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E-Commerce Business Plans. E-Commerce Prof. Sheizaf Rafaeli. Why New Business Models?. Business models are changing “In five years’ time, all companies will be Internet companies, or they won’t be companies at all.” Andrew Grove (CEO, Intel) Economist , 1999 Old measures don’t apply

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E-Commerce Business Plans

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E commerce business plans

E-Commerce Business Plans


Prof. Sheizaf Rafaeli

Why new business models

Why New Business Models?

  • Business models are changing

    • “In five years’ time, all companies will be Internet companies, or they won’t be companies at all.”

      • Andrew Grove (CEO, Intel) Economist, 1999

  • Old measures don’t apply

    • “What’s my ROI on e-commerce? Are you crazy? This is Columbus in the New World. What was his ROI?”

      • Andrew Grove

What is e commerce

What is E-Commerce?

  • Is it electronic mail?

  • Is it electronic data interchange (EDI)?

  • Is it video on demand?, home shopping?, electronic publishing?

  • Is it home banking? Or online personal financial information management?

  • Is it a new way of organizing?

  • Is it interactive advertising and marketing?

  • Is it a new methodology that shows how to implement re-engineering and total quality?

Buzzwords cheatsheet

Speed, Scope, Scale

Content, Community, Commerce

Sequential, Pooled, Reciprocal

B2C, B2B, C2C, C2B, B2G

Disintermediation/ Reintermediation

E-Commerce, E-business?

Internet, Intranet, Extranet, VPN

More, less innovation? Integration?

Automational, Informational, Transformational: Operational, Managerial

Buzzwords cheatsheet

E commerce business plans

Moving to More Interdependency




from Thompson (1967)

E commerce business plans


E commerce business plans

Definition of business model

  • An architecture for the product, service, and information flows surrounding a value-creating activity

  • Description of the various business stakeholders and the potential benefits to each

  • Description of the revenue flows that sustain the model

    (Strategy as who we are and what we do)

E commerce business plans

business models?

E business on the internet

E-Business on the Internet

  • Business-to-consumer (B2C)

    • Amazon, Dell

  • Business-to-business (B2B)

    • Freemarkets, CommerceOneVerticalnet

  • Consumer-to-consumer (C2C)

    • Ebay, QXL

  • Consumer-to-Business (C2B)

    • Priceline, Accompany, LastMinute

E business on the internet1

E-Business on the Internet

  • Business-to-government (B2G)

    • E-commerce Resource Center

  • Markets for Information

    • infomarco, epinions, abuzz

  • Markets for Bandwidth and Access

  • Interorganizational Systems (Extranets)

  • Enterprise-wide (Intranets)

Look for electronic commerce opportunities within the

enterprise, with business partners, and with customers.

E commerce e business

E-Commerce, E-Business

  • Electronic commerce is the integrated use of computing and communications technologies for business transactions.

  • First generation e-commerce uses the web as an alternative channel for conducting business (e.g., placing orders).

  • E-Business, in addition to encompassing e-commerce, includes both front- and back-office applications.

Second generation e commerce

Second-Generation E-commerce

  • Allows the business to do something with electronic networks that can’t be done effectively any other way

  • Ties a business process to the Web as the primary mechanism for conducting daily business

  • Is based upon full life-cycle business applications

  • Provides adaptive, personalized, value-added services

Sharing information with partners

Sharing Information with Partners

  • Interorganizational systems (IOS) are types of information systems that permit the coupling of transactions between organizations, making them more efficient and responsive.

  • An Extranet is an application of Internet technology that provides specific external parties with controlled access to internal corporate information.

Electronic data interchange edi

Electronic Data Interchange (EDI)

  • EDI has been used for 20 years, but it has

    • High cost

      • EDI applications are costly to develop and operate

    • Limited accessibility

      • Value-Added Networks (VANs) are often used

    • Rigid requirements

      • highly structured protocols and rigid meaning of data

    • Partial solutions

      • ordering and fulfillment, but not accounting or inventory

E commerce business plans









Unbundling the Organization




Electronic commerce has low interaction cost, it is natural

for web-based businesses to focus on a single core process.

(Hagel and Singer, 1999)

E commerce business plans




E commerce business plans

8 Business Model Examples

  • Merchant model:

  • Subscription or Metered usage

  • Infomediary

  • Advertising

  • Brokerage

  • Affiliates

  • Manufacturers

  • Communities and Communication

E commerce business plans

Business Model Examples

  • Merchant model:

    • Virtual only or Catalog, Travelocity, Expedia

    • Bricks & Clicks

    • Bits-only.

  • Subscription or Metered usage

    • Glassbook, Wall Street Journal, FatBrain, Consumer Reports -- BUT: NYT, Slate, MP3, etc...

  • Infomediary

    • Portals, registration requests

    • MyMealPlan, When, Evite, Versity, WebMD

    • Iowa electronic, Hollywood, Cheathouse, Dr. Koop

E commerce business plans

Business Model Examples

  • Advertising models

    • freebies: BlueMountain, Freemerchant

    • Specialized, personalized portals: Yahoo, Excite, Lycos

  • Brokerage models

    • Aggregate buyers (Accompany)

    • Fulfill: Kozmo, E-trade, Carsdirect

    • B2B bartering: MetalSite, ChemConnect

    • Search agent/bot: MySimon, CareerCentralbottomdollar,

E commerce business plans

Business Model Examples

  • Manufacturers

    • Intel, Apple, Virtual Vineyards

  • Communities

    • VerticalNet, iVillage, ICQ, Firefly

    • HumanClick, PeopleSupport

    • ThirdVoice, Ubique, iMarkup, uToK

    • “Viral Marketing”

E commerce business plans

Customer Service Life Cycle



Transfer (Disposal)

Review / Audit

Need description

Product offering



Service and support

Account management

Order entry

Payment / Settlement

Delivery logistics

Business models for electronic markets paul timmers

Business Models for Electronic Markets:Paul Timmers

Business models for electronic markets paul timmers 2

Business Models for Electronic Markets:Paul Timmers (2)

E commerce business plans


E commerce business plans

IT Business Value Metrics

Dimensions of IT Business Value









Cycle Time



Labor Cost

Inventory Cost




Decision Quality

Resource Usage

Competitive Flexibility

Organizational Form





Doing things better

Doing better things

Doing different things



  • Business Models for Electronic Marketshttp://www.electronicmarkets.org/netacademy/publications.nsf/all_pk/949/$file/v8n2_timmers.pdf?OpenElement&id=949

  • What’s your business model?http://www.eloquent.com/cgi/eloweb.dll?id=274-0

  • Intermediaries and CyberMediarieshttp://www.ascusc.org/jcmc/vol1/issue3/sarkar.html

  • Internet Business Model Patentshttp://www.jonesaskew.com/articles/99/s99modelpat.html

Resources 2

Resources (2)

  • The B2B Boom – Business 2.0 9/99http://www.business2.com/index/0999/

  • The Truth About Business Modelshttp://www.strategy-business.com/briefs/99301/

  • The Journal of Computer-Mediated Communication (JCMC) http://www.ascusc.org/jcmc

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