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Overview E-commerce business model

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Presentation on theme: "Overview E-commerce business model"— Presentation transcript:

1 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

2 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 2

3 Business Plans & Business Cases
- 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 3

4 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 4

5 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 firm’s business model E-commerce business model – aims to use and leverage the unique qualities of Internet and Web



8 Categorising E-commerce Business 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

9 B2C Business Models E-tailer/Storefront model Portal model
Content Provider Transaction Broker Market Creator Service Provider

10 E-tailer/Storefront Model
The customers and the seller interact directly, e.g.,, 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 -> very competitive

11 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

12 Portal Model- Cont Horizontal portals – aggregate information on a broad range of topics, e.g. search engines Yahoo! ,, Vertical portals (community sites) – large amount of information in one subject area,

13 Content Provider Content providers distribute digital content (news, music, video, artwork) over the Web,, 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

14 Transaction Broker Sites that process transactions for consumers, 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

15 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 (reverse austion), 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

16 Service Provider Offers services online – information storage – 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

17 B2C Business Models Summary

18 B2B Business Models E-distributor E-procurement Exhanges (B2B hubs)
Industry Consortia Private Industrial Networks

19 E-distributor Company that supplies products and services directly to individual businesses GE Electric Aircraft Engines ( Owned by one company seeking to serve many customers Revenue through sale of goods

20 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)

21 Exchanges An electronic digital marketplace where suppliers and commercial purchasers can conduct transactions, 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

22 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

23 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)

24 B2B Business Models Summary


26 What is working? music, books, gifts, Computers, electronic items
Pornography Travel / Tourism Retail - items that don’t 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)

27 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,

28 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 28

29 Plan What is your product? Who is your market?
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. 29

30 Getting Online Hosting Your Website
Fast Access Cost, Support, Space and Services Choosing a Domain Name (web address) / .nu / .to / .tv / .fj / Calling Card Choose name that relates to product Reflects on organization Easy to remember 30

31 Design Issues E.g. National PNG, Yahoo
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

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

33 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)

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

35 Marketing Your Website
OFFLINE Strategy - Show Your URL Stationary Advertising on conventional media Trade shows

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