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BUSINESS DRIVEN TECHNOLOGY

Business Plug-In B7E-Business Models

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LEARNING OUTCOMES

1. Describe the business-to-business (B2B) and business-to-consumer (B2C) e-business models

2. Describe the four main areas where companies conduct business online

3. Differentiate between a vertical marketplace and a horizontal marketplace

4. Summarize the current trends for e-business models

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INTRODUCTION

• Pure play – an Internet retailer that has no physical store, such as Expedia.com and Amazon.com

• E-business – conducting business on the Internet, not only buying and selling, but also serving customers and collaborating with business partners

• E-business model – an approach to conducting electronic business through which a company can become a profitable business on the Internet

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E-Business: Commerce on the Internet

• The 4 main areas where companies conduct business online include:

1. Direct marketing, selling, and services

2. Financial and information services

3. Maintenance, repair, and operations (MRO)

4. Intermediaries

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DIRECT MARKETING, SELLING, AND SERVICES

• Keys to success– Marketing – create site visibility and

demand– Sales – allow personalized content and

adaptive selling processes, integrate with back-office

– Services – automate customer service features such as customer feedback, customer inquires, tracking information, and customized services

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FINANCIAL AND INFORMATION SERVICES

• Online banking – Paying bills– Making transfers between accounts– Trading stocks, bonds, and mutual funds

• Online billing – Internet-based bill delivery services saves

money

• Secure information distribution – – Business can safeguard information

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MAINTENANCE, REPAIR, AND OPERATIONS (MRO)

• MRO goods include – office suppliers, office equipment, furniture, computers, and replacement parts

• Internet transforms corporate purchasing from a labor-and paperwork-intensive process into a self-service application

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INTERMEDIARIES

• Intermediaries – agents, software, or businesses that bring buyers and sellers together that provide a trading infrastructure to enhance e-business

• Reintermediation – using the Internet to reassemble buyers, sellers, and other partners in a traditional supply chain in new ways

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INTERMEDIARIES

• Common intermediaries– Content providers – companies that use the

Internet to distribute copyrighted content, including news, music, games, books, movies, and many other types of information

– Online brokers – intermediaries between buyers and sellers of goods and services

– Market makers –intermediaries that aggregate three services for market participants• A place to trade• Rules to govern trading• An infrastructure to support trading

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INTERMEDIARIES

• Types of Intermediaries

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E-BUSINESS MODELS

• Business-to-business (B2B)• Business-to-consumer (B2C)• Consumer-to-business (C2B)• Consumer-to-consumer (C2C)

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BUSINESS-TO-BUSINESS (B2B) MODELS

• Business-to-business (B2B) – applies to businesses buying form and selling to each other over the Internet

• E-procurement – the B2B purchase and sale of supplies and services over the Internet

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BUSINESS-TO-BUSINESS (B2B) MODELS

• Systematic sourcing – involves buying through prenegotiated contracts with qualified suppliers

• Spot sourcing – businesses buy transaction-oriented commodity-like products and rarely involves a long-term or ongoing relationship between buyers and sellers

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BUSINESS-TO-BUSINESS (B2B) MODELS

• Marketplace classifications1. MRO hubs

2. Yield managers

3. Catalog hubs

4. Exchanges

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BUSINESS-TO-BUSINESS (B2B) MODELS

• B2B exchanges are new organizational forms in digital space that can take place in the following:

– Buyer model (few buyers, many sellers)– Marketplace model (many buyers, many

sellers)– Longer term relationship model (few buyers,

few sellers)– Seller model (few sellers, many buyers)

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BUSINESS-TO-BUSINESS (B2B) MODELS

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Buyer Model (Few Buyers, Many Sellers)

• Reverse auction – the winning bid is the lowest, rather than the highest

• English auction – the highest bid offer wins

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Marketplace Model (Many Buyers, Many Sellers)

• Marketplace model – allows a virtually infinite number of businesses to transact electronically with minimal cost

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Longer Term Relationship Model (Few Buyers, Few Sellers)

• Longer term relationship model – items requiring a high degree of planning between buyers and sellers either in the design stage or in fulfillment

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Seller Model (Few Sellers, Many Buyers)

• Seller model – appropriate when the supplier hosts value-added services on its Web site such as suppliers’ product catalog and customers’ order information

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BUSINESS-TO-CONSUMER (B2C) BUSINESS MODELS

• Business-to-consumer (B2C) – appliers to any business that sells its products or services to consumers over the Internet

– e-shops (e-stores, e-tailers) – a version of a retail store where customers can shop at any hour of the day without leaving home or office

– e-mall – consists of a number of e-shops

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CONSUMER-TO-BUSINESS (C2B) BUSINESS MODELS

• Consumer-to-business (C2B) – applies to any consumer that sells a product or service to a business over the Internet

• C2B facilitates the following:– Social interaction– Personal finance management– Purchasing products and information

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CONSUMER-TO-BUSINESS (C2B) BUSINESS MODELS

• Consumer-to-consumer (C2C) – appliers to sites primarily offering goods and services to assist consumers interacting with each other over the Internet

• C2C communities thriving on the Internet:

– Communities of interest– Communities of relations– Communities of fantasy

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E-BUSINESS CHALLENGES

• Cost

• Value

• Security

• Leverage existing systems

• Interoperability

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Current Trends: E-Marketplaces and E-Markets

• e-marketplaces – are interactive business communities providing a central market space where multiple buyers and sellers can engage in e-business activities

– Horizontal marketplaces – connect buyers and sellers across many industries, primarily by simplifying the purchasing process

– Vertical marketplaces – provide products that are specific to trading partners in a given industry

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Current Trends: E-Marketplaces and E-Markets

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E-MARKETPLACE BENEFITS AND REVENUE MODELS

• Advantages and limitations of various e-marketplace revenue models

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THE “CONTENT” PERSPECTIVE OF E-MARKETPLACES

• Content and product description establish the common understanding between parties in a transaction

• The accessibility, usability, accuracy, and richness of the content directly affects the transaction

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Closing Case OneE-Business@eBay

• eBay.com is the world’s largest e-marketplace, offering everything from its trademark Pez dispensers and Beanie Babies to automobiles and homes

• eBay.com enables trade on a local, national, and international basis with customized sites in markets around the world

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Closing Case One Questions

1. Other major Web sites, like Amazon.com and Yahoo!, have entered the auction e-marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?

2. eBay is one of the only major Internet “pure plays” to consistently make a profit from its inception. What is eBay’s e-business model and why has it been so successful?

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Closing Case One Questions

3. eBay has long been an e-marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set up shop on eBay?

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Closing Case TwoMail with PostalOne

• United States Postal Service’s (USPS) productivity has grown by only 11 percent over the past three decades

• USPS is pursuing several e-business projects to help increase growth including:– NetPost Mailing Online– Post Electronic Courier Service– NetPost.Certified– EBillPay

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Closing Case Two Questions

1. Do you think the USPS’s steps are far-reaching enough to ensure its relevance in e-business?

2. What other strategic alliances, akin to its partnership with CheckFree, can the Postal Service develop to stay competitive?

3. Why would the USPS compete in a market that private companies already serve well?