Business Models

Risanuri Hidayat, Ir.,M.Sc.

Table of Contents

3.1 Introduction 3.2 Storefront Model 3.2.1 Shopping Cart Technology 3.2.2 Online Shopping Malls 3.3 Auction Model 3.4 Portal Model 3.6 Dynamic Pricing Models 3.6.1 Name-Your-Price Model 3.6.2 Comparison Pricing Model 3.6.3 Demand-Sensitive Pricing Model 3.6.6 Offering Products and Services for Free

Table of Contents

3.7 B2B Exchanges.

3.8 B2B Service Providers 3.9 Online Trading and Lending Models 3.10 Getting a Loan Online 3.11 Recruiting on the Web 3.12 Online News Services 3.13 Online Travel Services 3.14 Online Entertainment 3.15 Online Automotive Sites 3.16 Energy Online 3.17 Selling Brainpower 3.18 Online Art Dealers 3.19 Education Online 3.20 Click-and-Mortar Businesses

3.1 Introduction

In this chapter we explore the many business models currently being implemented on the Web. These models include:        The Storefront Model The Auction Model The Portal Model The Name-Your-Price Model The Comparison Pricing Model The Demand Sensitive Pricing model The B2B Exchange Model

3.1 Introduction

An

e-business

can be defined as a company that has an online presence.

E-commerce businesses allow customers to sell, trade, barter over the Web A companies policy, operations, technology and ideology define its business model

3.2 Storefront Model

Storefront model enables merchants to sell products on the Web  transaction processing, security, online payment, information storage E-commerce allows companies to conduct business

24-by-7

, all day everyday

,

worldwide An e-commerce storefront should include  online catalog of products, order processing, secure payment, timely order fulfillment.

3.2.1 Shopping Cart Technology

Shopping Cart

 An order-processing technology allows customers to accumulate lists of items they wish to buy as they continue to shop.

The shopping cart is supported by  the product catalog, merchant server, database technology Many companies combine a number of purchasing methods to give their customers a wide array of options.

3.2.2 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 act as shopping portals directing traffic to the leading shopping retailers for a specific product.

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

3.3 Auction Model

Online auction sites act as forums through which Internet users can log-on and assume the role of either bidder or seller.

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.

Auction sites collect a commission on every successful auction.

3.3 Portal Model

Portal sites 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

3.6 Dynamic Pricing Models

The Web has changed the way products are priced and purchased

Comparison pricing model

 Comparison pricing Web sites using shopping bot technology to find the lowest price for a given item

Demand-sensitive pricing model

 Group buying reduces price as volume sales increase

Name-your-price model

 Name-your-price for products and services.

3.6 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

3.7 B2B Exchanges

B2B exchanges  businesses buy, sell, auction, barter, distribute and ship products and services online

B2B e-commerce

 buying, selling, partnering, bartering or trading conducted between two or more businesses

3.9 Online Lending and Trading Models

Online trading empowers the average investor to handle their own investments Trading sites offer     Research Investments analysis Stock history Simple buying and selling Online Trading sites include:     E*TRADE Ameritrade CharlesSchwab Fidelity.com

Getting a Loan Online

Find, research and apply for loans online.

Many online lenders offer lower rates to attract customers.

Online lending services include free quotes, calculators and tutorials for borrowers.

Examples:    E-LOAN eCredit.com

Mortgagebot.com

Recruiting on the Web

Resume tutorials, cover letter help, and free job searching available on the Web Employers can find new employees from a global pool of applicants Earn rewards for refering new hires to recruiters Examples:    Guru.com

Dice.com

Refer.com

  Sixfigurejobs.com

Monster.com

Online News Services

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

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

Online Entertainment

The Web is a form of entertainment Interactive television will use the Internet to offer interactivity to the world MP3 and file-transfer technology threaten copyright law Examples:  IMDB    Farmclub.com

MP3.com

Ain’t It Cool News

Online Automotive Sites

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

Energy Online

Energy exchange sites allow energy providers to trade excess energy commodities, buy on auction and sell materials.

1000’s of energy commodities are sold online.

Efficiency increases as supply chains are simplified Examples:   Houstonstreet.com

Altranet  Retailenergy.com

Selling Brainpower

Unused patents and trademarks can be sold online Outrsourcing  Hiring outside contractors or companies to complete projects and offer consulting.

Contractors can find projects to match their needs on the Web Examples:    Hellobrain Yet2.com

Question Exchange

Online Art Dealers

Artists have access to a global audience The Web itself is a new medium for art Virtual galleries give artists a chance to showcase their work Shortfilms are finding new fans online Examples:     Art.com

Guild.com

AtomFilms art.net

Education Online

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

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 presence Click and mortar companies have brand recognition, and an established customer base Examples:  Barnesandnoble.com

 Bestbuy.com