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E-Business Models

E-Business Models. What is a business model Classifying e-business models Evolution of e-business models E-Business site planning Elements of Web design. Business Model.

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E-Business Models

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  1. E-Business Models • What is a business model • Classifying e-business models • Evolution of e-business models • E-Business site planning • Elements of Web design

  2. Business Model • It is a descriptionof the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams. (OSTERWALDER, 2004)

  3. Business Model • A business model is the organization’s essential logic for consistently achieving its principle objectives (Accenture: 2000) • E.g., Online retailer • A description of the market, business, and system support structures • In very general terms the three basic modeling products are: • Activity models - what a business does • Process models - how a business accomplishes what it does • Data models - describes the information structure of a business

  4. E-Commerce Categories • Business-to-consumer • Sales of goods and service to individual consumers • Focus on understanding consumer behavior when using online channels • Business-to-business • Sales of goods and services to businesses • Focus on organizational needs and purchasing processes • Consumer-to-consumer • Consumers selling directly to other consumers • Focus on facilitating exchange of information and goods among consumers

  5. Classifying e-Business Models Network Business Models Product/Service Distributors Producers Infrastructure Infrastructure distributors Infrastructure Portals Focused Distributors Portals

  6. E-Business Models – Focused Distributors • Online Retailers • Assume inventory, price set by seller, physical products/services • Online Marketplaces • Electronic channel to link buyers and sellers, online sales • Aggregators • Collect product information for consumers, no online sales • Infomediaries • Focus on information products, transaction online • Exchanges • Price discovery by auction or bid/ask, transaction online

  7. Portals • Horizontal portal • Access to a vast store of content and services • Tools for locating information • Advertising and subscription are major sources of revenue • Vertical portal • Access to deep content in a specific field or industry • Some have online transaction capabilities • Advertising, sales revenue, or transaction fee are major sources of revenue • Affinity portals (virtual communities) • Deep content targeted towards a particular consumer group/demographic

  8. Analysis of some popular e-business models • Amazon.com • Expedia.com • Mysimon.com • Yahoo.com • Chemconnect.com

  9. Another Way to Classify Business Models (Dr. Michael Rappa, NCSU) • Brokerage model (Orbitz, Priceline, Paypal) • Advertising model (Yahoo, Monster) • Infomediary (DoubleClick, Edmunds) • Merchant model (Amazon, LandsEnd) • Manufacturer/Producer (Dell) • Affiliate (Amazon) • Virtual community (SeniorNet, iVillage) • Subscription (Netflix, Truste) • Utility (ISPs and ASPs) (http://digitalenterprise.org/models/models.html)

  10. Evolution of Business Models • Why do business models evolve? • Enhance • Add features • Improve performance of current offerings • Expand • Add new product/service • Enter new markets • Extend • Add new line of business • Add new business models • Exit

  11. Developing the eCommerce business model • eCommerce strategies are best when driven by business, not technology, concerns. • One way is to dissect the buying/selling process into its various elements, from the buying side and the selling side, and with your customers and suppliers. Then, think about how you can apply the Web to each • What are your customer needs now and how are they changing? How can the Web help you address them?

  12. The Importance of the Customer Experience • First and foremost, the customer experience is a strategic issue. To succeed online, a company must make the customer experience the cornerstone of its Web strategy. Without a good customer experience, no amount of advertising, "brand-building," or high-tech gadgetry will save the company from failure. If it's not good for customers, they're going to leave forever. Period, end of story. It's not that complicated. Mark Hurst, President, Creative Good

  13. E-Business Site Planning • Business issues • Business need being solved by e-business solution • Target audience and their needs/preferences • Company’s strengths and how to capitalize on them • Project management and implications of delay • Funding and top management support • Evolution of the e-business model

  14. E-Business Site Planning • Technical Issues • Where to host the web site • Networking and bandwidth needs in future • System and web-site support in the long run • Legacy systems to integrate with • Security and privacy issues • Protecting customer information • Encryption, virus protection, firewall, etc. • Platform compatibility for end-users

  15. Web-site Design Elements • Company information and web-site purpose • Product/service information • Catalog search • Transaction processing / Shopping cart • Customer registration / Log-in • Database integration • Integration with related services • Digital certificate, payment, delivery • Contact / Feedback

  16. Further Readings • A Taxonomy of Internet Commerce, Paul Bambury • Business Models on the Web, Michael Rappa • Lessons Learned from the Downfall of Dot-Coms

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