revenue models and the business plan in e-commerce back to table of contents
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Revenue Modelsand the BusinessPlan in E-Commerce
Revenue Modelsand the BusinessPlan in E-Commerce
Back to Table of Contents
Revenue Modelsand the BusinessPlan in E-Commerce
Revenue Modelsand the BusinessPlan in E-Commerce
E-Commerce Revenue ModelsE-Commerce Revenue Models
E-Commerce Business PlanE-Commerce Business Plan
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Revenue Models and the Revenue Models and the Business Plan in E-Commerce Business Plan in E-Commerce
SectionSection 8-1
SectionSection 8-2
Chapter 8
Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Section 8-1Why It’s Important
A revenue model determines how a company makes money and how the company functions.
A well thought out model can mean the difference between success and failure.
Understanding what revenue models entail can help you understand more about how companies operate.
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Section 8-1 Key Terms
revenue model
e-zine
blog
affiliate program
licensing
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
What Is a Revenue Model?
The type of revenue model you choose will depend on the type of product or service you intend to sell.
revenue model how a company generates income
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Types of Revenue Models
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E-Commerce Revenue Models
Section 8-1
E-Commerce Models Online Applications
Product Sales consumer goods, retail, wholesale
Advertisingsearch engines, Web portals, directory pages, commercial Web sites
Serviceonline fee-for-service, fee-for-transaction, subscriptions
Inter-Organizational procurement, supply chain, distribution
Third-Party e-malls, online auctions, online exchanges
Licensing intellectual rights, patents, copyrighted material
Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Types of Revenue Models
The most basic revenue model involves selling one product or related product line to customers who use your Web site as they would a print catalog.
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Types of Revenue Models
There are two types of products you can sell:
8Section 8-1
products you make, which you should sell at a higher price than they cost to make
products you buy, which you should sell at a higher price than you paid for them
Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Types of Revenue Models
A wholesale price is the price a supplier charges a business for a product.
A retail price is the price a business charges customers.
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Types of Revenue Models
Like magazines, TV stations, and other media outlets, Web sites can sell advertising space as a source of revenue.
An online business must ensure that its ads will reach its target audience.
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Types of Revenue Models
Most magazines, newspapers, and information services earn income by selling advertising and subscriptions. An e-zine can also generate revenue by selling subscriptions.
e-zine electronic magazine
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Types of Revenue Models
A specialized type of e-zine is the weblog, or blog.
blog a public online journal kept by a writer, or blogger; short for Weblog
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Types of Revenue Models
Another way to generate revenue is through an affiliate program.
affiliate program a partnership through which an online business delivers customers to other online businesses
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In exchange for bringing business to your affiliates, you receive a commission, or a percentage of the sales they make on that business.
Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Types of Revenue Models
The idea behind licensing is simple.
licensing the granting of permission to use intellectual property, such as music, photos, software programs, and inventions
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Assume you have created a product. Companies would pay you a licensing fee for the right to market, copy, or use the product.
Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Types of Revenue Models
In the case of musical compositions, licensing is a critical form of protection.
Whenever a musical work is performed for the public—beyond family and friends—the performers must obtain a license.
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Section 8-1 Review
What is a revenue model? What is a major factor in determining the type of revenue model to use?
Why is it important for advertisers to know about a company’s customers before advertising on a particular site?
What is the difference between wholesale and retail prices?
What is a blog? How can it generate income?
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Section 8-1
Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Section 8-2Why It’s Important
Creating a company is hard work, and entrepreneurs must have a clear path, or business plan, laid out when they begin and as they continue to operate their businesses.
Knowing what a business plan contains will help you to understand more about what creating and running a business entails.
Section 8-2 17
Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Section 8-2 Key Terms
business plan
forward-looking statements
income statement
balance sheet
assets
liabilities
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
What Is a Business Plan?
Your business will be defined by your choices.
When you have to make tough decisions, such as whether to offer a new product, you’ll be able to refer to your business plan for guidance.
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
What Is a Business Plan?
Your business plan will be used to show potential investors what you hope to accomplish and how you plan to get there.
business plan a detailed description of a business’s objectives, products and services, operations, potential customers, and financial resources
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Elements of a Business Plan
21Section 8-2
Cover Page
Title Page
Table of Contents
Executive Summary
Management Plan
Company Description
Product and Service Plan
Mission and Vision Statements
Industry Overview
Market Analysis
Competitive Analysis
Marketing Plan
Operations Plan
Organizational Plan
Financial Plan
Growth Plan
Contingency Plan
Supporting Documents
Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Elements of a Business Plan
The executive summary of your business plan is a brief but detailed description of the company’s mission, objectives, products, and competition.
It is used to convince the reader that an operation is well-planned and has a good chance of success.
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Elements of a Business Plan
Your business plan should include forward-looking statements.
forward-looking statements the parts of a business plan that describe the future of a company in both the short and the long term
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Elements of a Business Plan
Investors will want to know about the demographics of your Web site.
Demographics include information about a customer’s age, income level, and location.
This information is used to identify a target market for a business.
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Elements of a Business Plan
An income statement is an important financial statement.
income statement summarizes a company’s revenue and expenses for a period of time and shows profits or losses
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A balance sheet is another important financial statement.
balance sheet shows how much a business is worth at a specific time
Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Elements of a Business Plan
A balance sheet lists all of a business’s assets and liabilities and shows the net worth, or actual value of the business.
assets all of the things owned by a business
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liabilities debts or lawsuits
Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Elements of a Business Plan
No matter how you choose to raise money, your business plan will serve as your primary set of credentials.
If you don’t need to raise money, your plan will serve as a road map for success.
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
Section 8-2 Review
What is a business plan? Why is it important?
What is an executive summary? Why is it an important component of a business plan?
What does an income statement reveal about a business? Why is it important?
What are customer demographics? Why is this information important?
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Revenue Models and the Business Plan in E-Commerce Revenue Models and the Business Plan in E-Commerce
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