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Chapter 2, e-Business Models

Outline2.1 Introduction2.2 Storefront Model

2.2.1 Shopping-Cart Technology2.2.2 Online Shopping Malls

2.3 Auction Model2.4 Portal Model2.5 Dynamic-Pricing Model

2.5.1 Name-Your-Price Model2.5.2 Comparison-Pricing Model2.5.3 Demand-Sensitive Pricing Model2.5.4 Bartering Model2.5.5 Rebates2.5.6 Offering Free Products and Services

2.6 B2B e-Commerce and EDI2.7 Click-and-Mortar Businesses

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2.1 Introduction

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

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2.1 Introduction

• e-Business – A company that has an online presence

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

• A company’s policy, operations, technology and ideology define its business model

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2.2 Storefront Model

• 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

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2.2.1 Shopping Cart Technology

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

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

• Shopping cart is supported by – Product catalog

– Merchant server

– Database technology

• Combine a number of purchasing methods to give customers a wide array of options

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2.2.2 Online Shopping Malls

• Wide selection of products and services• Offers greater convenience than shopping at

multiple online shops• Consumers can make multiple purchases in one

transaction

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2.3 Auction Model

• Online auction sites – Act as forums through which Internet users can log-on and

assume the role of either bidder or seller

– Collect a commission on every successful auction

– 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

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2.3 Auction Model

eBay home page. (These materials have been reproduced by Prentice Hall withthe permission of eBay, Inc. COPYRIGHT© EBAY, INC. All Rights Reserved.)

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2.3 Auction Model

Placing a bid on eBay. (These materials have been reproduced by Prentice Hall withthe permission of eBay, Inc. COPYRIGHT© EBAY, INC. All Rights Reserved.)

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2.4 Portal Model2.4 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

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2.5 Dynamic Pricing Models

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

• Comparison pricing model– 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 of sales increase

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

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2.5 Dynamic Pricing Models

• 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

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B2B E-commerce and EDI

• B2B e-business– The electronic business relationship between two or more

companies

• Traditional EDI uses a value-added network or VAN– A closed network that includes all members of a production

process

• XML (eXtensible Markup Language) – A development technology similar to HTML (Hypertext

Markup Language)

– Improves the compatibility between disparate systems, creating new market opportunities

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B2B E-commerce and EDI

• B2B e-commerce and the use of exchange sites allow businesses to reach their markets faster and more efficiently

• Lead time– The time it takes to receive a product from a supplier after an

order has been placed

• Long lead times increase inventory costs, increase worker stress levels and strain relationships between the manufacturer and the supplier

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2.6 B2B E-commerce and EDI

• JIT (just-in-time) inventory management– Supplies arrive at the exact time they are needed, thereby

limiting any unnecessary inventory expense

• Enterprise Application Integration (EAI)– The process of integrating traditional EDI systems with the

Web

• Business-to-business integrators (B2Bi) – Companies that use XML and similar technologies to help

other companies integrate their current systems with the Web

– www.excara.com, Webmethods.com, commerceone.com, tibco.com, Freemarkets.com, mercator.com

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2.7 Click-and-Mortar Businesses

• Brick-and-mortar– Companies that operate solely offline with traditional

business practices

• Click-and-mortar– Companies operating with both an online and offline

presence

• Click and mortar companies have brand recognition, and an established customer base– Barnesandnoble.com– Bestbuy.com

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2.7 Click-and-Mortar Businesses

• Key benefits to automotive industry– Combined supplier base

– Connects automobile manufacturers, dealers and consumers in a single marketplace

– Decreases lead time and production costs

• Key benefits to electronics industry– Provides access to thousands of components from hundreds

of electronic suppliers

– Provides ability to search by part number, product type or manufacturer

– Increases competitive pricing

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2.7 Click-and-Mortar Businesses

• Key benefits to energy industry– Provides real time pricing data on energy commodities

– Provides access to hundreds of energy commodities

– Allows regional energy providers to gain access to a worldwide market

• Key benefits to food industry– Reduced lead time preserves perishables

– Provides access to real time pricing data

– Online auction technology allows for alternative pricing

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2.7 Click-and-Mortar Businesses

• Benefits to chemical industry– Access to millions of chemical products from thousands of

suppliers

– Integrated supply chains provide faster, more reliable transactions

• Benefits to construction industry– Contracting and subcontracting are made simpler by online

bidding

– Construction companies can find raw materials from suppliers worldwide