Transcript Business Model 2 chapter - E-Help

•A
business model describes a set of business
entities and interrelationships among them. The
model describes the sources of revenue and
potential benefits accruing to the involved
business participants.
•The business model
provides the broad
perspective
necessary
for
identifying
appropriate solutions at some level of
abstraction. The identified solution should be
sustainable in terms of revenue & capable of
realizing the stated objective.
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EC has grown at lightening speed due to
growth
in
high
speed
internet
connectivity & evolution in publishing,
distribution,
payment
&
security
technologies.
To cope with the evolution , business
model s have been evolving at a rapid
rate.
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Web advertising methods
Increasing no of visitors.
Yahoo! With over 100 million page views
Amazon.com with 6 million registered
users, became attractive ground for the
advertisers.
Facebook
Rediffmail
 Google
Content Vs Transaction
 Native Vs Transplanted
These Classifies the internet business
models into 4 categories:
>Native Content based Models
>Native Transaction Models
>Transplanted content based Model
>Transplanted Transaction based Models
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Native Content based Models emerged due to
the efforts of many amateurs who set up
informational web sites expecting no financial
returns.
 Free access sites
Based on the nature of content the various models
that have appeared include:
1. Information Content Model
2. Freeware Model
3. Information Exchange Model
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The web today is probably the largest source of
information, available free of cost to the users.
Many websites were set up by amateurs,
containing scientific, country, culture and
tourism related information.
Many other websites organized the plethora of
available information content in the form of
virtual online libraries .
Attract visitors by offering information
In the early stages of Web developments – Major
source of Information Contents were scientists,
Academicians and Researchers
• The Information is typically available at no charge
basis
• It is typically utilized by agencies and groups
interested in wide dissemination of information
For example,
 • Virtual Library -- http://www.vlib.org
 • International Council of Museums–
 http://www.icom.org/vlmp
 • National Informatics Center, India–
http://www.nic.in
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s/w companies have extensively utilized the
freeware model to offer downloads of their
products.
 Web browsers by Netscape and Microsoft have
been available for free downloads
to
individual users.
Google Chrome, Mozila Firefox, Opera, etc
 This model has been largely responsible for
popularizing the web.
 Music, picture, educational tutorials(e-books)
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• Distribution of cooperatively developed free
software prototypes, products, patches and
demonstration versions.
• The contents (software packages) can be
downloaded at no incremental cost.
• For Example
• Linux – http://www.linux.org
• GNU -- http://www.gnu.org
• Apache Web server – http://www.apache.org
This model is based upon the exchange of
information
between
individuals
and
organizations over the internet.
 The information captured, during the interaction,
about a person can be used for building the profile
of individual users.
 The profile can be later utilized by target
marketing and advertising companies for
screening out and creating mailing list.
 User may provide information voluntarily as a
part of registration process.
hotmail.com, yahoo.com, amazon.com
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With growing acceptability and audience on
the internet, many traditional
economy
businesses saw an opportunity to generate
revenues on the internet landscape.
The traditional content providers-journals,
research
databases,
directories
and
advertising-have moved their content to the
internet.
As a result, information providers and brokers
have transplanted businesses on the internet
to take advantage of the growing audience.
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Content creators and publishers have relied
on a subscription based service model.
scientific journals, newsmagazines, and other
periodic content have been offered, on a
subscription basis. Leading publishers and
creators of digital content have adapted the
same subscriptions based model on the
internet.
In addition many news services, and valuable
audio and video content are also available in
digital format.
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Web sites providing content, e-mail, chat sessions,
and discussion forums are utilized for serving
advertisements to content viewers. Usually, such
sites provide content and services free of cost and
generate revenue through the advertisements they
display.
It is the basis of the growth and success of many
search engine companies such as yahoo ! The model
is derived from commercial television and printpublications, that make their basic revenue from the
advertisement stream. The model has several
variations, banner advertisement being the most
popular form. Banner advertisement are served to
users visiting one of these popular sites for content or
service.
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An infomediary company is the one that
collects a personal profile from its users
(consumers and /or suppliers) and
subsequently markets that to interested
set of users, while maintaining the data
privacy. In the process it also offers the
user a percentage of brokered deals or
other services.
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The infomediary model is based on the
premise of lowering the interaction
cost to consumers during the process
of
searching
for
suitable
products/services
and
prices.
Consumers
incur
substantial
interaction costs in trying to locate and
discover the price of products in cases
where product lines change rapidly
due to technological or marketing
evolutions, and where the pricing is
complicated.
For example, e-machine
(http:/ /www.emachine.com), a computer
hardware seller, collects information and
sales data during the interaction .the
collected data is sold to other businesses
that are interested in targeting a
specialized set of customers.
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The Affiliate Model achieves traffic
aggregation for the e-retailer at almost no risk.
The Affiliate companies offer sales of other
manufacturers or e-retailers’ products on their
web sites, for an incentive. The visitors of the
affiliate site may choose to click on an item or
service offered by the e-retailer at the affiliate
web site.
The affiliate site redirects the sales transaction
to the sponsoring e-retailer or manufacturer,
where the actual transaction is carried out.
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For example, amazon.com offers its affiliate
program as amazon associate program.
Anyone can join the associate program for free
by creating an account with amazon.com and
featuring a link to amazon.com on their web
page. Every time a visitor clicks through from
the associate to amazon.com, and makes a
purchase, the associate site earns a generous
commission of up to 15% of the purchase
value. The entire shopping experience i.e.,
selection of product, payment, fulfillment,
delivery and customer service is taken care of
by amazon.com
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This section features models that are native to
the internet and were either born out of
necessity on the internet or are suited for the it.
These models includes- digital product
merchandising, internet access provision,
providing software and services for creating &
maintaining websites and finally, a new kind of
intermediary that aggregates & presents the
info to meet the users objectives rather than
those industry segments.
• Network Infrastructure is at the foundation of growth
of electronic commerce
• Various modes of Internet Service Providers
– Dial-up Services
– Cable based services
– DSL and ADSL
– Leased Line services
• Payment options
– Flat rates
– Bandwidth based flat rates
– Usage based
– Free Access (in lieu of advertisement viewing)
• Electronic Shops and Businesses require 24x7 presence,
upkeep, maintenance
• Also, common services like transaction security and
payment services
• SMEs may not have expertise and the cost to get on
electronic marketplace by addressing all infrastructure
issues may get too high
• In this business model, the infrastructure company
provides complete set of services required for hosting
your business online.
• Yahoo Shops, iCat’s Lemonade Stand, Pugmarks.com
• Other services related to Speeding up the access
across the globe etc.
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Storeowners, catalog-based sellers,
manufacturers & brokers- financial, servives
insurance agents, travel services agents –
adapted the traditional business model to
increase their reach & reduce the market
friction.
3 of these models are described here
In this model , customers interact with the seller
through a web based interface for gathering &
analyzing the information needed for an
informed decision.
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Press -> BUY NOW
Seller request the buyer to select
Payment Mode
Validation using payment gateways or
electronic currency provider
Delivery process- shipping & handling
department
• Market makers, also known as brokers, play an
important role of facilitating the transactions by
bringing the buyers and seller together
• Commission based Services
• Model – Transplant the per transaction/value based
commission model by bringing the sellers and buyers
on electronic marketplace
For Example
• Stock brokers- Charles Schwab, ICICIDirect
• Flowers- Teleflowers
• Auctions- BaZee.com, AuctionIndia.com
From Manufacturer to Consumer
• Product passes through several intermediaries
• The cost of product increases in the distribution
process
• Each intermediate layer assists in the distribution and
logistics
• If a manufacturer is capable of direct distribution- it
can reduce the distribution cost.
– In the process, it may need to handle several distribution
and
logistics issues
– The customer feedback can be direct, and thus create an
opportunity for mass-customization
• Example- Dell Computers