Business Models

Content

1. Storefront Model2. Auction Model3. Portal Model4. Dynamic Pricing Model5. Online Trading Model6. Other Types of e-Business Models

• In this chapter we explore the many business models currently being implemented on the Web. These 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

Introduction

• An e-business can be defined as a company that has an online presence.

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

• A companies policy, operations, technology and ideology define its business model

Introduction (cont.)

• Storefront model enables merchants to sell products on the Web– 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.

Storefront Model

• Shopping Cart– An order-processing technology allows customers to

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

• The shopping cart is supported by – the product catalog, merchant server, database

technology

• Many companies combine a number of purchasing methods to give their customers a wide array of options.

Shopping Cart Technology

Park’n Shop

• Online Mall– A collection of online retailers that offer their products

and services on a single site.

• In an online mall, consumers can use the mall’s shopping cart technology to purchase items from many stores in a single transaction.

• Online malls act as shopping portals directing traffic to the leading shopping retailers for a specific product.

• Online malls offer speed and added convenience to a customers shopping experience.

Online Shopping Malls

• Online auction sites act as forums through which Internet users can log-on and assume the role of either bidder or seller.

• 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.

• Reverse auctions– allow the buyer to set a price as sellers compete to

match or even beat it. • Auction sites collect a commission on every

successful auction.

Auction Model

Red-dots

Portal 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

Yahoo!

Dynamic Pricing Model

• The Web has changed the way products are priced and purchased

• Comparison pricing model– Comparison pricing Web sites using shopping bot

technology to find the lowest price for a given item

• Demand-sensitive pricing model– Group buying reduces price as volume sales increase

• Name-your-price model – Name-your-price for products and services.

• Bartering Model– Individuals and business trade unneeded items for items

they desire.

– Ubarter.com, isolve.com

• Rebate Model– Sites offer rebates on product at leading online retailers

in return for commission or advertising revenues.

– eBates

• Free offering model– Free products and services generate high traffic

– Freemerchant, Start Sampling, FreeSamples.com

Dynamic Pricing Model (cont.)

Online Trading Model• Online trading empowers the average investor to

handle their own investments• Trading sites offer

– Research

– Investments analysis

– Stock history

– Simple buying and selling • Online Trading sites include:

– E*TRADE

– Ameritrade

– Fidelity.com

E*TRADE Banking and Financial Services

E*TRADE via PDA

• Find, research and apply for loans online.• Many online lenders offer lower rates to attract

customers.• Online lending services include free quotes,

calculators and tutorials for borrowers.• Examples:

– E-LOAN

– eCredit.com

– Mortagebot.com

Getting a Loan Online

Recruiting on the Web

• Resume tutorials, cover letter help, and free job searching available on the Web

• Employers can find new employees from a global pool of applicants

• Earn rewards for refering new hires to recruiters• Examples:

– Guru.com

– Dice.com

– Refer.com

– Sixfigurejobs.com

– Monster.com

JobAsia

Online News Services

• Internet and Web offer a 24-by-7 news source• It is important to check the information source as

rumors are often passed online• Independent and freelance content creators

compete with large scale industry players– CNN.com

– ESPN.com

– Drudge Report

– Boston.com

MingPao News

• Customers now have the power to bypass a travel agent

• Discounts and low fares available online• Name-your-price for tickets, hotels and car rentals• “Last minute” fares often lower online• Examples:

– Expedia.com

– Travelocity.com

– Cheaptickets.com

Online Travel Services

• The Web is a form of entertainment• Interactive television will use the Internet to offer

interactivity to the world• MP3 and file-transfer technology threaten

copyright law• Examples:

– IMDB

– Farmclub.com

– MP3.com

– iCast.com

Online Entertainment

MP3.com

• Consumers access automobile information empowering them to make an informed buying decision

• Dealers use the Web to showcase vehicles• Online auto auctions give buyers more options• Examples:

– Auto.com

– Autobytel.com

– Autoparts.com

Online Automotive Sites

• Energy exchange sites allow energy providers to trade excess energy commodities, buy on auction and sell materials.

• 1000’s of energy commodities are sold online.• Efficiency increases as supply chains are

simplified• Examples:

– Houstonstreet.com

– Altranet

– Retailenergy.com

Energy Online

• Unused patents and trademarks can be sold online• Hiring outside contractors or companies to

complete projects and offer consulting.• Contractors can find projects to match their needs

on the Web• Examples:

– Hellobrain

– Yet2.com

– Question Exchange

Selling Brainpower

• Artists have access to a global audience• The Web itself is a new medium for art• Virtual galleries give artists a chance to showcase

their work• Shortfilms are finding new fans online • Examples:

– Art.com

– Guild.com

– AtomFilms

– Art.net

Online Art Dealers

• E-learning is changing the way people learn.• Web-based training and education give the world

access to continuing education form their home• Many colleges and universities offer distance

learning and degree programs online• Examples:

– Click2learn

– Saba

– Smartforce

– Varsitybooks.com

Education Online

Hong Kong CyberU

• e-Business & e-Commerce : How to Program, H.M. Deitel, P.J. Deitel and T.R. Nieto, Prentice Hall, 2000.

• eBusiness Essentials: Technology and Network Requirements for Mobile and Online Markets, 2/e, by Mark Norris and Steve West, John Wiley & Sons.

• http://ecommerce.ncsu.edu/topics/models/models.html

Main References