E- Business Models

E- Business Models

Business model

Set of planned activities designed to result in a profit in a marketplace

Business plan

Describes a firms business model

E-commerce /business model

Uses/leverages unique qualities of Internet and Web

Key elements- Business Model

1. 2. 3. 4. 5. 6. 7. 8.

Value proposition Revenue model Market opportunity Competitive environment Competitive advantage Market strategy Organizational development Management team

Value Proposition

Why should the customer buy from you? Successful e-commerce value propositions:

Personalization/customization Reduction of product search, price discovery costs Facilitation of transactions by managing product delivery

Revenue Model
Revenue Model
Advertising

Ex
Yahoo

Revenue Source
Fees from advertisers in exchange for advertisements Fees from subscribers in exchange for access to content or services Fees/Commission for enabling or executing a transaction

Subscription

WSJ.com, Consumerreports.org eBay,E-trade

Transaction fee

Sales
Affiliate

Amazon,Gap, JCPenny.com
MyPoints

Sales of goods, services or information

Fees for business referrals

Market Opportunity

What marketspace do you intend to serve and what is its size?

Marketspace: Area of actual or potential commercial value in which company intends to operate Realistic market opportunity: Defined by revenue potential in each of market niches in which company hopes to compete

Market opportunity typically divided into smaller niches

Competitive Environment

Who else occupies your intended marketspace?

Other companies selling similar products in the same marketspace Includes both direct and indirect competitors

Influenced by:

Number and size of active competitors Each competitors market share Competitors profitability Competitors pricing

Competitive Advantage

What special advantages does your firm bring to the marketspace?

Achieved when firm produces superior product or can bring product to market at lower price than competitors
Asymmetries- exists whenever one participant in a market has more resources than the other First-mover advantage- resulting from being first into a marketplace with a product or service Unfair competitive advantage- occurs when one form develops an advantage based on factor that other firms cannot purchase Leverage- when a company uses its competitive advantages to achieve more advantages in surrounding areas

Important concepts:

PORTERs FIVE FACTOR MODEL -Assignment

Market Strategy

How do you plan to promote your products or services to attract your target audience?

Details how a company intends to enter market and attract customers Best business concepts will fail if not properly marketed to potential customers

Organizational Development

What types of organizational structures within the firm are necessary to carry out the business plan?

Describes how firm will organize work

Typically divided into functional departments Hiring moves from generalists to specialists as company grows

Management Team

What kinds of experiences and background are important for the companys leaders to have?

Strong management team gives instant credibility to outside investors Strong management team may not be able to salvage a weak business model, but should be able to change the model and redefine the business as it becomes necessary

E-business Models

Storefront Model

Auction Model Portal Model Dynamic-Pricing Model

Shopping-Cart Technology Online Shopping Malls

Name-Your-Price Model Comparison-Pricing Model Demand-Sensitive Pricing Model Bartering Model Rebates Offering Free Products and Services

Storefront Model

Storefront model enables merchants to sell products on the Web

Transaction processing, security, online payment, information storage Online catalog of products Order processing Secure payment Timely order fulfillment

An e-commerce storefront should include:

Shopping Cart technology

Shopping Cart

An order-processing technology allowing customers to accumulate lists of items they wish to buy as they continue to shop Product catalog Merchant server Database technology

Shopping cart is supported by

Combine a number of purchasing methods to give customers a wide array of options

Online Shopping malls

Wide selection of products and services Offers greater convenience than shopping at multiple online shops Consumers can make multiple purchases in one transaction

Auction model

Online auction sites

Act as forums through which Internet users can log-on and assume the role of either bidder or seller Collect a commission on every successful auction Sellers post items they wish to sell and wait for buyers to bid
The minimum price a seller will accept in a given auction Allow the buyer to set a price as sellers compete to match or even beat it

Reserve price

Reverse auctions

Portal Models

Portal sites

Horizontal portals

Give visitors the chance to find almost everything they are looking for in one place
Portals that aggregate information on a broad range of topics Yahoo!, AltaVista, Google Portals that offer more specific information within a single area of interest WebMD, IMDB, FirstGov

Vertical portals

Dynamic Pricing models

The Web has changed the way products are priced and purchased

Comparison pricing model

Demand-sensitive pricing model

A search engine that allows consumers to find a range of suppliers and th prices for a given product. Group buying reduces price as volume of sales increase Name-your-price for products and services Individuals and business trade unneeded items for items they desire Ubarter.com, isolve.com Sites offer rebates on product at leading online retailers in return for commission or advertising revenues eBates Free products and services generate high traffic Freemerchant, Start Sampling, FreeSamples.com

Name-your-price model

Bartering Model

Rebate Model

Free offering model

B2C Business Models

Portal

Horizontal/General-Offers an integrated package of content and content-search, service news, email etc Vertical/Specialized-Offers services and products to specialized marketplace Search- search engines like Google Virtual Merchant-Online version of the retail store Brick-and-Clicks-Online distribution channel of company that has physical stores also (Walmart) Catalog Merchant-Direct mail catalogue online ver Manufacturer direct-uses online channel to sell directly (Dell, Sony)

B2C

Content Provider

Transaction Broker

Information and entertainment providers such as newspapers,sports sites and online sources offering customers with up-tp-date news, information on sales (CNN,ESPN)
Processors of online transactions such as stockbroker and travel agents, that increase customer productivity by helping them get things done faster and cheaper (Travelocity,monster) Web-based businesses that use internet technology to create markets that bring buyers and sellers together (eBay)

Market Creator

Service Provider

Community Provider

Companies that make money by selling users a service

Sites where individuals with particular interest, hobbies, common experiences or social networks come together and meet online (Facebook, MySpace)