Lecture E-commerce and e-business for managers - Chapter 2: E-business models. This chapter includes contents: Storefront model, auction model, portal model, dynamic-pricing model, B2B e-commerce and EDI, click-and-mortar businesses.
1 Chapter 2, eBusiness Models Outline 2.1 Introduction 2.2 Storefront Model 2.2.1 ShoppingCart Technology 2.2.2 Online Shopping Malls 2.3 Auction Model 2.4 Portal Model 2.5 DynamicPricing Model 2.5.1 NameYourPrice Model 2.5.2 ComparisonPricing Model 2.5.3 DemandSensitive Pricing Model 2.5.4 Bartering Model 2.5.5 Rebates 2.5.6 Offering Free Products and Services 2.6 B2B eCommerce and EDI 2.7 ClickandMortar Businesses 2001 Prentice Hall, Inc. All rights reserved 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 NameYourPrice Model The Comparison Pricing Model The Demand Sensitive Pricing model The B2B Exchange Model 2001 Prentice Hall, Inc. All rights reserved 2.1 Introduction • eBusiness – A company that has an online presence • Ecommerce businesses allow customers to sell, trade and barter over the Web • A company’s policy, operations, technology and ideology define its business model 2001 Prentice Hall, Inc. All rights reserved 2.2 Storefront Model • Storefront model enables merchants to sell products on the Web – Transaction processing, security, online payment, information storage • Ecommerce allows companies to conduct business 24-by-7, all day everyday, worldwide • An ecommerce storefront should include: – – – – Online catalog of products Order processing Secure payment Timely order fulfillment 2001 Prentice Hall, Inc. All rights reserved 5 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 2001 Prentice Hall, Inc. All rights reserved 6 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 2001 Prentice Hall, Inc. All rights reserved 2.3 Auction Model • Online auction sites – Act as forums through which Internet users can logon 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 2001 Prentice Hall, Inc. All rights reserved 2.3 Auction Model eBay home page. (These materials have been reproduced by Prentice Hall with the permission of eBay, Inc. COPYRIGHT© EBAY, INC. All Rights Reserved.) 2001PrenticeHall,Inc.Allrightsreserved 2.3AuctionModel PlacingabidoneBay.(ThesematerialshavebeenreproducedbyPrenticeHallwith thepermissionofeBay,Inc.COPYRIGHTâEBAY,INC.AllRightsReserved.) 2001PrenticeHall,Inc.Allrightsreserved 2.4PortalModel 10 Portalsites – 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 2001 Prentice Hall, Inc. All rights reserved 11 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 • Demandsensitive pricing model – Group buying reduces price as volume of sales increase • Nameyourprice model – Nameyourprice for products and services 2001 Prentice Hall, Inc. All rights reserved 12 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 2001 Prentice Hall, Inc. All rights reserved B2B Ecommerce and EDI 13 • B2B ebusiness – The electronic business relationship between two or more companies • Traditional EDI uses a valueadded 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 2001 Prentice Hall, Inc. All rights reserved B2B Ecommerce and EDI 14 • B2B ecommerce 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 2001 Prentice Hall, Inc. All rights reserved 15 2.6 B2B Ecommerce and EDI • JIT (justintime) 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 • Businesstobusiness 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 2001 Prentice Hall, Inc. All rights reserved 16 2.7 ClickandMortar Businesses • Brickandmortar – Companies that operate solely offline with traditional business practices • Clickandmortar – 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 2001 Prentice Hall, Inc. All rights reserved 17 2.7 ClickandMortar 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 2001 Prentice Hall, Inc. All rights reserved 18 2.7 ClickandMortar 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 2001 Prentice Hall, Inc. All rights reserved 19 2.7 ClickandMortar 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 2001 Prentice Hall, Inc. All rights reserved ... Nameyourprice for products and services 2001 Prentice Hall, Inc. All rights reserved 12 2.5 Dynamic Pricing Models • Bartering Model – Individuals and business trade unneeded items for items they ... • Click and mortar companies have brand recognition, and an established customer base – Barnesandnoble.com – Bestbuy.com 2001 Prentice Hall, Inc. All rights reserved 17 2.7 Click and Mortar Businesses... 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