E-Business Models_2

Agenda
B2C business models B2B business models Business models in other emerging areas of e-commerce

Classsification of E-commerce Business Models

There is more than one way of classification (No single correct way)
Some companies use multiple business models

Classifications may be according to:

Interacting participants
B2C, B2B, C2C, G2C, G2B, P2P

Value proposition (offer) Revenue model Main theme, key processes Customers role Type of e-commerce technology etc.

B2C E-Business Models

Portal E-tailer Content provider Transaction Broker Market Creator Service Provider Community Provider

B2B E-Business Models

E-distributor E-procurement Exchanges (B2B Hubs)
Private marketplaces Industry Consortia

Single firm network Industry-wide networks

B2C Business Models: Portal

Portals are gateways to the Internet
Offers powerful Web searching tools-effiency and ease

But today, the portal business model is in addition to serving as a gateway to the Internet;
It is a destination site provide an integrated package of content and services all in one place

Typically utilizes combination of subscription, advertising, transaction fee model ISP (usually)

B2C Business Models: Portal

an integrated package of content like
news last minute weather forecasts currency rates stock quotes phone and map information

services like
E-mail accounts Entertainment Chat Community forum Game Downloads Shopping-auction E-card Sms service

search

Types & Examples

May be General or horizontal : portal
Intranets are also called enterprise portals

Specialized or vertical : vortal Examples

Superonline.com E-kolay.com Mynet.com Tnn.net Tr.net Yahoo.com Msn.com Aol.com

VORTALs
A gateway or portal to information related to a particular industry, such as human resources, health care, insurance, automobiles, or food manufacturing. Vortals are also seen as likely business-to-business communities
Kariyer.net Tatilsepeti.com Snowboard.com Yenibir.com Secretcv.com Cityname.com E-kolay (portal) links (vortals)
Bigpara, bebek, kadn, etc.

An alternative definition and classification for portals

a single point of access through a Web browser to information inside and/or outside an organization Commercial (public) portals Corporate portals Publishing portals Personal portals Mobile portals: a portal accessible via a mobile device Voice portals: a portal accessed by telephone or cell phone

B2C Business Models: E-tailer

Online version of traditional retailer Types include:
Virtual merchants:online retail store only
Eg. kangurum.com

Clicks and bricks:online distribution channel for a company that also has physical stores. eg. Migros sanal magaza Catalog merchants:online version of direct mail catalog Manufacturer:manufacturer selling directly over the Web Virtual shopping mall:eg. garantialisveris

Barriers to entry into the e-tailer marketplace, high or low?

Barrier to entry means
the total cost of entering a new marketplace

Barrier to entry for e-tailers is LOW BUT Becoming profitable and surviving is very difficult with no prior brand name
How can a new electronic e-tailer compete with teknosa.com? Is it easy for a new toy company to compete with toysRUs which has alliance with amazon.com

Business Model: Market Creator

Uses Internet technology to create markets in digital environment that bring buyers and sellers together
To display products Search for products Establish a price

Auction, reverse auction (promena.com.tr,myfutura.com=4build.com) or fixed price marketplaces Typically uses a transaction fee revenue model They dont have inventory or production cost

Market Creators
They are middleman The success factor is:
attracting sufficient critical number of sellers and buyers to the marketplace Speed, ability to become operational quickly

Examples:
Gittigidiyor.com, muzayede.com, eskidji.com eBay.com, Priceline.com

E-tailers have also started auction sites to create market on their e-tail sites

Content Provider
Information and entertainment companies that provide digital content, such as news, photos, video, artwork, deviantart.com, youtube.com over the Web Typically utilizes
subscription, pay for download, or advertising revenue model

The success factor is owning the content eg. Online books, online perodicals,

broadcasters of TV and radio

Syndication-Aggregation
Aggregation is a variation of standard content provider model
Infomediaries:
electronic intermediaries that control information flow in cyberspace, often aggregating information and selling it to others

They do not own but aggregate and distribute the content produced by others

Difficult to succeed unless it has a unique information source that other can not have

Transaction Broker-Intermediaries
Processes online transactions for consumers normally handled in person by phone or e-mail Primary value proposition saving of time and money by providing timely, accurate information and opinion Typical revenue model transaction fee Industries using this model:
Financial services Travel services Job placement services

Difference of transaction brokers from market creators

Transaction brokers
actually carry out the transaction for their customers act as agents in large markets

Market creators
Sellers and buyers are their own agents

Service Provider
Offers services online, like consultancy, trade knowledge, expertise, eg. Rega.com.tr Value proposition valuable, convenient, time-saving, low-cost alternatives to traditional service providers Revenue models subscription fees or one-time payment

Community Provider
Sites that create a digital online environment. people with similar interests can transact, communicate, and receive interest-related information. Typically rely on a hybrid revenue model Alliances like Linux, Kazaa,I-mesh, Naspter, bearshare, limeware, emule can be classified as community provider

B2B Business Models

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E-distributor
An intermediary that connects manufacturers (suppliers) with buyers by aggregating the catalogs of many suppliers in one place and services directly to individual businesses E-distributors in B2B
Maintenance, repair, and operation items (MROs):
Routine items that are usually not under regular contract with suppliers

E-procurement Companies
Create and sell access to digital electronic markets B2B service provider is one type offer purchasing firms sophisticated set of sourcing and supply chain management tools Application service providers a subset of B2B service providers Examples:
Ariba CommerceOne

Exchanges (B2B Hubs)

An electronic digital marketplace where suppliers and commercial purchasers can conduct transactions Usually owned by independent firms whose business is making a market Generate revenue by charging transaction fees Usually serve a single vertical industry

http://www.b2bprofile.com/turkey Wtpfed.org

Industry Consortia
Industry-owned vertical marketplaces that serve specific industries Horizontal marketplaces, in contrast, sell specific products and services to a wide range of industries Leading example: Covisint

Private Industrial Networks

Digital networks (usually, but not always Internet-based) designed to coordinate the flow of communications among firms engaged in business together Single firm network: the most common form (example Walmart) Industry-wide networks: often evolve out of industry associations

Business Models in Emerging E-commerce Areas

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Consumer-to-Consumer (C2C) P2P P4P C2C Provide a way for consumers to sell to each other, with the help of a online marketmaker. E.g. gittigidiyor.com, eBay.com P2P Peer to peer P four P

Peer-to-Peer (P2P) Business Models

Links users, enabling them to share files and common resources without a common server Challenge is for P2P ventures to develop viable, legal business models Example: Kazaa; Groovenetworks Facebook youtube Eksisozluk.com Yonja.com

E-commerce Enablers: The Gold Rush Model

Internet infrastructure companies: Companies whose business model is focused on providing infrastructure necessary for e-commerce companies to exist, grow and prosper Provide hardware, software, networking, security, e-commerce software systems payment systems, databases, hosting services, etc. Examples: turkticaret.net, est.com.tr, imat.com.tr

E-commerce Enablers

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Auctions as EC Market Mechanisms

Auction: A market mechanism by which a seller places an offer to sell a product and buyers make bids sequentially and competitively until a final price is reached Auctions can be done: online off-line at public sites (eBay) at private sites (by invitation)

Auctions as EC Market Mechanisms

Electronic auctions (e-auctions):
Auctions conducted online

Host sites on the Internet serve as brokers, offering services for sellers to post their goods for sale and allowing buyers to bid on those items Conventional business practices that traditionally have relied on contracts and fixed prices are increasingly being converted into auctions with bidding for online procurements

Auctions as EC Market Mechanisms

Dynamic pricing:
Prices that change based on supply and demand relationships at any given time

Auctions as EC Market Mechanisms

Four major categories of dynamic pricing
1. 2. 3. 4. One buyer, one seller One seller, many potential buyers One buyer, many potential sellers Many sellers, many buyers

Auctions as EC Market Mechanisms

1. One buyer, one seller
Forward auction: An auction in which a seller entertains bids from buyers One seller, many potential buyers
Forward auctions used for fast liquidation and as a selling channel. Price is increasing; the highest bidder wins

Auctions as EC Market Mechanisms

2. One buyer, many potential suppliers
Reverse auction (bidding or tendering system):
Auction in which the buyer places an item for bid (tender) on a request for quote (RFQ) system, potential suppliers bid on the job, with price reducing sequentially, and the lowest bid wins; primarily a B2B or G2B mechanism

Auctions as EC Market Mechanisms

3. One buyer, many potential sellers (special model)
name-your-own-price model:
Auction model in which a would-be buyer specifies the price (and other terms) they are willing to pay to any willing and able seller. It is a C2B model, pioneered by Priceline.com

Auctions as EC Market Mechanisms

4. Many sellers, many buyers
Double auction:
Auctions in which multiple buyers and their bidding prices are matched with multiple sellers and their asking prices, considering the quantities on both sides

The Reverse Auction Process

Benefits of E-Auctions

SOURCES and REFERENCES

Prepared from the books and other supplementary materials of the books and their ppt presentations Kenneth C. Laudon and Carol Guercio Traver; 2004; E-commerce, business, technology and society;Addison Wesley Efraim Turban; 2002 Electronic Commerce, A Managerial Perspective; Prentice Hall