Business Models

1
Business Models

• Brokerage
• Advertising
• Infomediary
• Merchant
• Manufacturer

• Affiliate
• Community
• Subscription
• Utility

Rappa
2
Brokerage

• Bringing together buyers and sellers
• Fulfillment (e.g., Etrade)
• Market Exchange (charge seller a fee e.g.,
  Metalsite)
• Business Trading Community (vertical web
  community)
• Buyer aggregator (buying group Mobshop)
• Distibutor (multi-vendor catalog NECX)
• Virtual Mall (hosts merchants via portal Yahoo!
  Stores)
• Metamediary (VMprocessingprotection zShops)
• Auction Broker (conducts auctions for sellers
  eBay)
• Reverse auction (broker can earn spread
  Priceline)
• Classifieds (price may or may not be specified)
• Search Agent (seeks goods/prices MySimon)
• Bounty Broker (reward for finding items
  BountyQuest)

3
Advertising

• Extension of traditional broadcasting model
• Generalized Portal (high-volume Yahoo!)
• Personalized Portal (customized My.Yahoo!)
• Specialized Portal (vortal, targeted)
• Attention/Incentive Marketing (pay for viewing
  CyberGold, IWon)
• Free Model (hosting, access, greeting cards
  BlueMountain)

4
Infomediary

• Collect and sell information about consumers
• Recommender System (users exchange information
  about products/services Deja.com ePinions)
• Registration Model (Content site, free to
  viewers, registration required NYTimes.com)

5
Merchant Model

• Classic wholesalers retailers (auction or fixed
  price)
• Virtual Merchant (Amazon OnSale)
• Catalog Merchant (Mail order migrated to the web
  Levenger)
• Click and Mortar (traditional Web Gap, Lands
  End BN)
• Bit Vendor (Strictly digital, most often
  downloaded only Eyewire)

6
The Others

• Manufacturing Model Eliminating an intermediary
  (Flowerbud, Dell)
• Affiliate Model Distributed sites provide
  click-through (Amazon BeFree)
• Community Model Users contribute content,
  funding, or knowledge on demand newsgroups (fee
  version Guru)
• Subscription Model Pay access high value is
  essential (because 46 wont pay)
• Utility Model Metered usage pay as you go
  (Fatbrain)

7
Why do any E-Business?
Meta Group study (Infoworld 3-27-2000, p.24)
8
The Landscape Business Models
Target B C Target B C
B Source of Goods, Info C B to B E-Steel, Free Markets B to C Amazon, Dell
B Source of Goods, Info C C to B Priceline C to C Ebay, QXL
Economist, Feb 26, 2000
9
The Models

• B to C Generates transactions from consumers.
• B to B Interbusiness transactions.
• B to B to C Integration of activities from the
  supply chain to the consumer.

Infoworld, 4-3-2000, p. 111 (M. Vizard)
10
Alphabet Soup?
Target of Goods, Information Target of Goods, Information Target of Goods, Information
B C G
Source B B to B B to C B to G
Source C C to B C to C C to G
Source G G to B G to C G to G
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Movement Toward Integration B to B to C
Target of Goods, Information Target of Goods, Information Target of Goods, Information
B C G
Source B B to B B to C B to G
Source C C to B C to C C to G
Source G G to B G to C G to G
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13
Creative Cash Flow Models

• Amazon.com has a unique advantage
• Shared by others?

14
Creative Approach Business Method Patents!

• Amazon One-Click shopping
• Amazon Affiliates program
• Open Market shopping carts
• Open Market secure credit card trans.
• Priceline.com name-your-own-price auction
• Sightsound.com selling digital content for
  download (asking for 1 royalty)

Actual Patents Owned (Infoworld, 3-6-2000, p. 30)
15
Amazons Patent

• July 1998 Federal Appeals Judge rules that
  business processes can be patented.
• October 1999 Amazon sues Barnes and Noble for
  one-click orders.
• December Judge agrees with Amazon, forcing BN
  to add a step to its checkout process.
• March 2000 Patent Office announces plans for
  tighter oversight of e-commerce patents.
• Feb 2001 Judge allows Barnes Noble to return
  to one-click ordering! Case still in lower court

PC Week 4-17-2000, pg. 80, Wall St. Journal Feb
2001
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