A description of a companys intention to create and capture value by linking new technological environments to business strategies.
Lam and Harrison-Walker estimated about 50 revenue-generating e-business models. There are different approaches to describe the models. The following are a list of these approaches.
1. Researchers with marketing orientation use product, price, place, and promotion. 2. Others, in terms of structural characteristics around the value chain of suppliers and buyers, IT systems and architectures, technical platforms, and security and traffic scale.
Lam and Harrison-Walker analysed business models employed by Internet companies and reduced them through the use of two-dimensional models. 1. Relational objectives 2. Value-based objectives
These are used to classify e-business models based on the Internets connectivity characteristic. Target Market Connectivity-related objects
These are related to a value formula such as generation of revenues and others benefits. Examples include non-financial contributions such as increased marketing effectiveness or improvement in consumer attitudes.
Very few firms sell products online and so this model is not widely employed in developing countries. Many service providers in developing countries have invented viable business models. Some argue that e-commerce can be a key competitive advantage if it is used effectively in these imperfect markets.
Thamel.com was established in 1999 as a web portal. Its physical office is located in Thamel, a street in Kathmandu Thamel.com originally targeted tourists. Then the company shifted its focus on Nepalese expatriates. Acted as a gift provider to expatriates and their families.
In 2001, 900,000 Nepalese lived outside the country. Higher Internet adoption rates, Higher disposable incomes Higher rate of credit cards ownership. This market is e-commerce ready with a greater value-creation opportunity. The company also targeted foreign Expatriates living in Nepalese. In 2004, 80% Thamel.com customers were Nepalese expatriates and 20% were foreigners
Economic factors 1994, Internet introduced in Nepal 1999, 0.15 % users of total population 2004, 0.9% users of total population Developing countries e-commerce market lacks economies of scale. ICT access charges expensive Monthly Internet access (20hrs/wk) was more than per capita annual income Still was a cash-based society over credit cards
Socio-Political factors Classifying Asian countries by level of adoption of digital and electronic signatures has put Nepal at level 0. As of mid-2004, Nepal hadnt enacted DES laws.
Cognitive factors Knowledge, skill and confidence related to e-commerce usage are even stronger 2% estimate of population are English literate in Nepal ½ of adult population is illiterate Highly undeveloped and unreliable postal systems Problems of postal system in Nepal include inefficient security, unreliability and theft.
Combination of the following: An internet portal A bundle of services A manufacturers agent A virtual mall
Two most popular models for a portal: Free model Offers some free goods and services to create high traffic Advertising opportunity Content sponsorship model Uses content, links and services to attract visitors to generate advertising revenue Thamel.com used the content sponsorship model.
Provides multiple services as a package deal for customer Facilitates online ordering and payment of goods Delivers gifts to the customer Confirms delivery by taking a digital photo of the gift being delivered to the customer
According to Lam and Harrison-Walker, a manufacturers agent represents more than one seller, and sometimes an entire industry, to sell specific types of products In 2004, Thamel.com featured over 7,000 products representing diverse industries such as chocolates, ceremonial goats, birthday cakes, silk saris and cheese Facilitates vendors such as the goat herders who do not have their own websites by providing information on their products on the Thamel.com website Revenue comes from user fees, advertising, sponsor commissions
Hosts multiple online merchants on its website
Targeted the population that experienced relatively fewer economic barriers – the expatriates Outsourced payment/transaction processing functions to the US Thamel.com as an alternative to Nepals poor technological and financial structure, and also to avoid the legal barriers Provided delivery service and delivery confirmation photos Initially Kathmandu had no street addresses making it difficult to find recipients homes Through a partnership with the Municipality of Kathmandu and their mapping system, they created delivery zones around well-known landmarks Took digital pictures of the delivery of the gift to the recipient which would be sent to the buyer as delivery confirmation, and a thank you note for using the service
1. In a developing country, a companys success depends on its ability to simultaneously deploy and manage multiple e-business models Thamel.coms customers would never have bought products listed on the companys website if it had just acted as a web portal
2. In relatively small markets of developing countries, companies can add value by bundling together various products and services
3. To deliver full potential, developing country-focused Internet business models are required to outsource some functions to the industrialized world Impossible to break all e-commerce barriers Outsourcing can enhance value delivery
The developing world still has much to learn about e-commerce. These countries must realize that: I. Not all business models targeting the developing world are equally successful. Developing countries still need to deeply research the factors that differentiate successful/unsuccessful e-commerce business models. II. Thamel.coms model worked in Nepal, but may not be successful in other scenarios
Countries in the developing world must: III. Determine the optimum size of the e-commerce market for companies in their country to profitable exploit. IV. Determine the types of companies that are likely to force their business partners to adopt ICTs (Information and Communications Technology). V. Determine the optimal level of involvement for government and private organizations in combating various e-commerce barriers.