ex Wall Street Journal, Consumer Reports
• USA Today tried this and failed.

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• No
• Companies try to generate revenues any way they
  can
• Multiple revenue models are combined on the same
  site

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Competing Against the Net
Retailer Responses to the E-Commerce Challenge

• Selective price discounts
• Bricks and mortar merchants can offer discounts
  for products that can also be bought online
• Concentrating attention on late adopters of
  technology
• Some consumers have a lot of fear, uncertainty
  and doubt about the online shopping experience
• This slows their defection to new online outlets

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Competing Against the Net
Retailer Responses to the E-Commerce Challenge

• Creating and staging experiences
• Pine and Gilmore stress that the economy is
  evolving toward experienced-based value
• Retailers function less as sellers of products
  than as stagers of events

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Competing Against the Net
Retailer Responses to the E-Commerce Challenge

• Adopt the Internet to create a hybrid system
• Bricks and mortar retailers can move certain
  parts of their retailing function online
• Physical locations often a superior way to
• Acquire customers
• Set up customer relationships
• Create a strong retail brand image
• The online presence
• Drives business to the physical locations
• Provides 24/7 convenience for loyal customers
• Adds new functionality gift registries and
  shopping services

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Successes

• Worldwide travel, banking, trading, auction the
  model of Buy/Sell Fulfillment with transaction
  fee
• Books, CDs volume but not yet profitable
• Paid value-added advertising sites extension of
  BM Model (classified ads, jobs sites)
• Ex www.Monster.com
• Niche propositions
• www.sweet-seductions.co.uk
• www.virtualvineyards.com
• www.dailygrind.com

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Successes

• In New Zealand
• www.pcdirect.co.nz
• Woolworths online
• BankDirect, ASB FAstNet
• TAB, 20 Million/year
• www.tuff-as-nuts.com

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Successes

• Mass-customisation addressing multiple segments
  of one
• Dell Computers
• www.smarterkids.com
• travel.co.nz
• Vitamins www.acumins.com

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Successes

• Click-and-Mortar
• Combining existing strengths in physical
  distribution with virtual approach
• Barnesandnoble.com
• in Japan, a retailer is experimenting with
  product pick-up in 7/11 shops

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Fiascos

• Www.Pets.com, www.mothernature.com (vitamins)
• www.priceline.com
• e-Shopping Mall concept (IBM)
• In New Zealand
• Flyingpig.co.nz (now re-launched)
• NBR, The Press

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Jobless sock puppet looking for a new home Icon
orphaned by the demise of Pets.com By Deborah
Lohse, Mercury News Position wanted Lovable,
slightly sarcastic sock puppet seeks good job,
preferably one requiring a microphone. Limited
but highly successful job experience as
a spokespuppet for a major dot-com company.
Highlights included being featured in a float in
the Macy's Thanksgiving Day parade. All offers
considered. For many people who never really
cozied up to the idea of buying pet supplies
online, the saddest part of the demise of
Pets.com was certainly the orphaning of the
unnamed Pets.com sock puppet
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Opportunities

• Find a niche, added-value product
• Migrate from catalog (Ezibuy)
• Try to exploit overseas market
• Minimise shipping constraints and costs

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