2Introduction to e-Commerce Objectives:1. Define the term "e-commerce business model.”2. Learn the key objectives that help create a successful e-commerce website.3. Review different e-commerce business models4. Why you don’t have to be “big” to achieve success online.
3Introduction to e-Commerce: What is a Business Model? A Business Model is how a business attracts customers and makes a profit.Successful businesses:Create and deliver something (a product or service) that has value.Have a market for its products or servicesCan pay their costs, i.e overheadUltimately make a profit
4Successful websites have the following four characteristics: Introduction to e-Commerce: Common Characteristics of Successful WebsitesSuccessful websites have the following four characteristics:They make it easier for users to do somethingThey offer users something of value, often times for freeThey incorporate features & benefits that generate repeat visits and useThey differentiate themselves from competition
5Introduction to e-Commerce eBay: Online Auction Business Model eBay is an electronic marketplace for people who want to sell things and people who want to buy.eBay is considered by many business experts to be the most successful e-commerce site ever.In 2006, eBay’s net revenues reached $5.97 billion, a 31% increase over the year before.eBay’s profits exceeded $1 billion for the second straight year in 2006 ($1.13 billion)How does eBay achieve the four characteristics/objectivesof successful websites?
6Introduction to e-Commerce eBay: Online Auction Business Model What does eBay make easier?It makes it easier for people to sell.It makes it easier for people looking to purchase to find items for sale.It makes it easier to buy, often times at a lower price.It makes it safer to do business with people you haven't met.
7Introduction to e-Commerce eBay: Online Auction Business Model What does eBay offer free to users?It is free for buyers to submit bids on eBay.It is free to monitor the progress of auctions on eBay.It is free to use eBay’s search engine to find items for sale that you have an interest in purchasing.
8Introduction to e-Commerce eBay: Online Auction Business Model How does eBay generate repeat usage?Through the bidding process (bidders are compelled to return to see how their bid is doing.)Requiring sellers and bidders to register.Website ease of use to buy and sell.A secure user environment (makes buyers and sellers more receptive to perform a transaction.)A unique variety of products.
9Introduction to e-Commerce eBay: Online Auction Business Model How does eBaydifferentiate itself from competition?Excitement and competition in the shopping process.Users don’t know the cost of a product until the winning bid has been posted.Product variety, ease of use, and securityFirst mover advantage.
10Introduction to e-Commerce eBay: Online Auction Business Model How does eBayAttract first-time visitors to its Web site?Clever search engine marketing strategiesPublicity - Weird, clever, and unique items auctioned on eBay have received worldwide media coverageAssociates program that provides linking incentivesAdvertising on TV, radio, the Internet, and direct mail
11Introduction to e-Commerce eBay: Online Auction Business Model How does eBay make money?Charges sellers a fee.Charges for specialized services such as the rental of electronic storefronts to sellers and an on-line bill payment service.Sells advertising space.
12Introduction to e-Commerce Amazon: Online Retail Business Model • Amazon is an online retailer of books, music, DVD/video, toys, electronics, software, and home products.Amazon spent 98 cents for every $1 of revenue it generated in 2006 while eBay spent just 81 cents for every dollar of its revenue. What helps make eBay’s business model more profitable?How does Amazon achieve the four characteristics/objectives of successful websites?
13Introduction to e-Commerce Amazon: Online Retail Business Model What does Amazon make easier?It makes it easier for people to shop with features such as one-click shopping.It makes it easier for people to get information about the products they are interested in.It makes it easier for people to compare the features, benefits, and prices of competitive products.It makes it easier to save money.
14Introduction to e-Commerce Amazon: Online Retail Business Model What does Amazon offer free?Detailed product information.Product ratings and reviews.Services and features (e.g. free chapters from books, samples of songs from CDs, e-cards, review restaurant menus, wedding registries, movie show times)
15Introduction to e-Commerce Amazon: Online Retail Business Model How does Amazon generate repeat usage?Purchasers must register.Software that tracks users purchasing behavior and generates messages that notify when a similar or related item becomes available or goes on sale.Promotions such as the gold box.
16Introduction to e-Commerce Amazon: Online Retail Business Model How does Amazon differentiate itself from competition?Offers its products at the lowest possible price.Has a large variety of products.Has an extensive database that tracks purchases
17Introduction to e-Commerce Amazon: Online Retail Business Model How does Amazon attract first-time visitors?Effective search engine marketingAn associates program that offers revenue generation potential for third party linksLots of advertising on TV, radio, in mail
18Introduction to e-Commerce NY Times: Online Newspaper Business Model The mission of the online version of the NY Times is to provide a high-quality, worldwide online audience with trusted editorial content from The New York TimesLaunched in January 1996Most of site’s content comes from content already being produced for hard-copy editionSite has 13.3 million registered users
19Introduction to e-Commerce NY Times: Online Newspaper Business Model What does the NY Times website make easier?It makes it easier for people to access news information in each day’s edition.It makes it easier for users to get access to additional information such as video feeds, slide shows, on-line chats with columnists and writers.It makes it easier to customize news information in the online paper to the user’s specific needs.
20Introduction to e-Commerce NY Times: Online Newspaper Business Model What does NY Times offer free to users?Users enjoy complete access to each day’s online version for free.How does NY Times generate repeat usage?Free contentFeature that allows articles to be ed to othersE-newsletters on special interest topicsName recognitionA personalized news service
21Introduction to e-Commerce NY Times: Online Newspaper Business Model How does NYTimes.com differentiate itself from competition?Content is updated several times during each dayUse of features that have enabled the hard-copy to differentiate itself, such as op-ed writers, Sunday Magazine supplement, and the Crossword PuzzleIt’s free!
22Introduction to e-Commerce NY Times: Online Newspaper Business Model How does NYTimes.com attract first-time visits?RSS Feeds that permit other sites including blogs to abstract and link to NYTimes.com articlesBy effectively using its hard-copy edition to promote its online edition
23Introduction to e-Commerce NY Times: Online Newspaper Business Model How does NYTimes.com make money if the subscription is free?AdvertisingAn ad that runs for about one month currently costs approximately $70,000Sale of Times Select subscriptions - access to premium and archived contentSale of related products/services such as software to do the crossword puzzle, and products in the site's on-line store.
24MySpace.com Social Networking Businesses like this model because content is created by users of the siteMySpace’s mission is to create the coolest online place a 13-to-34 year old Internet user could possibly be35 million visits per monthUser security is an issue with this modelMySpace was sold in 2006 for over half billion dollars
25MySpace.com Social Networking What does MySpace offer free to users?Users can create personal Web sites, blogs, photo galleriesUsers can communicate with friends online and meet new people who have similar interestsUsers can easily post and share images, videos, music etc.
26MySpace.com Social Networking How does MySpace generate repeat usage?Curiosity - When users post something at My Space, they check back at site frequently to see if friends or strangers have commented or left messages to their post.Habit - MySpace.com has become a standard form of communication among its users in much the same way people use instant messaging, , and cells.
27MySpace.com Social Networking How does MySpace differentiate itself from competition?Social Networking Sites are very vulnerable to competition because the communication technology they feature is easily replicated and enhanced (MySpace replaced Friendster.com)Sheer Size of MySpace’s user base (95 million registered users) gives it advantage because primary purpose of a social networking site is to communicate with as many “others” as possible.
28MySpace.com Social Networking How does MySpace attract first-time visitors?Viral marketing at its most effective. Since one of the key purposes of using MySpace.com is to communicate with friends, every user gets more people to become users.Owner of MySpace.com is World News Corp. one of the biggest media companies in the world. Company’s newspapers, TV networks, radio stations, and magazines can be used to promote the site at every opportunity.
29MySpace.com Social Networking MySpace should be used with caution and maturityDon’t post anything at MySpace.com that you don’t want everyone in the world to know about yourself.Employers now search MySpace for profiles of job candidates.There have been instances where MySpace users have been identified and victimized using information those users have made available at the Web site.
30You don’t have to be “BIG” to be successful online CustomInk.com - Started in a garageDeveloped a new and creative way to sell imprinted tee shirts that takes full advantage of the Internet’s interactive technologiesThis site’s users get to design the product they are purchasingThis Company has become successful by developing an online business model that makes it fun and engaging for customers to place orders and spend money at their Web site.
31Introduction to e-Commerce MTV.com: Niche Portal Business Model Focuses on music fans in their teens and twenties.Features deep, original content including music premieres and exclusives, convergent shows like TRL and Control Freak, original programmingIs consistently ranked the No. 1 music content site in the teen demographic, according to Media Metrix
32Introduction to e-Commerce MTV.com: Niche Portal Business Model What does the MTV.com website make easier?It makes it easier to find information about music and artists.It makes it easier to find out when and where an artist is performing.It makes it easier to sample and purchase recordings.It makes it easier to communicate with people from around the world who share the same musical interests.
33Introduction to e-Commerce MTV.com: Niche Portal Business Model What does MTV.com offer free to users?The ability to personalize features of the site based on musical tastes.Downloads of free music from new and established artists.Product ratings and reviews.Chats hosted by top recording artists.
34Introduction to e-Commerce MTV.com: Niche Portal Business Model How does MTV.com generate repeat usage?Requires visitors to join/register.Software that tracks personal preferences and purchasing behavior so that marketing can be more targeted.Free samples of new recordings.
35Introduction to e-Commerce MTV.com: Niche Portal Business Model How does MTV.com differentiate itself from competition?It focuses on the teenage demographic, which is known to spend its money on music-related interests.Exclusive content that is not available anywhere else.Special events and programming that takes advantage of its direct ties to one of the world’s most favorite television networks.It covers a wide expanse of musical related and cultural interests.
36Introduction to e-Commerce Assignment List the events happening inside your school that would be of interest to different segments of your community.List ways to get people interested in what’s going on inside your high school.Write how you could obtain information that will be used as content for your website.