ecommerce.pdf

ELECTRONIC COMMERCEELECTRONIC COMMERCE -- Framework, Technologies and Applications Framework, Technologies and Applications TataTataMcGrawMcGraw--Hill Hill 11

Electronic Commerce:Electronic Commerce:Business ModelsBusiness Models

22ELECTRONIC COMMERCEELECTRONIC COMMERCE -- Framework, Technologies and Applications Framework, Technologies and Applications TataTataMcGrawMcGraw--Hill Hill

Learning ObjectivesLearning Objectives

Importance of Business Models in Importance of Business Models in Electronic CommerceElectronic Commerce

What is a Business Model?What is a Business Model? Taxonomy of Electronic Commerce Taxonomy of Electronic Commerce

Business ModelsBusiness Models Transplanted Content based ModelsTransplanted Content based Models Transplanted Transaction based Transplanted Transaction based

ModelsModels Native Content Based ModelsNative Content Based Models Native Transaction based ModelsNative Transaction based Models


Growth in Electronic CommerceGrowth in Electronic Commerce

Unprecedented Growth in Internet ConnectivityUnprecedented Growth in Internet Connectivity Unprecedented Growth in Number of Web SitesUnprecedented Growth in Number of Web Sites Unprecedented High Profile failuresUnprecedented High Profile failures

Boo.comBoo.com (US $135 million)(US $135 million) Toysmart.comToysmart.com Kozmo.comKozmo.com (US $50 million)(US $50 million) Etoys.comEtoys.com Jaldi.comJaldi.com Autoindia.comAutoindia.com

Is Electronic Commerce Businesses are for real?Is Electronic Commerce Businesses are for real?


Electronic Commerce: Business ModelElectronic Commerce: Business Model

A business model describes a set of A business model describes a set of business entities and interrelationships business entities and interrelationships among them. The model describes the among them. The model describes the sources of revenues and potential sources of revenues and potential benefits accruing to the involved benefits accruing to the involved business actors.business actors.


Electronic Commerce: Business ModelElectronic Commerce: Business Model

The business model provides the broad The business model provides the broad perspective necessary for identifying perspective necessary for identifying appropriate solution at some level of appropriate solution at some level of abstraction.abstraction. The identified solution The identified solution should be sustainable in terms of should be sustainable in terms of revenues and capable of realizing the revenues and capable of realizing the stated objective. stated objective.


Taxonomy of Business ModelsTaxonomy of Business Models

Content TransactioContent Transactionsns

TransplantedNative

Information Content ModelFreeware ModelInformation Exchange Model

Digital ProductsInternet Access ProvisionWeb Hosting & Internet Services Metered Service ModelMetamediary Model

Subscription ModelAdvertisement ModelInfomediary ModelAffiliate Model

Electronic Store ModelBrokerage ModelManufacturing Model


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Information Content ModelInformation Content Model

Web is a largest source of Information repositoriesWeb is a largest source of Information repositories In the early stages of Web developments In the early stages of Web developments Major Major

source of Information Contents were scientists, source of Information Contents were scientists, Academicians and ResearchersAcademicians and Researchers

The Information is typically available at no charge The Information is typically available at no charge basisbasis

It is typically utilized by agencies and groups interested It is typically utilized by agencies and groups interested in wide dissemination of informationin wide dissemination of information

For example,For example, Virtual Library Virtual Library ---- http://www.vlib.orghttp://www.vlib.org International Council of MuseumsInternational Council of Museums

http://www.icom.org/vlmphttp://www.icom.org/vlmp National Informatics Center, IndiaNational Informatics Center, India http://www.nic.inhttp://www.nic.in


Freeware ModelFreeware Model

Distribution of cooperatively developed free Distribution of cooperatively developed free software prototypes, products, patches and software prototypes, products, patches and demonstration versions.demonstration versions.

The contents (software packages) can be The contents (software packages) can be downloaded at no incremental cost.downloaded at no incremental cost.

For ExampleFor Example Linux Linux http://www.linux.orghttp://www.linux.org GNU GNU ---- http://www.gnu.orghttp://www.gnu.org Apache Web server Apache Web server http://www.apache.orghttp://www.apache.org


Information Exchange ModelInformation Exchange Model

The interactionThe interaction-- clickclick--stream and transaction stream and transaction in addition to voluntarily provided information in addition to voluntarily provided information at time of registrations at a web site can be at time of registrations at a web site can be used for creating profile of user. used for creating profile of user.

This information can be exchanged with other This information can be exchanged with other targeted marketing and promotions companies. targeted marketing and promotions companies.

Privacy IssuesPrivacy Issues


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Subscription ModelSubscription Model

Economic Databases (CMIE, Prowess)Economic Databases (CMIE, Prowess) Stock Exchange Trading information (NSE )Stock Exchange Trading information (NSE ) Digital Contents Digital Contents

Scientific discoveries, Scientific discoveries, Images Images http://cfahttp://cfa--www.harvard.eduwww.harvard.edu Stock Market Stock Market -- EDGAREDGAR Journals Journals ---- http://acm.orghttp://acm.org, , http://http://ieee.orgieee.org

The model provides a subscription based access to The model provides a subscription based access to Digital contentsDigital contents

Flat rates vs. Contents based subscription ratesFlat rates vs. Contents based subscription rates


Advertising ModelAdvertising Model

Web sites that establish providing free interactive and Web sites that establish providing free interactive and repetitive services such as Email, Chat sessions, repetitive services such as Email, Chat sessions, Discussion forums, News etc. aggregate web traffic or Discussion forums, News etc. aggregate web traffic or eyeeye--ballsballs

These sites can serve Advertisements to these eyeballs These sites can serve Advertisements to these eyeballs by charging the companies to make up for the content by charging the companies to make up for the content provision and other associated cost and profit margins. provision and other associated cost and profit margins. The model is derived from the free television model.The model is derived from the free television model.

Charging on the basis of number of times a Charging on the basis of number of times a advertisement has been served. Additional charges for advertisement has been served. Additional charges for the clickthe click--through.through.

ISPs ISPs -- Caltiger.comCaltiger.com, , Juno.comJuno.com EmailsEmails-- HotMail.comHotMail.com, , Rediffmail.comRediffmail.com Portals/search engines Portals/search engines Yahoo.comYahoo.com


InfomediaryInfomediary ModelModel

Aggregated personal profiles/needs from its Aggregated personal profiles/needs from its users (consumers and /or suppliers)users (consumers and /or suppliers)

Subsequently, markets that data to interested Subsequently, markets that data to interested set of users set of users

Maintains the data privacyMaintains the data privacy The users may get a portion of the brokered The users may get a portion of the brokered

dealsdeals It operates by lowering the search/location It operates by lowering the search/location

cost cost It leverages on interaction cost for identifying It leverages on interaction cost for identifying

the right product and price in a fast evolving the right product and price in a fast evolving technologically innovative product groupstechnologically innovative product groups


Affiliate ModelAffiliate Model

Affiliated Web Site

Sponsoring Merchants Site

User Enters Affiliates Website

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1: Affiliated Site redirects the customer to sponsoring merchants site2: The Sponsoring merchant pays a percentage of transaction to the affiliated site

Figure 2.2: The Affiliate Model


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Digital Product Merchant ModelDigital Product Merchant Model

Seller Digital DataMM Content

s/w Programs

BuyerDigital DataMM Content

S/W Programs

Transaction

Payment Flow

Information Flow

Delivery


Internet Access Provision ModelInternet Access Provision Model

Network Infrastructure is at the foundation of growth Network Infrastructure is at the foundation of growth of electronic commerceof electronic commerce

Various modes of Internet Service ProvidersVarious modes of Internet Service Providers DialDial--up Servicesup Services Cable based servicesCable based services DSL and ADSLDSL and ADSL Leased Line servicesLeased Line services

Payment optionsPayment options Flat ratesFlat rates Bandwidth based flat ratesBandwidth based flat rates Usage basedUsage based Free Access (in lieu of advertisement viewing)Free Access (in lieu of advertisement viewing)


Web Hosting & Internet Services ModelWeb Hosting & Internet Services Model

Electronic Shops and Businesses require 24x7 Electronic Shops and Businesses require 24x7 presence, upkeep, maintenancepresence, upkeep, maintenance

Also, common services like transaction security and Also, common services like transaction security and payment servicespayment services

SMEsSMEs may not have expertise and the cost to get on may not have expertise and the cost to get on electronic marketplace by addressing all infrastructure electronic marketplace by addressing all infrastructure issues may get too highissues may get too high

In this business model, the infrastructure company In this business model, the infrastructure company provides complete set of services required for hosting provides complete set of services required for hosting your business online.your business online.

Yahoo Shops, Yahoo Shops, iCatsiCats Lemonade Stand, Lemonade Stand, Pugmarks.comPugmarks.com Other services related to Speeding up the access Other services related to Speeding up the access

across the globe etc.across the globe etc.


Metered Service ModelMetered Service Model

Owning licenses for multiple software Owning licenses for multiple software packages, information databases, computing packages, information databases, computing resources that are used occasionally is usually resources that are used occasionally is usually an expensive and timean expensive and time--consuming proposition.consuming proposition.

It puts strain on resourcesIt puts strain on resources Distracts from core business activities.Distracts from core business activities. Model Model -- Pay as you go approach for services on Pay as you go approach for services on

demanddemand ExampleExample-- HPsHPs Infrastructure on Tap Infrastructure on Tap


MetamediaryMetamediary ModelModel

intermediary that provides a single point of contact intermediary that provides a single point of contact between a community of customers and the between a community of customers and the community of supplierscommunity of suppliers

it deconstructs space and timeit deconstructs space and time it offers products in new waysit offers products in new ways

MetamediariesMetamediaries present the information from users present the information from users viewpoint rather than the Industry segments. viewpoint rather than the Industry segments.


MetamediaryMetamediary ModelModel

Travel Travel MagzinesMagzines

Newspaper classifiedsNewspaper classifieds

Travel AgentsTravel Agents

Hotel reservationHotel reservationAgentsAgents

Skiing Equipment dealerSkiing Equipment dealer

Trekking ClubsTrekking Clubs

Peer and Expert Peer and Expert reviews reviews

InsuranceInsurance

FinancingFinancing


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Electronic Store ModelElectronic Store Model

Requires robust delivery (third party) infrastructureRequires robust delivery (third party) infrastructure

Seller Seller Products like Products like Computers, Computers,

Electronic Systems, Electronic Systems, and Cameraand Camera

BuyerBuyerProducts like Products like Computers, Computers,

Electronic Systems, Electronic Systems, and Cameraand Camera

TransactionTransaction

Payment FlowPayment Flow

Information FlowInformation Flow

DeliveryDelivery


Brokerage ModelBrokerage Model

Market makers, also known as brokers, play an Market makers, also known as brokers, play an important role of facilitating the transactions by important role of facilitating the transactions by bringing the buyers and seller togetherbringing the buyers and seller together

Commission based ServicesCommission based Services Model Model Transplant the per transaction/value based Transplant the per transaction/value based

commission model by bringing the sellers and buyers commission model by bringing the sellers and buyers on electronic marketplaceon electronic marketplace

For ExampleFor Example

Stock brokersStock brokers-- Charles Schwab, Charles Schwab, ICICIDirectICICIDirect FlowersFlowers-- TeleflowersTeleflowers AuctionsAuctions-- BaZee.comBaZee.com, , AuctionIndia.comAuctionIndia.com


Manufacturer ModelManufacturer Model

From Manufacturer to ConsumerFrom Manufacturer to Consumer Product passes through several intermediariesProduct passes through several intermediaries The cost of product increases in the distribution The cost of product increases in the distribution

processprocess Each intermediate layer assists in the distribution and Each intermediate layer assists in the distribution and

logisticslogistics If a manufacturer is capable of direct distributionIf a manufacturer is capable of direct distribution-- it it

can reduce the distribution cost.can reduce the distribution cost. In the process, it may need to handle several distribution and In the process, it may need to handle several distribution and

logistics issueslogistics issues The customer feedback can be direct, and thus create an The customer feedback can be direct, and thus create an

opportunity for massopportunity for mass--customizationcustomization ExampleExample-- Dell ComputersDell Computers

ecommerce.pdf

Documents

hill hill electronic

applications framework

electronic commerce

hill hill growth

electronic commercegrowth

involved business actors

set of business entities

modelsnative content