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Topic 6 : Categories E-Commerce Business Model (Major Business Model (3.…
Topic 6 : Categories E-Commerce Business Model
Major Business Model
1. Commission
-based
Fee that is levied/charged on a transaction by 3rd party
Rely on commissions as a basis of business
2.Ad
vertising
The owner of website provides to end users subsidized or free content, services or even product that attract end-user visitors
Refers to advertising as a source of revenue for itself, charging advertisers fees for banners, permanent buttons, & pop-up windows
3. Mark
-up based
Refers to value added in sales than production
Used by wholesalers & retailers
Company bought finished goods from manufacturer & sold them to the public or to other firm
• e.g Amazon.com
4. Product
ion based
Saves cost and serve customers better
Most hardware / software suppliers uses this model
Manufacturer tries to reach customers or end user through Internet
5. Refer
ral based
Fees as a determinant for revenue
Firms refer a certain website / service based on the commission that they received for any order that’s being made
6. Sub
scription based
Company charges a flat rate
Subscription fee is paid regardless of usage
Content creators e.g. Fairfax Digital (a newspaper printing conglomerate) or Emerald (electronic journal database) charge a subscription to obtain access to its service
7. Fee
for Service based
Consumers pay only when they utilises the service
Firms generate income through more services rendered
Firms need to be able to convince customers to intensively use the service, as there are no subscription as income backup if the usage falls off
Pricing Models
For
To
increase
market share within a market
To
enter
a new market
To
defend
an existing market from new entrants
Models
1-to-1
bargaining
Buyer and seller of a good or service
debate
the price and exact nature of a transaction. If the bargaining produces agreement on terms, the transaction takes place
Capturing
more consumer surplus as it allows
price discrimination
, a process whereby a seller can charge a higher price to one buyer who is more eager
Reverse Auc
tion
The roles of buyer and seller are reversed, the
sellers compete
to obtain business
from the buyer
and prices will typically decrease as the sellers undercut each other (B2B)
Auc
tion
Process of buying and selling goods or services by
offering
them up for bid, taking bids, and then buying the item to the
highest bidder
sellers are
not constrained
by having to fix a price without knowing what the market will bare
Bar
ter
The act of
trading
goods or services between two or more parties
without
the use of
money
Mutual benefit
in exchanging goods and services rather than cash
Fixed
(menu) pricing
A strategy in which a price point is
established
and
maintained
for an
extended
period of time.
Intended to attract more customers and clients because it offers them assurances
Consistent,
so customers get used to the pricing and companies have less risk of offending them by fluctuating prices over time