E-business classification, types and mechanisms

1. E-Business Models_2

2. Agenda
• B2C business models
• B2B business models
• Business models in other emerging areas
of e-commerce

3. Classsification of E-commerce
Business Models
• There is more than one way of
classification (No single correct way)
• Some companies use multiple business
models

4. Classifications may be according to:
• Interacting participants
– B2C, B2B, C2C, G2C, G2B, P2P
• Value proposition (offer)
• Revenue model
• Main theme, key processes
• Customers’ role
• Type of e-commerce technology
• etc.

5. B2C E-Business Models
• Portal
• E-tailer
• Content provider
• Transaction Broker
• Market Creator
• Service Provider
• Community Provider

6. B2B E-Business Models
• E-distributor
• E-procurement
• Exchanges (B2B Hubs)
– Private marketplaces
– Industry Consortia
• Single firm network
• Industry-wide networks

7. B2C Business Models: Portal
• Portals are “gateways” to the Internet
– Offers powerful Web searching tools-effiency and
ease
• But today, the portal business model is in
addition to serving as a gateway to the
Internet;
– It is a destination site
– provide an integrated package of content and
services all in one place
• Typically utilizes combination of subscription,
advertising, transaction fee model
• ISP (usually)

8. B2C Business Models: Portal
• an integrated package of
content like
• news
• last minute
• weather forecasts
• currency rates
• stock quotes
• phone and map
information
• services like
• E-mail accounts
• Entertainment
• Chat
• Community forum
• Game
• Downloads
• Shopping-auction
• E-card
• Sms service
• search

9. Types & Examples
May be
• General or horizontal : portal
– Intranets are also called enterprise portals
• Specialized or vertical : vortal
• Examples
– Superonline.com
– E-kolay.com
– Mynet.com
– Tnn.net
– Tr.net
– Yahoo.com
– Msn.com
– Aol.com

10. VORTALs
• A gateway or portal to information related to a particular
industry, such as human resources, health care,
insurance, automobiles, or food manufacturing.
• Vortals are also seen as likely business-to-business
communities
• Kariyer.net
• Tatilsepeti.com
• Snowboard.com
• Yenibir.com
• Secretcv.com
• Cityname.com
• E-kolay (portal) links (vortals)
– Bigpara, bebek, kadın, etc.

11. An alternative definition and
classification for portals
a single point of access through a Web browser to
information inside and/or outside an
organization
• Commercial (public) portals
• Corporate portals
• Publishing portals
• Personal portals
• Mobile portals: a portal accessible via a mobile
device
• Voice portals: a portal accessed by telephone
or cell phone

12. B2C Business Models: E-tailer
• Online version of traditional retailer
• Types include:
 Virtual merchants:online retail store only
 Eg. kangurum.com
 Clicks and bricks:online distribution channel for
a company that also has physical stores. eg.
Migros sanal magaza
 Catalog merchants:online version of direct mail
catalog
 Manufacturer:manufacturer selling directly over
the Web
 Virtual shopping mall:eg. garantialisveris

13. Barriers to entry into the e-tailer
marketplace, high or low?
• Barrier to entry means
– the total cost of entering a new marketplace
• Barrier to entry for e-tailers is LOW
BUT
• Becoming profitable and surviving is very difficult
with no prior brand name
– How can a new electronic e-tailer compete with
teknosa.com?
– Is it easy for a new toy company to compete with
toysRUs which has alliance with amazon.com

14. Business Model:
Market Creator
• Uses Internet technology to create markets in
digital environment that bring buyers and sellers
together
– To display products
– Search for products
– Establish a price
• Auction, reverse auction
(promena.com.tr,myfutura.com=4build.com) or
fixed price marketplaces
• Typically uses a transaction fee revenue model
• They don’t have inventory or production cost

15. Market Creators
• They are middleman
• The success factor is:
– attracting sufficient critical number of sellers and
buyers to the marketplace
– Speed, ability to become operational quickly
• Examples:
– Gittigidiyor.com, muzayede.com, eskidji.com
– eBay.com, Priceline.com
• E-tailers have also started auction sites to create
market on their e-tail sites

16. Content Provider
• Information and entertainment companies that
provide digital content, such as news, photos,
video, artwork, deviantart.com, youtube.com
over the Web
• Typically utilizes
– subscription,
– pay for download, or
– advertising revenue model
• The success factor is owning the content
• eg. Online books, online perodicals,
broadcasters of TV and radio

17. Syndication-Aggregation
Aggregation is a variation of standard
content provider model
• Infomediaries:
electronic intermediaries that control information
flow in cyberspace, often aggregating information
and selling it to others
• They do not own but aggregate and distribute
the content produced by others
• Difficult to succeed unless it has a unique
information source that other can not have

18. Transaction Broker-Intermediaries
• Processes online transactions for consumers
normally handled in person by phone or e-mail
• Primary value proposition – saving of time and
money by providing timely, accurate information
and opinion
• Typical revenue model – transaction fee
• Industries using this model:
– Financial services
– Travel services
– Job placement services

19. Difference of transaction brokers from
market creators
• Transaction brokers
– actually carry out the transaction for their
customers
– act as agents in large markets
• Market creators
– Sellers and buyers are their own agents

20. Service Provider
• Offers services online, like consultancy,
trade knowledge, expertise, eg.
Rega.com.tr
• Value proposition – valuable, convenient,
time-saving, low-cost alternatives to
traditional service providers
• Revenue models – subscription fees or
one-time payment

21. Community Provider
• Sites that create a digital online
environment. people with similar interests
can transact, communicate, and receive
interest-related information.
• Typically rely on a hybrid revenue model
• Alliances like Linux, Kazaa,I-mesh,
Naspter, bearshare, limeware, emule can
be classified as community provider

22. 22
B2B Business Models

23. E-distributor
• An intermediary that connects
manufacturers (suppliers) with buyers by
aggregating the catalogs of many
suppliers in one place and services
directly to individual businesses
• E-distributors in B2B
– Maintenance, repair, and operation items
(MROs):
Routine items that are usually not under regular
contract with suppliers

24. E-procurement Companies
• Create and sell access to digital electronic
markets
• B2B service provider is one type – offer
purchasing firms sophisticated set of sourcing
and supply chain management tools
• Application service providers a subset of B2B
service providers
• Examples:
 Ariba
 CommerceOne

25. Exchanges (B2B Hubs)
• An electronic digital marketplace where
suppliers and commercial purchasers can
conduct transactions
• Usually owned by independent firms whose
business is making a market
• Generate revenue by charging transaction fees
• Usually serve a single vertical industry
• http://www.b2bprofile.com/turkey
• Wtpfed.org

26. Industry Consortia
• Industry-owned vertical marketplaces that
serve specific industries
• Horizontal marketplaces, in contrast, sell
specific products and services to a wide
range of industries
• Leading example: Covisint

27. Private Industrial Networks
• Digital networks (usually, but not always
Internet-based) designed to coordinate the
flow of communications among firms
engaged in business together
• Single firm network: the most common
form (example – Walmart)
• Industry-wide networks: often evolve out
of industry associations

28. 28
Business Models in Emerging
E-commerce Areas

29. Consumer-to-Consumer (C2C)
P2P
P4P
• C2C Provide a way for consumers to sell
to each other, with the help of a online
marketmaker. E.g. gittigidiyor.com,
eBay.com
• P2P Peer to peer
• P four P

30. Peer-to-Peer (P2P) Business Models
• Links users, enabling them to share files and
common resources without a common server
• Challenge is for P2P ventures to develop viable,
legal business models
• Example: Kazaa; Groovenetworks
• Facebook
• youtube
• Eksisozluk.com
• Yonja.com

31. E-commerce Enablers:
The Gold Rush Model
• Internet infrastructure companies: Companies whose
business model is focused on providing infrastructure
necessary for e-commerce companies to exist, grow and
prosper
• Provide
• hardware, software, networking,
• security, e-commerce software systems
• payment systems, databases, hosting services, etc.
• Examples: turkticaret.net, est.com.tr, imat.com.tr

32. 32
E-commerce Enablers

33. Auctions as EC Market Mechanisms
• Auction:
A market mechanism by which a seller
places an offer to sell a product and buyers
make bids sequentially and competitively
until a final price is reached
• Auctions can be done:
– online
– off-line
– at public sites (eBay)
– at private sites (by invitation)

34. Auctions as EC Market Mechanisms
• Electronic auctions (e-auctions):
Auctions conducted online
• Host sites on the Internet serve as brokers,
offering services for sellers to post their
goods for sale and allowing buyers to bid on
those items
• Conventional business practices that
traditionally have relied on contracts and
fixed prices are increasingly being
converted into auctions with bidding for
online procurements

35. Auctions as EC Market Mechanisms
• Dynamic pricing:
Prices that change
based on supply
and demand
relationships at any
given time

36. Auctions as EC Market Mechanisms
• Four major categories of dynamic pricing
1. One buyer, one seller
2. One seller, many potential buyers
3. One buyer, many potential sellers
4. Many sellers, many buyers

37. Auctions as EC Market Mechanisms
1. One buyer, one seller
Forward auction: An auction in which a
seller entertains bids from buyers
One seller, many potential buyers
Forward auctions used for fast liquidation
and as a selling channel. Price is
increasing; the highest bidder wins

38. Auctions as EC Market Mechanisms
2. One buyer, many potential suppliers
Reverse auction (bidding or tendering
system):
Auction in which the buyer places an item for
bid (tender) on a request for quote (RFQ)
system, potential suppliers bid on the job,
with price reducing sequentially, and the
lowest bid wins; primarily a B2B or G2B
mechanism

39. Auctions as EC Market Mechanisms
3. One buyer, many potential sellers
(special model)
“name-your-own-price” model:
Auction model in which a would-be buyer
specifies the price (and other terms) they
are willing to pay to any willing and able
seller. It is a C2B model, pioneered by
Priceline.com

40. Auctions as EC Market Mechanisms
4. Many sellers, many buyers
Double auction:
Auctions in which multiple buyers and their
bidding prices are matched with multiple
sellers and their asking prices, considering
the quantities on both sides

41. The Reverse Auction Process

42. Benefits of E-Auctions

43. SOURCES and REFERENCES
Prepared from the books and other supplementary
materials of the books and their ppt
presentations
• Kenneth C. Laudon and Carol Guercio Traver;
2004; E-commerce, business, technology and
society;Addison Wesley
• Efraim Turban; 2002 Electronic Commerce, A
Managerial Perspective; Prentice Hall