1. E-commerce Business Models and Concepts
Chapter 2
E-commerce Business Models and Concepts
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2. Private industrial network
B2B Business Models
Net marketplaces
E-distributor
E-procurement
Exchange
Industry consortium
Private industrial network
Single firm
Industry-wide
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3. Difference b/w b2b Business Models
Purchase/Input Type
Direct Inputs
Indirect Inputs
Spot Purchasing
Independent Exchanges
eDistributors
Contractual Purchasing
Industry Consortia
eProcurement
Type of Market
Vertical Markets
Horizontal Markets
A vertical market is a market in which vendors offer good and services specific to an industry, trade, profession, or other group of customers with specialized needs. 
A horizontal market, in which vendors offer a broad range of goods and services to a large group of customers with wide range of needs, such as businesses as a whole, men, women, households, or, in the broadest horizontal market, everyone.
'Spot' buying is purchase for immediate delivery, as opposed to delivery in three or six months' time (contractual buying).
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4. B2B Models: E-distributor
Supplies products and services directly to individual businesses
Owned by one company seeking to serve many customers
Revenue model: Sales of goods
Example: Grainger.com, Cisco, Dell.inc, BestBuy 
HVAC (heating, ventilation, and air conditioning) 
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5. Example
for example, is the largest distributor of maintenance, repair, and operations (MRO) supplies are thought of as indirect input to the production process – as opposed to direct inputs. In the past, Grainger relied on catalog sales and physical distribution centers in metropolitan areas. Its catalog of equipment went online in 1995 at Grainger.com, giving businesses access to more than 220,000 items. Company purchasing agents can search by type of product, such as motors, HVAC, or fluids, or by specific brand name.
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6. B2B Models: E-procurement (electronic purchasing)
E-procurement is the b2b purchase and sale of supplies and services over the Internet. 
Implementation of E-Procurement System allow your organization to reach and interact with global suppliers or providers.
Typically, e-procurement Web sites allow qualified and registered users to look for buyers or sellers of goods and services.
Depending on the approach, buyers or sellers may specify prices or invite bids. 
These Kind of E-commerce Businesses, Creates and sells access to digital electronic markets
application service providers (ASPs)
Revenue model:
Transaction fees, usage fees, annual licensing fees
Example: Ariba - a application service providers (ASPs)
(For Implementation contact Ariba.com)
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7. Ariba creates custom integrated online catalogs (where supplier firms can list their offerings) for purchasing firms.
On the sell side, Ariba helps vendors sell to large purchasers by providing software to handle catalog creation shipping, insurance, and finance.
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8. For example e-Procurement type:
Web-based ERP (Electronic Resource Planning) Creating and approving purchasing requisitions, placing purchase orders and receiving goods and services by using a software system based on Internet technology.
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9. VOCABULARY OF E-PROCUREMENT (Example) RFI: request for Information.
RFP: request for Proposal
RFQ: request for Quotation
RFx: the above three together.
BENEFITS OF E-PROCUREMENT
Better Products
One Stop Shop
More product choices
Faster Product Find
Reduces Paper Cost
Purchases can be tracked and made to comply with company guidelines. 
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10. B2B Models: Exchanges
Digital exchanges are independently-owned marketplaces that allow multiple suppliers and purchasers to trade in real time.
Usually owned by independent firms whose business is making a market
Usually serve a single vertical industry
for spot-purchasing by large companies in the IT, food and industrial equipment sectors.
Revenue model: Transaction, commission fees
Create powerful competition between suppliers
Number has dropped dramatically
Many exchanges were launched in the dotcom boom, probably some 1,500, but failed because the larger purchasers preferred to deal with a selected list of suppliers through private industrial networks. Digital exchanges may stabilize at some 200 odd.
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12. B2B Models: Industry Consortia
Industry-owned vertical marketplaces that serve specific industries (e.g., automobile, chemical)
More successful than exchanges
Sponsored by powerful industry players
Strengthen traditional purchasing behavior
Example: Exostar
Exostar's founding partners included BAE Systems, Rolls Royce, Boeing, Lockheed Martin and Raytheon.
In July 2010, Exostar was fulfilling the needs of over 70,000 companies in 95 countries with transactions totalling $35 billion annually.
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13. INDUSTRY CONSORTIUM
Revenue Model: Charging subscription and transaction fees.
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14. INDUSTRY CONSORTIUM (Examples)
Industrial Consortia
Industry
Exostar
Aerospace
SupplyOn
Automotive, Aerospace and Manufacturing
Elemica
Chemical
Dairy.Com
Dairy Products
Global Healthcare Exchange
Medical Services and Supplies
Quadrem
Metals, Minerals and Mining
OceanConnect
Risk Risk Management for Ship Owners,
Traders, Refiners,and Financial Institutions
TheSeam
Food and Beverage
Transplace
Freight and Carrier Services
Exostar connects with over 300 procurement systems in 20 different countries and has registered more than 24, 000 trading partners worldwide.
Most Fortune 500 and other large companies belong to industrial consortia, sometimes to several.
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15. Private Industrial Networks (Continue)
As the name suggests, private industrial networks are web-enabled networks that coordinate transactions between specific companies — in all aspects and all divisions: suppliers, distributors, retail, procurement, delivery and so on.
Such systems are also called collaborative, as they facilitate efficiencies throughout the network. Many large companies (Wal-mart, Agentrics, Coca-Cola, Nike, Hewlett-Packard, IBM, Microsoft, Cisco Systems, Dell and General Electric) operate private industrial networks, which indeed form the largest part of B2B ecommerce today.
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16. Private Industrial Networks
Unlike industrial consortia, which are collectively owned by several major companies, private industrial networks generally have a single, sponsoring company that sets and enforces the rules, only inviting other companies to participate at its own discretion (will).
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17. Private Industrial Networks (Continue)
Designed to coordinate flow of communication among firms engaged in business together
Electronic data interchange (EDI)
Single firm networks
Most common form
Example: Wal-Mart’s network for suppliers
Industry-wide networks
Often evolve out of industry associations
Example: Agentrics (initiate by Sears)
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18. Why Industry Wide Private Industrial Network
Why Industry Wide Private Industrial Network ? (A response to Single Firm Industrial Network like wall- mart)
wal-mart has refused to open its very successful network to other members of the retail industry, in effect to become an industry standard, for fear it will be sharing technology secrets with other retailers like Sears.
Sears and other retailers around the world have created their own set of organizations and networks that are open to all in the industry.
Agentrics is an industry-wide private industrial network for retailers and suppliers designed to facilitate and simplify trading among retailers, suppliers, partners and distributors.
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19. Business Models in Emerging E-commerce Areas
Consumer-to-consumer (C2C)
Examples: eBay, Half.com
Peer-to-peer (P2P)
Examples: The Pirate Bay, Cloudmark, Bit Torrent , Kazza
M-commerce:
E-commerce models using wireless technologies
Technology platform continues to evolve
In the United States, demand still highest for digital content like ring tones
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