e business models (clear expalanation)
TRANSCRIPT
BUSINESS B7
E-Business Models
Learning Outcomes
1. Describe the business-to-business (B2B) and business-to-consumer (B2C) e-business models
2. Describe the four main areas where companies conduct business online
3. Differentiate between a vertical marketplace and a horizontal marketplace
4. Summarize the current and future trends for e-business models
BUSINESS MODEL COMPONENTS
Value PropositionRevenue model
Market opportunityCompetitive environment
Competitive advantageMarket strategy
Organizational developmentManagement team
Introduction
Pure play – an Internet retailer that has no physical store, such as Expedia.com and Amazon.com
E-business – conducting business on the Internet, not only buying and selling, but also serving customers and collaborating with business partners
E-business model – an approach to conducting electronic business through which a company can become a profitable business on the Internet
The four main areas where companies conduct business online1. Direct marketing,
selling, and services
2. Financial and information services
3. Maintenance, repair, and operations (MRO)
4. Intermediaries
Direct Marketing, Selling, & Services
Key to success: Marketing – create site visibility and demand
Sales – allow personalized content and adaptive selling processes, integrate with back-office
Services – automate customer service features such as customer feedback, customer inquires, tracking information, and customized services
using the Internet to contact customers directly
Financial and Information Services
Online banking Paying bills Making transfers between accounts Trading stocks, bonds, and mutual funds
Online billing Internet-based bill delivery services saves money
Secure information distribution – Business can safeguard information
Maintenance, Repair, & Operations (MRO)
MRO goods include – office suppliers, office equipment, furniture, computers, and replacement parts
The Internet can transform corporate purchasingfrom a labor and paperwork intensive processinto a self-service application
Intermediaries
Intermediaries – agents, software, or businesses that bring buyers and sellers together that provide a trading infrastructure to enhance e-business
Reintermediation – using the Internet to reassemble buyers, sellers, and other partners in a traditional supply chain in new ways
Intermediaries
Content providers – companies that use the Internet to distribute copyrighted content, including news, music, games, books, movies, and many other types of information
Online brokers – intermediaries between buyers and sellers of goods and services
Intermediaries
Portals - Central hubs for online contents
Market makers – intermediaries that aggregate three services for market participants A place to trade Rules to govern trading An infrastructure to
support trading
Intermediaries
Infomediary – provides specialized information on behalf of producers of goods and services and their potential customers
Application service providers – sell access to Internet-based software applications to other companies
E-Business Models
Business-to-Business (B2B) Models
Business-to-business (B2B) – applies to businesses buying form and selling to each other over the Internet
E-procurement – the B2B purchase and sale of supplies and services over the Internet
Systematic sourcing – involves buying through prenegotiated contracts with qualified suppliers
Spot sourcing – businesses buy transaction-oriented commodity-like products and rarely involves a long-term or ongoing relationship between buyers and sellers
B2B: Marketplace classifications
B2B exchanges are new organizational forms in digital space that can take place in the following:
Buyer model (few buyers, many sellers)
Marketplace model (many buyers, many sellers)
Longer term relationship model (few buyers, few sellers)
Seller model (few sellers, many buyers)
B2B exchanges
Buyer Model - Reverse auction – the winning bid is the lowest, rather than the highest
Seller model – appropriate when the supplier hosts value-added services on its Web site such as suppliers’ product catalog and customers’ order information
Longer term relationship model – items requiring a high degree of planning between buyers and sellers either in the design stage or in fulfillment
Marketplace model – allows a virtually infinite number of businesses to transact electronically with minimal cost
Consumer-to-Business (C2B)
Consumer-to-business (C2B) – applies to any consumer that sells a product or service to a business over the Internet
C2B facilitates the following: Social interaction Personal finance management Purchasing products and information
Consumer-to-Consumer (C2C)
Consumer-to-consumer (C2C) – appliers to sites primarily offering goods and services to assist consumers interacting with each other over the Internet
C2C communities thriving on the Internet: Communities of interest Communities of relations Communities of fantasy
E-Business Challenges
Cost Value Security Leverage existing systems Interoperability
Current Trends: E-Marketplaces and E-Markets
e-marketplaces – are interactive business communities providing a central market space where multiple buyers and sellers can engage in e-business activities
Horizontal marketplaces – connect buyers and sellers across many industries, primarily by simplifying the purchasing process
Vertical marketplaces – provide products that are specific to trading partners in a given industry
Advantages and limitationsof various e-marketplace revenue models
The “Content” Perspective ofE-Marketplaces Content and product description establish the
common understanding between parties in a transaction
The accessibility, usability, accuracy, and richness of the content directly affects the transaction
Future Trends: E-Channels,E-Portals, and E-Government e-channel – Web-based business channel
e-portal – a single gateway through which to gain access to all the information, systems, and processes used by stakeholders of an organizations
e-government – the use of strategies and technologies to transform government(s) by improving the delivery of services and enhancing the quality of interaction between the citizen-consumer within all branches of government(s)
Extended E-Business Models
Specific e-business models as they relate to e-government Consumer-to-government (C2G) – constitutes the
areas where a consumer (or citizen) interacts with the government
Government-to-business (G2B) – includes all government interaction with business enterprises
Government-to-consumer (G2C) – governments dealing with consumers/citizens electronically
Government-to-government (G2G) – governments dealing with governments electronically
Closing Case One Questions
1. eBay is one of the only major Internet “pure plays” to consistently make a profit from its inception. What is eBay’s e-business model and why has it been so successful?
2. Other major Web sites, like Amazon.com and Yahoo!, have entered the auction e-marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?
3. eBay has long been an e-marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set up shop on eBay?