Ecommerce Business Models and Concepts

1
E-commerce Business Models and Concepts

• Presentation by
• Hilde M. Fiskum
• Anne Lene Sværen
• Elisabeth Haugland

2
E-commerce Business Models

• A business model is a set of planned activities
  designed to result in a profit in a marketplace
• E-commerce business model aims to use and
  leverage the unique qualities of the Internet and
  the World Wide Web

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Key Ingredients

• Value proposition
• Revenue model
• Market opportunity
• Competitive evironment
• Competitive advantage
• Market strategy
• Organizational development
• Management team

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Key Ingredients

• Value proposition
• Successful e-commerce value proposition include
  personalization and customization of product
  offerings, reduction of price discovery costs,
  and facilitation of transactions by managing
  product delivery
• Revenue model
• Advertising revenue model
• Subscription revenue model
• Transaction fee revenue model
• Sales revenue model
• Affiliate revenue model

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Key Ingredients

• Market opportunity
• Realistic market opportunity is defined by the
  revenue potential in each of the market niches
  where you hope to compete
• Competitive environment
• Influenced by
• Number of competitors
• Size of the operations
• What is the market share of each competitor
• Profitability of the competitors
• How do the competitors price their products

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Key Ingredients

• Competitive advantage
• Asymmetry
• First mover advantage
• Unfair competitive advantage
• Perfect markets
• Market strategy
• The best business concept, or idea, will fail if
  it is not properly marketed

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Key Ingredients

• Organizational development
• All firms need an organization to effectively
  implement their business plans and strategies
• Management team
• Strong management teams gives a business model
  instant credibility to outside investors

8
Categorizing e-commerce business models

• Categorize according to the
• e-commerce sectors they are utilized in (B2C,
  B2B, C2C )
• The business model can be affected on the
  technology involved
• Multiple use of business models

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Business-to-Consumer Business Models

• Portal
• E-Tailer
• Content Provider
• Transaction Broker
• Market Creator
• Service Provider
• Community Provider

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B2C Business Models

• Portal
• Horizontal portals
• Include all users of the internet
• Ex. Yahoo.com, AOL.com
• Vertical portals
• Focused around a particular subject matter or
  market segment
• Ex. iBoats.com
• Both earn money on advertising, referral fees,
  subscription fees, transaction fees

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B2C Business Models

• E-Tailer
• Ex. Amazon.com, Walmart.com, Dell.com
• Every internet user is a potential customer
• Differentiate from existing stores - develop a
  niche strategy
• Earn money primarily by selling goods
• Content Provider
• Ex. CNN.com
• Key to success owning the content
• Earn money on subscription fees, and/or charge
  for content downloads

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B2C Business Models

• Transaction Broker
• Financial, travel services, job placement
  services
• Ex. E-Trade.com, Monster.com
• Market opportunity large, but must overcome
  customer fears
• Earn money each time a transaction occurs
• Market Creator
• Ex. eBay.com
• The buyers and sellers are their own agents
• Earn money per transaction

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B2C Business Models

• Service Provider
• Offers consumers a valuable, convenient,
  time-saving and low-cost alternative to
  traditional service providers
• Trade knowledge, expertise and effort
• Large market opportunity
• Earn money on selling services fees and one-time
  payment
• Community Provider
• Create a fast, convenient, one-stop site where
  users can focus on their most important concerns
  and interests
• To be successful find a niche that is currently
  not being served
• Earn money on subscription fees, sales revenues,
  transaction fees and advertising

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Business-to-BusinessBusiness Models

• Marketplace/Exchange (B2B hub)
• E-distributor
• B2B Service Provider
• Matchmaker
• Infomediary

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B2B Business Model

• Marketplace/Exchange
• Vertical marketplaces serve specific industries
• Horizontal marketplaces serve wide range of
  companies
• Both types earn money on transaction fees
• Key to success Size of marketplace

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B2B Business Models

• E-distributor
• Set up by one company seeking to serve many
  customers
• More products and services more attractive
• Earn money on sales of goods
• B2B Service Provider
• Traditional Online Business Services
• Earn money on sales of services
• Application Service Provider ASP
• Earn money on rental fees

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B2B Business Model

• Matchmaker
• Form of transaction brokers
• Earn money on transaction fees
• Infomediary
• Audience broker
• Capture information about customers and use it to
  help advertisers
• Earn money on sales of information
• Lead generators
• Gather customer data to create customer profiles
  and preferences
• Earn money on referral fee

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Business Models in Emerging E-commerce areas

• Consumer-to-Consumer (C2C)
• Help consumers connect with other consumers who
  have items to sell
• Earn money on transaction fees
• Ex. eBay.com
• Peer-to-Peer (P2P)
• Technology enabling consumers to save files and
  services via the web
• Earn money on subscription fees, advertising, and
  transaction fees
• Ex. Napster.com
• M-commerce
• Extending business applications using wireless
  technology
• Earn money on sales of goods
• Ex. Amazon.com

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E-commerce Enablers The Gold Rush Model