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E-Commerce Business Models and Concepts (Eight Key Elements of a Business…
E-Commerce Business Models and Concepts
Eight Key Elements of a Business Model
Value proposition
Why should the customer buy from you
Successful E-Commerce value propositions
Personalisation /customisation
Reduction of product search, price discovery costs
Facilitation of transactions by managing product delivery
Revenue Model
How will you earn money?
Major types of revenue models
Advertising revenue model
Subscription revenue model
Transaction fee revenue model
Sales Revenue model
Affiliate Revenue model
Market Oppurtunity
What marketspace do you intend to serve?
Marketspace
- area of actual or potential commercial value in which company intends to operate.
Realistic market opportunity
- defined by revenue potential in each market niche in which company hopes to compete
Competitive Environment
Who else occupies your intended marketspace?
Influenced by...
Number and size of active competitors
Each competitor's market share
Competitors' profitability
Competitors' pricing
Competitive Advantage
What special advantages does your firm bring to the marketplace?
Important concepts
Asymmetries - one firm more resources, more dominant
First mover advantage, complementary resources
Unfair competitive advantage
Leverage - uses CA to achieve more market share
Perfect markets
Market Strategy
How do you plan to promote your products or services to attract your target audience?
How a company intends to enter a market and attract customers.
Organisational Development
What type of organisational structures within the firm are necessary to carry out the business plan?
Describes how firm will organise work.
Management Team
What Kind of backgrounds should the company's leaders have?
B2C Business Models
E-tailer
Online version of traditional retailer
Revenue model : sales
Low barriers to entry
Variations...
Virtual merchant
Bricks-and-clicks
Catalog merchant
Manufacturer-direct
Community Provider
Provide online environment (social network ) where people with similar interests can transact, share content and communicate.
Revenue model : typically hybrid, combining advertising, subscriptions, sales, affiliate fees
examples...
facebook
Twitter
LinkedIn
Content provider
Digital content on the web e.g. news, music, video, text, artwork
Revenue models : use a variety of models including advertising, subscription and sales of digital goods.
Portal
Search plus an integrated package of content and services
Revenue models : advertising, referral fees, transaction fees, subscriptions for premium services
Transaction broker
Process online transactions for consumers
Travel agents
Revenue model : transaction fees
Industries using this model
Financial services
Travel services
Job placement services
Market Creator
Create digital environment where buyers and sellers can meet and transact
Revenue model : transaction fees, fees to merchants for access
Service Provider
Online services e.g. google - maps, gmail etc.
Revenue models : sale of services, subscription fees, advertising, sales of marketing data.
B2B Business Modles
Exchanges
Independently owned virtual digital marketplace where hundreds of suppliers meet a small number of very large commercial purchasers
Revenue model : transaction, commission fees
Industry Consortia
Industry-owned vertical digital marketplace open to select suppliers
Revenue model : transaction, commission fees
E-procurement
Single firm creates digital markets where sellers and buyers transact for indirect goods.
Ariba for example created software that helps large firms organise their procurement process by creating digital markets for a single firm
Revenue model : service fees, supply-chain management, fulfillment services
Private Industrial Networks
Digital network used to coordinate among firms engaged in business together,
Contributes to 75% of all expenses by large firms.
E- distributor
Version of retail and wholesale store, MRO goods and indirect goods
Revenue model : sales of goods
Example : Grainger
How the internet influences industry structure
Bargaining power of suppliers
Online procurement systems typically decrease bargaining power of suppliers
Threat of substitute products
New substitutes emerge: streaming replaces DVDs,, online reservation replaces travel agents
Bargaining power of buyers
Availability of global price and product information
Barriers to entry
May reduce barriers to entry , such as physical store, sales force.
Rivalry among existing competitors
Increase price competition, expands the market