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Lecture at the Corvinus University of Budapest, at the MSc in Marketing program. Learning outcomes: Conceptualization of e-business models and model variants. Analyzing the recent trends globally and in Hungary. Discussing how business innovations rapidly change the industry setting, either in traditional or in online.
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Institute of Management Dept. of Management and Control
H-1093 Budapest, Fővám tér 8.; H-1828 Budapest, PO Box 489. Phone.: (1)4825377, (1)4825263; fax: (1)4825118 Internet: http://mgmt.uni-corvinus.hu
Faculty of Business Administration
E-business Models: Trends and Prospects in
Hungary
Online and Digital Marketing
March 6, 2013
Péter Móricz
Business models reveal the core logic of what,
how and why are we doing
■ Business models are management tools that reveal, as an interconnected
system of elements,
– the policies and choices of the value creation (what to offer? why is it
valuable?) > value proposition model
– the network of the participating actors (forms of cooperation and
governance) > architecture model
– the sources and streams of revenues sustaining the value creation >
revenue model
Péter Móricz 2. E-business Models: Trends and Prospects in Hungary
■ Radically improved and
creative value prop’s
(24/7/365, aggregation,
long tail, customization,
community building,
brokerage etc.)
■ Ongoing experimen-
tation with the revenue
flows (affiliate/PPC,
freemium, advertising,
subscription, dynamic
pricing, etc.)
During the last two decades, the Internet was the
main driver of business model innovation
■ New ways of
combining the roles of
the value creation &
delivery (C2C, web 2.0,
direct-to-customer etc.)
Péter Móricz 3. E-business Models: Trends and Prospects in Hungary
New e-business models triggered fundamental changes in even more industries.
Online business models increasingly challange the industry status quo.
Four fundamental patterns of e-business models
have specific characteristics
Péter Móricz E-business Models: Trends and Prospects in Hungary 4.
UTILITIES
SHOPS
MARKETPLACES
PORTALS
The four fundamental e-business models have
specific ways of sustaining the value proposition
Péter Móricz E-business Models: Trends and Prospects in Hungary 5.
Sellers,
buyers Transaction
Commission,
listing fees
Marketplace:
participants
Content
sources
User
(e.g. visitor)
Subscription,
advertisement
Portal:
content
Products,
services Customer
Margin,
service fees
Shop:
selection
Infrastructure,
know-how etc.
E-business
participant
Service fees,
price packages
Utility:
value-added s.
Portals
■ Aggregation, rebundling
■ Community building
■ Advertising and promotion
■ User database yields
■ Paid premium content or function
■ Affiliate
■ Commerce
Péter Móricz E-business Models: Trends and Prospects in Hungary 6.
Main theme Revenue streams
■ Three screens
■ Web 2.0
■ Open API
■ Tablets
■ Smartphones, location-based services
Trends
■ Horizontal/vertical portals
(mainstream/longtail)
■ B2C/B2B portals
■ Navigators (search, link catalogs etc.)
■ Web 2.0 (blogs, social network etc.)
■ Mashups
■ Games, entertainment
Model versions
Marketplaces
■ Many to many
■ Intermediation
■ Commission, PPC
■ Listing fee, maintenance fee
■ Extra services (shipment, payment)
■ Advertisements, highlighted items
■ Coupon fees
Péter Móricz E-business Models: Trends and Prospects in Hungary 7.
Main theme Revenue streams
■ Fixed price “auctions”, B2C
■ Classifieds (C2C)
■ Coupon sites
■ First mover lock-in?
Trends
■ B2B marketplaces (catalogs, auctions,
exchanges; horizontal/vertical)
■ Online malls
■ Price comparison
■ C2C auction, classifieds
■ Group buying, coupons and bonuses,
“name your own price”
■ Public e-procurement and e-auction
Model versions
Shops
■ E-commerce
■ Online buyer-seller relationship
■ Margin, sales revenue
■ Subscription fee
■ Cross-selling
Péter Móricz E-business Models: Trends and Prospects in Hungary 8.
Main theme Revenue streams
Trends
■ Classic webshops
■ Digital delivery webshops
■ Direct to consumer
■ Affiliate model
■ Private shopping clubs
■ B2B, e-procurement
Model versions
■ From shops to malls
■ Large players’ plans
■ Straight-forward ordering methods
■ Recommendation engines, self-service
■ Consumer feedback, after-sales services
Utilities
■ Support activities
■ Standardized value creation
■ Know-how and/or economies of scale
■ Fee based on usage/time
■ Off-the-shelf packages
■ Service fees
■ Commission
Péter Móricz E-business Models: Trends and Prospects in Hungary 9.
Main theme Revenue streams
■ Delivery tracking
■ Straight-forward shipping methods
■ Mobile payment, NFC
■ Cloud computing
Trends
■ Logistics
■ Payment
■ Ad brokerage
■ Consultancy, SEO
■ Webdesign, software
■ Webshop building / hosting
■ Hosting, ASP, SaaS
Model versions
Summary
■ Content aggregation (portals), market making (marketplaces), online selling (shops) and related support services (utilities) are the four main areas of e-business models
■ Unpredictable dynamics: New (?) e-business models emerge rapidly (coupons) while others unexpectedly decline (e.g. C2C auctions);
■ Competitors are not only those with the same model but also the other e-business models (e.g. auction site eBay versus Craigslist classifieds)
■ Successful e-business companies have multiple stakes in different models and consciously experiment with new models (e.g. Amazon EC2/S3, Allegroup’s Grando.hu)
■ Extreme technology dynamics calls for continuous innovation and renewal (e.g. QR codes, tablets, smartphones, NFC, mashups)
■ In Hungary, incumbent companies have their strength in “sense-and-respond” to the local needs (e.g. GRoby), but multinational companies are about to enter and grab some key positions (e.g. Amazon, Tesco)
■ Global entrants may threaten local companies (e.g. iWiW-Facebook) but also enlarge the pie by mobilizing new users
Péter Móricz E-business Models: Trends and Prospects in Hungary 10.
Further readings
■ Rappa’s e-business models: http://digitalenterprise.org/models/models.html
■ PhD thesis on Hungarian e-business models: http://phd.lib.uni-corvinus.hu/553/
■ Amazon’s business model evolution: http://www.slideshare.net/faberNovel/amazoncom-the-hidden-empire
■ E-commerce market research worldwide: www.emarketer.com
■ Online retail in Eastern Europe: http://ystats.com/en/press/release.php?id=182
■ E-commerce market research in Hungary: http://www.enet.hu/en/
■ Tesco Home Plus in South Korea: http://www.youtube.com/watch?v=fGaVFRzTTP4
■ Coop@home Drive-in: https://www.youtube.com/watch?v=QYKI8ZQkhbI
– Auchan Drive [French]: http://www.youtube.com/watch?v=kSdOiuleqAc
■ Amazon Locker [funny!]: https://www.youtube.com/watch?v=hXokiEofKpQ
– Deutsche Post Packstation [German]: http://www.youtube.com/watch?v=HUF3f4tvJnM
Péter Móricz E-business Models: Trends and Prospects in Hungary 11.
Institute of Management Dept. of Management and Control
H-1093 Budapest, Fővám tér 8.; H-1828 Budapest, PO Box 489. Phone.: (1)4825377, (1)4825263; fax: (1)4825118 Internet: http://mgmt.uni-corvinus.hu
Faculty of Business Administration
Business Models’ Basics
Retrospective backup
Business models à la carte
■ Low-cost/discount
■ Full service/
aggregation
■ Long-tail
■ Involvement/creation
■ Customization
■ Acceleration
■ Feeling
■ …
■ Vertical integration
■ Integrated
(dominated) supply
chain
■ Value constellations,
partnering
■ Community/self-
organized, web 2.0
■ …
Péter Móricz E-business Models: Trends and Prospects in Hungary 13.
■ Cross-subsidies/free:
e.g. advertising,
freemium, donations
■ Pay-per-use: e.g.
commission, service
■ Flat rate: e.g.
subscription
■ Selling: e.g. dynamic
pricing
■ …
Value Proposition Architecture Revenue Model
E-business framework models: Portals, Marketplaces, Shops, Utilities
Business models: The level of analysis
Péter Móricz E-business Models: Trends and Prospects in Hungary 14.
Business modelBusiness model Strategy
Value creation as a
system: elements and
connections
Competition &
differentiation
Business processes
Efficient and
effective
implementation
and execution
New
e-business
models
Enabler of
process
trans-
formation
Reshaped
strategic
environment
Internet had a profound effect at each level
Péter Móricz E-business Models: Trends and Prospects in Hungary 15.
Business model representations
3 “Simulator” 2 “Map” 1 “Case”
Type
Focus
Typical
applications
Tools
examples
Narrative
Qualitative patterns of a success or failure story
Recommendations, advising
Case study benchmarking and role playing
Graphic
Mapping the inter-action between key elements and factors
Understanding & generalization
Concept maps, value webs
Formal
Formal model of the relationship between elements and factors
Sensitivity test and scenario planning
Spreadsheets and business games
Péter Móricz E-business Models: Trends and Prospects in Hungary 16.
Visualization of business model maps
E-Business Model
Schematics (Weill & Vitale, 2001)
Competing Through
Business Models (Casadesus-Masanell &
Ricart, 2008)
Guideline
Adaptable
e3value (Gordijn & Akkermans,
2001)
Business Model
Generation (Osterwalder, 2004)
Fix specification
Meta-model
Mainly actors
Value network map
Mainly factors
Cause and effect map
Map element:
Flexibility
of application: