E-Commerce
It simply means buying and selling goods and services over the internet. E-Commerce
can be defined as any form of business transaction in which the parties interact
electronically. It is the technology-mediated exchange between parties as well as the
electronically-based intra or inter-organisational activities that facilitate such exchanges.
Models
The e-Business model, like any business model, describes how a company functions;
how it provides a product or service, how it generates revenue, and how it will create
and adapt to new markets and technologies. A Business Model is the method of doing
business by which a company can sustain itself by generating revenue. The Business
Model spells out how a company makes money by specifying where it is positioned in
the value of chain. Example Radio and TV aired free.
Although there are many different ways to categorize e- business models, they can be
broadly categorized as:
I.
II.
E- business Model based on the relationship of transaction parties
E- business Model based on the relationship of transaction types
I. E- business Model based on the relationship of transaction parties
1. B2C : Sells products or services directly to customers, eg amazon.com. Website
following B2C business models sells its products directly to a customer. A
customer can view products on the website of business organization. The
customer can choose a product and order the same. Website will send a
notification to the business organizations via email and organization will dispatch
the products to the customer.
2. B2B : Sells products or services to other business, or brings multiple buyers and
sellers together in a central market place, eg. Chemdex.com.
3. B2G: Business selling to local, state and federal agencies, eg. iGov.com
4. C2C : Consumers sell directly to other consumers, eg ebay.com
5. C2B : Consumers fix price on their own, which business accept or decline. Eg
Priceline.com
6. G2B Government uses B2G model website to approach business
organization s . Such websites support auctions , tenders and application
submission
7. G2C (Government to Citizen) Government uses this model to approach citizens
directly. Such websites support auctions of vehicles, machinery or any other
material. Such websites also provide services like registration for birth, marriage,
or death certificates. The main objective of G2C is to reduce average time for
fulfilling people’s requirement for various government services.
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2. How B2C works
 Visiting the virtual mall
 Customer registration
 Customer buys the product
 Merchant process the order
 Credit card is processed
 Operations management :eg quality management
 Shipment or delivery
 Customer receives
 After sales service
Benefits of B2C
 Inexpensive cost
 Big Opportunities
 Globalization
 Reduced operational coast
 Customer convenience
 Knowledge management
Barriers of B2C
 You can see but you can not touch, feel and smell
 Digital Photographs are not color accurate
 Consumer expects high service standards
 Trusting the company/brand
 Financial security
 Personal Data
2. How B2B works: Tools and techniques
 Use of pricing as a tool
 Use of application service provider Model
 Use of generic Model which are known for efficiency as well as personalized
attention to various business customers
 Use of Comparison shopping
B2B Transaction Model
 B2B Storefronts: Provide business with purchase, order fulfillment and other
value added services. Eg Staples.com
 B2B vertical Markets: Provide a trading community for specifying industry. Eg
HotelResource.com
 B2B aggregators: Provide a single marketplace for business purchasing for
multiple suppliers egChemdex.com
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
B2B trading hubs: Provide a market place for multiple vertical markets. Eg
VerticalNet.com
 B2B Post and browse Markets: Provide Marketplace where participants post buy
and sell opportunities eg CATEX.com
 B2B auction markets: Provide a market place for buyers and sellers to enter
competitive bids and contracts eg FreeMarkets.com
 B2B fully automated exchanges: : Provide a market place for the automatic
matching of standardized buy and sell contracts. Eg PaperExcange.com
Benefits of B2B
 Direct interaction with customers
 Focussed sales promotion
 Building customer loyalty
 Scalability
 Savings in distribution cost
II. E- business Model based on the relationship of transaction types
This business model is usually controlled by two parameters namely control and value
Integration. Based on this five types of transaction can be identified:
1. Brokerage:
2. Aggregator : Connects buyers and sellers
3. Info-mediary: Provides information e.g. yahoo.com
4. Community:
5. Value chain: portals e.g. yahoo.com
6. Subscription
7. Affiliate
1. Brokerage
Price-discovery mechanism
Meeting point for sellers and buyers
Actions and exchanges are the modes of transactions
It is a free-market
Global network of buyers and sellers
It is a virtual market place
Advantages
Allows buyers and sellers to trade directly bypassing intermediaries which
reduces cost for both the parties
Global reach
24/7 hours trading and provides continuous up to date information
Alleviation of risk of anonymous trading
Price discovery mechanism
A. Auction
B. Reverse action
C. Market exchange
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2. Aggregator Model
Electronic commerce business model where a firm (that does not produce or warehouse
any item) collects (aggregates) information on goods and/or services from several
competing sources at its website. They are known as Information aggregators.
Information aggregators are entities that collect information from a wide range of
sources, with or without prior arrangements, and add value by providing postaggregation services. Usually information aggregators collect information from various
sources, such as the Internet, diverse databases, company websites, and results of
searching engines.
Types of aggregators
a. Content aggregators. They are the large-scale sites on the web and mostly
represent large publishing companies. Eg pathefinder.com
b. Mainstream aggregators. They include sites like yahoo providing a web directory
and a search engine, along with a bunch of attractive tools like email services
etc.
c. Event aggregators. These are sites that provide in-depth content and tools
tailored to the needs of a particular group that acts clearly defined customer
base.
d. Shopping aggregators. They let consumers roam through hundred of sites and
catalogues and find the best price in seconds. They help consumers sift through
dozens of e-commerce sites.
3. Info- mediary Model
An organiser of virtual community is called an information intermediary or info-mediary,
who helps sellers to collect, mange, and maximize the value of information about
consumers. A major Internet business model, the infomediary model is characterized by
the capture and/or sharing of information. The simplest form of an infomediary model is
the registration model. In this scenario, companies require users to register before
gaining access to information on their Web sites, even if the information itself is
provided at no charge. Registration is a condition for viewing or downloading the
articles so the company can capture contact information and other data from the
interested party and use it to make sales calls and potentially acquire new clients for its
consultants.
Data about consumers and their buying habits are extremely valuable, especially when
that information is carefully analysed and used to target marketing campaigns. They are
information business, implying that they compete on their ability to capture and
manipulate information in a manner that adds value for their clients who could be
sellers or buyers.
Classification of info- mediaries
Info- mediaries can be classified on the basis of their relationship with sellers and buyers
into four types:
a) Specialize agents. These infomediaries usually mange a specialized market.
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b) Generic agents. These infomediaries maintain open relationship with both
buyers and suppliers and involve no relationship-specific investment. They
create value through their comprehensive and unbiased service, often
generating revenue from advertising.
c) Supplier agents. They are sponsored either by specific companies with a vested
interest in selling their products or by close affiliation to the core group of
sellers.
d) Buyer agents. They establish relationship with a core set of buyers, working on
their behalf and any number of suppliers.
4. Community model
The e-communities are formed when groups of people meet online to fulfill certain
needs or serve their common interest, exchange information, share interests, trade
goods and services, entertain and seek help. The community model is a method of
developing an online presence in which several individuals or groups are encouraged to
join and participate in ongoing interaction designed around a common purpose. Web
communities, or virtual communities, are not only a way for like-minded people to come
together online, they also are an increasingly important element of business plans.
Communities utilize electronic tools such as forums, chat rooms, e-mail lists, message
boards, and other interactive Internet mechanisms, which are usually tailored to the
particular community.
The community model comes in two basic varieties: those centered on relationships
and those centered on tasks. The former typically are informal, grassroots-oriented
communities that revolve around shared interests, ideas, topics, and goals. In these
communities, the development of relationships is the primary goal. To maximize
member involvement, community sites must offer maximum degrees of interactivity
and personalization. For example, GeoCities offers space and tools for members to set
up their own Web sites and establish virtual communities within the broader GeoCities
community. Task-centered communities generally are more structured and impersonal.
The relationships established or augmented online are a means to a mutual end, such as
enhanced profits. More specifically, web communities are established between business
partners, between businesses and their customers, between different groups of
customers, within companies, and between individuals and groups devoted to particular
topics.
5. Value chain model
Value chain Model- value chain moves business away discrete streams of data about the
product being made to one unified pool of information-one that even extends outside
the company to suppliers and customers. The goal is to develop full and seamless
interaction among all members of the chain, resulting in lower inventories, higher
customer satisfaction, and shorter time to the market.
1. Generalized Portal : AltaVista as a Value Chain Model
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AltaVista Company is the premier knowledge resource on the Internet. It strong engine
tool and patented technology. By capitalizing on the unique Web-wide features and
services, the AltaVista network provides a distinct Internet experience through multiple
integrated platforms, as in the following:
1. AltaVista search
2. AltaVista shopping.com
3. AltaVista live!
4. AltaVista raging bull
5. AltaVista free access
6. AltaVista international
2. Personalized Portal: My Yahoo! As a Value Chain Model
Some of the topics that Yahoo offers are:
1. Pick your weather cities
2. Track your stock quotes
3. Read your choice of news
4. Find local movie Showtime
5. Follow your favorite sports team
The manufacturer or "direct model
The manufacturer or "direct model", it is predicated on the power of the web to allow a
manufacturer (i.e., a company that creates a product or service) to reach buyers directly
and thereby compress the distribution channel. The manufacturer model can be based
on efficiency, improved customer service, and a better understanding of customer
preferences.
Purchase -- the sale of a product in which the right of ownership is transferred to
the buyer.
Lease -- in exchange for a rental fee, the buyer receives the right to use the
product under a “terms of use” agreement. The product is returned to the seller
upon expiration or default of the lease agreement. One type of agreement may
include a right of purchase upon expiration of the lease.
License -- the sale of a product that involves only the transfer of usage rights to
the buyer, in accordance with a “terms of use” agreement. Ownership rights
remain with the manufacturer (e.g., with software licensing).
Brand Integrated Content -- in contrast to the sponsored-content approach (i.e.,
the advertising model), brand-integrated content is created by the manufacturer
itself for the sole basis of product placement
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6. The Affiliate model
The affiliate (or click-through) model is a popular e-commerce relationship in which an
online merchant agrees to pay an affiliate in exchange for providing an advertisement
and link to the merchant's site. Each sale generated as a result of a customer "clicking
through" from an affiliate to the merchant results in a small commission for the affiliate.
The deal provides a stream of cash to affiliates and brings the merchant, which owns the
affiliate network, a host of new traffic, cutting customer-acquisition costs and allowing it
to target its desired audience.
7. Subscription model
Users are charged a periodic -- daily, monthly or annual -- fee to subscribe to a service. It
is not uncommon for sites to combine free content with "premium" (i.e., subscriber- or
member-only) content. Subscription fees are incurred irrespective of actual usage rates.
Subscription and advertising models are frequently combined.
Content Services -- provide text, audio, or video content to users who subscribe for a fee
to gain access to the service.
Person-to-Person Networking Services -- are conduits for the distribution of usersubmitted information, such as individuals searching for former schoolmates.
Trust Services -- come in the form of membership associations that abide by an explicit
code of conduct, and in which members pay a subscription fee.
Internet Services Providers -- offer network connectivity and related services on a
monthly subscription.
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