Revenue Models 4.

E-Business
Web business Revenue
(generating) Models For B2B/B2C sales
Web catalog (Online Sales)
Advertising-supported
Start
Affiliation
Fee-based
Subscription

Mixed
Novel ones- Non-Fungible Tokens or NFTs
Digital content (Sales/Subscription/Fees)
 Revenue Models

Web Catalog
Brand image?
Traditional Model
● Printed information mailed to prospective buyers
● Orders placed by mail or toll-free telephone number
Expands traditional model
● Replaces or supplements print catalogs
● Offers flexibility
○ Orders placed through Web site or telephone
○ Payments made though web site, telephone, or mail

Yet another sales outlet (channel)!

Adapted from mail-order (catalog) model

Can combine marketing channels
 Revenue Models

Web Catalog ...

Books, music, and videos
Amazon.com- Started … Evolved
Web-only- online music, book

Luxury goods- Difficult to sell online

E.g., Vera Wang and Versace -
Web sites provide information;
Heavy use of graphics and
animation

Combining marketing channels: Two retailer examples

 Revenue Models
Web Catalog ...
Clothing retailers
Categorized by type-
Prices, sizes, colors, tailoring ...
Yellow by Beximco Textiles & Apparels
● Online chat
● Whatsapp ordering
● Push Web pages/component to
customer’s browser
● Personal shopper agent
○ Learns preferences and makes suggestions
Strategy?
My Virtual Model (customers try clothes)
Problem: Varying computer monitor color settings
● Solution 1: Send fabric swatch on request
● Solution 2: Offer generous return policies
 Revenue Models

Subscription- Digital Content

• Digital Contents
– Books, Music, Videos ..
• ProQuest (digital publications)
• Wall Street Journal
• Netflix
– Highly efficient distribution mechanism
– Subscriptions for access to information
 Revenue Models

Revenue models used by online editions of newspapers and magazines

Value addition/OVP?
Fake News Strategy? 7
 Revenue Models

Advertising
• Network/Internet television
– measuring/charging visitor/views
• # of visitors, # of unique visitors, # of
click-throughs Time spent,
– Stickiness (of a site)
• Keeping visitors at site and attracting repeat visitors
• Exposed to more advertising in a sticky site
– Obtaining large advertiser interest
• Requires demographic information collection
• Now also behaviour- Cookie based tracking
across an advertisement network
Google, Bing, C-NET, KFR, Youtube

Tracking

Which
one?

Three strategies for an advertising-supported revenue model

Targeted advertising~ Higher rates 9

 Revenue Models
Growth of classified
advertising to Web sites
• Original version: Newspaper classified advertising
• Now on Web sites (Bdjobs.com)
– Very bad for newspapers? E.g. Prothom Alo
• Web employment advertising
– Most successful targeted classified advertising
category
• Examples: CareerBuilder.com, bdjobs.com ...

ProthomAlo Jobs vs.

Bdjobs.com
 Revenue Models

Advertising-Subscription Mixed
Subscribers pay fee and/or accept advertising
• Less advertising …
• Web sites offer different degrees of success
– The New York Times- Advertising
– The Wall Street Journal- Subscription revenue
weighted more heavily
– Bangladesh?

Advertising-Sales Mixed
 Revenue Models

Fee-for-Transaction
• Service fee charged- Based on transaction ...
• Travel agency
– Web-based travel agencies are new entrants
• Travelocity, Expedia, Hotels.com
• Also generate advertising revenue
– Specialized travel agents (cruises, hotels)

?
• Insurance brokers
– Quotes directly to public (1996)- Independent
insurance agents: disintermediated
– Insurance policy comparisons, sales sites
• Provides quotes for competitors’ products too
 Revenue Models

Fee-for-Transaction ...
• Online banking and financial services
– No physical product; Easy to offer on Web
– Trust and reliability of financial institution?

• Barriers/preventing growth
– Lack of bill presentment features
– Lack of account aggregation tools

Strategy for an online bank (BKash vs Brac Bank)

– Use existing bank’s identification and reputation
– Start online bank not affiliated with existing bank
– Use different name?
 Revenue Models

Fee-for-Transaction ...
• Online games - Sales
revenue source
– Advertising (older
concept)
– pay-to-play
for premium games
– subscription fees
– Virtual Items

• Physicians’ online consultations Free health service TONIC

– For ongoing, established relationship patients
– During Covid-19
 Revenue Models

Evolving game revenue model ...

• Subscription.- Monthly payments.
• Freemium subscription
• Box sales- sell boxed version
• In-game advertising- often cannot make enough money.
• Microtransactions. sell some virtual items /"cosmetic" items
• Virtual currency. Special case of microtransactions,
• Server leasing/place in the game. Second Life uses this model.
• Merchandise. Game-related merchandise like posters and t-shirts
• Offer walls/Affiliates. A kind of microtransactions, Show your players a
"wall" of offers from your partners.
• Offer flash games for free to other portal sites.to drive traffic to their
main sites

Ref: https://gamedev.stackexchange.com/questions/4968/what-revenue-models-exist-for-online-games
 Strategy

Free for Many, Fee for a Few

• Economics of manufacturing is different for physical
and digital products. This leads to a different revenue
model
– Offer basic product to many for free
– Charge a fee to some for differentiated products
• Examples: Google Premium Services!

Free + Premium
Free+mium
 Strategy

Adopt technology
• Companies must adapt to (new) revenue model
– or go out of business
• Some e-commerce Web sites needed years to grow
large enough to become profitable (CNN and ESPN)
– Due to lengthy unprofitable growth phases

• Management Issues
– Web revenue models implementation issues
– Dealing with the technological issues
 Strategy
Channel conflict
(cannibalization)
– Web sales/activities interfere with existing
– Consider
• Required compensation and bonus plans
adjustments to support Web site
● Channel Cooperation made it successful
• Web sites no longer sell products
● Sites now provide product details, retail
distributor information
– Online purchases returnable at retail stores (Value)
 Strategy

Go Online
• Moving fast to ecommerce (Strategic alliance
with an IT savvy organization)
– Amazon.com joined with Target, ToysRUs
• ToysRUs and Amazon suing each other
– Vs. Develop in-house capabilities

• Bangladesh?
 Web Presence

Effective Web Presence Website

• Critical even for

smallest/newest
• Public image conveyed to
stakeholders-
– Customers,
– Suppliers,
– Employees,
– Stockholders
– Neighbors
– general public
 Web Presence
Web Site Usability
• Current Web presences
– Few businesses accomplish all goals
– Most fail to provide visitors sufficient interactive
contact opportunities
• Improving Web presence
– accessible to more people/device
– easier to use
– encourage visitors’ trust
– feelings of loyalty
 Web Presence

Usability Testing
• Helps meet Web site goals
• Avoids Web site frustration
– Customers leave site without buying anything
• Simple site usability changes
– Include telephone contact information
– Staff a call center
• Learn about visitor needs by conducting focus groups
• Usability testing cost
– Low compared to Web site design costs
• Usability testing methods
 Web Presence
Web (presence) objectives
• Attracting visitors
• Keeping visitors to stay and explore
• Convincing to follow links to obtain information
• Creating an impression consistent with the
organization’s desired image
• Building a trusting relationship
• Reinforcing positive images
• Encouraging visitors to return
 Web Presence
Making Web presence consistent
with brand image
• Coca Cola Web site pages
– Trusted corporate image (Coke bottle)
– Image: traditional position as a trusted classic
• Pepsi Web site pages
– Usually filled with hyperlinks to activities and
product-related promotions
– Image: upstart product favored by younger
generation- Activities & Energy
 Web Presence

Trust, Loyalty and Relationship

• Good service leads to seller trust
– Delivery, order handling, help selecting product,
after-sale support

• Service builds customer loyalty

• Customer service in electronic commerce sites
– Problem
■ Lack integration between call centers and
Web sites (orders, enquiries)
■ Poor e-mail responsiveness
 Web Presence

Benchmarking (Control)
• Review e-commerce Web sites for
– Usability, customer service, other factors
• Expert Support (Global ...)
– Sell the gathered information directly to the
companies operating the Web sites
■ Include suggestions for improvements
• BizRate.com posts ratings
– Provides comparison shopping service
– Compiles ratings by conducting surveys of
sites’ customers
???