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E-commerce Business Models

Business models—a method of Business models—a method of doing business by which a doing business by which a company can generate revenue company can generate revenue to sustain itselfto sustain itself

ExamplesExamples::Name your priceName your price

Find the best priceFind the best price

Dynamic brokeringDynamic brokering

Affiliate marketingAffiliate marketing

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E-commerce Business Plans and

CasesBusiness plan: a written document that identifies the business goals and outlines the plan of how to achieve them Business case: a written document that is used by managers to garner funding for specific applications or projects; its major emphasis is the justification for a specific investment

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Structure of Business Models

Business model:Business model: A method of A method of doing business by which a doing business by which a company can generate company can generate revenue to sustain itself revenue to sustain itself

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Structure of Business Models (cont.)

Revenue model:Revenue model: description of description of how the company or an EC how the company or an EC project will earn revenueproject will earn revenue

SalesSalesTransaction fees Transaction fees Subscription feesSubscription feesAdvertising Advertising Affiliate feesAffiliate feesOther revenue sourcesOther revenue sources

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Structure of Business Models (cont.)

Value proposition:Value proposition: The benefits a The benefits a company can derive from using ECcompany can derive from using EC

search and transaction cost efficiencycomplementaritieslock-innoveltyaggregation and interfirm collaboration

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Exhibit 1.4: Common Exhibit 1.4: Common Revenue ModelsRevenue Models

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Typical Business Modelsin EC

1. Online direct marketing2. Electronic tendering systems

tendering (reverse auction): model in which a buyer requests would-be sellers to submit bids, and the lowest bidder wins

3. Name your own price: a model in which a buyer sets the price he or she is willing to pay and invites sellers to supply the good or service at that price

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Typical Business Models in EC (cont.)

4.4. Affiliate marketing: an arrangement Affiliate marketing: an arrangement whereby a marketing partner (a whereby a marketing partner (a business, an organization, or even an business, an organization, or even an individual) refers consumers to the individual) refers consumers to the selling company’s Web siteselling company’s Web site

5.5. Viral marketing:Viral marketing: word-of-mouth word-of-mouth marketing in which customers marketing in which customers promote a product or service to promote a product or service to friends or other peoplefriends or other people

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Typical Business Models in EC (cont.)

6.6. Group purchasing: quantity Group purchasing: quantity purchasing that enables groups purchasing that enables groups of purchasers to obtain a of purchasers to obtain a discount price on the products discount price on the products purchasedpurchased

7.7. SMEs:SMEs: s small to medium mall to medium enterprisesenterprises

8.8. Online auctionsOnline auctions

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Typical Business Models in EC (cont.)

8.8. Product and service customizationProduct and service customizationcustomization:customization: creation of a creation of a product or service according to product or service according to the buyer’s specificationsthe buyer’s specifications

8. Electronic marketplaces and exchanges

9. Value-chain integrators10. Value-chain service providers

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Typical Business Models in EC (cont.)

12. Information brokers13. Bartering 14. Deep discounting15. Membership16. Supply chain improvers

Business models can be independent or they can be combined amongst themselves or with traditional business models

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Example of Example of Supply Chain ImproverSupply Chain Improver

Orbis Group changes a linear physical supply chain to an electronic hub

Traditional process in the B2B advertising field

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Example of Example of Supply Chain Improver Supply Chain Improver

(cont.)(cont.)

ProductBank ProductBank simplifies this simplifies this lengthy process lengthy process changing the changing the linear flow of linear flow of products and products and information to information to a digitized huba digitized hub