• We are going to look at:
• Revenue models for selling on the Web
• How some companies move from one revenue model to another to achieve success
• Revenue strategy issues that companies face when selling on the Web
• Creating an effective business presence on the Web
• Web site usability
• Communicating effectively with customers on the Web

• The Web catalog model is a revenue model of selling goods and services on the Web that is based on the mail order catalog revenue model.
• In the Web catalog model, a Web site replaces or supplements print catalog distribution with information on its Web site.

• Computer manufacturers, for example Dell and
Gateway
• Clothing retailers
• Flowers and gifts
• General discounters
• Many of the most successful Web catalog businesses are firms that were in the mail order business and have simply expanded their operations to the Web.

• For many types of products, people are still unwilling to buy through a Web site.
• For example, luxury goods and high fashion items.
• The Web sites of Vera Wang and Versace are not designed to generate income but to provide information to customers who would then visit the physical store.
• Evian is another site geared towards affluent customers.

• Amazon.com is a hugely successful business using the Web catalog model for many reasons:
– There are over 4 million books in print throughout the world, but no physical store could hold them
– Books and videos are small-ticket items people are willing to buy without inspection
• Amazon’s success spurred other book and music sellers to undertake e-commerce. For example:
– Barnesandnoble.com, towerrecords.com

• Firms that own intellectual property have embraced the
Web as a new and highly efficient distribution mechanism.
• LexisNexis is an online service that offers a variety of legal, corporate, government, etc. information.
• ProQuest is a Web site that sells digital copies of published documents.
• The ACM Digital Library offers subscriptions to electronic versions of its journals to its members and to libraries.

• The advertising-supported business model is the one used by network television in the U.S.
• The success of Web advertising has been hampered by two major problems:
– No consensus has emerged on how to measure and charge for site visitor views.
–
Very few Web sites have sufficient numbers of visitors to interest large advertisers.

• Web Portals
– Only a few general-interest sites have sufficient traffic to be profitable based on advertising revenue alone.
• Newspaper publishers
– It is still unclear whether advertising helps or hurts the newspaper’s business as a whole.
• Target Classified Advertisers
– Employment and used-vehicle sites are successful examples of the advertising-supported revenue model.

• In this mixed model, subscribers pay a fee and accept some level of advertising.
• The New York Times and The Wall Street Journal use a mixed advertising-subscription model.
• Business Week offers a variation on the mixed model theme; it offers some free content but requires a subscription to access the entire site.
• ESPN sells advertising and offers a vast amount of free information, but fans can subscribe to its Insider service.

• The travel agency business model involves receiving a fee for facilitating a transaction.
• A number of online travel agencies began doing business on the Web.
• Stock brokerage firms use a fee-for-transaction model. They charge their customers a commission for each trade executed.

• Event Tickets
– The Web offers event-promoters an ability to sell tickets from one virtual location to customers practically anywhere in the world.
• Real estate and mortgage loan brokers
– Online real estate brokers provide all of the services that a traditional broker might provide.
• Online banking and financial services
– The greatest concerns that most people have when considering moving financial transactions to the Web are security and reliability.

• The fee in this model is based on the value of the service provided.
– These are neither broker services nor based on the number or size of transactions processed.
Online games
– Many online games sites offer premium games.
– Site visitors must pay to play these games.
• Concerts and films
– As more households obtain broadband access to the
Internet, companies will provide streaming video of concerts and films to paying customers.
• Professional services
– State laws have been one of the main forces preventing
U.S. professionals from extending their practices to the
Web.

Encyclopedia Britannica
• Print publisher to Advertising-Supported model to Advertising-Subscription Mixed Model

• Channel conflict – when web sites compete with existing parts of organisation
• Cannibalisation – when customers are “churned” rather than the web attracting new customers
•
• Problem:
Channel conflict or cannibalization can occur when sales activity on a company’s website interferes with existing sales channels.
•
• Solution:
Web sites provide product information but directs customers to online and physical stores where goods can be purchased.

• Businesses always create a presence in the physical world by building stores and office buildings.
• On the Web, businesses have the luxury of intentionally creating a space that creates a distinctive presence.
• A Web site can perform many image-creation tasks very effectively, including:
– Serving as a sales brochure
– Serving as a product showroom
– Showing a financial report
– Posting an employment ad
– Serving as a customer contact point

• Different firms, even those in the same industry, might establish different Web presence goals.
• Coca Cola and Pepsi are two companies that have developed strong brand images and are in the same business, but have developed different
Web presences.
• The Web presence conveys the image the company wants to project.

• An effective site is one that creates an attractive presence that meets the objectives of the business or other organization.
• Possible objectives include:
– attracting visitors to the Web site
– making the site interesting enough that visitors stay and explore
– convincing visitors to follow the site’s links
– creating an impression of corporate image
– building a trusting relationship with visitors
– reinforcing positive images of the organization
– encouraging visitors to return to the site

• The Toyota site is a good example of an effective
Web presence.
• The site provides:
– a product showroom feature
– links to detailed information about each product line
– links to dealers
– links to information about the company

• A key goal for many not-for-profit organizations is information dissemination.
• The combination of information dissemination and a twoway contact channel is a key element in any Web site.
• The American Civil Liberties Union and American Red
Cross have created effective Web presences.
• Political parties and museums also use Web sites for their image presences.

• When firms started creating Web sites in the mid
1990s, they often built simple sites that conveyed basic information about their business.
• The failure to understand how the Web is different from other presence-building media is one reason that businesses fail to achieve their
Web objectives.
• Firms must use the Web’s capability for two-way, meaningful communication with their customers.

• Businesses that are successful on the Web realize that every visitor to their Web site is a potential customer.
• An important concern for businesses is the variation in important visitor characteristics.
• People who visit a Web site seldom arrive by accident; they are there for a reason.
• Technology variations among visitors (e.g., connection speed) should be a concern for Web sites.

• Creating a Web site that meets the needs of visitors with a wide range of motivations can be challenging.
– to learn about products or services that the company offers
– to buy the products or services that the company offers
– to obtain information about warranty service, or repair policies for products they have purchased

• When customers buy a product, they are also buying a service element.
• A seller can create value in a relationship with a customer by nurturing customers’ trust and developing it into loyalty.
• Customer service is a problem for many corporate sites.
• A primary weak spot for many sites is the lack of integration between the company's call centers and their
Web sites.

• Two companies routinely review electronic commerce Web sites for usability, customer service, and other factors.
–
BizRate.com provides a comparison shopping service and offers links to sites with low prices and good service ratings for specific products.
– Gomez.com provides scorecards for electronic commerce sits in specific categories.

• Firms are now starting to perform usability testing of their Web sites.
• As usability testing becomes more common, more Web sites will meet their goals.
• Eastman Kodak, T. Rowe Price, and Maytag have found that a series of Web site test designs helped them to understand visitors’ needs.

• An important element of corporate Web presence is connecting with site visitors who are customers or potential customers.
• Mass media is a one-to-many communication model, the Web is a many-to-one communication model, and personal contact is a one-to-one communication model.

• The Web is an intermediate step between mass media and personal contact.
• Using the Web to communicate with potential customers offers many of the advantages of personal contact selling and many of the cost savings of mass media.

• We have looked at:
• Revenue models for selling on the Web
• How some companies move from one revenue model to another to achieve success
• Revenue strategy issues that companies face when selling on the Web
• Creating an effective business presence on the Web
• Web site usability
• Communicating effectively with customers on the Web