ELC 200 Day 4. Agenda Questions Roll Call Assignment 1 posted in Blackboard Due September 17 @ 2 PM...

ELC 200ELC 200Day 4Day 4

Agenda Questions Roll Call Assignment 1 posted in Blackboard

Due September 17 @ 2 PM (Next Class) assignment1.pdf

Finish Discussion on E-commerce Finish Discussion on E-commerce Business Models and ConceptsBusiness Models and Concepts

Chapter 2Chapter 2E-commerce Business Models and E-commerce Business Models and

ConceptsConcepts

Copyright © 2014 Pearson Education, Inc.

Learning Objectives Identify the key components of e-commerce

business models. Describe the major B2C business models. Describe the major B2B business models. Understand key business concepts and

strategies applicable to e-commerce.


Source: http://mdmk2012.wikispaces.com/Groupon%27s+User+Experience+Analysis

http://mdmk2012.wikispaces.com/Groupon%27s+User+Experience+Analysis

http://mdmk2012.wikispaces.com/Groupon%27s+User+Experience+Analysis

Insight on Business: Class Discussion

Is Groupon’s Business Model Sustainable? What is the value of Groupon to merchants? What

types of merchants benefit the most? What is the value of Groupon to investors? Is Groupon overvalued? What obstacles does Groupon face? Which competitors present the greatest threat to

Groupon?http://local.amazon.com/portland-me https://plus.google.com/u/1/+GoogleOffers/posts


http://local.amazon.com/portland-me

http://local.amazon.com/portland-me

Major B2C Business Models E-tailer Community provider (social network) Content provider Portal Transaction broker Market creator Service provider


B2C Models: E-tailer Online version of traditional retailer Revenue model: sales Variations:

Virtual merchantBricks-and-clicksCatalog merchantManufacturer-direct

Low barriers to entryDrop shippers


B2C Models: Community Provider Provide online environment (social

network) where people with similar interests can transact, share content, and communicate e.g.: Facebook, LinkedIn, Twitter, Pinterest

Revenue modelsTypically hybrid, combining advertising,

subscriptions, sales, transaction fees, affiliate fees


B2C Models: Content Provider Digital content on the Web

News, music, video, text, artwork

Revenue models Subscription; pay per download (micropayment);

advertising; affiliate referral

Variations Content owners Syndication http://www.yellowbrix.com/ Web aggregators https://news.google.com


Insight on Technology: Class Discussion

Battle of the Titans: Music in the Cloud Have you purchased music online or subscribed to a

music service? What was your experience?

What revenue models do cloud music services use?

Do cloud music services provide a clear advantage over download and subscription services?

Of the cloud services from Google, Amazon, and Apple, which would you prefer to use, and why?


B2C Business Models: Portal Search plus an integrated package of

content and services Revenue models

Advertising, referral fees, transaction fees, subscriptions

VariationsHorizontal/GeneralVertical/Specialized (Vortal)Search


B2C Models: Transaction Broker Process online transactions for

consumers Primary value proposition—saving time and money

Revenue model Transaction fees

Industries using this model Financial services lendingtree.com Travel services orbitz.com Job placement services Monster.com, indeed.com


B2C Models: Market Creator Create digital environment where

buyers and sellers can meet and transacte.g.: Priceline, eBay

Revenue model Transaction fees


B2C Models: Service Provider Online services

e.g.: Google—Google Maps, Gmail, etc.

Value proposition Valuable, convenient, time-saving, low-cost

alternatives to traditional service providers

Revenue modelsSales of services, subscription fees, advertising,

sales of marketing data


B2B Business Models Net marketplaces

E-distributorE-procurementExchangeIndustry consortium

Private industrial network


B2B Models: E-distributor Version of retail and wholesale store,

MRO goods and indirect goods Owned by one company seeking to

serve many customers Revenue model: Sales of goods e.g., Grainger.com, McMaster-Carr


B2B Models: E-procurement Creates digital markets where participants

transact for indirect goodsB2B service providers, application service providers

(ASPs)e.g., Ariba

Which cartoon character Says “Up! Up! Come on! Come on!” in Spanish?

Revenue modelService fees, supply-chain management, fulfillment

services


B2B Models: Exchanges Independently owned vertical digital marketplace

for direct inputs Revenue model

Transaction, commission fees

Create powerful competition between suppliers Tend to force suppliers into powerful price

competition; number of exchanges has dropped dramatically

http://www.chemnet.com/


B2B Models: Industry Consortia


Industry-owned vertical digital marketplace open to select suppliers

More successful than exchangesSponsored by powerful industry playersStrengthen traditional purchasing behavior

Revenue model: Transaction, commission fees

e.g., Exostar, Covisint

Private Industrial Networks Digital network Used to coordinate communication

among firms engaged in business together

Typically evolve out of company’s internal enterprise system

e.g.: Walmart’s network for suppliers


E-commerce Enablers:The Gold Rush Model

E-commerce infrastructure companies have profited the most:Hardware, software, networking, securityE-commerce software systems, payment systemsMedia solutions, performance enhancementCRM softwareDatabasesHosting services, etc.


Early Ecommerce Winners


How the Internet and the WebChange Business

E-commerce changes industry structure by changing: Michael Porter’s Five Forces

http://www.businessballs.com/portersfiveforcesofcompetition.htm

1. Rivalry among existing competitors

2. Barriers to entry

3. Threat of new substitute products

4. Strength of suppliers

5. Bargaining power of buyers


Industry Value Chains Set of activities performed by suppliers,

manufacturers, transporters, distributors, and retailers that transform raw inputs into final products and services

Internet reduces cost of information and other transactional costs

Leads to greater operational efficiencies, lowering cost, prices, adding value for customers


E-commerce and Industry Value ChainsFigure 2.3, Page 55


Firm Value Chains Activities that a firm engages in to

create final products from raw inputs Each step adds value Effect of Internet:

Increases operational efficiency

Enables product differentiation

Enables precise coordination of steps in chain


E-commerce and Firm Value ChainsFigure 2.5, Page 101


Value Chain Primary Activities1. Inbound logistics (get products or services)

2. Operations (make products or services)

3. Outbound logistics (deliver products or services)

4. Marketing and sales (sell products or services)

5. Service (deal with customer issues)

Value Chain Support Activities1. Corporate infrastructure

(management and support activities)

2. Human resources

3. Technology development

4. Finance & Accounting

5. Procurement (get MRO & supplies)

Value Chain for American Airlines

Analyzing Value Chain Activities What type of activity is being performed? Does it add value? Does it

ensure the quality of other activities?

How does the activity add value to the customer?

Could the same activity be reconfigured or performed in a different way?

What inputs are used? Is the expected output being produced?

Is the activity vital? Could it be outsourced, deleted completely, or combined with another activity?

How does information flow into and out of the activity? Is the activity a source of competitive advantage? Does the activity fit the overall goals of the organization?

E-commerce Value Chain The E-commerce Value Chain means identifying:

The competitive forces within the company’s e-commerce environment

The business model it will useIdentifying the value activities that help the e-

commerce value chain do its homework

E-commerce views information technology as part of a company’s value chain


Firm Value Webs Networked business ecosystem

Uses Internet technology to coordinate the value chains of business partners Within an industry

Within a group of firms

Coordinates a firm’s suppliers with its own production needs using an Internet-based supply chain management system

Slide 2-40


Internet-Enabled Value WebFigure 2.7, Page 105

Slide 2-41


Business Strategy Plan for achieving superior long-term returns

on the capital invested in a business firm Michael Porter’s Generic Strategies

http://www.quickmba.com/strategy/generic.shtml

Four generic strategies1. Differentiation

2. Cost

3. Scope

4. Focus

Slide 2-42

Auto example


Russia

World Wide

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