Session Two : Revenue Models

 Define the type of revenue collection methods for B2C and BCB marketplaces
 What is a revenue model?
 Define the type of revenue models available
 Understand the changes in the revenue composition of e-businesses

 Collection and disbursement of revenue items
 B2C
 Use of credit cards
 Digital wallets
 Digital Cash

 Collection and disbursement of revenue items
 B2B
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Electronic Letters of Credit – where a bank or other authority guarantees the payment, and therefore takes the risk associated with repudiation or order dispute
Internet based EDI – although less standardised than more traditional EDI, this approach has the benefit of integrating payment details with other organisational systems
 Electronic billing presentation and payment (EBPP): the process by which companies bill customers and receive payments electronically over the Internet. There are two types of presentment models:

 direct model: a biller delivers the bill to customers via its own website, or via a third-party's site consolidator model: bills from multiple billers are delivered to a single Web site, to be presented in aggregate to the consumer for viewing and payment

 A revenue model is a part of the overall business model, and is essentially the underlying concept of how the ebusiness will attract and collect revenue
 The three forms are:
 Sales
 Taxes/Individual Service User Payments
 Financial Contributions from the public

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
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Advertising – income from, for example, banner ads and linked to volume and quality of hits
Sponsorship – sponsorship from a company wanting to convey brand values through association with programs that fit the company's product or corporate image.
Subscription – in effect a membership charge for the ability to receive services for a specified time

 Transaction Fee – in effect, a broking fee for facilitating a sale between two parties
 Affiliate – referral fees when one website leads a party on to another where they conduct a transaction – and the original site therefore gains a cut of the fee : a referral type model

 Sales – may be of goods or services, which can include information (for example, market information) or provision of web services themselves (such as server spaces for websites, or hot counters)
 sales packages may themselves come in diverse forms, such as forward payments for a series of services or deliveries of goods, or agreements to purchase a number of as yet unspecified items (for examples, on a book club model) or basic sales plus discounts on add-ons and so on

 Online sales revenues are further affected by sales channel decisions , such as customer service, purchase processes, website performance

Before the dot.com crash
Subscription
Advertising
Transaction Fee
Sales
Affiliate

After the dot.com crash
Subscription
Advertising
Transaction Fee
Sales
Affiliate

 Discuss the feasibility of the types of revenue models the following companies use:
 www.ebay.com
 www.orbitz.com
 Harvard Business Review Online
 www.amazon.com

 Afuah & Tucci, Internet Business Models and Strategies: Text and Cases, 2001
 Groucutt & Griseri, Mastering E-
Business, 2004
 Soh & Markus, B2B E-Marketplaces — A
Strategic Archetypes Approach, 2002