Introduction to e-Commerce
Lesson Plan 1
Introduction to e-Commerce
Objectives:
1. Define the term "e-commerce business
model.”
2. Learn the key objectives that help create a
successful e-commerce website.
3. Review different e-commerce business
models
4. Why you don’t have to be “big” to achieve
success online.
Introduction to e-Commerce:
What is a Business Model?
• A Business Model is how a business attracts customers and
makes a profit.
• Successful businesses:
– Create and deliver something (a product or service) that
has value.
– Have a market for its products or services
– Can pay their costs, i.e overhead
– Ultimately make a profit
Introduction to e-Commerce:
Common Characteristics of Successful Websites
• Successful websites have the following four
characteristics:
– They make it easier for users to do something
– They offer users something of value, often times
for free
– They incorporate features & benefits that
generate repeat visits and use
– They differentiate themselves from competition
Introduction to e-Commerce
eBay: Online Auction Business Model
• eBay is an electronic marketplace for people who want to sell
things and people who want to buy.
• eBay is considered by many business experts to be the most
successful e-commerce site ever.
• In 2006, eBay’s net revenues reached $5.97 billion, a 31%
increase over the year before.
• eBay’s profits exceeded $1 billion for the second straight year
in 2006 ($1.13 billion)
How does eBay achieve the four characteristics/objectives
of successful websites?
Introduction to e-Commerce
eBay: Online Auction Business Model
What does eBay make easier?
• It makes it easier for people to sell.
• It makes it easier for people looking to purchase to
find items for sale.
• It makes it easier to buy, often times at a lower
price.
• It makes it safer to do business with people you
haven't met.
Introduction to e-Commerce
eBay: Online Auction Business Model
What does eBay offer free to users?
• It is free for buyers to submit bids on eBay.
• It is free to monitor the progress of auctions on
eBay.
• It is free to use eBay’s search engine to find items
for sale that you have an interest in purchasing.
Introduction to e-Commerce
eBay: Online Auction Business Model
How does eBay generate repeat usage?
• Through the bidding process (bidders are
compelled to return to see how their bid is doing.)
• Requiring sellers and bidders to register.
• Website ease of use to buy and sell.
• A secure user environment (makes buyers and
sellers more receptive to perform a transaction.)
• A unique variety of products.
Introduction to e-Commerce
eBay: Online Auction Business Model
How does eBay
differentiate itself from competition?
• Excitement and competition in the shopping
process.
• Users don’t know the cost of a product until the
winning bid has been posted.
• Product variety, ease of use, and security
• First mover advantage.
Introduction to e-Commerce
eBay: Online Auction Business Model
How does eBay
Attract first-time visitors to its Web site?
• Clever search engine marketing strategies
• Publicity - Weird, clever, and unique items
auctioned on eBay have received worldwide media
coverage
• Associates program that provides linking
incentives
• Advertising on TV, radio, the Internet, and direct
mail
Introduction to e-Commerce
eBay: Online Auction Business Model
How does eBay make money?
• Charges sellers a fee.
• Charges for specialized services such as the
rental of electronic storefronts to sellers and
an on-line bill payment service.
• Sells advertising space.
Introduction to e-Commerce
Amazon: Online Retail Business Model
• Amazon is an online retailer of books,
music, DVD/video, toys,
electronics, software, and home products.
• Amazon spent 98 cents for every $1 of
revenue it generated in 2006 while eBay
spent just 81 cents for every dollar of its
revenue. What helps make eBay’s business
model more profitable?
How does Amazon achieve the four
characteristics/objectives of successful websites?
Introduction to e-Commerce
Amazon: Online Retail Business Model
What does Amazon make easier?
• It makes it easier for people to shop with features
such as one-click shopping.
• It makes it easier for people to get information
about the products they are interested in.
• It makes it easier for people to compare the
features, benefits, and prices of competitive
products.
• It makes it easier to save money.
Introduction to e-Commerce
Amazon: Online Retail Business Model
What does Amazon offer free?
• Detailed product information.
• Product ratings and reviews.
• Services and features (e.g. free chapters
from books, samples of songs from CDs, ecards, review restaurant menus, wedding
registries, movie show times)
Introduction to e-Commerce
Amazon: Online Retail Business Model
How does Amazon generate repeat usage?
• Purchasers must register.
• Software that tracks users purchasing behavior and
generates e-mail messages that notify when a
similar or related item becomes available or goes
on sale.
• Promotions such as the gold box.
Introduction to e-Commerce
Amazon: Online Retail Business Model
How does Amazon differentiate itself from
competition?
• Offers its products at the lowest possible
price.
• Has a large variety of products.
• Has an extensive database that tracks
purchases
Introduction to e-Commerce
Amazon: Online Retail Business Model
How does Amazon attract first-time visitors?
• Effective search engine marketing
• An associates program that offers revenue
generation potential for third party links
• Lots of advertising on TV, radio, in mail
Introduction to e-Commerce
NY Times: Online Newspaper Business Model
• The mission of the online version of the NY
Times is to provide a high-quality, worldwide
online audience with trusted editorial content
from The New York Times
• Launched in January 1996
• Most of site’s content comes from content
already being produced for hard-copy edition
• Site has 13.3 million registered users
Introduction to e-Commerce
NY Times: Online Newspaper Business Model
What does the NY Times website make easier?
• It makes it easier for people to access news
information in each day’s edition.
• It makes it easier for users to get access to
additional information such as video feeds, slide
shows, on-line chats with columnists and writers.
• It makes it easier to customize news information in
the online paper to the user’s specific needs.
Introduction to e-Commerce
NY Times: Online Newspaper Business Model
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What does NY Times offer free to users?
Users enjoy complete access to each day’s online
version for free.
How does NY Times generate repeat usage?
Free content
Feature that allows articles to be emailed to others
E-newsletters on special interest topics
Name recognition
A personalized news service
Introduction to e-Commerce
NY Times: Online Newspaper Business Model
How does NYTimes.com differentiate itself from
competition?
• Content is updated several times during each day
• Use of features that have enabled the hard-copy to
differentiate itself, such as op-ed writers, Sunday
Magazine supplement, and the Crossword Puzzle
• It’s free!
Introduction to e-Commerce
NY Times: Online Newspaper Business Model
How does NYTimes.com attract first-time visits?
• RSS Feeds that permit other sites including blogs
to abstract and link to NYTimes.com articles
• By effectively using its hard-copy edition to
promote its online edition
Introduction to e-Commerce
NY Times: Online Newspaper Business Model
How does NYTimes.com make money if the
subscription is free?
• Advertising
– An ad that runs for about one month currently costs
approximately $70,000
• Sale of Times Select subscriptions - access to
premium and archived content
• Sale of related products/services such as software
to do the crossword puzzle, and products in the
site's on-line store.
MySpace.com Social Networking
• Businesses like this model because content
is created by users of the site
• MySpace’s mission is to create the coolest
online place a 13-to-34 year old Internet user
could possibly be
• 35 million visits per month
• User security is an issue with this model
• MySpace was sold in 2006 for over half
billion dollars
MySpace.com Social Networking
What does MySpace offer free to users?
• Users can create personal Web sites, blogs, photo
galleries
• Users can communicate with friends online and
meet new people who have similar interests
• Users can easily post and share images, videos,
music etc.
MySpace.com Social Networking
How does MySpace generate repeat usage?
• Curiosity - When users post something at My
Space, they check back at site frequently to see if
friends or strangers have commented or left
messages to their post.
• Habit - MySpace.com has become a standard form
of communication among its users in much the
same way people use instant messaging, e-mail,
and cells.
MySpace.com Social Networking
How does MySpace differentiate itself from
competition?
• Social Networking Sites are very vulnerable to
competition because the communication technology
they feature is easily replicated and enhanced
(MySpace replaced Friendster.com)
• Sheer Size of MySpace’s user base (95 million
registered users) gives it advantage because primary
purpose of a social networking site is to communicate
with as many “others” as possible.
MySpace.com Social Networking
How does MySpace attract first-time visitors?
• Viral marketing at its most effective. Since one of
the key purposes of using MySpace.com is to
communicate with friends, every user gets more
people to become users.
• Owner of MySpace.com is World News Corp. one of
the biggest media companies in the world.
Company’s newspapers, TV networks, radio
stations, and magazines can be used to promote
the site at every opportunity.
MySpace.com Social Networking
MySpace should be used with caution and maturity
• Don’t post anything at MySpace.com that you don’t
want everyone in the world to know about yourself.
• Employers now search MySpace for profiles of job
candidates.
• There have been instances where MySpace users
have been identified and victimized using
information those users have made available at the
Web site.
You don’t have to be “BIG” to be successful online
CustomInk.com - Started in a garage
• Developed a new and creative way to sell imprinted
tee shirts that takes full advantage of the Internet’s
interactive technologies
• This site’s users get to design the product they are
purchasing
• This Company has become successful by
developing an online business model that makes it
fun and engaging for customers to place orders
and spend money at their Web site.
Introduction to e-Commerce
MTV.com: Niche Portal Business Model
• Focuses on music fans in their teens and
twenties.
• Features deep, original content including music
premieres and exclusives, convergent shows
like TRL and Control Freak, original
programming
• Is consistently ranked the No. 1 music content
site in the teen demographic, according to
Media Metrix
Introduction to e-Commerce
MTV.com: Niche Portal Business Model
What does the MTV.com website make easier?
• It makes it easier to find information about music and
artists.
• It makes it easier to find out when and where an artist is
performing.
• It makes it easier to sample and purchase recordings.
• It makes it easier to communicate with people from
around the world who share the same musical interests.
Introduction to e-Commerce
MTV.com: Niche Portal Business Model
What does MTV.com offer free to users?
• The ability to personalize features of the site based
on musical tastes.
• Downloads of free music from new and established
artists.
• Product ratings and reviews.
• Chats hosted by top recording artists.
Introduction to e-Commerce
MTV.com: Niche Portal Business Model
How does MTV.com generate repeat usage?
• Requires visitors to join/register.
• Software that tracks personal preferences
and purchasing behavior so that marketing
can be more targeted.
• Free samples of new recordings.
Introduction to e-Commerce
MTV.com: Niche Portal Business Model
How does MTV.com differentiate itself from
competition?
• It focuses on the teenage demographic, which is known
to spend its money on music-related interests.
• Exclusive content that is not available anywhere else.
• Special events and programming that takes advantage
of its direct ties to one of the world’s most favorite
television networks.
• It covers a wide expanse of musical related and cultural
interests.
Introduction to e-Commerce
Assignment
• List the events happening inside your school
that would be of interest to different segments
of your community.
• List ways to get people interested in what’s
going on inside your high school.
• Write how you could obtain information that will
be used as content for your website.