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. amazon.com, dell.com, play.com
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! , Altavista.com, About.com
Vertical portals (community sites) – large amount of information in one subject area
Bolt.com, IVillage.com

13. Content Provider
Content providers distribute digital content (news, music, video, artwork) over the Web
WSJ.com, Rhapsody.com, CNN.com
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
E-Trade.com, Ameritrade.com Monster.com
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
Priceline.com (reverse austion), eBay.com
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
xDrive.com – information storage
Mybconsulting.com – 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
Grainger.com
GE Electric Aircraft Engines (geae.com)
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
Exchange.eSteel.com, GEPolymerland.com
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
Jasc.com
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