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Electronic Commerce

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Electronic Commerce

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  1. Electronic Commerce Information Management Department of CCNU www.themegallery.com

  2. www.ccnu.edu.cn EC Chapter 3 Selling on the Web: Revenue Models and Building a Web Presence

  3. www.ccnu.edu.cn EC Learning Objectives: In this chapter, you will learn about: (1) Revenue models (2) How some companies move from one revenue model to another to achieve success (3) Revenue strategy issues that companies face when selling on the Web (4) Creating an effective business presence on the Web (5) Web site usability (6) Communicating effectively with customers on the Web

  4. 2 Revenue Models in Transition 4 1 Revenue Models Creating an Effective Web Presence 6 Connecting with Customers 5 Web Site Usability www.ccnu.edu.cn EC Contents of Chapter 3 3 Revenue Strategy Issues

  5. www.ccnu.edu.cn EC Part One Revenue Models

  6. 1 Web Catalog Revenue Models 2 Digital Content Revenue Models 3 Advertising-Supported Revenue Models Advertising-Subscription Mixed Revenue Models 4 www.ccnu.edu.cn EC Contents 5 Fee-for-Transaction Revenue Models 6 Fee-for-Service Revenue Models

  7. www.ccnu.edu.cn EC Learning Objectives: 1.Konw how many types of revenue models? 2.How can they profit?

  8. www.ccnu.edu.cn EC Emphasis & Difficulty: 1. Web Catalog Revenue Models 2. Advertising-Supported Revenue Models 3. Fee-for-Transaction Revenue Models

  9. www.ccnu.edu.cn EC Revenue Models (cont.) 1 Web Catalog Revenue Models(网上目录盈利模式) In this revenue model, the seller establishes a brand image, and then uses the strength of that image to sell through printed catalogs mailed to prospective buyers. Buyers place orders by mail or by calling the seller’s toll-free telephone number. • (1)Computers and consumer electronics • Apple, Dell, Gateway, and Sun Microsystems have had great success selling on the Web • Dell created value by designing its entire business around offering a high degree of configuration flexibility to its customers Electronic Commerce

  10. www.ccnu.edu.cn EC Revenue Models (cont.) 1 Web Catalog Revenue Models(网上目录盈利模式)(continue) • (2) Books, Music, and Videos • Retailers use the Web catalog model to sell books, music, and videos • Among the most visible examples of electronic commerce • Jeff Bezos---Formed Amazon.com • Jason and Matthew Olim • -Formed an online music store they called CDnow • -Used the Web catalog revenue model

  11. www.ccnu.edu.cn EC Revenue Models (cont.) 1 Web Catalog Revenue Models(网上目录盈利模式)(continue) • (3) Luxury Goods • People are still reluctant to buy luxury goods through a Web site • Web sites of Vera Wang and Versace Constructed to provide information to shoppers, not to generate revenue • Web site of Evian Designed for a select, affluent group of customers

  12. www.ccnu.edu.cn EC Revenue Models (cont.) 1 Web Catalog Revenue Models(网上目录盈利模式)(continue) • (4) Clothing Retailers • Lands’ End • Pioneered the idea of online Web shopping assistance with its Lands’ End Live feature in 1999 • Personal shopper (采购员) • Intelligent agent program that learns customer’s preferences and makes suggestions • Virtual model(虚拟模特) • Graphic image built from customer measurements.

  13. www.ccnu.edu.cn EC Revenue Models 1 Web Catalog Revenue Models(网上目录盈利模式)(continue)

  14. www.ccnu.edu.cn EC Revenue Models (cont.) 1 Web Catalog Revenue Models(网上目录盈利模式)(continue) • (5) Flowers and Gifts • 1-800-Flowers • Created an online extension to its telephone order business • Chocolatier Godiva • Offers business gift plans on its site

  15. www.ccnu.edu.cn EC Revenue Models 1 Web Catalog Revenue Models(网上目录盈利模式)(continue)

  16. www.ccnu.edu.cn EC Revenue Models (cont.) 1 Web Catalog Revenue Models(网上目录盈利模式)(continue) • (6) General Discounters(折扣店) • A number of new companies have started retail operations on the Web. • Some of these completely new businesses operate as Web-based deep discounters. • Borrowing a concept from the physical world’s Wal-Marts and discount club stores, these discounters sell merchandise such as computer equipment, software, consumer electronics, books, music CDs, and sports equipment at extremely low prices.

  17. www.ccnu.edu.cn EC Revenue Models (cont.) 2 Digital Content Revenue Models(数字内容盈利模式) • Firms that own intellectual property have embraced the Web as a new and highly efficient distribution mechanism • Lexis.com • -Provides full-text search of court cases, laws, patent databases, and tax regulations • ProQuest • -Sells digital copies of published documents

  18. www.ccnu.edu.cn EC Revenue Models 2 Digital Content Revenue Models(数字内容盈利模式)

  19. www.ccnu.edu.cn EC Revenue Models (cont.) 3 Advertising-Supported Revenue Models(广告支持盈利模式) • Broadcasters provide free programming to an audience along with advertising messages • Success of Web advertising is hampered by No consensus on how to measure and charge for site visitor views • Stickiness of a Web site: the ability to keep visitors and attract repeat visitors • Very few Web sites have sufficient visitors to interest large advertisers

  20. www.ccnu.edu.cn EC Revenue Models (cont.) 3 Advertising-Supported Revenue Models (广告支持盈利模式)(continue) • (1) Web Portals(门户网站) • Web directory(网络目录) • A listing of hyperlinks to Web pages • Portal or Web portal • -Site used as a launching point to enter the Web • -Almost always includes a Web directory and search engine • -Examples: Yahoo!, AOL, AltaVista

  21. www.ccnu.edu.cn EC Revenue Models (cont.) 3 Advertising-Supported Revenue Models (广告支持盈利模式)(continue) • (2) Newspaper Publishers(报纸出版局) • Many newspapers publish all or part of their print content on the Web. • The Internet Public Library Online Newspapers page includes links to hundreds of newspaper sites around the world. It is unclear whether a newspaper's presence on the Web helps or hurts the newspaper's business as a whole. • In addition to the concern about lost sales of print editions, most newspaper publishers are currently experimenting with various other ways of generating revenue from their Web sites.

  22. www.ccnu.edu.cn EC Revenue Models (cont.) 3 Advertising-Supported Revenue Models (广告支持盈利模式)(continue) • (3) Targeted Classified Advertising Sites(目标分类广告网站) • Web sites that specialize in providing only classified advertising do have • profit potential. • Employment ad sites can also target specific categories of job seekers by including short articles on topics of interest. • The Monster.com page directed at management-level job applicants.

  23. www.ccnu.edu.cn EC Revenue Models 3 Advertising-Supported Revenue Models(广告支持盈利模式)(continue)

  24. www.ccnu.edu.cn EC Revenue Models (cont.) 4 Advertising-Subscription Mixed Revenue Models(广告-收费混合模式) • Subscribers • -Pay a fee and accept some level of advertising • -Typically are subjected to much less advertising • Used by • -The New York Times and The Wall Street Journal • Business Week • -Offers some free content at its Business Week online site • -Requires visitors to buy a subscription to the Business Week print magazine

  25. www.ccnu.edu.cn EC Revenue Models (cont.) 5 Fee-for-Transaction Revenue Models(交易费用模式) • Businesses offer services and charge a fee based on the number or size of transactions processed • Disintermediation(免中介化) • -Removal of an intermediary from a value chain • Reintermediation(再中介化) • -Introduction of a new intermediary

  26. www.ccnu.edu.cn EC Revenue Models (cont.) 5 Fee-for-Transaction Revenue Models (交易费用模式)(continue) • (1) Travel Agent • Travel agents earn commissions on each airplane ticket, hotel reservation, auto rental that they book. • The travel agency revenue model involves receiving a fee for facilitating a transaction. • The value added by a travel agent is that of information consolidation and filtering.

  27. www.ccnu.edu.cn EC Revenue Models 5 Fee-for-Transaction Revenue Models(交易费用模式)(continue)

  28. www.ccnu.edu.cn EC Revenue Models (cont.) 5 Fee-for-Transaction Revenue Models (交易费用模式)(continue) • (2) Automobile Sales • Automobile Sales provide an information service to car buyers. • To the extent that the salesperson provides little or no value to the consumer, these firms are reducing the transaction cost in the process. • (3) Stockbrokers(证券经纪公司) • They charge their customers a commission for each trade executed. • The online brokers help customers reducing the transaction cost and offering an alternative service that has greater perceived value for many investors today.

  29. www.ccnu.edu.cn EC Revenue Models (cont.) 5 Fee-for-Transaction Revenue Models (交易费用模式)(continue) • (4) Insurance Brokers(保险经纪公司) • Sales agency businesses are moving to the web. • Although insurance companies themselves have been slow to offer policies and investments for sale on the web, a number of intermediaries that sell insurance policies have emerged. • Quotesmith decided in 1996 to offer its policy price quotes directly to the • public over the Internet.

  30. www.ccnu.edu.cn EC Revenue Models 5 Fee-for-Transaction Revenue Models(交易费用模式)(continue)

  31. www.ccnu.edu.cn EC Revenue Models (cont.) 5 Fee-for-Transaction Revenue Models (交易费用模式)(continue) • (5) Event Tickets(票务) • The web sell tickets from one virtual location to customers practically anywhere in the world. • They reduce transaction costs for both buyers and sellers of tickets. • (6) Online Banking and Financial Services • (在线银行与金融服务业) • Today's banks give customers a way to pay their bills electronically and few online banks offer account aggregation. • The greatest concerns are security and the reliability.

  32. www.ccnu.edu.cn EC Revenue Models (cont.) 5 Fee-for-Transaction Revenue Models (交易费用模式)(continue) • (7) Real Estate and Mortgage Loan Brokers • (房地产与抵押贷款经纪公司) • Online real estate brokers provide all of the services that a traditional broker might provide. • IndyMac Bank Home Lending offers mortgage loan seekers an online credit review and decision in minutes.

  33. www.ccnu.edu.cn EC Revenue Models 5 Fee-for-Transaction Revenue Models(交易费用模式)(continue)

  34. www.ccnu.edu.cn EC Revenue Models (cont.) 6 Fee-for-Service Revenue Models(服务费用模式) • Fee based on the value of a service provided • Services range from games and entertainment to financial advice • Online games • -Growing number of sites include premium games in their offerings Site visitors must pay to play these premium games

  35. www.ccnu.edu.cn EC Revenue Models (cont.) 6 Fee-for-Service Revenue Models (服务费用模式)(continue) • Concerts and films(音乐会和电影) • -As more households obtain broadband access to the Internet, companies are providing streaming video of concerts and films to paying subscribers • Professional Services(专业服务) • -State laws are one of the main forces preventing U.S. professionals from extending their practices to the Web

  36. www.ccnu.edu.cn EC Revenue Models 6 Fee-for-Service Revenue Models(服务费用模式)(continue)

  37. www.ccnu.edu.cn EC Part Two Revenue Models in Transition

  38. 1 Subscription to Advertising-Supported Model 4 5 Multiple Transitions www.ccnu.edu.cn EC Contents Advertising-Supported to Advertising-Subscription Mixed Model 2 3 Advertising-Supported to Fee-for-Services Model 2 Advertising-Supported to Subscription Model

  39. www.ccnu.edu.cn EC Learning Objectives: 1.How some companies move from one revenue model to another to achieve success 2.How many models in transition?

  40. www.ccnu.edu.cn EC Emphasis & Difficulty: 1.Revenue models in transition 2.Advertising-supported to Advertising-subscription mixed model 3.Multiple transitions

  41. www.ccnu.edu.cn EC Revenue Models in Transition (cont.) -Microsoft founded its Slate magazine Web site -An upscale news and current events publication -Charged an annual subscription fee after a limited free introductory period -Was unable to draw sufficient number of paid subscribers -Now operated as an advertising-supported site 1 Subscription to Advertising-Supported Model (从收费模式转向广告模式)

  42. www.ccnu.edu.cn EC Revenue Models in Transition (cont.) Salon.com: -Operated for several years as an advertising-supported site -Now offers an optional subscription version of its site -Subscription offering was motivated by the company’s inability to raise additional money from investors 2 Advertising-Supported to Advertising-Subscription Mixed Model(从广告模式转向广告-收费混合模式)

  43. www.ccnu.edu.cn EC Revenue Models in Transition (cont.) Xdrive Technologies: -Opened its original advertising-supported Web site in 1999 -Offered free disk storage space online to users -After two years, it was unable to pay the costs of providing the service with the advertising revenue generated -Later switched to a subscription-supported model 3 Advertising-Supported to Fee-for-Services Model(从广告模式转向服务费用模式)

  44. www.ccnu.edu.cn EC Revenue Models in Transition (cont.) Northern Light(北电网络): -Founded in August 1997 as a search engine with a twist Revenue model: -Combination of advertising-supported model plus a fee-based information access service January 2002: -Converted to a new revenue model that was primarily subscription supported 4 Advertising-Supported to Subscription Model (从广告模式转向收费模式)

  45. www.ccnu.edu.cn EC Revenue Models in Transition (cont.) Encyclop?dia Britannica(大不列颠百科全书) Original offerings: -The Britannica Internet Guide -Free Web navigation aid -Encyclop?dia Britannica Online -Available for a subscription fee or as part of a CD package 1999: -Converted to a free, advertiser-supported site 2001: -Returned to a mixed model 5 Multiple Transitions(多次转变)

  46. www.ccnu.edu.cn EC Revenue Models in Transition 5 Multiple Transitions(多次转变)

  47. www.ccnu.edu.cn EC Part Three Revenue Strategy Issues

  48. 2 Strategic Alliances and Channel Distribution Management 3 Mobile Commerce www.ccnu.edu.cn EC Contents Channel Conflict and Cannibalization Channel Conflict and Cannibalization 1

  49. www.ccnu.edu.cn EC Learning Objectives: 1.Revenue strategy issues that companies face when selling on the web 2.Know how to deal with them

  50. www.ccnu.edu.cn EC Emphasis & Difficulty: 1.Channel conflict and cannibalization 2.Strategic alliances and channel distribution management