ECOMMERCE

E-Business Models

LECTURER: OSMAN KANU

PHONE#: +23276141146 / +23280031888
EMAIL: okanu@ccmtsl.com
 Learning Objectives

 Understand the concept of E-Business Models

 Explain the features of various E-Business Models
 Classify different types of E-Business Models
 Introduction

Understanding the problem you are solving for your customers is

undoubtedly the biggest challenge you’ll face when you’re starting a
business.
But, ensuring that your product fits the needs of the market is only one
part of starting a successful business.
The other key ingredient is figuring out how you’re going to make
money. This is where your business model comes into play.
 What is a business model?

Business models can be broken into three parts:

 Everything it takes to make something: design, raw materials, manufacturing, labor, and so on.
 Everything it takes to sell that thing: marketing, distribution, delivering a service, and
processing the sale.
 How and what the customer pays: pricing strategy, payment methods, payment timing, and so
on.
 What is a business model?

Business model refers to a company's plan for making a profit. It identifies the products or services
the business plans to sell, its identified target market and any anticipated expenses.
Business models are important for both new and established businesses. They help new and
developing companies to;
 Attract investment,
 Recruit talent,
 Motivate management and staff.
E-commerce Business Models

 Business model
 Set of planned activities designed to result in a profit in a marketplace

 Business plan
 Describes a firm’s business model

 E-commerce business model

 Uses/leverages Internet and Web for it implementation.
 7 Key Elements of a Business Model

1. Value proposition
2. Revenue model
3. Market opportunity
4. Competitive advantage
5. Market strategy
6. Organizational development
7. Management team
 Value Proposition

 Why should the customer buy from you?

 Successful e-commerce value propositions:

 Personalization/customization
 Reduction of product search, price discovery costs
 Facilitation of transactions by managing product delivery
 Revenue Model

 How will the firm earn revenue, generate profits, and produce a superior return
on invested capital?

 Major types:
 Advertising revenue model
 Subscription revenue model
 Transaction fee revenue model
 Sales revenue model
 Market Opportunity

 What market space do you intend to serve and what is its size?

 Market
space: Area of actual or potential commercial value in which
company intends to operate
 Market opportunity typically divided into smaller niches
 Competitive Advantage

 Whatspecial advantages does your firm bring to

the market space?
 Achieved when firm produces superior product or can
bring product to market at lower price than competitors
 Market Strategy

 How do you plan to promote your products or services to attract your target audience?
 Details how a company intends to enter market and attract customers
 Best business concepts will fail if not properly marketed to potential customers
 Organizational Development

 What types of organizational structures within the firm are necessary to carry out the business plan?

 Describes how firm will organize work

 Typically divided into functional departments

 Hiring moves from generalists to specialists as company grows
 Management Team

 What kinds of experiences and background are important for the company’s leaders to have?
 Employees are responsible for making the business model work
 Strong management team gives instant credibility to outside investors
 Strong management team may not be able to salvage a weak business model, but should be
able to change the model and redefine the business as it becomes necessary
 E-Business Models

An e-business model is simply the approach a company takes to become a profitable business on the Internet.
E-Commerce or Electronics Commerce business models can generally be categorized into the following types.

 Business - to - Business (B2B)

 Business - to - Consumer (B2C)
 Consumer - to - Consumer (C2C)
 Consumer - to - Business (C2B)
 Business - to - Government (B2G)
 Government - to - Business (G2B)
 Government - to - Citizen (G2C)
 Business - to -Business (B2B)

A type of commerce transaction that exists between businesses, such as those involving a manufacturer and
wholesaler, or a wholesaler and a retailer is known as Business-to-Business (B2B).
IBM, Hewlett Packard (HP), CISCO, Dell are the examples of B2B. Chemconnect.com and chemdex.com are the
examples of B2B that brings two firms together on the virtual market.
 Models in B2B

The B2B model can be supplier centric, buyer centric or intermediary centric models
Supplier Centric Model
In this model, a supplier sets up the electronic commerce market place. Various customers interact
with the supplier at its electronic market place. The supplier is generally a dominant supplier. He may
provide customized solutions and pricing to fit the needs of buyers. Intel and Cisco have been adopting
the supplier centric Model.
Buyer centric Model
In this model, big business organizations with high volume purchase capacity create an electronic
commerce market place. The online electronic commerce marketplace is used by the buyer for placing
requests for quotations and carrying out the entire purchase process. The US government and the General
Electric Trading Process Network are examples of buyer-centric model
 Models in B2B

Intermediary – centric model

In this model, a third party sets up the electronic commerce market place. The third party attracts
both buyer and seller to interact with each other at its market place. The buyer places their request interacts with
each other and reaches a final decision in purchase or sale of goods.
 Advantages of B2B

Instant purchases
Online business allows for instant purchases. Now, companies can do almost everything over the internet.
Increased revenue
24/7 online ordering will increase companies’ revenue. Many different time zones exist in the world and potential
clients might not have the same business hours as you.
Expands company’s presence
If your company has joined the online community, than it is expanding its presence and increasing its brand
awareness.
Closer business relationships
Doing business with other companies online will create closer business relationships.
 The Disadvantages of a B2B

Limited Market
Businesses selling to other businesses face a much smaller buying group than businesses selling to consumers
Long Purchase Decision Time
The B2B sales cycle involves a complicated set of factors, involving multiple stakeholders and decision-makers,
with total decision times that can stretch out for months.
Inverted Power Structure
A B2B buyer can, also within limits, demand certain customizations, impose exacting specifications and drive a
hard line with pricing because the seller depends much more heavily on retaining its customers.
Sales Process
The typical sale process in B2B demands considerable face time, often multiple meetings, and gets driven by
quantifiable factors, rather than the qualitative and emotional factors
Q&A
Thank You