Overview

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Overview

• E-commerce business model
• Key components of e-commerce business Models
• Major B2C business models
• Major B2B business models
• Business models in other emerging areas of
  e-commerce

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Business Models

• A method of doing business by which a company can
  generate revenue to sustain itself
• Spells out where the company is positioned in the
  value chain
• Business models are a component of a business
  plan or a business case

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Business Plans Business Cases

• Business plan
• - A written document that identifies the
  business goals and outlines the plan of how to
  achieve them

• Business case
• - A written document that is used by managers
  to garner funding for specific applications or
  projects its major emphasis is the justification
  for a specific investment

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The Content of a Business Plan

• Mission statement and company description
• The management team
• The market and the customers
• The industry and competition
• The specifics of the products and/or services

• Marketing and sales plan
• Operations plan
• Financial projections and plans
• Risk analysis
• Technology analysis

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E-commerce business model

• Business model set of planned activities
  designed to result in a profit in a marketplace
• Business plan document that describes a firms
  business model
• E-commerce business model aims to use and
  leverage the unique qualities of Internet and Web

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Categorising E-commerceBusiness models

• We categorize business models according to
  e-commerce sector (B2C, B2B, C2C)
• Type of e-commerce technology used can also
  affect classification of a business model
• Some companies use multiple business models

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B2C Business Models

• E-tailer/Storefront model
• Portal model
• Content Provider
• Transaction Broker
• Market Creator
• Service Provider

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E-tailer/Storefront Model

• The customers and the seller interact directly,
  e.g. amazon.com, dell.com, play.com
• Organise an online catalogue of products
• Take orders through Web site
• Shopping cart technology
• Accept payments in a secure environment
• Send merchandise to customers
• Manage customer data
• Market Web site to potential customers
• Revenue through product sales
• Low barriers to entry -gt very competitive

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Portal Model

• Portal sites give visitors access to a variety of
  information in one place
• News, sport, weather, online shopping, searching
• Revenue through charging advertisers and charging
  for premium services
• Charging strategies for portals
• charge merchants for a link
• per customer click-through
• reserve best areas for paying customers

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Portal Model- Cont

• Horizontal portals aggregate information on a
  broad range of topics, e.g. search engines
• Yahoo! , Altavista.com, About.com
• Vertical portals (community sites) large amount
  of information in one subject area
• www.webmd.com, Bolt.com, IVillage.com

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Content Provider

• Content providers distribute digital content
  (news, music, video, artwork) over the Web
• WSJ.com, Rhapsody.com, CNN.com
• Second largest source of B2C e-commerce revenue
  in 2002
• Revenue generates through subscription fees, pay
  for download, or advertising
• Syndication a variation of standard content
  provider model

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Transaction Broker

• Sites that process transactions for consumers
• E-Trade.com, Ameritrade.com Monster.com
• Primary value proposition saving of time and
  money for customers
• Typical revenue model transaction fee
• Based on frat rate or sliding scale
• Industries using this model
• Financial services
• Travel services
• Job placement services

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Market Creator

• Uses Internet technology to create markets that
  bring buyers and sellers together
• Where they can display products, search for
  products and establish prices
• Priceline.com (reverse austion), eBay.com
• Typically uses a transaction fee revenue model
• Usually a commission on sales is collected and
  sometimes a submission fee
• A middleman no inventory and production costs,
  not involved in payment and delivery

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Service Provider

• Offers services online
• xDrive.com information storage
• Mybconsulting.com consulting for small
  businesses
• Value proposition valuable, convenient,
  timesaving, low-cost alternatives to traditional
  service providers
• Revenue models subscription fees or one-time
  payment
• Mixing services with products powerful strategy

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B2C Business Models Summary
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B2B Business Models

• E-distributor
• E-procurement
• Exhanges (B2B hubs)
• Industry Consortia
• Private Industrial Networks

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E-distributor

• Company that supplies products and services
  directly to individual businesses
• Grainger.com
• GE Electric Aircraft Engines (geae.com)
• Owned by one company seeking to serve many
  customers
• Revenue through sale of goods

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E-procurement

• Create and sell access to digital electronic
  markets
• Ariba
• CommerceOne
• B2B service provider is one type offer
  purchasing firms sophisticated set of sourcing
  and supply chain management tools
• Application service providers a subset of B2B
  service providers
• Revenue through fees (for market making services,
  supply chain management)

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Exchanges

• An electronic digital marketplace where suppliers
  and commercial purchasers can conduct
  transactions
• Exchange.eSteel.com, GEPolymerland.com
• Usually owned by independent firms whose business
  is making a market
• Generate revenue by charging transaction fees
• Usually serve a single vertical industry
• Number of exchanges had fallen to around 700 in
  2003

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Industry Consortia

• Industry-owned vertical marketplaces that serve
  specific industries
• Horizontal marketplaces, in contrast, sell
  specific products and services to a wide range of
  industries
• Leading example Covisint

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Private Industrial Networks

• Digital networks (usually, but not always
  Internet-based) designed to coordinate the flow
  of communications among firms engaged in business
  together
• Single firm network the most common form
  (example Walmart)
• Industry-wide networks often evolve out of
  industry associations (example WWRE)

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B2B Business Models Summary
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What is working?

• Pornography
• Travel / Tourism
• Retail - items that dont need personal touch -
  objectivity in product quality and performance
• music, books, gifts, Computers, electronic items
• Auctions
• Real Estate - houses and investment properties.
• Customer support services
• More efficient and effective processes between
  businesses (B 2 B)

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What is not working?

• Items which require touch and trial
• Luxury goods
• Clothes - beyond Tshirts
• Groceries - it works for some people but market
  is restricted
• Note Many OFF line factors determine success of
  Online service. Eg. Transport network, customer
  profiles,

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Getting online

• Why get online?
• Promote awareness of your Organization
• Sell a product
• Customer support
• Information and contact page
• Networking
• Everyone else has a web page

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Plan

• What is your product?
• Electronic, Services or physical
• Portable and inexpensive to deliver
• Tourism
• Who is your market?
• Overseas Fish buyers
• Upper income art collectors
• Budget travellers / Up market
• Obstacles, Implementation and deadlines.

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Getting Online

• Hosting Your Website
• Fast Access
• Cost, Support, Space and Services
• Choosing a Domain Name (web address)
• www.myname.com / .nu / .to / .tv / .fj /
• Calling Card
• Choose name that relates to product
• Reflects on organization
• Easy to remember

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Design Issues

• Often Simple Is Better
• E.g. National PNG, Yahoo
• Complexity depends on your website objectives
• Planning content
• How do you keep content fresh and relevant
• Who Develops your website?
• Professional Services
• Do it Yourself

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Web Site Software

• Web-site Creation
• Common Software Tools.
• Image Editing
• Adobe Photoshop
• Jasc.com
• Web Page Development
• Paintshop Microsoft Front page - 150
• Dream Weaver - 150 200
• Netscape Communicator-Free
• Note There are a lot of cheaper software online.

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Managing your Web Site

• Managing your website can take TIME!
• Adapting Business processes
• Good Samaritan Inn example
• Look at employee time
• Customer expectations
• Limitations of the medium (non face to face)

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Marketing Web site

• How do people find your website?
• ONLINE Strategy
• Links from related and / or popular web sites
• Search Engines
• Online Advertisements
• Informed by other users

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Marketing Your Website

• OFFLINE Strategy - Show Your URL
• www.MYCOMPANY.com
• Stationary
• Advertising on conventional media
• Trade shows