Business Models
Risanuri Hidayat, Ir.,M.Sc.
Table of Contents
3.1 Introduction
3.2 Storefront Model
3.2.1 Shopping Cart Technology
3.2.2 Online Shopping Malls
3.3 Auction Model
3.4 Portal Model
3.6 Dynamic Pricing Models
3.6.1 Name-Your-Price Model
3.6.2 Comparison Pricing Model
3.6.3 Demand-Sensitive Pricing Model
3.6.6 Offering Products and Services for Free
Table
of
Contents
3.7 B2B Exchanges.
3.8 B2B Service Providers
3.9 Online Trading and Lending Models
3.10 Getting a Loan Online
3.11 Recruiting on the Web
3.12 Online News Services
3.13 Online Travel Services
3.14 Online Entertainment
3.15 Online Automotive Sites
3.16 Energy Online
3.17 Selling Brainpower
3.18 Online Art Dealers
3.19 Education Online
3.20 Click-and-Mortar Businesses
3.1 Introduction
In this chapter we explore the many business
models currently being implemented on the
Web. These models include:
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The Storefront Model
The Auction Model
The Portal Model
The Name-Your-Price Model
The Comparison Pricing Model
The Demand Sensitive Pricing model
The B2B Exchange Model
3.1 Introduction
An e-business can be defined as a
company that has an online presence.
E-commerce businesses allow customers
to sell, trade, barter over the Web
A companies policy, operations,
technology and ideology define its
business model
3.2 Storefront Model
Storefront model enables merchants to sell
products on the Web
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transaction processing, security, online payment,
information storage
E-commerce allows companies to conduct
business 24-by-7, all day everyday, worldwide
An e-commerce storefront should include
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online catalog of products, order processing, secure
payment, timely order fulfillment.
3.2.1 Shopping Cart Technology
Shopping Cart
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An order-processing technology allows customers
to accumulate lists of items they wish to buy as
they continue to shop.
The shopping cart is supported by
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the product catalog, merchant server, database
technology
Many companies combine a number of
purchasing methods to give their
customers a wide array of options.
3.2.2 Online Shopping Malls
Online Mall
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A collection of online retailers that offer their products
and services on a single site.
In an online mall, consumers can use the mall’s
shopping cart technology to purchase items from
many stores in a single transaction.
Online malls act as shopping portals directing
traffic to the leading shopping retailers for a
specific product.
Online malls offer speed and added
convenience to a customers shopping
experience.
3.3 Auction Model
Online auction sites act as forums through which Internet
users can log-on and assume the role of either bidder or
seller.
Sellers post items they wish to sell and wait for buyers to
bid.
Reserve price
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The minimum price a seller will accept in a given auction.
Reverse auctions
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allow the buyer to set a price as sellers compete to match or
even beat it.
Auction sites collect a commission on every successful
auction.
3.3 Portal Model
Portal sites give visitors the chance to find
almost everything they are looking for in one
place.
horizontal portals
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portals that aggregate information on a broad range
of topics.
Yahoo!, AltaVista, Google
vertical portals
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portals that offer more specific information within a
single area of interest.
WebMD, IMDB, FirstGov
3.6 Dynamic Pricing Models
The Web has changed the way products are
priced and purchased
Comparison pricing model
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Comparison pricing Web sites using shopping bot
technology to find the lowest price for a given item
Demand-sensitive pricing model
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Group buying reduces price as volume sales increase
Name-your-price model
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Name-your-price for products and services.
3.6 Dynamic Pricing Models
Bartering Model
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Individuals and business trade unneeded items for
items they desire.
Ubarter.com, isolve.com
Rebate Model
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Sites offer rebates on product at leading online
retailers in return for commission or advertising
revenues.
eBates
Free offering model
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Free products and services generate high traffic
Freemerchant, Start Sampling, FreeSamples.com
3.7 B2B Exchanges
B2B exchanges
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businesses buy, sell, auction, barter, distribute
and ship products and services online
B2B e-commerce
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buying, selling, partnering, bartering or trading
conducted between two or more businesses
3.9 Online Lending and Trading
Models
Online trading empowers the average investor to handle
their own investments
Trading sites offer
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Research
Investments analysis
Stock history
Simple buying and selling
Online Trading sites include:
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E*TRADE
Ameritrade
CharlesSchwab
Fidelity.com
Getting a Loan Online
Find, research and apply for loans online.
Many online lenders offer lower rates to attract
customers.
Online lending services include free quotes,
calculators and tutorials for borrowers.
Examples:
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E-LOAN
eCredit.com
Mortgagebot.com
Recruiting on the Web
Resume tutorials, cover letter help, and free job
searching available on the Web
Employers can find new employees from a
global pool of applicants
Earn rewards for refering new hires to recruiters
Examples:
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Guru.com
Dice.com
Refer.com
Sixfigurejobs.com
Monster.com
Online News Services
Internet and Web offer a 24-by-7 news source
It is important to check the information source as
rumors are often passed online
Independent and freelance content creators
compete with large scale industry players
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CNN.com
ESPN.com
Drudge Report
Boston.com
Salon.com
Online Travel Services
Customers now have the power to bypass a
travel agent
Discounts and low fares available online
Name-your-price for tickets, hotels and car
rentals
“Last minute” fares often lower online
Examples:
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Expedia.com
Travelocity
Cheaptickets.com
Online Entertainment
The Web is a form of entertainment
Interactive television will use the Internet to offer
interactivity to the world
MP3 and file-transfer technology threaten
copyright law
Examples:
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IMDB
Farmclub.com
MP3.com
Ain’t It Cool News
Online Automotive Sites
Consumers access automobile information
empowering them to make an informed buying
decision
Dealers use the Web to showcase vehicles
Online auto auctions give buyers more options
Examples:
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Auto.com
Autobytel.com
Autoparts.com
Energy Online
Energy exchange sites allow energy providers to
trade excess energy commodities, buy on
auction and sell materials.
1000’s of energy commodities are sold online.
Efficiency increases as supply chains are
simplified
Examples:
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Houstonstreet.com
Altranet
Retailenergy.com
Selling Brainpower
Unused patents and trademarks can be sold
online
Outrsourcing
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Hiring outside contractors or companies to complete
projects and offer consulting.
Contractors can find projects to match their
needs on the Web
Examples:
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Hellobrain
Yet2.com
Question Exchange
Online Art Dealers
Artists have access to a global audience
The Web itself is a new medium for art
Virtual galleries give artists a chance to
showcase their work
Shortfilms are finding new fans online
Examples:
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Art.com
Guild.com
AtomFilms
art.net
Education Online
E-learning is changing the way people learn.
Web-based training and education give the
world access to continuing education form their
home
Many colleges and universities offer distance
learning and degree programs online
Examples:
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Click2learn
Saba
Smartforce
Varsitybooks.com
Click-and-Mortar Businesses
Brick-and-mortar
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Companies that operate solely offline with traditional
business practices
Click-and-mortar
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Companies operating with both an online and offline
presence
Click and mortar companies have brand
recognition, and an established customer base
Examples:
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Barnesandnoble.com
Bestbuy.com