BUSINESS B7
E-Business Models
Learning Outcomes
1.
Describe the business-to-business (B2B) and
business-to-consumer (B2C) e-business models
2.
Describe the four main areas where companies
conduct business online
3.
Differentiate between a vertical marketplace and a
horizontal marketplace
4.
Summarize the current and future trends for ebusiness models
Introduction
 Pure play – an Internet retailer that has no physical
store, such as Expedia.com and Amazon.com
 E-business – conducting business on the Internet,
not only buying and selling, but also serving
customers and collaborating with business partners
 E-business model – an approach to conducting
electronic business through which a company can
become a profitable business on the Internet
The four main areas where companies
conduct business online
Direct marketing,
selling, and
services
2. Financial and
information
services
3. Maintenance,
repair, and
operations
(MRO)
4. Intermediaries
1.
Direct Marketing, Selling, & Services
using the Internet to contact customers directly
Key to success:
 Marketing – create site visibility and demand
 Sales – allow personalized content and adaptive
selling processes, integrate with back-office
 Services – automate customer service features such
as customer feedback, customer inquires, tracking
information, and customized services
Financial and Information Services
 Online banking



Paying bills
Making transfers between accounts
Trading stocks, bonds, and mutual funds
 Online billing

Internet-based bill delivery services saves money
 Secure information distribution –

Business can safeguard information
Maintenance, Repair, & Operations
(MRO)
The Internet can transform corporate purchasing
from a labor and paperwork intensive process
into a self-service application
 MRO goods include – office suppliers, office
equipment, furniture, computers, and replacement
parts
Intermediaries
 Intermediaries – agents, software, or
businesses that bring buyers and sellers together
that provide a trading infrastructure to enhance ebusiness
 Reintermediation – using the Internet to
reassemble buyers, sellers, and other partners in
a traditional supply chain in new ways
Intermediaries
 Content providers –
companies that use the
Internet to distribute
copyrighted content,
including news, music,
games, books, movies,
and many other types of
information
 Online brokers –
intermediaries between
buyers and sellers of
goods and services
Intermediaries
 Portals - Central
hubs for online
contents
 Market makers –
intermediaries that aggregate
three services for market
participants
 A place to trade
 Rules to govern trading
 An infrastructure to
support trading
Intermediaries
 Infomediary – provides
specialized information
on behalf of producers
of goods and services
and their potential
customers
 Application service
providers – sell
access to Internetbased software
applications to other
companies
E-Business Models
Business-to-Business (B2B) Models
 Business-to-business (B2B) – applies to
businesses buying form and selling to each other
over the Internet
 E-procurement – the B2B purchase and sale of
supplies and services over the Internet
 Systematic sourcing – involves buying through
prenegotiated contracts with qualified suppliers
 Spot sourcing – businesses buy transactionoriented commodity-like products and rarely involves
a long-term or ongoing relationship between buyers
and sellers
B2B: Marketplace classifications
B2B exchanges are new organizational forms in
digital space that can take place in the following:
 Buyer model (few
buyers, many sellers)
 Marketplace model
(many buyers, many
sellers)
 Longer term
relationship model
(few buyers, few
sellers)
 Seller model (few
sellers, many buyers)
B2B exchanges
 Buyer Model - Reverse
 Longer term
auction – the winning
bid is the lowest, rather
than the highest
 Seller model –
appropriate when the
supplier hosts valueadded services on its
Web site such as
suppliers’ product
catalog and customers’
order information
relationship model –
items requiring a high
degree of planning
between buyers and
sellers either in the
design stage or in
fulfillment
 Marketplace model –
allows a virtually infinite
number of businesses
to transact electronically
with minimal cost
Consumer-to-Business (C2B)
 Consumer-to-business (C2B) – applies to any
consumer that sells a product or service to a
business over the Internet
 C2B facilitates the following:



Social interaction
Personal finance management
Purchasing products and information
Consumer-to-Consumer (C2C)
 Consumer-to-consumer (C2C) – appliers to sites
primarily offering goods and services to assist
consumers interacting with each other over the
Internet
 C2C communities thriving on the Internet:



Communities of interest
Communities of relations
Communities of fantasy
E-Business Challenges
 Cost
 Value
 Security
 Leverage existing systems
 Interoperability
Current Trends: E-Marketplaces and
E-Markets
e-marketplaces – are interactive business
communities providing a central market space where
multiple buyers and sellers can engage in e-business
activities
 Horizontal marketplaces – connect buyers and
sellers across many industries, primarily by
simplifying the purchasing process
 Vertical marketplaces – provide products that
are specific to trading partners in a given industry
Advantages and limitations
of various e-marketplace revenue models
The “Content” Perspective of
E-Marketplaces
 Content and product description establish the
common understanding between parties in a
transaction
 The accessibility, usability, accuracy, and richness of
the content directly affects the transaction
Future Trends: E-Channels,
E-Portals, and E-Government
 e-channel – Web-based business channel
 e-portal – a single gateway through which to gain
access to all the information, systems, and processes
used by stakeholders of an organizations
 e-government – the use of strategies and
technologies to transform government(s) by
improving the delivery of services and enhancing the
quality of interaction between the citizen-consumer
within all branches of government(s)
Extended E-Business Models
Specific e-business models as they relate to
e-government
 Consumer-to-government (C2G) – constitutes the
areas where a consumer (or citizen) interacts with the
government
 Government-to-business (G2B) – includes all
government interaction with business enterprises
 Government-to-consumer (G2C) – governments
dealing with consumers/citizens electronically
 Government-to-government (G2G) – governments
dealing with governments electronically
Closing Case One Questions
1.
eBay is one of the only major Internet “pure plays” to
consistently make a profit from its inception. What is
eBay’s e-business model and why has it been so
successful?
2.
Other major Web sites, like Amazon.com and Yahoo!,
have entered the auction e-marketplace with far less
success than eBay. How has eBay been able to
maintain its dominant position?
3.
eBay has long been an e-marketplace for used goods
and collectibles. Today, it is increasingly a place where
major businesses come to auction their wares. Why
would a brand name vendor set up shop on eBay?