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E-Commerce Business Models

E-Commerce Business Models. What is a Business Model. “A description of how a business plans to make money using the Intenet” What value (product, service, information) the business offers to customers A description of how that value is delivered to the customer.

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E-Commerce Business Models

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  1. E-Commerce Business Models

  2. What is a Business Model “A description of how a business plans to make money using the Intenet” • What value (product, service, information) the business offers to customers • A description of how that value is delivered to the customer. • What each party (supplier, customer, third parties) does. • How product, service, information flows • Who owns data, transaction, relationship • Which customers are targeted • Pricing strategy • A charging (revenue) strategy • A set of key strategic resources

  3. New Thinking • Traditional Business Approach • Develop Business Model • How can IT support it? • E-Business Approach • What can Internet enable the company to do? • Develop Business Model

  4. Rappa’s E-Business Models

  5. E-Business Models(1): Brokerage • B2B Catalogues, Exchanges, Auctions • Ariba, E-steel, FreeMarkets • Buyer Agregator • Volumebuy • Virtual Mall • Yahoo! Stores • MetaMediary • Amazon’s zShops • Auctions • eBay • Reverse Auctions • Priceline • Classifieds • Trading Post • Shopping Agents • RoboShopper • Bounty Brokers • BountyQuest

  6. Brokerage models: Buy-sell fulfillment Examples: • Online financial brokerages such as e-trade • Online travel agents: broker charges buyer and/or seller transaction fee • Using volume and low overheads to deliver best negotiated prices such as CarsDirect.com

  7. Brokerage models: Market exchange • Most common B2B market model • Revenue proposition: transaction fee based on value of sale • Market mechanisms: • Offer – buy • Negotiated offer-buy • Auctions • Example: ChemConnect.com

  8. Brokerage models: Business trading community • Comprehensive sources of information for a specific vertical market • Example: VerticalNet.com’s vertical market support: • Product information in buyer’s guides • Supplier and product directories • Industry news and articles • Job listings & classifieds • Revenue proposition ?

  9. Brokerage models: Buyer aggregator • Exploit benefits of demand-side aggregation • Revenue proposition: transaction fees • Examples: VolumeBuy.com, Etrana.com

  10. Brokerage models: Distributor • Catalogue aggregator model • Buyers get additional support in the form of buyer-specific quotes from preferred suppliers, lead time, recommended substitutions • Value and revenue propositions ? • Examples: QuestLink.com ConvergeTrade.com

  11. Brokerage models: Virtual mall • A site that hosts many online merchants • Revenue proposition: setup, monthly listing and per-transaction fees • Best tied with a generalized portal • Examples: Yahoo!Stores, Stuff.com

  12. Brokerage models: meta-mediary • A virtual mall that will in addition, provide the following services: • Process transactions • Track order • Billing and collection services • Quality assurance for customers • Examples: Amazon.com zshops

  13. Brokerage models: Auction broker • Revenue proposition: transaction fees • Examples: eBay, AuctionNet

  14. Brokerage models: Reverse auction • Prospective buyer makes a final (sometimes binding) bid for a good or service – broker seeks fulfillment • Revenue model: processing fee, spread between bid and fulfillment price • Frequently aimed at high-price items such as cars and airline tickets • Examples: Priceline.com, Respond.com, eWanted, myGeek.com

  15. Brokerage models: Search agents • Example: DealTime.com, MySimon.com, RoboShopper.com

  16. Brokerage models: Bounty brokers • Offering rewards for locating people, documents, ideas etc. • Revenue proposition: Broker charges flat listing fee plus percentage of bounty for successful transactions • Example: BountyQuest.com

  17. E-Business Models (2): Advertising Model • Portal • Yahoo! • Personalised Portals • My.Yahoo! • Vortals • Incentive Marketing • CyberGold • Fee Model • HotMail • Bargain Discounter • Buy.com

  18. E-Business Models (3) : Infomediary • Businesses based on selling information about websites or web users • Recommender System • Deja.com • Registration Model • NYTimes.com

  19. E-Business Models (4): Merchant Model • Pure Play • Amazon • Clicks and mortar • Barnes and Noble • Bit Vendor • Eyewire

  20. E-Business Models (5): Manufacturer Model • Producer of goods sells direct to consumers • O’Reilly (IT publisher) • Intel • Dell

  21. E-Business Models (6): Affiliate Model • Commission-based click through to another e-business • Banner Click-throughs • Referal to Amazon

  22. E-Business Models (7): Community Model • Voluntary Contributor Model • Public Broadcasting • Knowledge Network • User questions answered by volunteer (e.g. ExpertCentral) or fee-charging expert (e.g. Guru.com)

  23. E-Business Models (8): Subscription Model • Users pay for high value content • Economist on line • Accu weather

  24. E-Business Models (9): Utility Model • Pay as you go • Authentica • Fatbrain.com

  25. Weill and Vitali’s E-Business Models

  26. What can you sell?(Value Proposition) • Content • Goods and Services • Access to products • Convenience • Integration / Coordination • Infrastructure • Community (access to like people) • Empowerment (aggregation) • Entertainment

  27. How can you charge?(Revenue Proposition) • Payment for goods, service, content • Commission on transactions • Subscription (one-off or recurrent fees) • Voluntary contributions • Advertising • Sponsorship • Reputation capital • Referral (click-through charge) • Sell information about users • Charge for placement (Yahoo auction) • Meter usage • Barter • Bounties • Indirect

  28. Business Consumer Channel Conflict • Type one: business establishes two channels direct to consumer • Say, shop-front and internet • Conflict arises when one channel “cannibalizes” (takes away sales from) the other rather than complementing each other • Space Wine case • Levy jeans

  29. Dealers Business Consumer Channel Conflict • Type two: business disintermediates its own dealers • Avon • Direct sales of automobiles • Can be in response to pure play competitors • Can be part of a strategy transition to pure play

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