This work is supported by National Science and Technology Planning Project (Project Number: 2007BAH10B00)

A Study on the Profit Model of the Port E-Commerce Platform

WANG Ying-chun1,2, ZHANG Lei1, WANG Lu1

1 Management School, Tianjin University of Technology, Tianjin 300384 P.R.China 2 Management School, Tianjin University, Tianjin 300072 P.R.China

(e-mail:stonelei1207@sina.com)

Abstract - Proceed from the commerce view, a perfect combination of port and e-commerce is the new breakthrough point that would make port income creating. This paper makes e-commerce thoughts and technologies applied for the traditional port transaction, excavates the value on the base of the port e-commerce platform, studies the profit model of the port e-commerce platform on the aspects of competition structure, the key to the success of industry-driven factors, value creation configuration, the core of business, marketing way, the basic and channel of value and so on. Moreover, it builds an evaluating model by using multistage fuzzy evaluation method.

Keywords - E-commerce, port, profit model, fuzzy evaluation

I. INTRODUCTION

The organic integration of e-commerce and port construction can be considered on two aspects. The first one, beginning with the port services, the works such as the marina, customs, warehousing, distribution, transportation and other logistics information between various departments and important files transferred and certificated and so on can be made effectively implemented by using e-commerce technology. The other one, at a business point of view, holding a large number of port cargo business information, the dealer can change information to business opportunities and enhance resource utilization through effective information integration. The business transaction here labels entity goods and logistics services as commodities and both parties in the transaction can make use of opportunities provided by the port for the convenient transaction, saving wear and tear of the resources in the middle part.

II. THE PORT E-COMMERCE PLATFORM MODEL

As an operating company, the port e-commerce platform uses e-procurement model to stock the products consumed in the operation. It is by the comparison between the supplier and facilitated transactions method that reduces purchasing costs. Introducing electronic- auction function to trade of logistics services and the introduction makes transaction more user-friendly and practical. The platform implements membership system, sets up port-based virtual business community and members interact through information, appends the

information to a higher value. The platform is a third-party trade lieu with market conditions issuance, in addition to the information matching the transaction to cause transaction, offering payment and insurance and other finance business support, which is a complete set of transaction. With the support of decision-making support system and other technologies, it is a value chain business integration model application that making logistics and trade information effectively filtrated and matched, making original valueless data being a valuable business opportunity. The platform effectively links supplier of logistics services and clients such as goods and vessel agencies with transaction and then procures revenue, which is a typical realization of online information intermediary. The provision of payment service is bound to have a certification institution as a protection. Platform’s providing clients with a secure and credible market place by using its credibility and authority certification service, which is pivotal to maintain an integrated platform with a strong support from government agencies.

In the process of comprehensive using typical e-commerce models, the establishment of a unique e-commerce platform mode for port, the barrier-free circulation of information flow, business flow, logistics, capital flow, looking on the overall port information and electronic trading operations in the synergistic view, planning port e-commerce platform from the system perspective, which adapted to the systematic trend of port development.

III. THE PROFIT MODEL OF THE PORT E-COMMERCE PLATFORM

A Competitive Structure

Regardless of unique nature of information, authority, or multi-coordination, the port e-commerce platform has great priorities, due to the direct co-operation and support of government agencies, but price competition exists between the platform and other private counterparts in the same line. To enhance the "no-leave" is the key to compete. Competitors collect more scattered users, while the platform should give the role of cooperation full play to the railway, bus operators and other customers, make effort to expand the user base. In addition, security of payment and other services which can be independent of the port operation business exist competition with the current major e-commerce businesses. Breaking the

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original market distribution and encroaching with the market share, which is the approach to open markets for the platform.

B The key to the success of industry-driven factors

Network scale. With the increase of member’s number, the value of the network increases, while the increase in value will attract more members to join, thus expand the platform information base and result in increasing returns to set up a monopolistic position. Network scale can decide whether or not the platform is a virtuous cycle and will achieve long-term operation.

C Value creation structure

It mainly reflects on the value of the network. Main business is not necessary the main source of income, while arresting users towards platform with free information is the down-lead of value creation, followed by lush facilitated value-added services, which is the fundamentality of value creation. The port e-commerce platform mainly serves as the role of go-between, who combines the two sides together, and if both buyers and sellers feel that go-between bring the value for them, for intermediaries could be profitable. [4]

Fig.1. The circle of user value

D The core of business

(1) Connect the two sides such as both in transactions or the business documents come-and-go. (2) Promote communion with customers in depth- breadth, and provide customers with the complementary. [4]

� Information services (the issuance, query, matching of information; the transmission, validation, verification of business documents; qualification inquiry, etc.) � Business support services (payment protection; bank,

insurance, financial support; negotiation; auction sites) � Certification authority (qualification identification,

the evaluation of the credibility, etc.) � Logistics services (proxy service, logistics program

recommendations, cargo tracking, etc.)

E Marketing mode

Platform’s cooperation with customs, inspection and quarantine, taxation and other departments makes some port conventional business linked to platform, which compels the user to complete these businesses through the platform, the moment that marketing is completed in a circular way. On the basis of the above, with the "internal pulling" approach, the high value information is used to attract customers, and the value-added services are used to consolidate customer base, at one time network externality theory is used to the implement marketing.

F The running costs

This is a hybrid e-commerce platform with high tech- nology, requiring a higher pre-development cost. Otherw- ise, the seamless connection with many departments and the unimpeded transmission of information flow, capital flow needs a good system maintenance, which will take some maintenance costs. Platform is operated by the specialized operators in information, network and other departments, so there is no inventory, distribution, returns and other problems but a more stable cost.

G Elements of a profit model

(1) Profit Point � Both sides in business can feel all-around authoritative differentiated services � The provision of services platform to both sides in business is convenient for the business operation � The provision of trading platform to both sides in business reduces the cost at the same time (2) Profit target � Seek for cooperation with the railway, telecommu- nications and other sectors to achieve "win-win" � Absorb scattered customers (3) Profit lever

Intermediary business services establish a network made by two sides business provide services and equipment. [4]

(4) Profit barrier � Ability -- Unique information, the mutual reliant and friendly relations with clients, the proprietary operations of authority sector as well as the platform protection system are competitive advantage difficult to be imitated. � Persistency -- Joint with important relevant depart- ments cooperation manner, cultivate clients loyalty and then form a virtuous circle of the customers value. (5) The source of profits � Membership fee. For scattered users, the member- ship system is not only the authenticity constraint for their issued information, but also an effective way to improve customer loyalty. Through the real-name authentication of accreditation institution, user must pay fee to enjoy the services in the platform as a member. In the paying circumstances, bartering real information for real infor- mation will create a good atmosphere, which is beneficial to long-term business platform. Parts of businesses with the “no-leave” in this platform provide a good oppor-

tunity to implement the membership fees system. � Melon-cutting. For railways, bus companies and other departments which have long-term cooperation and relatively stable business with the port, membership fees system is clearly inappropriate. A large number of unique information is hold by these departments and port in their own hands, if sharing information and making full use of its commercial value in e-commerce platform, the trans- action will have a “win-win” benefit. The establishment of income distribution principle for both sides in business brings on long-term and stable cooperation, which not only makes platform gain a stable operating earnings, but also makes the port more economically and rationally allocate the capacity based on the sharing information. That means more rational allocation of resources, more effective work on any side. � The charge for enterprise certification. Platform establishes its own certification institution, connecting the registration information database to public security, taxation, customs, etc, where clients can get the appro- priate authentication about evaluation of quality and credibility and examine each other's assessment infor- mation of the transaction, which provides transactions security services. This platform is to provide certification services to clients in exchange for income, like banks prove their credit level for credit card users. � Bid ranking, keyword search. A great deal of searching applications determines the importance to locate forefront of the information items in the search results. Users put forward for a thought-right price, and then enjoy the keyword queuing in some position a period of time [3].The port e-commerce platform uses this method for reference in enterprise promotion, supply and demand information, the recommended program, etc. � Advertisement. Insert the relative ads in different interfaces, which will not increase user’s antipathy and ensure a very good effect to the ads. Port e-commerce platform with the highly targeted customers are more convenient for the arrangements for ad placement. � Mobile value-added services. Cooperated with mobile communications business. Add additionally such as short message communications businesses to expand the extension of the platform services. The platform operator receipts the service charge from the customers who enjoy value-added services and the melon-cutting from the cooperation with mobile communications business to achieve a win-win purpose. One service, two proceeds. Open thinking will dig more value-added items. � Pay protection. There have been many successful precedents, such as Alipay of Alibaba, PayPal of eBay, etc. In addition to carrying on payment operations of port e-commerce platform, the payment instrument can service for other payment activities outsides the platform as an independent value-added service with highlight business characteristics. Bearing certain risk security, the operator with widen thinking could joint insurance companies and extrusion corresponding businesses in order to obtain cooperation melon-cutting and payment instruments income, doubling the harvest.

IV. THE EVALUATING METHOD FOR PLATFORM PROFIT MODEL BASED ON MULTISTAGE FUZZY

EVALUATION METHOD

The evaluation for profit model is to establish a specifical guide-line system, make objective, fair and accurate evaluation for the operation status of platform using multistage fuzzy evaluation method.

Fuzzy comprehensive evaluation method extended the fuzzy set theory created by ZADENIA. The method does a comprehensive evaluation that will get the results as objective as possible and achieve better practical results. [5]

A Multistage fuzzy evaluation model

(1) Determine the evaluation framework Use Delphi method, expert scoring method and other

qualitative analysis to determine multilevel evaluation guideline, as row in TABLE I:

TABLE I CALCULATING WEIGHTS AND REMARKS

WITH FUZZY EVALUATION METHOD

Determine remarks set U = (U1, ... ... Un) , as row in TABLE I, this case takes U = (excellent, good, medium, bad). (2) Determine the weight of multistage guideline

Use FAHP, Delphi method, experts investigation and other methods to determine the weight of this case: Level-1 guideline weight:

V = , 0 (1)

Level-2 guideline weight:

(2)

(3) Determine the fuzzy estimation matrix Use expert evaluation method to determine the

various guidelines. Aim at the distribution frequency of remark in each level to determine the fuzzy

matrix , ija expresses the membership degree of remark “j” in guideline “i”, as the data in row

in TABLE I. (4) Level-1 comprehensive evaluation

� �11 1 11 1

1

1 1

n n

i i i ik

i in k kn

r r a aR V A v v

r r a a

� � � �� � � �� �� � � �� � � � � �

�

� �

� � � � � � �

� � (3)

getting 1R , 2R , 3R from this case, which express the mem- bership of every evaluation in every level-1 guideline. (5) Level-2 comprehensive evaluation

� �1

2 1 2 3 4

3

, , ,R

B V R B B B BR

� �� �� �� �� � �

�

(4) Calculate B and make B normalized, getting B�

(6) Comparison of the weight values in B� and the guideline corresponding to the maximum is the comprehensive evaluation results for this model.

B Example for algorithm

Using the above methods and apply Delphi, experts investigation method to get the evaluation data of the port e-commerce platform as followed TABLE II:

TABLE II THE WEIGHT AND REMARK OF PORT

E-COMMERCE PLATFORM

Level-1 fuzzy comprehensive evaluation, the followed expresses the evaluation for every level-1 guideline

1

0.24 0.30 0.27 0.19R = 0.50 0.20 0.30 o 0.18 0.39 0.32 0.11 = 0.24 0.30 0.27 0.19

0.15 0.45 0.24 0.16

� �� �� �� � �

2

0.21 0.45 0.20 0.140.25 0.43 0.21 0.11

R= 0.21 0.30 0.14 0.35 o = 0.25 0.35 0.21 0.140.19 0.38 0.32 0.110.25 0.45 0.20 0.10

� �� �� �� �� � �

3

0.18 0.39 0.29 0.140.20 0.40 0.35 0.05

R = 0.21 0.25 0.26 0.28 o = 0.25 0.28 0.25 0.140.18 0.49 0.20 0.130.25 0.40 0.25 0.10

� �� �� �� �� � �

Level-2 fuzzy comprehensive evaluation 0.24 0.30 0.27 0.19

B= 0.42 0.30 0.28 o 0.25 0.35 0.21 0.14 = 0.25 0.30 0.27 0.190.25 0.28 0.25 0.14

� �� �� �� � �

Make B normalized, get B� = 0.248 0.297 0.2670.188 .

According to the principle of maximum membership degree, the good weight accounts for the proportion of the largest 0.297, so the overall fuzzy evaluation for this e-commerce platform is good. From the data analysis, the e-commerce platform in the financial performance, marketing influence and the platform effect three aspects develops relatively balanced, and the evaluations of all aspects are good, in which the evaluation of marketing influence is particularly high, accounting for the highest good proportion of 60%. By contrast, the financial performance with the greatest impact on the overall evaluation is slightly less, for the proportion of poor evaluation is 46%. Based on the above analysis, operator should frame the operating program focusing on improving financial performance and take active and effective measures, aiming at improving the net assets profitability, capital turnover rate and profit rate. The reforms need to be focused on the emphasis in order to win the most income with the least pay, which will make effectively it easy to improve the overall estimate of e-commerce platform.

As can be seen through the above example, the use of multistage fuzzy evaluation method, synthetically thinking over the guideline for evaluating the operation of e-commerce platform, on the basis of the data from experts scoring methods, the fuzzy matrix computation, all above makes the whole evaluation system reasonable and objective.

V. CONCLUSION

In the view of business, organically combine port affairs and e-commerce, then build an e-commerce platform in the background of port. Mine profit channels from the platform mode and build the profit model for the e-commerce platform. The use of multistage fuzzy

evaluation method helps the port operator understand platform performance and according to evaluation results in any layer, the port operator can find the problems on performance from application of this model in this enterprise, so he could take effective measures in order to enhance the platform profit results.

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