E COMMERCE BUSINESS MODELS AND CONCEPTS TWEET TWEET!
NEW TRENDS AND TECHNOLOGIES 2010 – 174 Million people would use search engines to conduct billion searches online 150 million people would watch 30 million videos online 104 million people would read blogs Are we this starved for communication options? Twitter was the phenomena of the moment in which “tweeple” express themselves in 140 characters or less … “friends’ here are “followers” Twitter has produced little revenue and zero profits although $160 million has been invested … how can this be exploited for commercial purposes?
TWITTER Is the buzz social network that is the web-based version of cell phone based texting Podcasting company Odeo got the idea in a search to increase revenues and eventually spun it into Twitter.com The idea of Twitter is to marry the short text message with the Web to create social networks No fees, no charges or installation – you just tweet a short update on your cell phone and your friends can keep up with your activities, locations, etc. Over 145 M registered users … great for updates during the World Cup, Iranian /Egyptian rebellions, death of Steve Jobs … 200 M tweets sometimes dispatched almost simultaneously 80% Tweets generated by 10% users and their churn rate is 60% … 40% users remain a month or more
Churn rates – high.. People feeling too connected to acquaintances? Unique users Number of tweets Investors include Amazon founder Benchmark Capital Spark Capital Company Valuation $1B … why?? TERMS FOR DETERMINING BUSINESS AND COMMERCIAL USES
Valuation based on the commercial uses just as is Facebook … but what does Twitter produce of commercial value? Primary Asset – user attention and audience size 1. “get it now” access 2. database of information from Tweets! Additionally … powerful tool for news COMPANY VALUATION
NEWS REPORTS VIA TWITTER The World Reports one individual at a time ….
HOW DO I MONETIZE THESE ASSETS? Advertising!! Promotional Tweets – Red Bull and Starbucks
Promotional Trends what’s hot, what are people talking about? Twitter promotes this as reflective of what people are bird accounts Users follow for special offers … twofers for films, fashion, beauty products “flash marketing” to influentials MONETIZATION
TEMPORAL REAL TIME SEARCHES Twitter offers something none of the other sites really can.. Real time information.. Agreements with Google, Yahoo, Microsoft enable them to index tweets and enable Internet searches Who is this service a benefit to and how does it morph into a commercial use? Dell has opened to sell discontinued models and open box computers
E-COMMERCE BUSINESS MODELS Set of planned activities (business processes) designed to result in a profit in a marketplace A business plan is the document that describes the firm’s business model An E-Commerce Model aims to use and leverage the unique qualities of the Internet and WWW to generate profits Key Elements of the Business Model Value Proposition – why should the customer by from you? Revenue Model – How will you earn money? Competitive environment – who else occupies your intended marketplace Market Strategy – How do you plan to promote your products or services to attract your TA Organizational development – what types of organizational structures within the firm are necessary to carry out the business plan? Management team – what kinds of experience and background are important for the company’s leaders to have?
VALUE PROPOSITION How does your product or service fulfill a need for the consumer? What are your competitive advantages? Why should the customer patronize your firm versus another? personalization, customization, reduced information search, facilitation of transactions
REVENUE MODEL Describes how the firm will earn money.. Generate profits and produce an adequate ROI vs. alternative investments Advertising Revenue Model – website offers a forum for advertisements and receives fees from advertisers. Site attracts high viewership, retain viewers (stickiness) therefore able to charge higher prices Transaction Fee Revenue Model – fee for enabling or executing transactions (E*Trade) Sales Revenue Model – derive revenue by selling goods and information or services to customers. LL Bean, Amazon, Gap.com Subscription Revenue Model – offers users content or services but charges a subscription fee for access to all or some of the offerings. Requirements to be successful involve offering information with high value added (Match.com, consumerreports.com) Affiliate Revenue Model – receive a referral fee or % of revenue from business resulting from referral. (MyPoints)
MARKET OPPORTUNITY The company’s intended MARKETSPACE (i.e., an area of actual or potential commercial value). Market Opportunity is defined as opportunities available to the firm in that market space and is usually divided into smaller market niches. Realistic market opportunity – revenue potential in each of the market niches where you hope to compete EX: Your company creates software learning systems for sale over the Internet. Software Training market is $70B – 2 major segments – Instructor led (70%) and Computer Based (30%). Within this 2 niches – small business and Fortune 500. Your company is a startup – can’t compete for Fortune 500 … Your realistic market opportunity is then $6B (smaller business looking for computer based software training that is cost effective MarketSpace and Market Opportunity in the Software Training Market Instructor Led Training $49 (70% of the market) Small Business $19 Billion Fortune 500 $30 Billion Computer Based Training (30% of the market) Small Business $6Billion Fortune 500 $15Billion