Unit-2

Business Model for E-commerce

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 What is Business Model?

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✓ Methods of doing business by which a company can sustain

itself, that is, generate revenue.
✓ Different methods through which an ecommerce generates
revenue is called Business Model for E-commerce.
 In an Electronic Market:
The interaction between participants is supported by
electronic trade processes between buyer and seller that are basically
search, valuation, payment and settlement, logistics, and
authentication
Business Model for E-commerce
Based on Stocks
01 1. Stock Keeping Model
2. Drop shipping Model

Based on Relationship of the Parties

02 1.
2.
B2C (Business to Consumer)
B2B (Business to Business)
3. C2C (Consumer to Consumer)
4. C2B (Consumer to Business)
5. B2G (Business to Government)

03 Based on the Relationship of Transaction Types

1. Brokerage
2. Aggregator
3. Info-mediary
4. Community
5. Value chain
6. Advertising
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B2C (Business to Consumer)
✓ It involves transactions between business organizations and
consumers.
✓ It applies to any business organization that sells its products or
services to consumers over the Internet.
✓ These sites display product information in an online catalog
and store it in a database.
✓ The B2C model also includes services online banking, travel
services, and health information

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 B2C Process
(How B2C Works?)

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 Advantages of B2C:
i. Inexpensive costs
ii.Globalization (eg., can order from any corner of the world)
iii.Reduced Operational Cost (paper cost, ads, storage)
iv.Customer Convenience (user-friendly interface, shopping
carts, receipts, bills, order status, delivery status)
v. Knowledge management (how many customers saw the
product, bought, reviews, etc.)
B2B (Business to Business)
✓ Involves electronic transactions for ordering, purchasing, as
well as other administrative tasks between business houses.
✓ It includes trading goods, such as business subscriptions,
professional services, manufacturing, and wholesale dealings.
✓ Sometimes in the B2B model, business may exist between
virtual companies, neither of which may have any physical
existence. In such cases, business is conducted only through
the Internet. Eg., software companies
 (i) Review catalogues,

B2B Process (ii) Identify specifications

(iii) Define requirements,
(iv) Post request for proposals (REP).
(How B2B (v) Review vendor reputation.
(vi) Select vendor.
Works?) (vii) Fill out purchase orders (PO).
(viii) Send PO to vendor,
(ix) Prepare invoice,
(x) Make payment,
(xi) Arrange shipment, and
(xii) Organize product inspection and reception

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 Advantages of B2B:

i. Direct Interaction with customers

ii. Focused sales promotion (likes, dislikes, preferences of the
customers so that we can promote accordingly)
iii. Scalability (across different time zones, and locations)
iv. Saves distribution costs
C2C (Consumer to Consumer)

✓ It’s a business model that fosters commerce between private

individuals, usually in an online environment.
✓ C2C companies act as intermediaries to foster engagement
and help consumers reach bigger audiences.
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Hamrobazaar
C2B (Consumer to Business)
✓ It is similar to the B2C model, however, the difference is that in
this case the consumer is the seller and the business
organization is the buyer. In this kind of a transaction,
✓ The consumers decide the price of a particular product rather
than the supplier
✓ Consumers who create value for a product or business
✓ For example, UpWork or www.monster.com is a Web site on
which a consumer can post his bio-data for the services he can
offer. Any business organization that is interested in deploying
the services of the consumer can contact him and then employ
him
Upwork, Fiverr, Monster.com
 Hybrid Model
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• This is where the platform combines two or more of the above-

mentioned forms. Amazon, Alibaba is a perfect example.
 E-Governance Model

Transaction between Government and Other

entities

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 (Health Insurance Board)

Consumer's Right Monitoring System

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 G2G (Government to Government)

G2B (Government to Business)

G2C (Government to Consumer)

C2G (Consumer to Government)

B2G (Business to Government) ©roveensharma

Business Model for E-commerce
Based on Stocks
01 1. Stock Keeping Model
2. Drop shipping Model

Based on Relationship of the Parties

02 1.
2.
B2C (Business to Consumer)
B2B (Business to Business)
3. C2C (Consumer to Consumer)
4. C2B (Consumer to Business)
5. B2G (Business to Government)

03 Based on the Relationship of Transaction Types

1. Brokerage
2. Aggregator
3. Info-mediary
4. Community
5. Value chain
6. Advertising
 Brokerage

Aggregator

Info-mediary

Community

Value Chain

Advertising
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E-Commerce Models based on

Transaction Types
 Brokerage Model
In this model, there are third parties known as brokers, who bring sellers
and buyers of products and services together to engage in transactions.
Brokers have a frequent role in B2B, B2C, and C2C markets.

Broker charges a fee or commission for each transaction. It includes:

1. Marketplace Exchange
2. Buy/Sell Fulfillment
3. Auction Broker
4. Transaction Broker
5. Search Agent
6. Virtual marketplace or Virtual Mall
 Marketplace Exchange
E-commerce sites like Orbitz.com offer a full range of services covering the transaction
process, from market assessment to negotiation and fulfillment.
 Buy/Sell Fulfillment
Takes customer orders to buy or sell a product or service, including terms
like price and delivery. Example: CarsDirect.com
 Auction Broker
Conducts auctions for sellers (individuals or merchants). Broker charges the
seller a listing fee and commission scaled with the value of the transaction.
 Transaction Broker

Provides a third-party payment mechanism for buyers and sellers to

settle a transaction

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 Search Agent

A software agent or “AI" used to search-out the price and availability for a
good or service specified by the buyer. Eg: Bing AI

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 Virtual Marketplace/Mall

A hosting service for online merchants like Amazon that charges setup,
monthly listing, and/or transaction fees. Eg: Zshops
 Aggregator Model
Electronic commerce business model where a firm (that does not
produce or warehouses any item) collects (aggregates) information on
goods and/or services from several competing sources at its website.

The firm's strength lies in its ability to create an 'environment' which

draws visitors to its website, and in designing a system which allows
easy matching of prices and specifications.

-Catalog merchant
-Bit vendor
-Subscription Model (should subscribe, eg., to access consumer reports)
-Virtual Merchant
 Infomediary Model
Some firms function as infomediaries (information intermediaries)
assisting buyers and/or sellers understand a given market. Info-mediary
model includes:-

1. Audience measurement services (helps market research agencies)

2. Metamediary (provides information without being involved in the
actual transaction between the parties)
3. Incentive Marketing (provides redeemable points to consumers if
they buy from associated dealers. Thus, data collected about users
is sold for advertisement.
4. Advertising Networks (puts banner ads in member sites and collects data of
the users for marketing.
 Community Model

✓ Open Source: Software developed collaboratively by a global community of programmers

who share code openly. Eg., Redhat, linux, etc.
✓ Open Content: Openly accessible content developed collaboratively by a global
community of contributors who work voluntarily. Eg: Wikipedia
✓ Public Broadcasting: Eg: The Classical Station (by voluntary donation)
✓ Social Networking Services: Facebook
 Value Chain Model

✓ Value Chain Model:

Business model that describes full range of activities required to create a product or service
Value Chain Model

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Fig. Value Chain in Ecommerce
 Advertising Model

✓ Portal: A website or web page providing access or links to other sites.

✓ Classifieds: List items for sale or wanted for purchase. Listing fees are common, but there
also may be a membership fee.
✓ User Registration: Content-based sites that are free to access but require users to register
✓ Contextual Advertising/Behavioral Marketing: Pop-ups, form fill ups, surveys, etc.

Examples in Upcoming slides, respectively

Portal

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 Now
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Before
(Craigslist,
E-commerce)
 User Registration

Eg: Register to Unlock the document

Contextual Ad/ Behavioral Marketing

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Thanks