BUSINESS B7

E-Business Models

Learning Outcomes
1.

Describe the business-to-business (B2B) and

business-to-consumer (B2C) e-business models

2.

Describe the four main areas where companies

conduct business online

3.

Differentiate between a vertical marketplace and a

horizontal marketplace

4.

Summarize the current and future trends for ebusiness models

Introduction
Pure play an Internet retailer that has no physical

store, such as Expedia.com and Amazon.com

E-business conducting business on the Internet,

not only buying and selling, but also serving

customers and collaborating with business partners
E-business model an approach to conducting

electronic business through which a company can

become a profitable business on the Internet

The four main areas where companies

conduct business online
1.

2.

3.

4.

Direct marketing,
selling, and
services
Financial and
information
services
Maintenance,
repair, and
operations
(MRO)
Intermediaries

Direct Marketing, Selling, & Services

using the Internet to contact customers directly
Key to success:
Marketing create site visibility and demand
Sales allow personalized content and adaptive

selling processes, integrate with back-office

Services automate customer service features such

as customer feedback, customer inquires, tracking

information, and customized services

Financial and Information Services

Online banking

Paying bills
Making transfers between accounts
Trading stocks, bonds, and mutual funds

Online billing

Internet-based bill delivery services saves money

Secure information distribution

Business can safeguard information

Maintenance, Repair, & Operations

(MRO)
The Internet can transform corporate purchasing
from a labor and paperwork intensive process
into a self-service application

MRO goods include office suppliers, office

equipment, furniture, computers, and replacement

parts

Intermediaries
Intermediaries agents, software, or

businesses that bring buyers and sellers together

that provide a trading infrastructure to enhance ebusiness
Reintermediation using the Internet to

reassemble buyers, sellers, and other partners in

a traditional supply chain in new ways

Intermediaries
Content providers

companies that use the

Internet to distribute
copyrighted content,
including news, music,
games, books, movies,
and many other types of
information

Online brokers

intermediaries between
buyers and sellers of
goods and services

Intermediaries
Portals - Central

hubs for online

contents

Market makers

intermediaries that aggregate

three services for market
participants
A place to trade
Rules to govern trading
An infrastructure to
support trading

Intermediaries
Infomediary provides

specialized information
on behalf of producers
of goods and services
and their potential
customers

Application service

providers sell
access to Internetbased software
applications to other
companies

E-Business Models

Business-to-Business (B2B) Models

Business-to-business (B2B) applies to

businesses buying form and selling to each other

over the Internet
E-procurement the B2B purchase and sale of
supplies and services over the Internet
Systematic sourcing involves buying through
prenegotiated contracts with qualified suppliers
Spot sourcing businesses buy transactionoriented commodity-like products and rarely involves
a long-term or ongoing relationship between buyers
and sellers

B2B: Marketplace classifications

B2B exchanges are new organizational forms in

digital space that can take place in the following:
Buyer model (few

buyers, many sellers)

Marketplace model
(many buyers, many
sellers)
Longer term
relationship model
(few buyers, few
sellers)
Seller model (few
sellers, many buyers)

B2B exchanges
Buyer Model - Reverse

Longer term relationship

auction the winning

bid is the lowest, rather
than the highest
Seller model
appropriate when the
supplier hosts valueadded services on its
Web site such as
suppliers product
catalog and customers
order information

model items requiring

a high degree of
planning between buyers
and sellers either in the
design stage or in
fulfillment
Marketplace model
allows a virtually infinite
number of businesses to
transact electronically
with minimal cost

Consumer-to-Business (C2B)
Consumer-to-business (C2B) applies to any

consumer that sells a product or service to a

business over the Internet
C2B facilitates the following:

Social interaction
Personal finance management
Purchasing products and information

Consumer-to-Consumer (C2C)
Consumer-to-consumer (C2C) appliers to sites

primarily offering goods and services to assist

consumers interacting with each other over the
Internet
C2C communities thriving on the Internet:

Communities of interest
Communities of relations
Communities of fantasy

E-Business Challenges
Cost
Value
Security
Leverage existing systems
Interoperability

Current Trends: E-Marketplaces and

E-Markets
e-marketplaces are interactive business
communities providing a central market space where
multiple buyers and sellers can engage in e-business
activities
Horizontal marketplaces connect buyers and

sellers across many industries, primarily by

simplifying the purchasing process
Vertical marketplaces provide products that
are specific to trading partners in a given industry

Advantages and limitations

of various e-marketplace revenue models

The Content Perspective of

E-Marketplaces
Content and product description establish the

common understanding between parties in a

transaction
The accessibility, usability, accuracy, and richness of

the content directly affects the transaction

Future Trends: E-Channels,

E-Portals, and E-Government
e-channel Web-based business channel
e-portal a single gateway through which to gain

access to all the information, systems, and processes

used by stakeholders of an organizations
e-government the use of strategies and

technologies to transform government(s) by

improving the delivery of services and enhancing the
quality of interaction between the citizen-consumer
within all branches of government(s)

Extended E-Business Models

Specific e-business models as they relate to

e-government
Consumer-to-government (C2G) constitutes the

areas where a consumer (or citizen) interacts with the

government
Government-to-business (G2B) includes all
government interaction with business enterprises
Government-to-consumer (G2C) governments
dealing with consumers/citizens electronically
Government-to-government (G2G) governments
dealing with governments electronically

Closing Case One Questions

1.

eBay is one of the only major Internet pure plays to

consistently make a profit from its inception. What is
eBays e-business model and why has it been so
successful?

2.

Other major Web sites, like Amazon.com and Yahoo!, have

entered the auction e-marketplace with far less success
than eBay. How has eBay been able to maintain its
dominant position?

3.

eBay has long been an e-marketplace for used goods and

collectibles. Today, it is increasingly a place where major
businesses come to auction their wares. Why would a
brand name vendor set up shop on eBay?