1. Risanuri Hidayat, Ir.,M.Sc.
Business Models
Risanuri Hidayat, Ir.,M.Sc.

2. Table of Contents 3.1 Introduction 3.2 Storefront Model
3.2.1 Shopping Cart Technology
3.2.2 Online Shopping Malls
3.3 Auction Model
3.4 Portal Model
3.6 Dynamic Pricing Models
3.6.1 Name-Your-Price Model
3.6.2 Comparison Pricing Model
3.6.3 Demand-Sensitive Pricing Model
3.6.6 Offering Products and Services for Free

3. Table of Contents 3.7 B2B Exchanges. 3.8 B2B Service Providers
3.9 Online Trading and Lending Models
3.10 Getting a Loan Online
3.11 Recruiting on the Web
3.12 Online News Services
3.13 Online Travel Services
3.14 Online Entertainment
3.15 Online Automotive Sites
3.16 Energy Online
3.17 Selling Brainpower
3.18 Online Art Dealers
3.19 Education Online
3.20 Click-and-Mortar Businesses

4. 3.1 Introduction
In this chapter we explore the many business models currently being implemented on the Web. These models include:
The Storefront Model
The Auction Model
The Portal Model
The Name-Your-Price Model
The Comparison Pricing Model
The Demand Sensitive Pricing model
The B2B Exchange Model

5. 3.1 Introduction
An e-business can be defined as a company that has an online presence.
E-commerce businesses allow customers to sell, trade, barter over the Web
A companies policy, operations, technology and ideology define its business model

6. 3.2 Storefront Model
Storefront model enables merchants to sell products on the Web
transaction processing, security, online payment, information storage
E-commerce allows companies to conduct business 24-by-7, all day everyday, worldwide
An e-commerce storefront should include
online catalog of products, order processing, secure payment, timely order fulfillment.

7. 3.2.1 Shopping Cart Technology
An order-processing technology allows customers to accumulate lists of items they wish to buy as they continue to shop.
The shopping cart is supported by
the product catalog, merchant server, database technology
Many companies combine a number of purchasing methods to give their customers a wide array of options.

8. 3.2.2 Online Shopping Malls Online Mall
A collection of online retailers that offer their products and services on a single site.
In an online mall, consumers can use the mall’s shopping cart technology to purchase items from many stores in a single transaction.
Online malls act as shopping portals directing traffic to the leading shopping retailers for a specific product.
Online malls offer speed and added convenience to a customers shopping experience.

9. 3.3 Auction Model
Online auction sites act as forums through which Internet users can log-on and assume the role of either bidder or seller.
Sellers post items they wish to sell and wait for buyers to bid.
Reserve price
The minimum price a seller will accept in a given auction.
Reverse auctions
allow the buyer to set a price as sellers compete to match or even beat it.
Auction sites collect a commission on every successful auction.

10. 3.3 Portal Model
Portal sites give visitors the chance to find almost everything they are looking for in one place.
horizontal portals
portals that aggregate information on a broad range of topics.
Yahoo!, AltaVista, Google
vertical portals
portals that offer more specific information within a single area of interest.
WebMD, IMDB, FirstGov

11. 3.6 Dynamic Pricing Models
The Web has changed the way products are priced and purchased
Comparison pricing model
Comparison pricing Web sites using shopping bot technology to find the lowest price for a given item
Demand-sensitive pricing model
Group buying reduces price as volume sales increase
Name-your-price model
Name-your-price for products and services.

12. 3.6 Dynamic Pricing Models
Bartering Model
Individuals and business trade unneeded items for items they desire.
Ubarter.com, isolve.com
Rebate Model
Sites offer rebates on product at leading online retailers in return for commission or advertising revenues.
eBates
Free offering model
Free products and services generate high traffic
Freemerchant, Start Sampling, FreeSamples.com

13. 3.7 B2B Exchanges B2B exchanges B2B e-commerce
businesses buy, sell, auction, barter, distribute and ship products and services online
B2B e-commerce
buying, selling, partnering, bartering or trading conducted between two or more businesses

14. 3.9 Online Lending and Trading Models
Online trading empowers the average investor to handle their own investments
Trading sites offer
Research
Investments analysis
Stock history
Simple buying and selling
Online Trading sites include:
E*TRADE
Ameritrade
CharlesSchwab
Fidelity.com

15. Getting a Loan Online Find, research and apply for loans online.
Many online lenders offer lower rates to attract customers.
Online lending services include free quotes, calculators and tutorials for borrowers.
Examples:
E-LOAN
eCredit.com
Mortgagebot.com

16. Recruiting on the Web
Resume tutorials, cover letter help, and free job searching available on the Web
Employers can find new employees from a global pool of applicants
Earn rewards for refering new hires to recruiters
Examples:
Guru.com
Dice.com
Refer.com
Sixfigurejobs.com
Monster.com

17. Online News Services Internet and Web offer a 24-by-7 news source
It is important to check the information source as rumors are often passed online
Independent and freelance content creators compete with large scale industry players
CNN.com
ESPN.com
Drudge Report
Boston.com
Salon.com

18. Online Travel Services
Customers now have the power to bypass a travel agent
Discounts and low fares available online
Name-your-price for tickets, hotels and car rentals
“Last minute” fares often lower online
Examples:
Expedia.com
Travelocity
Cheaptickets.com

19. Online Entertainment The Web is a form of entertainment
Interactive television will use the Internet to offer interactivity to the world
MP3 and file-transfer technology threaten copyright law
Examples:
IMDB
Farmclub.com
MP3.com
Ain’t It Cool News

20. Online Automotive Sites
Consumers access automobile information empowering them to make an informed buying decision
Dealers use the Web to showcase vehicles
Online auto auctions give buyers more options
Examples:
Auto.com
Autobytel.com
Autoparts.com

21. Energy Online
Energy exchange sites allow energy providers to trade excess energy commodities, buy on auction and sell materials.
1000’s of energy commodities are sold online.
Efficiency increases as supply chains are simplified
Examples:
Houstonstreet.com
Altranet
Retailenergy.com

22. Selling Brainpower Unused patents and trademarks can be sold online
Outrsourcing
Hiring outside contractors or companies to complete projects and offer consulting.
Contractors can find projects to match their needs on the Web
Examples:
Hellobrain
Yet2.com
Question Exchange

23. Online Art Dealers Artists have access to a global audience
The Web itself is a new medium for art
Virtual galleries give artists a chance to showcase their work
Shortfilms are finding new fans online
Examples:
Art.com
Guild.com
AtomFilms
art.net

24. Education Online E-learning is changing the way people learn.
Web-based training and education give the world access to continuing education form their home
Many colleges and universities offer distance learning and degree programs online
Examples:
Click2learn
Saba
Smartforce
Varsitybooks.com

25. Click-and-Mortar Businesses
Brick-and-mortar
Companies that operate solely offline with traditional business practices
Click-and-mortar
Companies operating with both an online and offline presence
Click and mortar companies have brand recognition, and an established customer base
Examples:
Barnesandnoble.com
Bestbuy.com