3rd week - e-commerce business models and concepts
DESCRIPTION
E-commerce, Information Technology, UNIM MojokertoTRANSCRIPT
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Information Technology, Engineering Faculty
UNIM
E-Commerce Business Models &
Concepts
Academic Year: 2014-2015
UNIM
(3rd Week)
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Bussiness Model
Definition
Source: "Business Models for Electronic Markets" by Paul Timmers
in Electronic Markets, Vol. 8, No. 2, July 1998, p. 4.
• An architecture for the product, service, and information flo
ws, including a description of the various business actors and
their roles; and
• A description of the potential benefits for the various business
actors; and
• A description of the sources of revenue.
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Type of Bussiness Model
Michael Rappa
1. Brokerage
2. Advertising
3. Infomediary
4. Merchant
5. Manufacturer
6. Affiliate
7. Community
8. Subscription
9. Utility
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Brokerage
Definition
Brokers are market makers, they bring buyers and sellers together
and facilitate transactions in B2C or B2B or C2C markets.
Scope
Marketplace Exchange: Orbitz, ChemConnect
Buy/Sell Fulfillment: CarsDirect, Respond.com
Demand Collection System: Priceline.com
Auction Broker: eBay
Transaction Broker: PayPal, Escrow.com
Distributor :
Search Agent: MySimon
Virtual Marketplace: Amazon.com
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Advertising
Definition
This model is an extension of the traditional media broadcasting model.
This model only works when the volume of viewer traffic is large or highly s
pecialized.
Scope
Portal : Yahoo!
Classifieds: Monster.com, Match.com
User Registration: NYTimes Digital
Query-based Paid Placement : Google, Overture
Contextual Advertising : Gator, WhenU, eZula
ContentTargeted Advertising : Google
Intromercials : CBS MarketWatch
Ultramercials
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Infomediary
Definition
Data about consumers and their buying habits are extremely val
uable, especially when that information is carefully analyzed and
used to target marketing campaigns.
Independently collected data about products are useful to cons
umers. Infomediaries provide information to both buyers and selle
rs.
Scope
Advertising Networks : DoubleClick
Audience Measurement Services : Nielsen//Netratings
Incentive Marketing : Coolsavings, MyPoints, Greenpoints
Metamediary : Edmunds
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Merchant
Definition
These are classic wholesalers and retailers of goods and services.
In other words, "e-tailers.“
Scope
Virtual Merchant :Amazon.com
Catalog Merchant : Lands’ End
Click and Mortar : Barnes & Noble
Bit Vendor : Apple iTunes Music Store
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Manufacturer
Definition
This model is predicated on the power of the Web to allow manu
facturers to reach buyers directly and thereby compress the distri
bution channel.
Scope
Purchase, Lease, License, Brand Integrated Content.
E.g.
DellComputer
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Affiliate
Definition
Provides purchase opportunities from a number of different sites.
The affiliate sites provide purchase-point click-through to the mer
chant.
Scope
Banner Exchange, Pay-Per-Click, Revenue Sharing.
E.g.
Barnes & Noble and Amazon.com.
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Community
Definition
Users who have a common interest in an area congregate at co
mmunity Web sites.
The viability of the community model is based on user loyalty.
Scope
Open Source: RedHat
Public Broadcasting: The Classical Station (WCPE.org)
Knowledge Networks: AllExpert.
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Subscription
Definition
Users are charged a periodic fee to subscribe to a service.
Scope
Content Services: Listen.com, Netflix
Person-to-Person Networking Services: Classmates
Trust Services: Truste
Internet Service Providers: America Online
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Utility
Definition
A metered usage or pay as you go approach.
Scope
Metered Usage, Metered Subscriptions.
E.g.
IBM (International Business Machine)
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Business Concept
8 Key Elements of a Business Model
1. Value proposition
2. Revenue model
3. Market opportunity
4. Competitive environment
5. Competitive advantage
6. Market strategy
7. Organizational development
8. Management team
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Value Proposition
“Why should the customer buy from you?”
Successful e-commerce value propositions:
Personalization/customization
Reduction of product search, price discovery costs
Facilitation of transactions by managing product delivery
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Revenue Model
“How will the firm earn revenue, generate profits, and produce a su
perior return on invested capital?”
Major types:
Advertising revenue model
Subscription revenue model
Transaction fee revenue model
Sales revenue model
Affiliate revenue model
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Market Opportunity
“Whatmarketspace do you intend to serve and what is its size?”
Marketspace: Area of actual or potential commercial value in w
hich company intends to operate
Realistic market opportunity: Defined by revenue potential in eac
h market niche in which company hopes to compete
Market opportunity typically divided into smaller niches
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Competitive Environment
“Who else occupies your intendedmarketspace?”
• Other companies selling similar products in the same marketspac
e
• Includes both direct and indirect competitors
Influenced by
Number and size of active competitors
Each competitor’s market share
Competitors’ profitability
Competitors’ pricing
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Competitive Advantage
“What special advantages does your firm bring to the marketspace
?”
Is your product superior to or cheaper to produce than your com
petitors’?
Important concepts
Asymmetries
First-mover advantage, complementary resources
Unfair competitive advantage
Leverage
Perfect markets
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Market Strategy
“How do you plan to promote your products or services to attract yo
ur target audience?”
Details how a company intends to enter market and attract cust
omers
Best business concepts will fail if not properly marketed to potenti
al customers
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Organizational development
What types of organizational structures within the firm are necessary
to carry out the business plan?”
Describes how firm will organize work
Typically, divided into functional departments
As company grows, hiring moves from generalists to specialists
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Management Team
“What kind of backgrounds should the company’s leaders have?”
A strong management team
Can make the business model work
Can give credibility to outside investors
Has market-specific knowledge
Has experience in implementing business plans
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Finish