1. BUSINESS B7
E-Business Models

2. Learning Outcomes
Describe the business-to-business (B2B) and business-to-consumer (B2C) e-business models
Describe the four main areas where companies conduct business online
Differentiate between a vertical marketplace and a horizontal marketplace
Summarize the current and future trends for e-business models

3. Introduction
Pure play – an Internet retailer that has no physical store, such as Expedia.com and Amazon.com
E-business – conducting business on the Internet, not only buying and selling, but also serving customers and collaborating with business partners
E-business model – an approach to conducting electronic business through which a company can become a profitable business on the Internet

4. The four main areas where companies conduct business online
Direct marketing, selling, and services
Financial and information services
Maintenance, repair, and operations (MRO)
Intermediaries

5. Direct Marketing, Selling, & Services
using the Internet to contact customers directly
Key to success:
Marketing – create site visibility and demand
Sales – allow personalized content and adaptive selling processes, integrate with back-office
Services – automate customer service features such as customer feedback, customer inquires, tracking information, and customized services

6. Financial and Information Services
Online banking
Paying bills
Making transfers between accounts
Trading stocks, bonds, and mutual funds
Online billing
Internet-based bill delivery services saves money
Secure information distribution –
Business can safeguard information

7. Maintenance, Repair, & Operations (MRO)
The Internet can transform corporate purchasing
from a labor and paperwork inten­sive process
into a self-service application
MRO goods include – office suppliers, office equipment, furniture, computers, and replacement parts

8. Intermediaries
Intermediaries – agents, software, or businesses that bring buyers and sellers together that provide a trading infrastructure to enhance e-business
Reintermediation – using the Internet to reassemble buyers, sellers, and other partners in a traditional supply chain in new ways

9. Intermediaries
Content providers – companies that use the Internet to distribute copyrighted content, including news, music, games, books, movies, and many other types of information
Online brokers – intermediaries between buyers and sellers of goods and services

10. Intermediaries Portals - Central hubs for online contents
Market makers – intermediaries that aggregate three services for market participants
A place to trade
Rules to govern trading
An infrastructure to support trading

11. Intermediaries
Infomediary – provides specialized information on behalf of producers of goods and services and their potential customers
Application service providers – sell access to Internet-based software applications to other companies

12. E-Business Models

13. Business-to-Business (B2B) Models
Business-to-business (B2B) – applies to businesses buying form and selling to each other over the Internet
E-procurement – the B2B purchase and sale of supplies and services over the Internet
Systematic sourcing – involves buying through prenegotiated contracts with qualified suppliers
Spot sourcing – businesses buy transaction-oriented commodity-like products and rarely involves a long-term or ongoing relationship between buyers and sellers

14. B2B: Marketplace classifications

15. B2B exchanges are new organizational forms in digital space that can take place in the following:
Buyer model (few buyers, many sellers)
Marketplace model (many buyers, many sellers)
Longer term relationship model (few buyers, few sellers)
Seller model (few sellers, many buyers)

16. B2B exchanges
Buyer Model - Reverse auction – the winning bid is the lowest, rather than the highest
Seller model – appropriate when the supplier hosts value-added services on its Web site such as suppliers’ product catalog and customers’ order information
Longer term relationship model – items requiring a high degree of planning between buyers and sellers either in the design stage or in fulfillment
Marketplace model – allows a virtually infinite number of businesses to transact electronically with minimal cost

17. Consumer-to-Business (C2B)
Consumer-to-business (C2B) – applies to any consumer that sells a product or service to a business over the Internet
C2B facilitates the following:
Social interaction
Personal finance management
Purchasing products and information

18. Consumer-to-Consumer (C2C)
Consumer-to-consumer (C2C) – appliers to sites primarily offering goods and services to assist consumers interacting with each other over the Internet
C2C communities thriving on the Internet:
Communities of interest
Communities of relations
Communities of fantasy

19. E-Business Challenges
Cost
Value
Security
Leverage existing systems
Interoperability

20. Current Trends: E-Marketplaces and E-Markets
e-marketplaces – are interactive business communities providing a central market space where multiple buyers and sellers can engage in e-business activities
Horizontal marketplaces – connect buyers and sellers across many industries, primarily by simplifying the purchasing process
Vertical marketplaces – provide products that are specific to trading partners in a given industry

22. Advantages and limitations of various e-marketplace revenue models

23. The “Content” Perspective of E-Marketplaces
Content and product description establish the common understanding between parties in a transaction
The accessibility, usability, accuracy, and richness of the content directly affects the transaction

24. Future Trends: E-Channels, E-Portals, and E-Government
e-channel – Web-based business channel
e-portal – a single gateway through which to gain access to all the information, systems, and processes used by stakeholders of an organizations
e-government – the use of strategies and technologies to transform government(s) by improving the delivery of services and enhancing the quality of interaction between the citizen-consumer within all branches of government(s)

25. Extended E-Business Models

26. Specific e-business models as they relate to e-government
Consumer-to-government (C2G) – constitutes the areas where a consumer (or citizen) interacts with the government
Government-to-business (G2B) – includes all government interaction with business enterprises
Government-to-consumer (G2C) – governments dealing with consumers/citizens electronically
Government-to-government (G2G) – governments dealing with governments electronically

27. Closing Case One Questions
eBay is one of the only major Internet “pure plays” to consistently make a profit from its inception. What is eBay’s e-business model and why has it been so successful?
Other major Web sites, like Amazon.com and Yahoo!, have entered the auction e-marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?
eBay has long been an e-marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set up shop on eBay?