E-BUSINESS MODELS

GENERAL

E-Business Modeldefinition

An e-and m- business model is an approach to conducting electronic business through which a company can sustain itself and generate profitable revenue growth

Business model-continued

• The business model spells out how a company plans to make money and how it is competitively positioned in an industry

Internet

• Please reflect on the promise of the Internet years ago

• And now?

Life

•Given the carnage among dot-com stocks this year, what online business models are expected to succeed in the future?

What we learned was what we knew all along

• Businesses need to make more money than they spend. The new model is the old model, but technology is essential to maintain a competitive advantage, and cash flow is more important than ever

Portals

• The idea behind portals is the same as that behind television advertising: aggregating eyeballs and directing them toward advertisements

But…

But…• television viewers are passive:

people need to wait through the ads to see the shows they want to watch

But…

The Web doesn't work that wayWHY?

• Content presentation is not serial

• Viewers are active, not passive • There are always thousands of

places to go

Hard times

• Many portal sites, such as Go.com and AltaVista.com, have fallen on hard times

• For example, what happened to Priceline.com?

First to market model

• Many of the failing companies were operating on a first-to-market strategy Their hope was that by getting their ideas out ahead of the market, consumers would develop brand loyalty before competitors arrived

First-to-market as a business model

First-to-market as a business model has always been risky. You are vulnerable because you have nothing proprietary, need vast funding and rely on rapid deployment

Check But sometimes it works…http://www.deananddeluca.com/

So why did investors and venture capitalists get caught in such speculative and irrational investments?

Investors

• Investors felt that they were investing in technology, when they were really investing in retailers and distributors

Retailers and distributors have small profit margins.

They couldn't justify their valuations in typical price/earnings ratios.

When does it turn profitable? Companies like Amazon.com are starting to answer this

Consider

• One segment of the business-to-consumer world that's thriving is in niche markets

Your examples?

Exercise

Please visit

http://www.redenvelope.com/

RedEnvelope Gifts Inc

• RedEnvelope Gifts Inc., launched in 1997 as REDENVELOPE, began as a last-minute gift site but now markets more than 1,000 items that are unique to the site

RedEnvelope

Customers seem willing to pay a premium for RedEnvelope-edited selection and enhanced customer service

The company has $30 million in sales, with a 46-point profit margin

There needs to be a quick path to profitability

• In the context discussed so far, the ultimate metric is margin

There are three levers to achieving margin:

• edited selection • customer service • inspirational branding

Another look at e-business model

• Is the model buyer- or seller-centric?

• What is the driving force of the business?

Strength of the Internet?

• The greatest strength of the Internet is its ability to bring together people, governments and businesses, and facilitate the flow of information among them

Internet and B2B

• Is that one of the main reasons why business models for business-to-business online marketplaces are expected to succeed?

B2B

• Is Internet viable platform for B2B trade?

• Is web site just another channel?

• Is the real surprise to discover how hard it is to become profitable?

M-business

• What elements make mobile business viable?

• Which technologies allow mobile devices to communicate easily with the Internet?

• Are there standards that ensure effective transfer of information?

M-business

• From competition to cooperation

Example: Nokia and IBM

• Changing customer’s relationship

Example: culture of feedback and review

Power to the purchaser

Buying communities

M-business

• How is the market likely to develop?

• What are current strategies?

• Who is going to make money out of this and how?

M-business

Will have to supply services that go beyond traditional web-based systems

• Services that an enterprise offers to their professional and private customers

• Services that help different enterprises to effectively combine their business processes

• Services an enterprise provides to it's employees to support the internal business processes  

M-business

• Dependability of mobile information systems

• Adaptability of systems to context • Development of systems on a wide range of

client platforms • Process support for mobile workers  

M-business

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Demo

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