Transcript E-commerce Business Models

Written by: Nir Kshetri
Presented by:
Marc Gill
Travis Cain
Janelle Boucher
Marc Gill
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Economic Barriers
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Sociopolitical Barriers

Cognitive Barriers
Travis D. Cain

“A description of a company‘s intention to create
and capture value by linking new technological
environments to business strategies.”
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Lam and Harrison-Walker estimated about
50 revenue-generating e-business models.
There are different approaches to describe
the models. The following are a list of these
approaches.
1.
2.
Researchers with marketing orientation
use product, price, place, and promotion.
Others,
in
terms
of
structural
characteristics around the value chain of
suppliers and buyers, IT systems and
architectures, technical platforms, and
security and traffic scale.

Lam
and
Harrison-Walker
analysed
business models employed by Internet
companies and reduced them through the
use of two-dimensional models.
1. Relational objectives
2. Value-based objectives

These are used to classify e-business models
based on the Internet‘s connectivity
characteristic.

Target Market

Connectivity-related objects


These are related to a value formula such as
generation of revenues and others benefits.
Examples include non-financial
contributions such as increased marketing
effectiveness or improvement in consumer
attitudes.
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Very few firms sell products online and so
this model is not widely employed in
developing countries.
Many service providers in developing
countries have invented viable business
models. Some argue that e-commerce can be
a key competitive advantage if it is used
effectively in these 
”imperfect” markets.
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Thamel.com was established in 1999 as a
web portal.
Its physical office is located in Thamel, a
street in Kathmandu
Thamel.com originally targeted tourists.
Then the company shifted its focus on
Nepalese expatriates. Acted as a gift
provider to expatriates and their families.
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In 2001, 900,000 Nepalese lived outside the country.
Higher Internet adoption rates,
Higher disposable incomes
Higher rate of credit cards ownership.
This market is e-commerce ready with a greater
value-creation opportunity.
The company also targeted foreign Expatriates living
in Nepalese.
In 2004, 80% Thamel.com customers were Nepalese
expatriates and 20% were foreigners

Economic factors
1994, Internet introduced in Nepal
 1999, 0.15 % users of total population
 2004, 0.9% users of total population
 Developing countries e-commerce
market lacks economies of scale.
 ICT access charges expensive

Monthly Internet access (20hrs/wk) was more than per
capita annual income
 Still was a cash-based society over credit cards


Socio-Political factors


Classifying Asian countries by level of
adoption of digital and electronic
signatures has put Nepal at level 0.
As of mid-2004, Nepal hadn’t enacted
DES laws.

Cognitive factors

Knowledge, skill and confidence related to
e-commerce usage are even stronger

2% estimate of population are English literate in Nepal

½ of adult population is illiterate


Highly undeveloped and unreliable postal systems
Problems of postal system in Nepal include inefficient
security, unreliability and theft.
Janelle Boucher
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Combination of the following:

An internet portal

A bundle of services

A manufacturer’s agent

A virtual mall
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Two most popular models for a portal:

Free model
Offers some free goods and services to create high traffic
 Advertising opportunity


Content sponsorship model


Uses content, links and services to attract visitors to
generate advertising revenue
Thamel.com used the content sponsorship
model.

Provides multiple services as a package deal
for customer


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Facilitates online ordering and payment of
goods
Delivers gifts to the customer
Confirms delivery by taking a digital photo of
the gift being delivered to the customer
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According to Lam and Harrison-Walker, a manufacturers’ agent
represents “more than one seller, and sometimes an entire
industry, to sell specific types of products”
In 2004, Thamel.com featured over 7,000 products representing
diverse industries such as chocolates, ceremonial goats, birthday
cakes, silk saris and cheese
Facilitates vendors such as the goat herders who do not have
their own websites by providing information on their products
on the Thamel.com website
Revenue comes from user fees, advertising, sponsor
commissions

Hosts multiple online merchants on its
website
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Targeted the population that experienced relatively fewer
economic barriers – the expatriates
Outsourced payment/transaction processing functions to the US
Thamel.com as an alternative to Nepal’s poor technological and
financial structure, and also to avoid the legal barriers
Provided delivery service and delivery confirmation photos
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Initially Kathmandu had no street addresses making it difficult to find
recipients’ homes
Through a partnership with the Municipality of Kathmandu and their
mapping system, they created delivery zones around well-known
landmarks
Took digital pictures of the delivery of the gift to the recipient which would
be sent to the buyer as delivery confirmation, and a thank you note for
using the service
1.
In a developing country, a company’s
success depends on its ability to
simultaneously deploy and manage
multiple e-business models

Thamel.com’s customers would never have
bought products listed on the company’s
website if it had just acted as a web portal
2.
In relatively small markets of developing
countries, companies can add value by
bundling together various products and
services
3.
To deliver full potential, developing
country-focused Internet business models
are required to outsource some functions
to the industrialized world

Impossible to break all e-commerce barriers

Outsourcing can enhance value delivery

The developing world still has much to learn
about e-commerce. These countries must
realize that:
I.
II.
Not all business models targeting the developing
world are equally successful. Developing countries
still need to deeply research the factors that
differentiate successful/unsuccessful e-commerce
business models.
Thamel.com’s model “worked” in Nepal, but may
not be successful in other scenarios
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Countries in the developing world must:
III.
IV.
V.
Determine the optimum size of the e-commerce
market for companies in their country to
profitable exploit.
Determine the types of companies that are likely
to force their business partners to adopt ICTs
(Information and Communications Technology).
Determine the optimal level of involvement for
government and private organizations in
combating various e-commerce barriers.
QUESTIONS???