E-commerce business model

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 Introduction
• Electronic commerce commonly known as e-
commerce consists of the buying and selling
of products or services using the electronic
media such as the Internet and other
computer networks.
• The amount of trade conducted electronically
has increased sharply since the introduction
of the Internet.

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 Introduction
• Creating an e-commerce solution mainly
involves creating and deploying an e-
commerce site.
• The first step in the development of an e-
commerce site is to identify the e-commerce
model.

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Common characteristics of all the e-commerce
models :
• E-commerce models are not location specific and
are available and accessible from everywhere
and at any point of time.
• E-commerce models provide service is for 24
hours and so it is time independent.
• E-commerce models reduce transaction cost and
transaction effort.
• In e-commerce models the potential customers
are all the internet users of the world and
continuous support can be provided to the
customers.
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Common characteristics of all the e-commerce
models :
• E-commerce models offer integrated solution
to the customers and this integration enables
single-window service mainly through the
website of the company.
• Through e-commerce models different
activities like search and selection, marketing,
ordering, payment, co-ordination of delivery
schedule and services are made on-line.

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 Business to Consumer (B to C) model – Basic idea

• Business to Consumer (B to C) model which is often written

as B2C model involves transactions taking place between
business organizations and consumers.
• It applies to any business or any organization that sells its
products or services to consumers over the Internet.
• These websites which are examples of Business to
Consumer (B to C) model display their product related
information in an online catalog and store it in a database
available to the customers anywhere on a 24X7 basis as
soon as the customer accesses the website.

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 Business to Consumer (B to C) model – Basic idea

• The Business to Consumer (B to C) model or the B2C

model also includes services like online banking,
online travel related services, and such services that
provide health related information.
• The example of the website www.amazon.com site
also involves the B2C model in which the consumer
searches for a book on their site and places an order,
if required.

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Business to Consumer (B to C) model – Major Activities

1. Sharing of information:-Example:-
(i)website of the company.
(ii)On-line catalogues.
(iii)E-mail. (iv) On-line advertisements.
(v) Newsgroups and discussion groups or
forums.
(vi)Social networking websites.

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Business to Consumer (B to C) model – Major Activities

2. Ordering for products or services

In Business to Consumer (B to C) electronic commerce
model any customer may order a product by making use
of electronic forms (on-line fill-up and submission) or
electronic mail.
3. Payment options
In Business to Consumer (B to C) electronic commerce
model options for making payment include:
(i)credit cards (ii) electronic cheques (iii)digital cash
(iv) debit cards.

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Business to Consumer (B to C) model – Major Activities

4. Delivery co-ordination
In Business to Consumer (B to C) electronic commerce
model delivery co-ordination implies the physical
delivery of a product or service from the service
provider to the customer.
5. Service and support
In Business to Consumer (B to C) electronic commerce
model the different ways to provide service and
support to the customers may include:
(i)confirmation through email (ii) on-line surveys
(iii) help desks and toll free numbers.

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 Business to Consumer (B to C) model – Major Challenges

• The B2C model of e-commerce is more prone to

the security threats because individual
consumers provide their credit card number and
personal information in the website of a business
organization.
• In case of the B2C model the consumer might
doubt that his information is not secured and
may not be used effectively by the business
organization. This is the main reason why the B2C
model is not very widely accepted even today.

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Business to Business (B to B) model – Major Activities

• It can efficiently deal with the movement of the entire

supply chain and the manufacturing and procuring
processes.
• It can automate the processes to deliver the right
products and services at the earliest available
opportunity and in a cost-effective manner.
• Facilitating of purchasing process and procurement
process.
• Monitoring of Inventory management.
• Monitoring of payment management.
• Monitoring of service management.

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Business to Business (B to B) model –
Hypothetical Example
• M/s A & Co. company sells automobile parts and
M/s X& Co. assembles automobile parts and then
sells the automobiles to customers. M/s X& Co.
comes across the web site of M/s A & Co. and
finds it suitable.
• M/s X& Co. then requests for more information
about M/s A & Co. and after being satisfied with
the procured details, finally decides to purchase
automobile parts from M/s A & Co.

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Business to Business (B to B) model –
Hypothetical Example
• To do this, M/s X& Co. places an order on the
Web site of M/s A & Co. After M/s A & Co.
receives the order details, it validates the
information.
• As soon as the order is confirmed, the payment
procedures are settled by the two companies.
• Finally, M/s A & Co. sends an acknowledgement
of payment to M/s X& Co. and delivers the goods
as per the terms and conditions they have
mutually agreed upon.
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 Types of B to B market
[independent, buyer oriented, supplier-oriented e-market place ]

Independent e-marketplace :
• Independent e-market-places are usually on-line public
marketplaces that are open to all buyers or sellers in a
particular industry or region.
• It is operated by a third party who is neither a buyer
nor a seller.
• By registering on an independent e-marketplace, one
can access advertisements or may request for
quotations or also may bid as per requirement.
• There is some form of payment required to participate
in the independent e-marketplace.
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 Independent e-marketplace
• This independent e-marketplace is the
fundamental type of e-marketplace because in
this type of e-market place the main motive is to
establish revenue without interfering in the
product manufacturing.
• The owner of the marketplace is an independent
organization, whose main motive is to generate
revenues through operating the marketplace on
behalf of sellers and buyers.
• Example: ebay.com.
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 Buyer oriented e-marketplace
• The buyer-oriented-e-marketplace is normally
run by a consortium (i.e. an association or a
combination of businesses, financial institutions,
or investors for the purpose of entering into a
joint venture) of buyers in order to ensure a
healthy purchasing environment.
• One can always use a buyer oriented e-
marketplace to advertise his /her catalogue to a
pool of relevant customers who will want to buy
if the one who had advertised is a supplier.
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 Buyer oriented e-marketplace
• The working methodology of a buyer-oriented-e-
marketplace is as follows:-
• A buyer opens an electronic market on its own
server and invites potential suppliers to bid.
• This model offers a greater opportunity to
committed suppliers.
• The most popular type of buyer-oriented e-
marketplace is the computerized version of
traditional auctions where prices are set by
buyers bidding against each other.
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 Buyer oriented e-marketplace
• What makes online auctions so powerful is
that, with Internet technology, most numbers
of businesses or individuals can bid and thus it
allows the sellers to get the best price.

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 Supplier-oriented e-marketplace
• As the name implies a supplier oriented e-
marketplace is set-up and operated by a number of
suppliers with the intention to reach a large number
of buyers at the earliest available opportunity.
• Alternatively, a supplier-oriented e- marketplace is
also known as a supplier directory.
• Most of the manufacturer driven electronic stores
belong to this category of supplier-oriented
e-marketplace.

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 Supplier-oriented e-marketplace
• In this model, both individual consumers and
business buyers use the supplier-oriented e-
marketplace.
• These supplier-oriented e-marketplaces are
usually searched by the product or service
being offered through them.
• Successful examples of this business model
are companies like Dell, Intel, Cisco and IBM.

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 C2C
• Consumer-to-consumer (C2C) (or citizen-to-
citizen) electronic commerce is a business
transactions between consumers which
require the involvement of the third party. In
C2C model customers transact goods or
services with other consumers using internet.

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• It is basically financial interaction between two non-business
entitities using the internet. C2C model acts as an
intermediaries such as auction, forms a trading forum and used
s a classified advertisement. One limitation of C2C business
model is that there is no way to check the quality and reliability
of the product online because both parties are unknown to
each other. This type of e-commerce is expected to increase in
the future because it reduces the costs of the product unlike
company where some tangible and intangible costs are
incorporated in their product. C2C commerce levels increased
dramatically online which is shown in figure 2
•  

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• This type of e-commerce is expected to
increase in the future because it reduces the
costs of the product unlike company where
some tangible and intangible costs are
incorporated in their product. C2C commerce
levels increased dramatically online which is
shown in figure 2
•  

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 B2G
• Business-to-government (B2G) is a business model
that refers to doing businesses such as selling
products, services or information to governments
or government agencies through integrated
marketing communications techniques such as,
branding, advertising, and web-based
communications. B2G which is also refereed as
public sector marketing are activities are conducted
via the Internet through real-time bidding

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 C2G
•  applications usually include tax payment,
issuance of certificates or other documents,
etc. Although we cannot strictly define
consumer or citizen to government as e-
Commerce we can see several C2G
applications under the scope of transactions
that are done and handled more efficiently
and effectively with e-Commerce systems and
technologies.
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 G2G
• Government- to-Government (abbreviated G2G) is
the online non-commercial interaction between
Government organizations and its various
departments. The objective of the G2G is to
coordinate inter-department services more
efficiently and effectively to provide better service
to the citizen, and make the system transparent to
citizens. The purpose of the G2G is to support e-
government initiatives by improving
communication, data access and data sharing.
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• The purpose of the G2G is to support e-
government initiatives by improving
communication, data access and data sharing.

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