The Real Value of
“E-Business Models”
ÇAĞLA DEMIRCIOĞLU
ŞEYMA ŞAHIN
What Is E-Business?
 E-Business: Buying, selling, servicing
customers, collaborating with business
partners, and conducting electronic
transactions within an organisations.
 E-Business is more than selling and marketing
online!
 E-Business becomes a major economic force.
 E-Business becomes an element of overall
business strategy - not the total business
strategy
* A Managerial Perspective 2004.
What Is E-business?
 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.
What Is the Difference Between
E-business and Business?
Business
E-business
 Definitions are clear
 Definitions are ‘fuzzy’
 No change in the business and
 Permanent and unpredictable
technology environment
 High time pressure
 Continuous learning
change in the
business and technology
environment
 Time to market and speed
 Continuous learning & fast
adaptation
Brief
Information
About Current
E-Business
Models
 Why it is important?
-
Success vs failure
 Example: Boo.com
-
What makes a good model is very difficult
4 Key Distinctions
 The Supply Chain Model
 Revenue Model
 B2C vs B2B
 Clicks and Mortar vs Pure Play
is can be classified as
Direct Sales – Dell, Cisco
Intermediary(Portals) – Yahoo, MSN, AOL
Marketplace - eBay
* Portals and marketplace facilitates the sales
process but direct sales provide product or services.
The Supply Chain Model
Revenue
Model
Two types of revenue model:
A.
Income generated directly through consumer
transaction
B.
Free sites
Examples: Yemeksepeti.com, Yahoo
B2C vs B2B
 B2C => More frequent and smaller size
of transactions and needs for mass
advertising
 B2B => Less frequent and larger size of
transactions
Clicks and
Mortar
vs
Pure–Play
Model
 Clicks and mortar is an online distribution channel
for company that also has physical stores.
 Pure – Play is purely net based.
 Clicks and Mortar relies on offline assets as well.
Example:
Wallmart.com, BestBuy – Clicks and Mortar
Amazon, eBay - Pure Play
A Study of Failures
Failure Rates By Model
B2C
B2B
Direct Sales
E-tail
Portal
Marketplace
Free site
Pay site
Odds of survival of different
business models compared
13.6%
6.3%
6.8%
16.3%
20.0%
25.0%
15.0%
8.5%
Pure Internet
22.8%
Clicks and Mortar 2.6%
E-tail vs. direct sales
0.93:1
Portal vs. direct sales
0.97:1
Marketplace vs. direct sales
1.3:1
Pay vs. free
0.80:1
Clicks/mortar vs. pure net
11.00:1
• Mismanage to match
the stages of growth
while working with
limited capital
• High burn rate (rate
at which they use up
startup capital)
Example:
Bizbuyer.com offers a
online marketplace
for small business
owners
Fatal Errors of Many E-Businesses
Clicks and Mortar
 Case: eVineyard vs Wine.com
Wine.com:
Outsourcing logistic system
Longer deliver times and out of stock problems
Larger and better known
eVineyards:
Setting up its own retail stores
Quicker and more reliable service
Different logistic strategies
Wine.com acquired by eVineyards in 2001
 Channel conflict
- Risk of failure
decreases with
payment in case of
retail and direct sales.
- But increases in the
case of portal.
* The point is that
the decision whether
or not to charge for
the service varies with
the business models.
Free vs Pay Web Sites
Supply Chain Model
Direct Sales:
1.
Mathcing price to demand and costs to
revenues Example: Musicmaker vs MP3 and
Napster.
Business vs Consumer Market
 Mercata targeted consumers and could not generate enough savings per
transaction.
 Zoho targeted business and receive the advantage of transaction in large
volumes.
By definiton, the
companies that have
succeeded have been
those that understood
and managed to
overcome the
particular problems
inherent in their
model.
Summary
Questions
1.
There are few and large companies in clicks and
mortar market, while in pure play there are lots
of and small to large scale companies. What is
the chief reason behind this distinction between
two market?
2.
Although Wine.com is larger and better known
than eVineyards and even if both use the same
business model, what makes eVineyards
different from Wine.com?
Answers
1.
Because, pure play market has a low barrier to
entry, so small companies exists and be able to
compete with big companies.
2. Different logistic strategies:
Wine.com:
Outsourcing logistic system
Longer deliver times and out of stock problems
eVineyards:
Setting up its own retail stores
Quicker and more reliable service
Thank You For Your
Attention