Presentation on theme: "E-Business Models Business Model-Definition"— Presentation transcript:
1 E-Business Models Business Model-Definition It defines a revenue stream to the provider.It provides benefits to the consumer.It provides architecture to deliver those benefits.Simply put, it is how an organization makes money.
2 E-business ModelsA business model defines a revenue stream to the provider, benefits to the consumer, and an architecture to deliver those benefits.Online intermediaries are classified by the way they make money:1. Content sponsorship2. Direct selling3. Infomediary4. Intermediary model
3 E-business Models Intermediary Models: 1. Brokerage Models: Online Exchange e.g. E-tradeOnline Auction e.g. eBay2. Agent Models:Agent Model Representing SellersSelling AgentManufacture’s AgentMetamediaryVirtual MallAgent Model representing BuyersShopping AgentReverse AuctionBuyer Cooperative E-tailing ModelBit VendorTangible Products
5 Content Sponsorship E-Business Model Firms create web sites, attract a lot of traffic, and sell advertising.Involves using a niche strategy to draw special interest audiences (e.g. travel, gardening, dance, transport, food and drink.)The product sold is a space on the Web.Similar to traditional media, where television, magazines, and other media sell space and air time.Major portals such as AOL, Yahoo, MSN, Lycos, Excite use this models. Sometimes used with other models to generate a revenue stream e.g., an online e-tailer(www.buy.com), sells ads on its site to generate additional revenue, which helps them to lower prices.
6 Direct Selling E-Business Model Manufacturers sell directly to customers instead of using intermediaries. (e.g. Cisco systems, Dell Computer)Wholesalers and retailers are not needed, causing disintermediation.The Internet makes it easier to bypass intermediaries.Used in business-to-business markets-saves millions of dollars at times in sales related expenses, such as, personnel, product configuration, and order processing costs.Also used in consumer markets with sales of digital, software, and music, that require no inventory, pick-up, packing and shipping.(e.g. CNET shareware. Com.Wall Street Journal Online)
7 Direct Selling Considerations Perishable products, such as fresh foods and flowers are sold using this method. (e.g. pro-flowers delivers flowers fresh from the grower.)Benefits include cost savings and rapid delivery for the consumer.Benefits to the manufacturer include an ability to claim a piece of the middleman’s margin.
9 Infomediary Considerations The space is resold to other advertisers.Consumers have the benefit of receiving ads targeted to their interests, thereby providing them with control concerning the ads they receiveBenefit to the infomediary is that consumer information increases the value of its ad inventory.Benefit to advertisers is that they can reach a highly targeted audience even while the consumer is on a competitor’s site.
10 Brokerage ModelsThe broker creates a market in which buyers and sellers negotiate and complete transactions. They typically charge a fee.e.g.1.Offline Exchange: NYSE2.Online Exchange:C2CB2C Carpoint, AutoByTelB2B NECX, Paper Exchange, E-Steel, Altra3.Online Auction: C2C e BayB2C UbidB2B Spottrader
11 Brokerage Model Considerations Benefits to the Buyer:1. Convenience2. Speed of order execution3. Transaction processing4. Cost savings through lower prices5. Decreased search time6. Savings of energy and frustration in locating appropriate sellers.
12 Brokerage Model Continued Benefits to the Seller1. Creation of a pool of interested buyers.2. Cost savings in the form of lowered customeracquisition costs and transaction costs.3. Unloading surplus inventory and obtaining market price for their goods.
13 Agent Models Representing Sellers Agents do represent either the buyer or seller depending on who pays their fees.Selling Agents:Represent a single firm to help it move products and normally work for a commission. For example, affiliate programs pay commissions to web site owners for customer referrals. e.g. Amazon Associates Program and
14 Agent Models Representing Seller Continued Manufacturer’s Agent:Represent more than one seller.1. B2C (Seller aggregators)2. B2B (Catalog aggregators)
15 Agent Models Representing Seller Continued MetamediaryAn agent that represents a cluster of manufacturers, e-tailers and content providers organized around a life event or major asset purchase.knot.com
16 Agent Models Representing Seller Continued Benefits of MetamediariesThey solve four major consumer problems:1. Reduce search times2. Provide quality assurance about vendors3. Facilitate transactions for a group of related purchases.4. Provide relevant and unbiased content information about the purchase.They benefit business partners by :1. Having traffic directed to their sites2. Co-branding with the metamediary
17 Agent Models Representing Seller Continued Virtual MallsHost multiple online merchants in a model similar to a shopping mall. Hosted merchants gain exposure from traffic coming to the mall.e.g. Yahoo!Store)Six benefits:1. Branding2. Digital wallets3. Frequent shopper programs4. Gift registry5. Search facility6. Recommendation service
18 Agent Models Representing Buyers(Purchasing agent) Shopping Agents conduct product searches for consumers and display a list of merchants and the price at which they will sell the item.e.g. www. pricescan. comSecond –generation shopping agents measure value not just price.e.g.www.evenbetter.com(Frictionless Value Shopper)
19 Agent Models Representing Buyers(Purchasing agent) Reverse Auction serves as purchasing agent for individual buyers. The buyers specifies a price and sellers bid for the buyer’s business.e.g.www. priceline.combenefits to the seller1.unloading excess inventory, especially perishable inventorybenefits to the buyer1.lower prices2.the satisfactions of being able to name one’s price.
21 E-Tailing ModelsE-tailing model set up an on-line storefront and sell to businesses and for consumers.1. Use of bit vendorsAny content that can be digitized can be transmitted over the Internet:text, graphics, audio and content.e.g.2. Tangible products