1 E-Business Models Kazan State University Instructor: Sasa Dekleva

2 Outline Introduction Marketplaces and Exchanges Storefront model Shopping cart technology Online shopping malls Auction model Portal model Dynamic pricing models Name your price, Comparison pricing, Demand-sensitive pricing, Bartering B2B e-business: benefits and obstacles Click-and-mortar businesses

3 Introduction E-business A company has online presence A company buys, sells, trades or barters over the Internet Business model is defined by company’s policies, operations, principles and technology Key components of e-business include: electronic data interchange (EDI) messaging, electronic funds transfer file transfers, e-forms customer service

4 Electronic Marketplaces and Exchanges Some serve specific industry communities and consist of: independent "market makers“ industry-led consortia private collaborative e-marketplaces Provide access to neutral information about products from a variety of competing companies Examples include: Chemdex.com for the chemicals industry (closed by now) Chemdex.com plantautomation.com for plant automation managers plantautomation.com eDental.com for dentists eDental.com Integration of online auctions is increasing the attractiveness of such communities

5 “Consortia" Marketplaces Such markets include: Covisint for the auto industry Covisint eHitex and e2Open for the electronics/high-tech sector eHitex Aerospan and MyAircraft.com for the aerospace industry AerospanMyAircraft.com Transora for the food, beverage, and consumer packaged- goods industries Transora Avendra and HotelnetB2B for the hotel and hospitality industry AvendraHotelnetB2B TradeRanger and Intercontinental Exchange for the energy industry TradeRangerIntercontinental Exchange Buyers and sellers will be able to negotiate deals electronically and employ intelligent agents to do it

6 E-Markets and Exchanges Potential for significant savings and reaching new markets Still in flux, because: e-market ventures face long-term financial issues retrenchment in venture capital and investor funding traditional companies with lots of money back the industry consortia could pull out of these operations if they fail to deliver value suppliers may back away from buyer-side marketplaces fear of commoditization of their products

7 Storefront Model Enables merchants to sell products or services on the Web Involves transaction processing, security, online payment, information storage 24-by-7 E-commerce allows companies to conduct business 24-by-7, all day everyday, worldwide An e-commerce storefront should include: online catalog of products order processing secure payment timely order fulfillment

8 Shopping Cart Technology Shopping cart Shopping cart Order-processing technology allowing customers to accumulate lists of items they wish to buy as they continue to shop Shopping cart is supported by: product catalog merchant server database technology Combining a number of purchasing methods to give customers a wide array of options

9 Online Shopping Malls Wide selection of products and services Offers greater convenience than shopping at multiple online shops Consumers can make multiple purchases in one transaction

10 Auction Model Online auction sites Act as forums through which Internet users can log on and assume the role of either bidder or seller Collect a commission on every successful auction Sellers post items they wish to sell and wait for buyers to bid Reserve price The minimum price a seller will accept in a given auction Reverse auctions Allow the buyer to set a price as sellers compete to match or even beat it

11 eBay’s Home Page

12 Placing a Bid on eBay

13 Portal Model Portal sites Give visitors the chance to find almost everything they are looking for in one place Horizontal portals Portals that aggregate information on a broad range of topics Yahoo!, AltaVista, Google Yahoo!AltaVistaGoogle Vertical portals Portals that offer more specific information within a single area of interest WebMD, IMDB, FirstGov WebMDIMDBFirstGov

14 Portals Enterprise portals remain a potent force for binding together business goals for providing a unified view of the enterprise to its customer base Increasingly viewed as appropriate for nontransactional relationships

15 Dynamic Pricing Models The Web has changed the way products are priced and purchased Comparison pricing model Web sites using shopping bot technology to find the lowest price for a given item Demand-sensitive pricing model Group buying reduces price as volume of sales increases Name-your-price model Name-your-price for products and services

16 Dynamic Pricing Models Bartering model Individuals and business trade unneeded items for items they desire Ubarter.com, isolve.com Ubarter.comisolve.com Rebate model Sites offer rebates on product at leading online retailers in return for commission or advertising revenues eBates Free offering model Free products and services generate high traffic Freemerchant, StartSampling, FreeSamples.com FreemerchantStartSamplingFreeSamples.com

17 E-Business Benefits The major benefits include: lower purchasing costs improved supply-chain management reduced cycle times faster time to market improved customer service new market opportunities improved management controls as a result of embedded business rules

18 Access to Information E-business gives companies access to information on their customers and vendors Through XML, e-business applications can make accounting, marketing, inventory, and product information accessible to business partners E-business extracts data and transmits it over the Internet to the partner's computer system The information is integrated into the partner's databases and stored in data marts or data warehouses Using OLAP or data-mining tools, business analysts can examine and model customer preference and purchasing trends

19 E-Business Barriers Barriers include: lack of single, comprehensive solutions need to reorganize business processes legacy application integration security bandwidth scalability high-availability issues

20 Click-and-Mortar Businesses Brick-and-mortar Companies that operate solely offline with traditional business practices Click-and-mortar Companies operating with both an online and offline presence Click-and-mortar companies have brand recognition, and an established customer base Barnes and Noble, BestBuy Barnes and NobleBestBuy

21 Click-and-Mortar Businesses Key benefits to automotive industry Combined supplier base Connects automobile manufacturers, dealers and consumers in a single marketplace Decreases lead time and production costs Key benefits to electronics industry Provides access to thousands of components from hundreds of electronic suppliers Provides ability to search by part number, product type or manufacturer Increases competitive pricing

22 Click-and-Mortar Businesses Key benefits to energy industry Provides real time pricing data on energy commodities Provides access to hundreds of energy commodities Allows regional energy providers to gain access to worldwide market Key benefits to food industry Reduced lead time preserves perishables Provides access to real time pricing data Online auction technology allows for alternative pricing

23 Click-and-Mortar Businesses Benefits to chemical industry Access to millions of chemical products from thousands of suppliers Integrated supply chains provide faster, more reliable transactions Benefits to construction industry Contracting and subcontracting are made simpler by online bidding Construction companies can find raw materials from suppliers worldwide

24 Software Offerings Software vendors call their offerings "e-business" solutions, which include: e-commerce supply-chain management customer, partner, and employee relationship management business intelligence and knowledge management All solutions coming now on the market will deliver data to browsers, typically as an HTML rendering Many Web-aware applications now support XML standards

25 Standards E-business requires open, standard platforms and protocols Open standards for e-business include: TCP/IP XML HTML HTTP COM CORBA ANSI X.12 SET SSL need to plug into ERP

26 Extensible Markup Language (XML) System for defining, validating, and sharing document formats XML enhances interoperability between systems and databases Created and developed by the W3C XML Working Group XML maintains the separation of the user interface from structured data XML resembles and complements HTML, with XML tags describing the data More than 330 XML initiatives are underway among various industry groups

27 XML-Related Initiatives UDDI (Universal Description, Discovery and Integration) XAML (Transaction Authority Markup Language) tpaML (Trading Partner Agreement Markup Language) SOAP (Simple Object Access Protocol) e-Speak