Introduction to e-Commerce
Web Business Models
Dr. Michael D. Featherstone
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Business Models
The term business model came into
usage after Dan Bricklin invented the
first ‘Killer App’…VisiCalc (which initially
ran on only one computer – under one
operating system).
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Business Models
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Business Models
COMPLEX SYSTEMS REVIEWED
• Complex systems typically have a large number of small parts or components that
interact with similar nearby parts and components (The “long tail” of the power law for
example).
• These local interactions often lead to the system organizing itself without any master
control or external agent being "in charge".
• Such systems are often referred to as being self-organizing.
• Such systems frequently form power distributions.
• These self-organized systems are also dynamic systems under constant change.
• Short of death or destruction, they do not settle info a final stable "equilibrium" state.
• New entities emerge in complex systems.
• To the extent these systems react to changes in their environment so as to maintain
their integrity, they are known as complex adaptive systems.
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A Review of the Electronic Commerce Literature to Determine the
Meaning of the Term ‘Business Model’.
Susan Lambert
School of Commerce
Flinders University of South Australia
Abstract
In the electronic commerce literature there is confusion as to the meaning
and purpose of the term ‘business model’. There are wide ranging
perceptions of the term causing many to wonder just what a business
model is. Definitions vary as do the designated attributes of business
models thereby creating problems for academics and professionals relying
on the literature for guidance in understanding business models.
This paper presents and analyses the definitions of ‘business model’
presented in the electronic commerce literature along with the designated
business model attributes. The typologies and taxonomies of business
models present in the literature are examined and evaluated. It is
concluded that until there is some consensus as to the definition of
‘business model’ and the attributes agreed upon, useful taxonomies of
business models would not be forthcoming.
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Business Models
Business Models
By Business Category
By Revenue Generation Mechanism
By Simplicity
‘A business model is the method of doing business by which a company can
generate revenue to sustain itself’
Turbin “Electronic Commerce:A managerial perspective (2004, p. 11)
Business Model Components
Value Proposition
Revenue Model
Revenue Models
Market opportunity
Advertising
Competitive environment
Subscription
Competitive Advantage
Transaction Fee
Market strategy
Sales
Organizational development
Affiliate
Management team
Laudon and traver “e-Commerce” 2009 p. 67
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Business Models
Mike Rappa’s Models
•
Brokerage
•
Advertising
•
Infomediary
•
Merchant
•
Manufacturer (Direct)
•
Affiliate
•
Community
•
Subscription
•
Utility
http://digitalenterprise.org/models/models.html
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Business Models
Simplicity (Simple Models to more Complex Models)
The concept of Simple Business Models grew from this question:
If the Web is a complex system and if one of the attributes of complex
systems is that new entities should emerge, then what types of new
business entities are emerging in the Web?
One would expect simpler models to emerge earlier in a new business
environment.
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Business Models – Level 1
• Buying domain names
• Selling goods on e-Bay
These require no Web presence.
They leverage the technology that others have developed.
They require very little or no “up front” investment
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Business Models Level 2
• Domain Name Parking
• Opening an e-Bay market presence or store
This requires a slightly higher investment in technological skills.
•You need to know how to transfer your domain name to
another DN server
•You still leverage technology others have provided
•Now you begin to have an interest traffic to your page(s).
•Metrics/Analytics become an important part of your business.
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Business Models Level 3
• Affiliate Sites
This requires a still higher investment in technological skills and a wider variety of
skills…
Design skills – as you actually need to develop or provide content for a site
However… You may still leverage technology others have provided as third party
companies may become more important to your enterprise
•Purchase/Download design templates
•Analytics provided by 3rd party developers
•Marketing assistance from other sites. (For example: Google, Ask, Yahoo)
Now you begin to have a very serious interest in analytics.
•Metrics become a much more important part of your business.
•How do we drive people to our site?
•What do they do when they get there?
•How do we keep them coming back?
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Business Model Evolution
E-Commerce Case - Amazon
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Business Models Level 4
E-Commerce Sites and Dynamic Content Centric sites
This requires a still higher investment in technological skills.
Also requires more time, money and attention …
Web business strategy becomes a factor. Design skills – as you actually need to develop or
provide content for a site
You may still leverage technology others have provided as third party companies may become
more important to your enterprise
•Purchase/Download design templates which include shopping carts
•Ability to process credit card or Paypal accounts
•Marketing assistance from other sites. (For example: Google, Ask, Yahoo)
•Access to Web Markets (For example Alibabba, Global Source)
Might need still more sophisticated analytics and now strategic tools
•High level analytics
•Link analysis tools
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MBA in a Paragraph
“As many more BUSINESSES of each INDUSTRY are Started
than can possibly survive; and as, consequently, there is a
frequently recurring struggle for existence among businesses, it
follows that any business, if it vary however slightly in any
manner profitable to itself (that is to say if it somehow
differentiates itself to its advantage), under the complex and
sometimes varying conditions of competition, that business will
have a better chance of being naturally selected by customers
and thus will have a better chance of surviving”
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This Concludes the Web Business Models Presentation
Thank you for your attention
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