E-Business Models
Kazan State University
Instructor: Sasa Dekleva
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Outline
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Introduction
Marketplaces and Exchanges
Storefront model
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Auction model
Portal model
Dynamic pricing models
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Shopping cart technology
Online shopping malls
Name your price, Comparison pricing, Demand-sensitive
pricing, Bartering
B2B e-business: benefits and obstacles
Click-and-mortar businesses
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Introduction
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E-business
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A company has online presence
A company buys, sells, trades or barters over the Internet
Business model is defined by company’s policies,
operations, principles and technology
Key components of e-business include:
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electronic data interchange (EDI)
messaging, e-mail
electronic funds transfer
file transfers, e-forms
customer service
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Electronic Marketplaces and
Exchanges
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Some serve specific industry communities and consist
of:
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Provide access to neutral information about products
from a variety of competing companies
Examples include:
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independent "market makers“
industry-led consortia
private collaborative e-marketplaces
Chemdex.com for the chemicals industry (closed by now)
plantautomation.com for plant automation managers
eDental.com for dentists
Integration of online auctions is increasing the
attractiveness of such communities
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“Consortia" Marketplaces
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Such markets include:
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Covisint for the auto industry
eHitex and e2Open for the electronics/high-tech sector
Aerospan and MyAircraft.com for the aerospace industry
Transora for the food, beverage, and consumer packagedgoods industries
Avendra and HotelnetB2B for the hotel and hospitality
industry
TradeRanger and Intercontinental Exchange for the energy
industry
Buyers and sellers will be able to negotiate deals
electronically and employ intelligent agents to do it
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E-Markets and Exchanges
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Potential for significant savings and reaching new
markets
Still in flux, because:
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e-market ventures face long-term financial issues
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traditional companies with lots of money back the industry
consortia
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retrenchment in venture capital and investor funding
could pull out of these operations if they fail to deliver value
suppliers may back away from buyer-side marketplaces
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fear of commoditization of their products
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Storefront Model
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Enables merchants to sell products or services on the
Web
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Involves 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:
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online catalog of products
order processing
secure payment
timely order fulfillment
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Shopping Cart Technology
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Shopping cart
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Shopping cart is supported by:
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Order-processing technology allowing customers
to accumulate lists of items they wish to buy as
they continue to shop
product catalog
merchant server
database technology
Combining a number of purchasing methods
to give customers a wide array of options
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Online Shopping Malls
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Wide selection of products and services
Offers greater convenience than shopping at
multiple online shops
Consumers can make multiple purchases in
one transaction
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Auction Model
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Online auction sites
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Reserve price
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Act as forums through which Internet users can log on 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
The minimum price a seller will accept in a given auction
Reverse auctions
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Allow the buyer to set a price as sellers compete to match or
even beat it
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eBay’s Home Page
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Placing a Bid on eBay
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Portal Model
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Portal sites
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Horizontal portals
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Give visitors the chance to find almost everything they are
looking for in one place
Portals that aggregate information on a broad range of
topics
Yahoo!, AltaVista, Google
Vertical portals
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Portals that offer more specific information within a single
area of interest
WebMD, IMDB, FirstGov
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Portals
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Enterprise portals remain a potent force
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for binding together business goals
for providing a unified view of the enterprise to its
customer base
Increasingly viewed as appropriate for
nontransactional relationships
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Dynamic Pricing Models
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The Web has changed the way products are priced
and purchased
Comparison pricing model
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Demand-sensitive pricing model
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Web sites using shopping bot technology to find the lowest
price for a given item
Group buying reduces price as volume of sales increases
Name-your-price model
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Name-your-price for products and services
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Dynamic Pricing Models
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Bartering model
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Rebate model
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Individuals and business trade unneeded items for items
they desire
Ubarter.com, isolve.com
Sites offer rebates on product at leading online retailers in
return for commission or advertising revenues
eBates
Free offering model
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Free products and services generate high traffic
Freemerchant, StartSampling, FreeSamples.com
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E-Business Benefits
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The major benefits include:
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lower purchasing costs
improved supply-chain management
reduced cycle times
faster time to market
improved customer service
new market opportunities
improved management controls as a result of
embedded business rules
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Access to Information
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E-business gives companies access to information on
their customers and vendors
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Through XML, e-business applications can make accounting,
marketing, inventory, and product information accessible to
business partners
E-business extracts data and transmits it over the Internet
to the partner's computer system
The information is integrated into the partner's databases
and stored in data marts or data warehouses
Using OLAP or data-mining tools, business analysts can
examine and model customer preference and purchasing
trends
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E-Business Barriers
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Barriers include:
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lack of single, comprehensive solutions
need to reorganize business processes
legacy application integration
security
bandwidth
scalability
high-availability issues
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Click-and-Mortar Businesses
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Brick-and-mortar
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Click-and-mortar
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Companies that operate solely offline with
traditional business practices
Companies operating with both an online and
offline presence
Click-and-mortar companies have brand
recognition, and an established customer
base
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Barnes and Noble, BestBuy
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Click-and-Mortar Businesses
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Key benefits to automotive industry
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Combined supplier base
Connects automobile manufacturers, dealers and consumers
in a single marketplace
Decreases lead time and production costs
Key benefits to electronics industry
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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
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Click-and-Mortar Businesses
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Key benefits to energy industry
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Provides real time pricing data on energy commodities
Provides access to hundreds of energy commodities
Allows regional energy providers to gain access to worldwide
market
Key benefits to food industry
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Reduced lead time preserves perishables
Provides access to real time pricing data
Online auction technology allows for alternative pricing
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Click-and-Mortar Businesses
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Benefits to chemical industry
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Access to millions of chemical products from
thousands of suppliers
Integrated supply chains provide faster, more
reliable transactions
Benefits to construction industry
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Contracting and subcontracting are made simpler
by online bidding
Construction companies can find raw materials
from suppliers worldwide
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Software Offerings
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Software vendors call their offerings "e-business"
solutions, which include:
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e-commerce
supply-chain management
customer, partner, and employee relationship management
business intelligence
and knowledge management
All solutions coming now on the market will deliver
data to browsers, typically as an HTML rendering
Many Web-aware applications now support XML
standards
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Standards
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E-business requires open, standard platforms
and protocols
Open standards for e-business include:
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TCP/IP
XML
HTML
HTTP
COM
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CORBA
ANSI X.12
SET
SSL
need to plug into
ERP
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Extensible Markup Language
(XML)
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System for defining, validating, and sharing
document formats
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XML enhances interoperability between systems and
databases
Created and developed by the W3C XML Working Group
XML maintains the separation of the user interface from
structured data
XML resembles and complements HTML, with XML tags
describing the data
More than 330 XML initiatives are underway among various
industry groups
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XML-Related Initiatives
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UDDI (Universal Description, Discovery and
Integration)
XAML (Transaction Authority Markup Language)
tpaML (Trading Partner Agreement Markup
Language)
SOAP (Simple Object Access Protocol)
e-Speak
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E-Business & E-Commerce
Mary Lind
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Chpt 3 E-business Models
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Storefront Model
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B-to-c
Online catalog, take order on web site, accept
payments and send merchandise to customer
www.more.com
www.ticketmaster.com
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Chpt 3 E-business Models
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Shopping-cart Technology
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Allows customer to accumulate items to buy
Product catalog is hosed on the merchant server
www.amazon.com
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Chpt 3 E-business Models
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Online Shopping Malls
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Sites act as portals – directing traffic to retailers
www.mall.com
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Chpt 3 E-business Models
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Auction Model
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B-to-c and b-to-b
Usually log in and assume role of bidder or seller
Reverse auction model – allows buyter to set a
price as sellers compete to match or beat it
Reserve price is the lowest price a buyer will
accept www.liquidprice.com
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Chpt 3 E-business Models
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Portal Model
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Gives vistors the chance to find everything they
are looking fo in one place
www.hotbot.com www.yahoo.com
Portals linking consumer to inline merchants,
online shopping malls, and auction sites
Some portals charge merchants for a link
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Chpt 3 E-business Models
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Vertical Portals / Community Sites
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Comm. Site for special interest groups – medicine,
law www.webmd.com www.lexis.com
Comm. Site around a demographic – teenageers
www.bolt.com, women www.ivillage.com
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Chpt 3 E-business Models
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Dynamic Pricing Models
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www.priceline.com www.imandi.com
Name your price model – allows customer to choose price
for products/service
Comparison pricing model – www.bottomdollar.com
Demand-sensitive pricing – When customers buy in bulk the
price per product is reduced www.mercata.com
Bartering Model – offer one item in exchange for another
www.ubarter.com
Rebates – www.ebate.com
Free Products and Svcs – www.iwon.com
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Chpt 3 E-business Models
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B2B Exchanges
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Between 2 or more businesses
Procurement – acquiring goods and services
wwwlicgcommerce.com www.tradeaccess.com
www.itoi.com
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Chpt 3 E-business Models
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B2B Service Providers
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Supply chain mgmt, procurement, logistics,
customer svc www.ariba.com
www.freemarkets.com Connecting buyers and
sellers
www.liveperson.com offering a product with a
help center
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Chpt 3 E-business Models
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Online Trading and Lending Models
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www.dljdirect.com www.fidelity.com
www.etrade.com
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Chpt 3 E-business Models
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Getting a Loan Online
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www.eloan.com
www.ecredit.com
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Chpt 3 E-business Models
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Recruiting on the Web
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Recruiting and job searching
www.monster.com
www.dice.com
www.guru.com
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Chpt 3 E-business Models
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Online New and Travel Svc
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www.wsj.com
www.barrons.com
www.espn.com
www.travelocity.com
www.expedia.com
www.cheaptickets.com
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Chpt 3 E-business Models
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Online Entertainment and Online Automotive
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www.icast.com
www.imdb.com
Ss.autobytel.com
www.autoparts.com
www.auto.com
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Chpt 3 E-business Models
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Miscellaneous
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Energy www.retailenergy.com
Brainpower www.questionexchange.com
Art Dealers www.art.com
E-learning www.click2learn.com www.saba.com
Click and Mortar Businesses – www.bn.com
www.bestbuy.com www.curcuitcity.com
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Chapter 10
E-Business Past
and
E-Business Future
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Objectives
In this chapter, you will learn to:
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Discuss the development of the technology
bubble of the late 1990s
Describe the technology and other factors
affecting the success or failure of several ebusiness models
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List several emerging technologies
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Identify future e-business trends
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The Technology Bubble
Speculative bubbles are situations where overly
exuberant optimism on the part of investors drives a
market far beyond its sustainable performance
The dot.com bubble:
„ Also called the Internet or technology bubble
„ Refers to investors’ unbridled infatuation with the
commercial possibilities of new Internet technologies
and the resulting meteoric rise (and astounding fall)
of many e-businesses in the so called “new economy”
of the late 1990s and early 2000
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E-Business Models: What
Went Right and What Went
Wrong
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While some e-businesses successfully married
Internet technologies to their e-business
models, some did not
Additionally, some early e-businesses
followed poorly conceptualized e-business
models that failed to generate sufficient
revenue
A variety of other mistakes and
miscalculations also contributed to the
downfall of some early e-businesses
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Successful E-Business Models
Some e-businesses have succeeded by
focusing on the main strength of Internet
technologies — moving information quickly
from one place to another
Examples include:
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eBay
NetBank
The Hotel Reservations Network
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Successful E-Business Models
Successful e-business models avoid:
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Physical product inventories which results in
High costs of product due to:
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Purchasing
Manufacturing
Warehousing
Shipping
They either function as intermediaries or offer
electronic products and services
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eBay
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Uses Internet technologies to bring buyers
and sellers together in an online auction
marketspace
Founded in 1995
Generates revenues from auction listings and
selling fees and was profitable almost from
the start
Continues to report astounding growth in
both sales and profits
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NetBank
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NetBank is the largest online FDIC-insured
Federal savings bank and one of the only
online banks still operating as of this writing
NetBank offers traditional financial services
such as checking accounts, money market
accounts, bank loans, and so forth
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Hotel Reservations Network
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Originally, HRN sold hotel rooms via toll-free
call centers
In 1995, HRN moved part of its operations
to the Web by running multiple Web sites
Additionally, HRN entered into affiliate
relationships with other travel-oriented Web
sites (such as Travelocity)
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Successful E-Business Models
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A “pure play” e-business retailer is one that
sells its products and services online only and
does not have sales from brick-and-mortar
stores or printed catalogs
The most famous pure play e-business
retailer is Amazon.com
Many traditional companies use Internet
technologies to streamline their supply chains
and boost customer support, which
contributes to their overall profitability
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Unsuccessful E-Business
Models
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Many early e-business entrepreneurs and
investors miscalculated the speed with which
consumers would adopt the new Internet
technologies
Some early e-business models were based on
the idea that new online marketspaces would
quickly and completely replace traditional
offline marketplaces
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Unsuccessful E-Business
Models
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Other companies tried to adapt the traditional
brick-and-mortar retailing model to the Web
and found that product, marketing,
advertising, warehousing, and order
fulfillment costs far outstripped revenues
Other early e-business entrepreneurs and
investors focused their e-business models on
rapid growth and increased market share,
failing to consider the need to generate
revenues in excess of expenses in order to
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create profits
Unsuccessful E-Business
Models
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Many early e-businesses were based on an ebusiness model that involved generating
revenues by selling advertising
Unfortunately, in many cases advertisers
were not convinced that Web advertising was
effective and the necessary advertising
revenues never materialized
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Emerging Technologies:
Web Services
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Web services refers to the technologies
involved in exchanging data between
different applications and systems over an IP
network such as the Internet
Web services technologies include XML,
UDDI, WSDL, and SOAP
UDDI or Universal Description, Discovery, and
Integration is an XML-based directory in
which e-businesses list themselves and
provide a description of the Web-based
services they offer to other e-businesses
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Web Services
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The Web-based services descriptions included
in a UDDI directory are created using WSDL
(Web Services Description Language) which is
an XML-based markup language
SOAP or Simple Object Access Protocol is the
protocol used to exchange XML files between
applications on different operating systems
using HTTP and an IP network
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Web Services
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Another XML-based technology for Web
services is ebXML
ebXML is a globally supported set of standard
XML specifications that support B2B
transactions over the Internet
ebXML specifications are used to identify an
e-business and the Web-based services it
offers
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Peer-to-Peer Computing
When discussing distributed computing, peerto-peer computing (P2P) refers to the
uploading or downloading of files between
computers on the same LAN or between
computers on different LANs over an IP
network such as the Internet
P2P technologies:
„ May become an integral part of future
knowledge management systems
„ May be used to extend the benefits of the
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ERP and SCM systems
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Collaborative Commerce
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Collaborative commerce or c-commerce refers
to the interrelationships between multiple ebusinesses that use Internet technologies to
work together to form “trading communities”
in which information about the development
of products and services can be exchanged
between trading partners
Additionally, trading community participants
can buy and sell each other’s products and
services
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Collaborative Commerce
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Analysts envision that the next wave of ERP
and SCM systems will allow e-businesses and
their trading partners to collaborate in a way
that substantially reduces costs
This collaboration may make it possible to
instantly share product information, business
forecasts, customer information, promotional
opportunities, and a host of other business
information
This sharing of information would all take
place via the Internet
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Intelligent Agents and the
Semantic Web
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An intelligent agent, often just called an
agent, is a computer program that can act
independently by using simple logic to carry
out scheduled tasks
In the future, intelligent agents may provide
much of the computing needed to manage
the increasingly complex transactions
involved in the daily life of an individual or an
e-business
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Intelligent Agents and the
Semantic Web
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The term Semantic Web refers to a plan
describing a possible future for the World
Wide Web — a future in which intelligent
agents radically improve your ability to find
and manipulate data
This new capability would rely on an XMLbased technology called Resource Description
Framework, or RDF
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X Internet
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The term X Internet, which stands for both
“executable Internet” and “extended
Internet”, was coined in 2001 by analysts at
Forrester Research, Inc.
These analysts expect the Web to evolve into
an environment where consumers and ebusinesses use disposable executable
programs that could be downloaded to
computers or handheld devices
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X Internet
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These disposable programs could be used to
get real-time information or to provide a
variety of interactive online experiences
In the X Internet, nearly every electrical
device would be Internet-enabled and would
work with applications and intelligent agents
that would sense and control the world
around us
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Electronic Product Code (ePC)
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The Electronic Product Code (ePC) standard provides
a unique identification code for each individual
product that emerges from a manufacturing process
The new ePC technologies use:
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A 96-bit numbering code which consists of:
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Header
Manufacturer ID
Product ID
Individual serial number
This 96-bit code is attached to an item via a very
small electronic “smart tag” which uses Radio
Frequency Identification (RFID) technologies
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Electronic Product Code (ePC)
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Two components of ePC technologies are the
Object Naming Service and the Physical
Markup Language
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The Object Naming Service (ONS) acts as a “post
office” by using ePC tag addresses to locate data
on each tagged item
The Physical Markup Language (PML), an XMLbased markup language, is a generalized language
that can be used to describe physical objects
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Internet2
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Internet2 is a separate high-speed network
for the scientific and academic world that
allows scientists, researchers, and educators
to work together in real time
It connects:
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Colleges and universities
Government agencies
Other scientific and educational facilities in North
America, South America, Europe, and Asia via two
high-speed fiber-optic backbones
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Nanoscale and Quantum
Computing
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Nanoscale computing is computing with
devices or components smaller than a
nanometer (one billionth of a meter)
Beyond nanoscale computing is quantum
computing, in which individual atoms are
used to store data
Both nanoscale and quantum computing offer
potential advances in memory capacity,
processing speed, and storage capacity
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Biotechnology and
Bioinformatics
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Bioinformatics is the use of computers and
databases to augment biological research
The most famous application of
bioinformatics is the Human Genome Project
Biotechnology is already being used to make
e-business networks more secure
As the risks to e-business network assets and
data escalate, the use of biometric
identification techniques becomes
increasingly important
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Focusing on the Future:
B2C and B2B Transactions
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B2C online transactions will continue to grow
steadily
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More and more consumers will become
comfortable purchasing items online
Businesses will work together to use the
Internet and the Web in new and creative ways
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Wireless E-Business
Transactions
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Wireless e-business is still in its infancy
Wireless e-business revenues will grow due
to:
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Evolving wireless technologies
More useful wireless Web content
Increased interest on the part of consumers
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Security, Security, Security
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The demand for improved network and
Web site security will continue to grow
due to:
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Businesses becoming increasingly more
dependent on their networks and the
Internet to conduct their activities
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Customers, Customers,
Customers
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Commercialization of the Internet has led to
an empowerment of both business and
individual consumers who now have access to
better information and more product choices
Customer relationship management systems
and the use of personalization will become
more important as both businesses and
individual consumers are confronted with an
ever growing slate of e-businesses from
which to choose
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Globalization of E-Business
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The potential customer base for a smart ebusiness looking to globalize its market share
continues to grow as more and more
consumers around the world gain Internet
access
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Globalization of E-Business
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Globalization of E-Business
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Globalization of E-Business
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E-businesses in the U.S. that do not realize
the importance of the globalization of the
Internet and its effect on the e-business
marketspace will likely miss out on huge
opportunities to reach new customers
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