e - Commerce

Session - 2

What’s in the store Today?

• Business Model• Case Study Presentation

Business Models

E-Commerce Business Models

A companies policy and operations define its business model

Types of 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

e-Commerce Business Models1. Storefront Model

Shopping Cart Technology (Amazon)

Online Shopping Malls

2. Auction Model (eBay)

Reverse Auction Model

3. Portal Model

Horizontal Portal Model

Vertical Portal Model

e-Commerce Business Models

4. Dynamic Pricing Models

Name-Your-Price Model

Comparison Pricing Model

Demand-Sensitive Pricing Model

Bartering Model

Rebates

e-Commerce Business ModelsAdvertising-Driven Business Model

Online Trading Model

Online Loan Getting Model

Online Recruitment Model

Online News Services Model

Online Travel Services Model

Online Automotive Sites Model

Online Energy Sites Model

Online Education Model

Selling Brainpower Model

4. Storefront Model

• Storefront model enables merchants to sell products on the Web

• Storefront Model is basic form of e-Commerce where the buyer and the seller interact directly– Transaction processing, Online payment &

Security, Information storage– Interactive, Dynamic, Client/Server Model, – Session Management, Database Handling,

Load Balancing, Failover

• E-commerce allows companies to conduct business 24-by-7, all day everyday, worldwide

4. Storefront Model

• An e-commerce storefront should include – Online catalog of products– Order data processing

• Take orders through web site– Secure payment

• Accept payments in secure environment– Timely order fulfillment– Manage Customer Data

4.1 Shopping Cart Technology

• Shopping Cart–Most common e-commerce business–Shopping cart technology is used to buy and

sell items on the internet–An order-processing technology allows

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

–Basic form of e-Commerce where the buyer and the seller interact directly

Shopping Cart Technology• The shopping cart technology includes –Product catalog hosted on merchant server–Database technology

• Products Specifications• Items Description, Item Availability• Shipping Information• Stock level• Customer Information

– Name, Address, credit-card info

– Shopping Cart Technology use Client/Server Model

–Session Tracking

amazon.com• Most widely recognized example of an e-business

that uses shopping cart technique• Line of Products

– Books, music, video, DVD, electronic card, consumer electronics, beauty items, toys, tools, hardware

• How to Buy Item– Search for products in a variety of ways– Add to Shopping cart

• Options– Change quantity, remove an item, check out,

continue shopping• Cancel an Order: any time before shipment

Amazon.com

• Email Confirmation of order– First mail when order is placed– Second mail when order is shipped– Customer can track the status of his

purchases

• Payment Option: Credit Card

amazon.comInformation Stored in Database• Product Related Information

– Product Specification / Item DescriptionFor Example: Book• Title, author, price, sale history, publisher,

review– Product Category (best seller, science,

engineering)– Shipping Information– Stock Level

• Personal Identification– Customer Information

• Name, Billing Address, Shipping Address, Shipping Preference

– Credit Card Information– Password– Past Purchases

Shopping Cart Issues• Interactive & Dynamic• Multi-tiered Web Application• Session Management• Database Handling

– Connection Pooling• Robust & Reliable

– Load Balancing, Failover• Transaction processing

– ACID• Security• Online payment• Information storage

4.2 Online Shopping Malls

• Online Mall– A collection of online retailers that offer

their products and services on a single site.In an online mall, consumers can use the mall’s

shopping cart technology to purchase items from many stores in a single transaction.

• Online malls offer speed and added convenience to a customers shopping experience.

• Online malls act as shopping portals directing traffic to the leading shopping retailers for a specific product.

5. Auction Model• C2C e-Business• “Online auction site acts as a forum through which

Internet users can log-on and assume the role of either bidder or seller”.

• “Online auction site acts as a forum for online buying & selling”

Sellers post items they wish to sell and wait for buyers to bid.

– Seller• Post an item’s description• Enter minimum price • Deadline to close auction

– Bidder• Search an item , Bid for an item

Auction Model • Revenue (commission based)

– Auction sites collect a commission on every successful auction.

• Shipment– Auction site might / doesn’t involve in

payment or delivery. – Method is worked out between two parties

• Successful Bid– Buyer and Seller must confirm

Reverse Auction Model

• Reverse auction Model–allows the buyer to set a price as sellers

compete to match or even beat it. –Generates bidding activity

• Reserve price–The minimum price a seller will accept in

a given auction.

ebay.com (Auction Site) • Most profitable e-business• 450,000 items added each day• People can buy/sell just anything• Company Earning

– %age of sale amount– Submission fee based on amount of exposure

• Featured Auction (specific product category)• List on eBay Home Page• Bold Face Font

• eBay doesn’t maitain physical inventory• eBay doesn’t deal with shipping

ebay.com (Auction Site)• Information required when product is entered by

Seller– Item Description– Keyword for searching– Initial Price– Date– Personal Information of Seller

• eBay System– Fault Tolerant System

• Backup (h/w, s/w, data), Redundancy– High Availability Computing (minimize downtime)

Other Auction Sites

• auction.yahoo.com• Ibidlive.com

• B2B Auction Sites– dovebid.com– Worldcallexchagne.com– u-bit-it.com

6. Portal Model• Portal sites give visitors the chance to find

almost everything they are looking for in one place. – New, sports, weather, search the web

• Portals link customers to – online merchants– online shopping malls – auction sites – News Agencies– Weather Agencies

6. Types of Portal Model

1. Horizontal Portals (search engines)– portals that aggregate information on a

broad range of topics.– Yahoo!, AltaVista, Google, Ask Jeeves

2. Vertical Portals (community sites)– Provides large amount of information in one

subject area– portals that offer more specific information within a

single area of interest.

– WebMD, LEXIS, IVillage, Internet.com, AOL

Shopping portal– Links customer to thousand of sites carrying a

variety of products

– Advantages (shop from any place, make payment through portal)

6. Portal Model

• How Portals make money?– Some portals charge merchants for a link– Some portals charge merchants for per

customer click – Portals also make money from

advertisement

7. Dynamic Pricing Models• The Web has changed the way business is done

and the way products are priced and purchased

Name-your-price model (priceline.com)– Name-your-price for products and services.

– Merchants receive the customer’s desired price and decide whether or not to sell the product or service. If the customer’s price is not reasonable then that customer will be asked to choose another price.

Rebate Model, Bartering Model

8. Advertising-Driven Business Model

• Free products and services generate high traffic

• Examples• Free Email • Free hosting

– http://www.mycgiserver.com

• Free News Site• Free Games Site

9. Online Loan Getting

• Getting a loan online is a growing segment of eCommerce

• Advantages– Find for loans online with lower rates.– Apply for loans online from any where, any

time

10. Online Recruitment

• Services Offered– Job searching (Job Seeker)– Place a Job Offer (Employer)– Resume tutorials: How to write Resume– Cover Letter help

• Employers can find new employees from a global pool of applicants

• Examples:– Dice.com– Monster.com– Refer.com– Sixfigurejobs.com– Guru.com

11. Online News Services

• Internet and Web offer a 24-by-7 news source

• Less Printing and Distribution Cost • It is important to check the information

source as rumors are often passed online• Independent and freelance content

creators compete with large scale industry players– CNN.com– ESPN.com– Drudge Report– Boston.com– Salon.com

12. Online Travel Services

• Customers now have the power to bypass a travel agent

• Discounts and low fares available online• Name-your-price for tickets, hotels and car

rentals• “Last minute” fares often lower online• Examples:

– Expedia.com– Travelocity– Cheaptickets.com

13. Online Automotive Sites

• Buy and sell new and used cars• Consumers access automobile information

empowering them to make an informed buying decision

• Dealers use the Web to showcase vehicles• Online auto auctions give buyers more options

• Examples:– Auto.com– Autobytel.com– Autoparts.com

Online Education

• E-learning is changing the way people learn.• Web-based training and education give the

world access to continuing education form their home

• Many colleges and universities offer distance learning and degree programs online

• Examples:– Click2learn– Saba– Smartforce– Varsitybooks.com

Online Trading Models

• Online trading empowers the investor to handle their own investments

• Online brokerage house• Trading sites offer

– Stocks analysis– Investments analysis– Stock history– Simple buying and selling – Buy/sell stocks, bonds & investments

• Online Trading sites include:– E*TRADE– Ameritrade– CharlesSchwab– Fidelity.com

To be continued in Session 3…