e comm models

Comp2513Comp2513

E-Commerce Business ModelsE-Commerce Business Models

Daniel L. Silver, Ph.D.Daniel L. Silver, Ph.D.

2002 Daniel L. Silver 2

OutlineOutline

Three fundamental categories of E-Commerce Three fundamental categories of E-Commerce business modelsbusiness models– B2C, B2B and C2CB2C, B2B and C2C

A B2C ScenarioA B2C Scenario– Window ShoppingWindow Shopping– Step into the store (registration)Step into the store (registration)– Filling the shopping cartFilling the shopping cart– On to the checkoutOn to the checkout– Paying for the itemsPaying for the items– Fulfillment and shipment trackingFulfillment and shipment tracking


Three Fundamental Categories of Three Fundamental Categories of E-Commerce Business ModelsE-Commerce Business Models

B2C – Business to ConsumerB2C – Business to Consumer– What most people typically think of when they What most people typically think of when they

think E-Commercethink E-Commerce C2C – Consumer to ConsumerC2C – Consumer to Consumer

– Auctions, Bartering modelsAuctions, Bartering models B2B – Business to BusinessB2B – Business to Business

– The original E-Commerce models – Why?The original E-Commerce models – Why?


B2C – Business to ConsumerB2C – Business to Consumer

Storefront Model Storefront Model – The best known form of E-CommerceThe best known form of E-Commerce– Displays products (catalogs), takes orders, Displays products (catalogs), takes orders,

accepts payment, fulfills order, manage accepts payment, fulfills order, manage customer datacustomer data

– Click and Mortar versus Internet OnlyClick and Mortar versus Internet Only– Amazon.com, eToys.com, CDnow.com, Amazon.com, eToys.com, CDnow.com,

Chapters.caChapters.ca



Online Shopping Mall ModelOnline Shopping Mall Model– Present wider selection of products and servicesPresent wider selection of products and services– Searching and shopping convenienceSearching and shopping convenience– Common shopping cart, payment and shipping Common shopping cart, payment and shipping

methodmethod– Takes advantage of economies of scaleTakes advantage of economies of scale– Merchants are charged in various waysMerchants are charged in various ways– Mall.com, Canadashop.com, Shoptheshops.comMall.com, Canadashop.com, Shoptheshops.com



Portal ModelsPortal Models– Horizontal portals – general search enginesHorizontal portals – general search engines

» Broad range of topics, shallow depthBroad range of topics, shallow depth» Links to various malls, stores, auctions, sourcesLinks to various malls, stores, auctions, sources» Altavista.com, Hotbot.com, Yahoo.com, GoogleAltavista.com, Hotbot.com, Yahoo.com, Google

– Vertical portals – specialistVertical portals – specialist» Narrow range of topics, in-depth informationNarrow range of topics, in-depth information» See See http://http://www.verticalportals.comwww.verticalportals.com//

– Help users collect information and purchaseHelp users collect information and purchase– Charge merchants for advertisememtsCharge merchants for advertisememts



Innovative/Dynamic Pricing ModelsInnovative/Dynamic Pricing Models– Name-your-price – Priceline.comName-your-price – Priceline.com– Comparison pricing – Bottomdollar.comComparison pricing – Bottomdollar.com– Bulk-buy pricing – mercata.com, mobshop.comBulk-buy pricing – mercata.com, mobshop.com– Rebating – eBates.com. eCentives.comRebating – eBates.com. eCentives.com– Free products and services – iWon.com, Free products and services – iWon.com,

Freemerchant.com – free hosting, free store Freemerchant.com – free hosting, free store building, free traffic logs, free auction tools, etc building, free traffic logs, free auction tools, etc

Most would not be possible without the InternetMost would not be possible without the Internet


C2C – Consumer to ConsumerC2C – Consumer to Consumer

Auction ModelAuction Model– Internet forum for sellers and biddersInternet forum for sellers and bidders– Various auctions (reserve-price, reverse, Dutch)Various auctions (reserve-price, reverse, Dutch)– eBay.com (1995, Pez dispenser collector)eBay.com (1995, Pez dispenser collector)– 4M simultaneous auctions, 450K new items/day4M simultaneous auctions, 450K new items/day– $3.8B spent in online auctions in 2000$3.8B spent in online auctions in 2000(Forrester)(Forrester)

Bartering ModelBartering Model– Offering one item in exchange for anotherOffering one item in exchange for another– Ubarter.comUbarter.com


B2B – Business to BusinessB2B – Business to Business

Businesses have long done E-Commerce with Businesses have long done E-Commerce with each othereach other– EFT – Electronic Funds Transfer (banks)EFT – Electronic Funds Transfer (banks)– EDI – Electronic Data Interchange (suppliers)EDI – Electronic Data Interchange (suppliers)

Traditional EDI uses a VAN Traditional EDI uses a VAN (value-added network)(value-added network)

– Closed networks, manufactures and suppliers Closed networks, manufactures and suppliers – Purchase orders and invoices exchanged dailyPurchase orders and invoices exchanged daily– Standards vary, VANs are costly, closed netsStandards vary, VANs are costly, closed nets

Moving to the Internet, Web technology and XML Moving to the Internet, Web technology and XML (upgrade of EDI) (upgrade of EDI)


B2B – Business to BusinessB2B – Business to Business

B2B Internet exchanges provide standard methods B2B Internet exchanges provide standard methods of buying, selling, bartering and partneringof buying, selling, bartering and partnering

2003: US$403 B 2003: US$403 B 2004 projection: 2004 projection:

– US$2.77 trillion US$2.77 trillion » (eMarketer)(eMarketer)

– US$7.29 trillion US$7.29 trillion » (Gardner Group)(Gardner Group)

B2B auctions:B2B auctions:– US$52 billion 2002US$52 billion 2002


The Traditional B2C The Traditional B2C Commerce ScenarioCommerce Scenario

1.1. Buyer and seller meetBuyer and seller meet

2.2. Buyer chooses product and places orderBuyer chooses product and places order

3.3. Seller delivers productSeller delivers product

4.4. Buyer pays for productBuyer pays for product


The E-Commerce B2C ScenarioThe E-Commerce B2C Scenario

Consumer PerspectiveConsumer Perspective Search the InternetSearch the Internet Choose the right Choose the right

productproduct Place the order and Place the order and

shipping info.shipping info. Enter payment info.Enter payment info. Receive product via Receive product via

Internet or ground Internet or ground shipmentshipment

Business PerspectiveBusiness Perspective AdvertisingAdvertising Inventory (product) Inventory (product)

ManagementManagement Order Processing Order Processing

(shopping cart)(shopping cart) Payment MgmtPayment Mgmt Fulfillment and Fulfillment and

ShippingShipping Profile ManagementProfile Management


A B2C ScenarioA B2C Scenario

I would like to buy some hands-free I would like to buy some hands-free technology to work with my cellular phone technology to work with my cellular phone for my consulting business.for my consulting business.

Criteria:Criteria:– It must be reliableIt must be reliable– Inexpensive as possibleInexpensive as possible– Light-weightLight-weight– Small (able to fit into my pocket)Small (able to fit into my pocket)


Typical B2C Shopping TripTypical B2C Shopping TripView Homepage Registration

Address Book

Shopping Cart

Product AdvisorSearch

Receive Ack.

Submit Order

Enter Payment Info.

Enter Shipping Info.

Select Products

Navigate


A B2C ScenarioA B2C ScenarioTechnology QuestionsTechnology Questions

How does a browser connect to a server?How does a browser connect to a server? How does a search engine work?How does a search engine work? What is a cookie?What is a cookie? How do those banner adds work?How do those banner adds work? Are there web pages for every item?Are there web pages for every item? What is all that gobbledygook in the page address?What is all that gobbledygook in the page address? What is a shopping cart? How long does it exist?What is a shopping cart? How long does it exist? How does a web sites know who I am on return?How does a web sites know who I am on return? Should I register?Should I register?


A B2C ScenarioA B2C ScenarioTechnology QuestionsTechnology Questions

How does it find my password?How does it find my password? How does it automatically send me emails?How does it automatically send me emails? What are the messages concerning insecure What are the messages concerning insecure

submissions all about?submissions all about? What is authentication, certificate, encryption?What is authentication, certificate, encryption? How do they know my credit card is good?How do they know my credit card is good? How do they know there is credit left?How do they know there is credit left? How is software I have purchased downloaded?How is software I have purchased downloaded? How do they track my shipment?How do they track my shipment?


B2C Levels of AutomationB2C Levels of Automation

Front-EndFront-End Static Web contentStatic Web content Dynamic Web contentDynamic Web content Secure orderingSecure ordering Shopping cartShopping cart Persistent customer Persistent customer

DataData Personalization of Personalization of

ContentContent

Back-EndBack-End ManualManual Non-integrated Non-integrated

computercomputer Automatic entryAutomatic entry Total Web integrationTotal Web integration


Business Evolution on the WebBusiness Evolution on the Web

Publishing

Time or Maturity

Functionality Interactivity

Transactions

Processes

Static web pages

Dynamic web pages

Web-enabled applicatons

THE ENDTHE END

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