Introduction to Electronic Commerce: Business Models

1
Introduction to Electronic Commerce Business
Models

• Yelena Yesha
• Olga Streltchenko

2
Electronic Commerce (EC)

• Is an area of study that is concerned with
  developing methodologies and systems that support
  
• Creation of information sources
• Effective and efficient interactions among
  sellers, consumers, intermediaries and producers
• Movement of information across global networks.

3
EC Objectives

• In general -
• Increasing the speed and efficiency of business
  transactions and processes and improving customer
  relationships and services

4
EC Environment

• Vast amount of multimedia data
• Distributed, autonomous, and heterogeneous
  information sources
• Supports decision making
• The Internet as an infrastructure.

5
Categories of EC - B2C

• Is built on mutual distrust
• Has a small volume of transactions
• Requires a ubiquitous low-cost infrastructure
• Provides an opportunity for personalization and
  customization.

6
Categories of EC B2B

• Growth of B2B marketplaces and exchanges
• Growth in complexity
• Currently at a saturation point.
• Inter_at_ctiveWeek.com.
• Currently, 98 of medium and large firms are
  connected to the Internet and 41 are engaged in
  EC
• 70 engaged in EC by 2003
• Projected by eMarketer.
• Full range of business automation
• Supply chain management, negotiation, etc.

7
Categories of EC B2B (contd)

• Worldwide B2B revenues will grow from 185
  billion in 2000 to 1.26 trillion in2003.
• eCommerce B2B Report, eMarketer.

8
Categories of EC - B2G

• More restrictive due to government regulations
• In the US, the Federal Acquisition Streamlining
  Act (FASA) has mandated that all government
  agencies conduct bidding via EDI by late 1999.

9
EC Activities

• EC involves various business activities such as
• Online marketing
• Order processing
• Payment
• Delivery (information goods) or delivery
  management
• Technical support/Customer care.

10
EC Transformation of Business

• Transformation occurs through
• Globalization
• New products/services approaches
• Greater speed to market
• Better customer acquisition and retention through
  customization and personalization
• Enhanced cost competition.

11
Phases of E-Commerce

• Incremental Approach
• improve existing process for greater efficiency
  and effectiveness (E.g.. Banks)
• Strategic Transformation
• Go beyond improvement ( think radical/new way of
  doing)
• Globalization
• The last stage in EC.
• Host of issues need to be addressed (legal, etc)

12
Business Models- Characteristics and Examples

• Business Model
• Description/architecture of business activities
• Identifies potential benefits (revenues) from
  various activities
• Must work hand-in-hand with marketing strategy.
• Examples
• Retailing of goods and services
• Supply chain management, requisitions, etc.
• ASP (Application Service Provider)
• Banking/financial services, and more.

13
EC Models -Introduction

• EC can either
• compliment traditional business
• represent a whole new way of doing business.
• Issue is what is an appropriate model and
  marketing strategy.

14
EC Models

• Primary Models
• E-Shop
• Traditional web marketing
• Low cost passed to consumer
• 24 hr availability
• See www.hotwired.com/e-business/tutorials for
  excellent tutorial on setting up an e-shop

15
EC Models (contd)

• E-Procurement
• Attracts large number of suppliers
• Automated tender processing
• Lower cost for both parties
• Major corporations/public entities involvement.

16
EC Models (contd)

• E-Auction
• Electronic bidding with contacting, payment and
  delivery
• Buyers benefit from competitive costs and lower
  lot size
• Buyers benefit through reduced stock requirement
  and lower sales overhead.

17
EC Models (contd)

• E- Mall
• Collection of e-shops
• Enhanced under a common umbrella( brand name)
• Benefits through common user interface and spill
  over from neighbors.

18
EC Models (contd)

• 3rd Party Market Place
• Contracting out of web marketing to a 3rd party
• Allows for common marketing front end and
  transaction support for multiple businesses.
• Virtual Communities
• A growing trend
• Allows members to add their profiles to the web
  company.

19
EC Models (contd)

• Value chain Providers/Integrators
• Support part of the value chain. E.g. electronic
  payments ( banks)
• Add value by integrating several steps of value
  chain.
• Collaboration Platform
• Provide environment/specialist tools for
  collaboration
• E.g. collaborative design.

20
EC Models (contd)

• Information Brokers
• Information search (Google)
• Derive revenue through use (LEXIS) or
  advertising(Yahoo).
• ASP

21
EC Models (contd)

• Banking/Financial services
• Account management tools
• Simplified bill payment system
• Automated customer service
• Availability of quotes and charts representing
  stock market information
• Visualization and decision support tools for
  investment.

22
Technology Success Factors

• Technology Success Factors
• Aligned infrastructure
• Integrated business systems (ERP)
• Security