Chapter 5: Business models
modified for 2005
 Questions answered in this chapter:
• What is a business model?
• Do firms compete on value propositions or value
clusters?
• How does the firm develop an online offering?
• What is a successful, unique resource system?
• What are the financial models available to firms?
• What business classification schemes seem most
appropriate for the new economy?
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
1
Exhibit 5-1: Components of a Business Model
Value
ValueCluster
Cluster
Marketspace
MarketspaceOffering
Offering
Resource
ResourceSystem
System
Financial
FinancialModel
Model
1
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
2
Do Firms Compete on value Propositions
or Value Clusters?
Value Proposition
target segment
focal customer benefit
unique capabilities
Value Cluster
multiple
target segments
Modified for 2005
combination of
customer benefits
unique capabilities
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
3
Do Firms Compete on value Propositions
or Value Clusters? (continued)
 Choice of Segments
• Market size and growth rates
• Unmet or insufficiently met customer needs
• Week or nonexistent competitors
 Choice of Focal Customer Benefits
• Single-benefit approach
• Multiple-benefit approach
 Choice of Unique and Differentiating Capabilities
• Tangible assets
• Intangible assets
• Capabilities of the organization
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
4
Exhibit 5-2: Shattering Myth That Consumers Care Only About Prices Online
PERCENTAGE OF CUSTOMERS WHO CARE ABOUT ATTRIBUTE
Customer Support
65
On-time Delivery
58
49
Product Content
49
ATTRIBUTE
Product Shipping & Handling
Privacy Policies
45
Ease of Ordering
24
Product Information
24
Web Site Navigation & Locks
23
Product Selection
22
Product Price
19
0
10
20
30
40
50
60
70
Source: JP Morgan Report: etailing and the five Cs
2
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
5
Quality of a value proposition or cluster
 Customer Criteria. Do target customers understand
the proposition or cluster? Is it relevant to their
needs? Is it perceived as unique or indistinguishable
from other propositions or clusters?
 Company Criteria. Will the company “rally
around” the proposition or cluster? Does the
company have the resources or capabilities to own
this cluster?
 Competitive Criteria. Are other competitors trying
to hold a similar proposition or cluster? Can
current or future competitors match this cluster?
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
6
How Does a Firm Develop an Online
Offering?
Online Offering
Identify
scope of offering
Identify customer
decision process
Map offering to
customer decision process
single product category
problem recognition
purchase-decision cycle
several product categories
information search
egg diagram
evaluation of alternatives
purchase decision
satisfaction
Loyalty
Disposal
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
7
Exhibit 4-2: Customer Decision
Process — Flower Example
Problem Recognition
PREPURCHASE
Information Search
Evaluation of Alternatives
Purchase Decision
PURCHASE
Satisfaction
POSTPURCHASE
Loyalty
Disposal
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
8
Exhibit 5-3: Egg Diagram for 1-800-flowers.com





“Care and handling”
“Do it yourself”
Special events and
educational
workshops held at
stores
Product
Offering
Post-Sales Support
Order receipt email
 eQ&A online customer
service
 FAQ
 Customer service
inquiry form
Perks


Gift reminder service
Holiday specials
Ideas and Information
Everyday celebrations
 Floral ideas
 Garden ideas
suggestions
 Home ideas
Special occasion suggestions
 Gift ideas
 Gourmet ideas
Need
 Store locator
Recognition
 Recommendations by budget
 Best sellers
Education on Flowers
and Decoration
Search For Ideas
and Offerings





Gift Recommendations
 Gift guru
 Favorite gifts
 Gift frequency
 Gift impossible
 Gift baskets
 Corporate gift services
Flower / Gift Decision Process
Post Sales Support
and Perks
Miles earned with
flower purchases
Free gifts
Discounts at AOL &
BN with flower
purchases
Member specials
Evaluation of
Alternatives





Message
Selection


Product price
Product picture
Product description
Delivery information
Delivery availability
Purchase
Decision

Gizmo fully-animated
greeting cards
Physical cards in gifts


Shopping basket
E commerce transaction
Special shopping features
– Delivery outside U.S.
– 1-800-lasfloras.com
Adapted from Mohan Sawhney “Making New Markets”, Business 2.0
4
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
9
What Is a Successful Resource System?
 Modifications to the activity system logic for
the online marketplace
• Shift from physical world to virtual and back to
physical world
• Shift from a supply-side focus to a demand-side
focus
• Shift from activities to capabilities
• Shift from single to multifirm systems
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
10
Specifying a Resource System
 Step 1: Identify core benefits in the value cluster
 Step 2: Identify capabilities that relate to each
benefit (In ed.2 they combine call capabilities
resources.) So, this is identify resources.
 Step 3: Link resources to each capabilities. (In ed.1,
resources was the actual systems, and they are no
longer listed in ed.2.)
 Step 4: Identify to what degree the firm can deliver
each capability
 Step 5: Identify partners who can complete
capabilities
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
11
Exhibit 5-4: 1-800-flowers.com Resource System
BloomNet
BloomNet
Network
Network
Address
Book
AddressBook
Gift
Gift
RecommendRecommendations
ations
Online
Gift
OnlineGift
Center
Center
Gift
Reminder
GiftReminder
From ed.1
Third
Party
ThirdParty
Contractors
Contractors
Strong
Strong
Distribution
Distribution
Network
Network
Fulfillment
Fulfillment
Center
Center
Stores
Stores
Rich
Content
RichContent
Broad
Broad
Assortment
Assortment
of
Gifts
ofGifts
High
Quality
HighQuality
of
Flowers
ofFlowers
Personalization
Personalization
Capabilities
Capabilities
Popular
Web
PopularWeb
Site
Site
Garden
Works
GardenWorks
Integrated
Integrated
Partner
Offers
PartnerOffers
Telephone
Telephone
3,000
Affiliates
3,000Affiliates
Plow
Hearth
Plow&&Hearth
Great
Foods
GreatFoods
Widespread,
Widespread,
Easy
Access
EasyAccess
Customer
Customer
Service
Service
On-line
On-line
Multiple
Contact
MultipleContact
Points
Points
Franchi
Franchi
se
se
Stores
Stores
Catalog
Catalog
Technology
Technology
Customer
Customer
Service
Service
Centers
Centers
= Core Benefits
= Activities & assets
= Capabilities
Wide
to
Reachto
WideReach
Customers
Customers
Strong
Brand
StrongBrand
Name
Name
Starmedia
Starmedia
SNAP
SNAP
Integrated
Integrated
on-line
offon-lineoffline
systems
linesystems
AOL
AOL
MSN
MSN
5
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
12
Exhibit 4-4: 1-800-Flowers.com Resource System
Strong
Distribution
Network
Online Gift
Center
Broad
Assortmen
t of Gifts
From ed.2
High
Quality of
Flowers
Popular
Website
Core
Benefits
Integrated
Partner Offers
Widesprea
d
Easy
Access
Customer
Service
Technology
Strong Brand
Name
Multiple
Contact Points
Wide Reach to
Customers
= Core Benefits
=Resources
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
13
Criteria to Assess the Quality of a Resource
System




Uniqueness of the system
Links between resources and benefits
Links among resources in the system
Links among resources (and supporting
systems)
 Links between virtual world and physical
world business systems
 Sustainable advantage
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
14
Exhibit 5-5 : On-line/Off-line Egg Diagram for 1-800-flowers.com

Special events and
educational workshops
held at stores


 Prompts


Off-line Product
Offering



“Care and handling”
“Do it yourself”
On-line
Product Offering
Prompts on toll free number recording
Suggestions from CSRs* in stores and via phone

on
toll free number
recording
 Suggestions from
CSRs* in stores and
via phone
 Brochure
Gift reminder service
Holiday specials
Everyday celebrations suggestions Ideas and Information
 Floral ideas
Special occasion suggestions
 Garden ideas
 Home ideas
 Gift ideas
 Gourmet ideas
Need
 Store locator
Recognition
 Recommendations by budget
 Best sellers
Education on Flowers and
Decoration
Gift Recommendations
 Gift guru
 Favorite gifts
 Gift frequency
 Gift impossible
 Gift baskets
 Corporate gift services
Search For Ideas
and Offerings
Post-Sales Support


In-store
customer service
Customer
servifce on tollfree number




Order receipt email
eQ&A online customer
service
FAQ
Customer service inquiry
form
Evaluation of
Alternatives


Perks

In-store specials
Specials offered
via phone





Suggestions
from CSRs in
stores via
phone
Brochure
Flower / Gift Decision Process
Post Sales Support
and Perks




Miles earned with
flower purchases
Free gifts
Discounts at AOL &
BN with flower
purchases
Member specials

Message
Selection




Product price
Product picture
Product description
Delivery information
Delivery availability


Information
from CSRs in
store and via
phone
Brochure
Purchase
Decision

Gizmo fully-animated greeting
cards
Physical cards in gifts


Select card in-store
Select card via phone


Shopping basket
E commerce transaction
Special shopping features
– Delivery outside U.S.
– 1-800-lasfloras.com
Purchase in-store
Purchase via phone
*CSR = Customer service representative
6
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
15
The Role of Partnerships
 Portal agreements (AOL, Yahoo, MSN, etc.)
 Anchor tenant agreements (exclusive
partnerships)
 Promotion agreements (cross industry
promotions such as frequent-flier miles,
telephone discount rates, gift certificates,
etc.)
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
16
What Are the Financial Models Available to
Firms?
Financial Models
Revenue Models
Shareholder Value Models
advertising
company and
user derived
product sales
company derived
value creation
transaction
subscription
Growth Models
products
new
existing
online markets
new
existing
offline markets
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
new
existing
Chapter 5: Business Models
17
Revenue Models
Advertising- Earning revenue through the selling of ads
(banner or interstitial), site sponsorships, event
underwriting, or other forms of communication
Product, Service, or Information Sales- Income
generated from the sale of goods on the site
Transaction- Revenue accrued from charging a fee or
taking a portion of the transaction sum
Subscription- Revenue generated through subscriber
fees for magazines, newspapers, or other
information/service businesses
License Fees- Revenue generated from licensing of
content Based on Rayport and Jaworski: Introduction to e-commerce:
Modified for 2005
Chapter 5: Business Models
18
Exhibit 5-6: Revenue Growth Choices: 1-800-flowers
Plow
Plow && Hearth
Hearth
Plants
Plants
PRODUCTS
New
Greatfoods.com
Greatfoods.com
Home
Home Decor
Decor
Gourmet
Gourmet Treats
Treats
Greeting
Greeting Cards
Cards
Existing
Corporate
Corporate Gift
Gift
Services
Services
Existing
In-Store
In-Store Seminars
Seminars
New
Existing
New
OFF-LINE MARKETS
ON-LINE MARKETS
9
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
19
Online Business Models
(value models for shareholders)
 Metamarket Switchboard Model
 Traditional and Reverse Auction Models
 Freshest-Information Model
 Highest-Quality Model
 Widest-Assortment Model
 Lowest-Price Model
 Most-Personalized Model
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
20
Exhibit 4-6: Summary of Online Business Models
Business
Models
Core
Benefits and
Proposition
Online
Offering
Metamarkets
Switchboard
Auction
 Single
 Depth
and
breadth of
product assortment
 Number of active buyers
Timely
 Either
 Usually
Broad
point of
access for all
needs
category specific
of access
categories
a large
number of
products
 Large,
Key
Resources
Revenue
Model
Examples
Freshest
Information
Highest Quality
and ac- High-quality
curate informa- products with
tion
exclusivity
or targeted audience
Concentrates
on smaller
offerings for
smaller markets
Broadest
inventory possible
Can lead to
best prices
Lowest Prices
 Lowest
prices
Can
Most
Personalized
 Unique
product, service, or
experience
be either
 Niche catecategory killer
gory or across
in one category
wide variety of
or widest ascategories
sortment
across man
categories
Significant
 Ability to build
brand name
strong backoffice systems
Strong logistics
and leverage
to manage
scale econobrand name
mies
 Geared
 Product
 Product
toward
a single buyer
active
 Large base of
customer base
buyers and
sellers
 Commitment
to building
 Good, reliable
technology
 Strong brand
name
 Transaction
 Transaction
fees
fees
 Product sales
 Advertising
 Affiliate deals
Hiring
 BabyCen-
 eBay
NYTimes.com
FAO.com
 Amazon.com
 Lowest-
 Reflect.com
ter.com
 Verticalnet
 CarPoint.com
 FashionMall.com
 Amazon
Salon.com
Ashford.com
 CDNow
fare.com
 Allbooksforless.com
 Outpost.com
 Sevency-
Modified for 2005
tions
 Covisint
Auc-
best
personnel
Product
and
service sales
Subscription
Advertising
Business
2.0
Zagat.com
Ability
Widest
Assortment
to
source
products
Outstanding
customer service
Strong brand
Product,
service, and
information
sales
Advertising
sales
 Product
sales
 Ability
to
generate exceptional customer knowledge
sales
 Subscriptions
 Sephora.com
 EBags.com
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
cles.com
 eDiets.com
21
Example: Marketwatch.com
Business Model
Value Cluster
• Target segments (savvy investors, “seekers”,
“dabblers”)
• Key benefits (up-to-the-minute information;
original, in-depth analysis; personal-finance tools;
multiple points of access)
• Supportive rationale (experienced editorial staff,
multiple forms of media, CBS News and Financial
Times brand names)
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
22
Marketwatch.com Business Model (cont’d)
 Supportive Rationale
• Experienced editorial staff with financial
expertise
• Infrastructure allowing access from multiple
forms of media
• Credibility through its association with CBS
News
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
23
Marketwatch.com Business Model
(continued)
 Marketspace Offering
• Scope: The best provider of financial
information and analysis across a number of
media
• Media: Online, television, radio, wireless
devices
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
24
Exhibit 5-8: MarketWatch.com Egg Diagram
Planning Tools
Learn




Investor’s Primer
IPO Basics
Financial Glossary




Track Investments

Portfolio View

Portfolio Analyzer

Portfolio Allocation

Portfolio Forecast
Track
Investments
Learn
About
Personal
Finance
Sharebuilder
Payment Calculator
Home Price Checker
Best Credit Card Rates
Insurance QuickQuote
Television

CBS MarketWatch
News Watch
Weekend

Email Alerts

Real-time Headlines  Contributions To:
– CBS Early Show

Hotstock Tracker
– CBS Evening News

Marketwatch Live
– CBS NewsPath

eSignal
Radio
 Contribution to Westwood One
Online

Plan
Investment
Strategy
Personal Finance Process
Stay Updated on
the Latest News
and Figures
Market Figures
Futures and Options
Futures Contracts

After-Hours Futures
Bonds

Bellwether Bonds
Report
Funds
Invest
Invest
Breaking News

Develop
Insight
Sponsorships by Online Brokerages

Datek Online
Develop Insight

Fidelity Investments
Third
Party
Sources
Commentary

National Discount Brokers

Fund Profile

Market Guide

Thom Calandra’s

Ameritrade

Fund Charts

Hoover’s Online
Stockwatch

DLJ Direct
Stocks

Multex

Bambi Francisco’s Net
Broker Decision Center

Interactive Charting

Annual Reports Club
Sense

Historical Charts

INVESTools

Bezderick on Bonds

Over 250,000 Investment  (Many other commentary
Research Reports
columns)

eNewsletters
Community

Private E-mail

People Watch

Hot Discussions

Occasional Polls
Global Markets



Key Rate
Snapshot
International
Indexes
Non-Us Stocks
US Markets



Market Monitor
Major Indexes
Dollar Volume
Leaders
1
3
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
25
Marketwatch.com Business Model
(continued)
 Resource System
•
•
•
•
•
CBS News
Financial Times
Marketwatch.com
BigCharts.com
Content partners (Hoovers, Zacks,
INVESTools, etc.)
• Distribution partners (Yahoo, AOL, Quicken,
etc.)
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
26
Exhibit 4-8: MarketWatch.com Resource System
International
Presence
Distribution
Partnerships
Up-to-theMinute
Information
Partnerships with
Content Providers
Multiple
Points of
Access
Available
Infrastructure
Credible
Analysis and
Personal
Finance Tools
Experienced
Editorial Staff
Modified for 2005
Association
with CBS
CORE BENEFITS
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
=Core Benefits
=Resources
27
Old View of Resource System from ed.1
Exhibit 5-9: MarketWatch.com Resource System
US
US
Asia
Asia
Up-to-the-minute
Up-to-the-minute
Information
Information
Multex
Multex
Annual
AnnualReports
ReportsClub
Club
AOL
AOL
FT
FTPartnership
Partnership
(Europe)
(Europe)
Big
BigCharts
Charts
Acquisition
Acquisition
Hoovers
Hoovers
Distribution
Distribution
Partnerships
Partnerships
DBC
DBCAdmin
Admin
Services
Services
Westwood
WestwoodOne
One
Radio
Radio
Network
Network
DBC
DBCTechnology
Technology
Leading
Leading
Technology
Technology
News
NewsAlert
Alert
Quicken
Quicken
Multiple
MultiplePoints
Pointsofof
Access
Access
International
International
Presence
Presence
Partnerships
Partnershipswith
with
Content
ContentProviders
Providers
Yahoo!
Yahoo!
Available
Available
Infrastructure
Infrastructure
Website
Website
WSRN
WSRN
Zacks
ZacksInvestment
Investment
Research
Research
INVESTools
INVESTools
Experienced
Experienced
Editorial
EditorialStaff
Staff
Experienced
Experienced
Reporters
Reporters
and
andEditors
Editors
Credible
CredibleAnalysis
Analysis
and
andPersonal
Personal
Finance
FinanceTools
Tools
Wireless
WirelessAccess
Access
Licensing
Licensing
CBS
CBSBrand
BrandName
Name
TV
TVJournalists
Journalists
Association
Association
with
withCBS
CBS
Brand
Brandmentions
mentions
during
duringCBS
CBSshows
shows
Well-organized
Well-organized
editorial
editorialstaff
staff
CBS
CBS
Marketwatch
Marketwatch
Weekend
Weekend
=Core Benefits
Access
Accesstoto
CBS
CBSStudios
Studios
Content
Content
Distribution
Distribution
Through
Through
CBS
CBSNewsPath
NewsPath
=Capabilities
=Activities and Resources
1
4
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
28
Exhibit 4-9: Partners Give / Get Matrix
Benefits to Partner:
“Give”
Partners


CBS News


Content Partners
(e.g., Hoovers,
Zacks, INVESTools)

Modified for 2005
Experienced editorial staff
24/7 international coverage of
financial markets
Real-time financial news
34 percent ownership of
MarketWatch.com

Access to MarketWatch.com
audience






Distribution Partners
(e.g., Yahoo, AOL,
Quicken)
Benefits to MarketWatch.com:
“Get”

Users get access to
MarketWatch.com content and
tools
Advertising and click-through
fees collected


Credibility of CBS brand name
Access to CBS facilities
Access to CBS audience of 6.6
million homes
$30 million of rate-card
promotion and advertising on
CBS channels
High-quality analysis of financial
news
Portion of revenue generated
from sales of partner products
Increase in audience reach
Increase in brand recognition
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
29
Marketwatch.com Business Model
(continued)
 Revenue model
• Advertising revenue (72% in 1999)
• Licensing revenue (21% in 1999)
• Other revenue, subscription, etc. (7% in 1999)
 Value model (best information)
 Growth model
•
•
•
•
•
Modified for 2005
Advanced portfolio-tracking tools
International markets
Services to address expanded trading hours
Expand reach to wireless devices
Expand TV and radio shows to more stations
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
30
Table 5-7: MarketWatch.com Revenue Growth Choices
Advanced Portfolio Tracking
Tools
International Markets
New
Services Leveraging Increased
Broadband
Products and
Features
Services to Address Expanded Trading
Hours
Expand TV and Radio Shows
to More Stations
Expand Reach to Wireless Devices
Expand Number of
Newspapers Providing
MarketWatch Content
Existing
Existing
New
Existing
On-line Markets
New
Off-line Markets
1
6
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
31
Exhibit 4-10: MarketWatch.com’s
Revenue Distribution
40
35
30
25
20
Advertising
34.95
Licensing
24.77
Other
18.03
17.98
15.81
15
10
5.26
5
3.15
1.64
3.09
0
1999
Modified for 2005
2000
2001
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
32
Alternative to Business Value Models:
Market-wide Classification Schemes
 Porter generic strategy model
• differentiation strategy
• cost strategy
• niche strategy
 Sawhney and Kaplan model
• business-to-customer hubs
• business-to-business hubs (vertical and functional hubs)
 Rayport, Jaworski, and Siegal model
•
•
•
•
Modified for 2005
Forward-integrated producers
Supply-side aggregators
Backward-integrated user
Demand-side aggregators
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
33
Exhibit 5-7: Sawhney and Kaplan — Classification of B-to-B Models
VERTICAL HUBS
Paper
Paper
Chemicals
Chemicals
Plastics
Plastics
Steel
Steel
Logistics
LogisticsManagement
Management
Media
MediaBuying
Buying
FUNCTIONAL
HUBS
Advertising
Advertising
Energy
EnergyManagement
Management
Source: Adapted from Business 2.0, September 1999, p.88
Modified for 2005
1
0
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
34
Table 5-4: RJS Model Summary
SOURCES OF CONTENT ORIGINATION
SupplySide
Single Brand
Multiple Brands
Forward-Integrated Producer
Supply-Side Aggregator
(Wal-Mart.com)
(Surplusdirect.com)
Backward Integrated User
Demand-Side Aggregator
(Dellonline.com) - B2B
(Accompany.com)
FOCUS OF
STRATEGY
DemandSide
Hybrid Integrator
(Cisco.com)
Hybrid Aggregator
(Amazon.com)
1
1
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
35
Table 5-5: Implications of “Pure Play” Business Approaches
Business Model
Forward-Integrated
Producer
Implications
Potential Sources of
Competitive
Advantage
Potential Benefits to
Producer
Potential Benefits to
User
• Streamlined
•
•
outbound logistics
Producer brand
Producer customer
base
• Lower cost for
delivery of products,
services, or
information
• Efficiencies which
translate into cost
savings
• Lower price for
products, services,
or information
• Efficiencies which
translate into cost
savings
Backward Integrated
User
• Streamlined
inbound logistics
Supply Aggregator
• Strong brand
identity
• Relevant strategic
alliances
• Lower cost for
• More targeted
delivery of products,
access to
services, or
customers
information
• Efficiencies which
translate into cost
savings
• Lower price for
• Time savings
products, services, • Privacy
or information
• Efficiencies which
translate into cost
savings
Demand Aggregator
• Strong brand
identity
• Relevant customer
scale
• Expanded access
to customers
• More targeted
access to
customers
• Connection to
others who are
likeminded
• Access to relevant
information/advice
1
2
Modified for 2005
Based on Rayport and Jaworski: Introduction to e-commerce:
Chapter 5: Business Models
36