1 Chapter 2, e-Business Models Outline 2.1Introduction 2.2Storefront Model 2.2.1Shopping-Cart Technology 2.2.2Online Shopping Malls 2.3Auction Model 2.4Portal.

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Chapter 2, e-Business Models

Outline2.1 Introduction2.2 Storefront Model

2.2.1 Shopping-Cart Technology2.2.2 Online Shopping Malls

2.3 Auction Model2.4 Portal Model2.5 Dynamic-Pricing Model

2.5.1 Name-Your-Price Model2.5.2 Comparison-Pricing Model2.5.3 Demand-Sensitive Pricing Model2.5.4 Bartering Model2.5.5 Rebates2.5.6 Offering Free Products and Services

2.6 B2B e-Commerce and EDI2.7 Click-and-Mortar Businesses

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Introduction

In this chapter we explore the many business models currently being implemented on the Web Models include: The Storefront Model The Auction Model The Portal Model The Name-Your-Price Model The Comparison Pricing Model The Demand Sensitive Pricing model The B2B Exchange Model

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Introduction

e-Business A company that has an online presence

E-commerce businesses allow customers to sell, trade and barter over the Web

A company’s policy, operations, technology and ideology define its business model

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Storefront Model

Storefront model enables merchants to sell products on the Web What people hear most about e-business Transaction processing, security, online payment,

information storage E-commerce allows companies to conduct

business 24-by-7, all day everyday, worldwide An e-commerce storefront should include:

Online catalog of products Order processing Secure payment Timely order fulfillment

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Shopping Cart Technology

Shopping Cart An order-processing technology allowing

customers to accumulate lists of items they wish to buy as they continue to shop

Shopping cart is supported by Product catalog Merchant server Database technology

Combine a number of purchasing methods to give customers a wide array of options

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Online Shopping Malls

Wide selection of products and services Offers greater convenience than shopping at

multiple online shops Consumers can make multiple purchases in

one transaction

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Auction Model

Online auction sites Act as forums through which Internet users can

log-on and assume the role of either bidder or seller

Collect a commission on every successful auction Sellers post items they wish to sell and wait for

buyers to bid Reserve price

The minimum price a seller will accept in a given auction

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Auction Model

Reverse-auction model Lowest-unique-bid auction Allow the buyer to set a price as sellers compete

to match or even beat it If no bid meets the reverse price, the auction is

unsuccessful If a successful bid is made, the buyer and the

seller must commit Most auction sites do not involve themselves in

payment or delivery, except they can get revenue and profit

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Auction Model

Lowest-unique-bid auctions probably aren't auctions at all, but that's the common name for them. They work like this: The seller places a high-value item up for

"auction". Each buyer makes one or more sealed bids. Each bid costs the buyer some money (typically

the cost of a premium-rate SMS or phone call). The person who makes the lowest unique bid wins

the item for that price. So... as a buyer, what's the best approach? Bid low?

Big high? Multiple bids? Is there a "best" here at all, or is this a just a lottery

by any other name?

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Auction Model

eBay home page. (These materials have been reproduced by Prentice Hall withthe permission of eBay, Inc. COPYRIGHT© EBAY, INC. All Rights Reserved.)

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Portal ModelPortal Model

Portal sites Give visitors the chance to find almost

everything they are looking for in one place Horizontal portals

Portals that aggregate information on a broad range of topics

Yahoo!, AltaVista, Google Vertical portals

Portals that offer more specific information within a single area of interest

WebMD, IMDB, FirstGov

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Portal ModelPortal Model

Helps users collect information on an item for which they are looking for and allow users to browse independently owned storefronts

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Dynamic Pricing Models

In the past, bargain hunter had to search for deals by visiting numerous local retailers and wholesalers.

Ways to generate pricing for business in Internet Enable customers to name the prices they are willing

to pay for travel, homes, automobiles, consumer goods, etc. Find lower prices by joining with other buyers Offer products and services free by selling

advertising Join with other buyers to purchase products in

large quantities. Etc.

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Dynamic Pricing Models

The Web has changed the way products are priced and purchased

Comparison pricing model Allow customers to poll a variety of merchants

and find a desired product or service at the lowest price

Web sites using shopping bot technology to find the lowest price for a given item

Sites get revenue from partnerships with merchants

E.g. BottomDollar.com

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Dynamic Pricing Models

Demand-sensitive pricing model Group buying reduces price as volume of

sales increase Because pricing and products vary between

these and other, similar sites, customers should visit several such sites before making a purchase.

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Dynamic Pricing Models

Name-your-price model Name-your-price for products and services Empowers customers by allowing them to

state the price they are willing to pay for products and services

Use Intelligent agent Search and arrange large amounts of data and

report answers based on the data

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Dynamic Pricing Models

Bartering Model Individuals and business trade unneeded

items for items they desire Ubarter.com, isolve.com

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Dynamic Pricing Models

Rebate Model Sites offer rebates on product at leading online

retailers in return for commission or advertising revenues

pass discounts, e.g. Help attract customers to the sites

E.g., “everyday low prices”, “buy one get one free”

eBates Add value to a customer’s visit to build customer

satisfaction and loyalty

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Dynamic Pricing Models

Free offering model Use advertising-driven revenue streams Offer free products and services to generate

high traffic Obtain revenue from advertising Freemerchant, Start Sampling, FreeSamples.com

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B2B E-commerce and EDI

B2B e-business The electronic business relationship between two or

more companies Traditional EDI uses a value-added network or VAN

A closed network that includes all members of a production process

XML (eXtensible Markup Language) A development technology similar to HTML (Hypertext

Markup Language) Improves the compatibility between disparate systems,

creating new market opportunities

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B2B E-commerce and EDI

B2B e-commerce and the use of exchange sites allow businesses to reach their markets faster and more efficiently

Lead time The time it takes to receive a product from a

supplier after an order has been placed Long lead times increase inventory costs,

increase worker stress levels and strain relationships between the manufacturer and the supplier

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B2B E-commerce and EDI

JIT (just-in-time) inventory management Supplies arrive at the exact time they are

needed, thereby limiting any unnecessary inventory expense

Enterprise Application Integration (EAI) The process of integrating traditional EDI

systems with the Web

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B2B E-commerce and EDI

Business-to-business integrators (B2Bi) Companies that use XML and similar

technologies to help other companies integrate their current systems with the Web

www.excara.com, Webmethods.com, commerceone.com, tibco.com, Freemarkets.com, mercator.com

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Click-and-Mortar Businesses

Brick-and-mortar Companies that operate solely offline with

traditional business practices Click-and-mortar

Companies operating with both an online and offline presence

Click and mortar companies have brand recognition, and an established customer base Barnesandnoble.com Bestbuy.com

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Click-and-Mortar Businesses

Key benefits to automotive industry Combined supplier base Connects automobile manufacturers, dealers

and consumers in a single marketplace Decreases lead time and production costs

Key benefits to electronics industry Provides access to thousands of components

from hundreds of electronic suppliers Provides ability to search by part number,

product type or manufacturer Increases competitive pricing

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Click-and-Mortar Businesses

Key benefits to energy industry Provides real time pricing data on energy

commodities Provides access to hundreds of energy

commodities Allows regional energy providers to gain

access to a worldwide market Key benefits to food industry

Reduced lead time preserves perishables Provides access to real time pricing data Online auction technology allows for

alternative pricing

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Click-and-Mortar Businesses

Benefits to chemical industry Access to millions of chemical products from

thousands of suppliers Integrated supply chains provide faster, more

reliable transactions Benefits to construction industry

Contracting and subcontracting are made simpler by online bidding

Construction companies can find raw materials from suppliers worldwide