Business Models
Content
1. Storefront Model
2. Auction Model
3. Portal Model
4. Dynamic Pricing Model
5. Online Trading Model
6. Other Types of e-Business Models
Introduction
• In this chapter we explore the many business
models currently being implemented on the Web.
These models include:
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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
Introduction (cont.)
• 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
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.
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.
Park’n Shop
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.
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.
Red-dots
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
Yahoo!
Dynamic Pricing Model
• 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.
Dynamic Pricing Model (cont.)
• 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
Online Trading Model
• 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
– Fidelity.com
E*TRADE Banking and Financial Services
E*TRADE via PDA
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
– Mortagebot.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:
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Guru.com
Dice.com
Refer.com
Sixfigurejobs.com
Monster.com
JobAsia
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
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CNN.com
ESPN.com
Drudge Report
Boston.com
MingPao News
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.com
– 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:
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IMDB
Farmclub.com
MP3.com
iCast.com
MP3.com
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
• 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:
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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:
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Click2learn
Saba
Smartforce
Varsitybooks.com
Hong Kong CyberU
Main References
• e-Business & e-Commerce : How to Program, H.M. Deitel,
P.J. Deitel and T.R. Nieto, Prentice Hall, 2000.
• eBusiness Essentials: Technology and Network Requirements
for Mobile and Online Markets, 2/e, by Mark Norris and
Steve West, John Wiley & Sons.
• http://ecommerce.ncsu.edu/topics/models/models.html