P1253296772JkNAo

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Business Models
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Characteristics

• A networked architecture that defines ownership,
  sources of revenues, value-chain, and flows of
  information, goods, and payments
• The Internet-technology can be used to
  reconfigure business models and automate the flow
  of information
• Interfaces can be one-to-many or many-to-many
• Business model and business strategy ?

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Taxonomy

• Ownership structure
• Public (independent)
• Private
• Consortium
• Value-chain
• Different ways to generate value propositions
• Industry specific
• Vertical
• Horizontal
• Transactional and non-transactional

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Public E-marketplace

• Owned by an independent third party
• Automated access (many-to-many)
• Niches
• Low prices, commodity-type products, and indirect
  material
• Value creation from aggregation
• Contextual services
• Logistics, financial, insurance, research reports
• Critical mass and liquidity
• http//www.alibaba.com http//www.expedia.com

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Private E-marketplace

• Owner is also a trader
• Requires approximately 100 million to build one
• Owner creates business rules and rules of
  participation
• Owner profits more than the trading partners
• One-to-many interactions
• Buy-side and sell-side

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Cisco Systems

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Integration Benefits

• Single business platform
• Use of standardized interfaces
• Transaction process efficiency
• Consolidated purchasing
• Improved sourcing decisions
• Faster production ramp-up

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Unique Capabilities

• Owner interacts with partners directly and
  controls what information partners see.
• Promotes communication protocols consistent with
  the owners trading practices
• Supports different access rights of participants
• Supports selling/buying with multiple attributes
• Permits customer collaboration and customization
• AMR predicts private e-marketplace market will
  reach 35 billion by 2005
• http//www.walmart.com
• http//www.cisco.com

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Consortium E-marketplace

• A private e-marketplace where the ownership is
  shared by more than one
• Liquidity of e-marketplace is assured by the
  equity holders
• Equity-sharing and profit-sharing
• Integration benefits consolidated purchases,
  collaborative product design, and supply-chain
  improvements

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Consortium E-marketplace (cont)

• Aggregation benefits sharing infrastructure
  cost, product, and service standardization
• Challenges
• Trading partners may perceive visibility of their
  relationships (with their partners) as a threat
• May pose anti-trust problems with the FTC
• Examples Kraft, General Mills, Nabisco,
  Aerospan, Covisint
• http//www.transora.com, and
  http//www.e2open.com

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Roles in the Value-chain

• Creator
• Develop new products/service ideas
• Refine existing products/services
• Producer
• Package creators ideas into products, services,
  and business solutions
• Distributor
• Enable buyers and sellers to connect,
  communicate, and transact (supply chain or demand
  chain)
• Customer
• Individual customers
• Business customers

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Model Differentiators

• Disintermediation/Reintermediation
• Inventory ownership
• Online/Offline sale
• Information sharing
• Revenue sources
• Cost drivers

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Differentiators
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Aggregation

• Forward Aggregation

 
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Sell
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Purchase
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Resellers
Buyers
E-Marketplace
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Features

• Aggregates the selling power of small sellers,
  and the sellers exploit economics of scale in
  purchasing from major suppliers
• Sellers are helped by the marketplace in
  fulfillment, order configuration, logistics, and
  call centers (Ingram Micro)
• A catalog hub that consolidates sellers catalogs
  is also an aggregator
• Plasticsnet.com requires only a single purchase
  order to purchase from a diverse set of suppliers

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Reverse Aggregation
   
Suppliers
Buyers
E-Marketplace
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Features

• Aggregates the buyers
• Price reduction, reduced transaction cost
  
• http//www.fob.com
• Can outsource procurement
• Would work best with a few large and many small
  buyers
• Product diversity would make reverse aggregation
  difficult
• Other aggregators
• Shopbots aggregate information on books, music,
  and electronics
• Relationship aggregators to management the
  diverse bank accounts of a company
  
• http//www.maxmiles.com

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Originators

• Provide online expertise to match product
  features with customer needs
• Knowledge of buyers and sellers businesses
• Initial qualification, specification, packaging
  (identify and qualify buyers)
• Works well with a fragmented supplier base,
  and/or complex products
• Freemarkets provide structure, standards, and
  liquidity for complex transactions
• MySimon matches multiple attributes for tailored
  purchasing advice

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Collaboration Platform

• Provides a set of tools for collaboration
  collaborative product design and supply chain
• Online collaboration through web services (.net
  of Microsoft)
• Plug-in business processes in a service grid,
  accessible to all companies

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Transaction Facilitators

• Provide efficient transaction services between
  buyers and sellers
• Use of advanced databases to automate a diverse
  set of transactions
• Payment processing, and order processing
• Economics of scale in transactions
• Require large business volumes for survival (low
  margins)
• Must collaborate with originators and other
  e-marketplaces for referrals
• Competitive advantage through customizing
  transactions for users
• Integrate the companys business rules in
  web-based purchasing

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Resource Consolidators

• Create spot markets for resources
• Capacity, inventory, and human resources
• Enable companies to quickly adjust their
  capacities
• Price volatility and demand uncertainty
• High-fixed asset industries energy, electricity,
  and utility
• CapacityWeb, Employease, Tradeout.com, and Enron
  online

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Service Providers

• Specialize on a specific narrow segment of the
  value-chain
• Payment services, logistics services
• Search agents
• Application service providers
• Customer profiling and business opportunities
  brokerage
• Electronic notaries and certification authorities

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B2B Auction Hub

• Forward auction
• Seller posts goods and buyers bid
• Sell surplus or used equipment
  http//www.machinefinder.com
• Reverse auction
• Buyer posts description of needed goods
• Suppliers bid
• E-marketplace qualifies sellers and buyers
• Dynamic pricing based on supply and demand