1. AGENDA FOR TODAY 8:30 - 9:20 E-business models 9:20 - 9:30 Break
9:30 -10:00 Group discussion
10:00- 11:00 Case WEBVAN
11: :10 Break
11: :00 The customer interface for e-business

2. For Tomorrow
Please prepare: STAPLES.COM

3. E-business Models CEDIR Program Summer 2001
Professor Ramiro Montealegre
E-business Models

4. Until now: Framing Market Opportunity
(i.e. where will the business compete)
Today: Business Models
(i.e. how will the business win)

5. Components of a Business Model
Value Cluster
Marketspace Offering
Resource System
Financial Model

6. Consumer Decision Process
Disposal
Loyalty
Satisfaction
Purchase Decision
Evaluation of Alternatives
Information Search
Problem - Recognition
Pre-Purchase
Purchase
Post-Purchase

7. Egg Diagram for 1-800-flowers.com
Gift reminder service
Holiday specials
Everyday celebrations suggestions
Special occasion suggestions
Ideas and Information
“Care and handling”
“Do it yourself”
Special events and educational workshops held at stores
Floral ideas
Garden ideas
Home ideas
Gift ideas
Gourmet ideas
Store locator
Recommendations by budget
Bestsellers
Flower / Gift Decision Process
Need Recognition
Product Offering
Gift Recommendations
Education on Flowers and Decoration
Search for Ideas and Offerings
Gift guru
Favorite gifts
Gift frequency
Gift impossible
Gift baskets
Corporate gift services
Post-Sale Support
Order receipt
eQ&A online customer service
FAQ
Customer service inquiry form
Post-Sale Support and Perks
Evaluation of Alternatives
Product price
Product picture
Product description
Delivery information
Delivery availability
Perks
Miles earned with flower purchases
Free gifts
Discounts at AOL & BN.com with flower purchases
Member specials
Message Selection
Purchase Decision
Shopping basket
E-commerce transaction
Special shopping features
Delivery outside US
1-800-lasfloras.com
Gizmo fully-animated greeting cards
Physical cards in gifts

8. 1-800-flowers.com Resource System
Address Book
BloomNet Network
Third-Party Contractors
Strong Distribution Network
Gift
Recommend-
ations
Fulfillment Center
Stores
Online Gift Center
Gift Reminder
Broad Assortment of Gifts
High Quality of Flowers
Rich Content
Personalization Capabilities
Popular Website
Garden Works
Integrated Partner Offers
Telephone
3,000 Affiliates
Plow & Hearth
Online
Customer Service
Widespread, Easy Access
Great Foods
Multiple Contact Points
Franchise Stores
Catalog
Technology
Strong Brand Name
Wide Reach to Customers
Customer Service Centers
= Core Benefits
Snap
Starmedia
= Activities & assets
Integrated online offline Systems
MSN
AOL
= Capabilities

9. Sawhney and Kaplan — B2B Models
Vertical Hubs
Paper
Chemicals
Plastics
Steel
Logistics Management
Media Buying
Advertising
Energy Management
Functional Hubs
Source: Adopted from Business 2.0, September 1999, page 88

10. Sources of Content Origination
RJS Model Summary
Sources of Content Origination
Single Brand
Multiple Brands
Supply Side
Demand Side
Hybrid Integrator
(Cisco.com)
Hybrid Aggregator
(Amazon.com)
Forward-Integrated Producer
(Walmart.com)
Supply-Side Aggregator
(Surplusdirect.com)
Demand-Side Aggregator
(Accompany.com)
Backward Integrated User
(Dellonline.com) - B2B
Focus of Strategy

11. Alternative Shareholder Value Model

12. For Further Reading B2B, INTRANET,AND B2C
TRENDS
Microsoft
IBM HP

13. Case Discussion -- Webvan: Groceries on the Internet
CEDIR Program
Summer 2001
Professor Ramiro Montealegre
Case Discussion -- Webvan:
Groceries on the Internet

14. Targeted Families for Online Grocery Retailing
1. Both parents working 100%
- If working 70%, similar behavior as a
non-working parent
2. With Children
- larger shopping baskets
- More likely to be home from 16:00 to 19:00
Research by: Le Shop, 2000

15. Customers: Acquisition Cost Vs. Lifetime Value
Grocery Industry
3 year lifetime * 40 orders/year * $100 average order = $12,000
Book Industry
3 year lifetime * 3 orders/year * $ 40 average order = $
Acquisition Costs:
Net Catalog Bricks-&-Mortar
Books $ $ $59
Groceries $2,918 $2,989 $2,969

16. Online Grocery Shopping
ADVANTAGES:
- Fewer opportunities for impulse buying
- Help in planning meals
- Can buy in their own terms and shop any time
- Time saving
- Avoid crowded stores and parking lots
- Access to larger selection and product information
DISADVANTAGES:
- Cannot inspect food before purchase
- Miss spontaneity of discovering new/seasonal products
- Miss the social opportunity to interact
- Concern about fraud and privacy

17. Traditional Retail Store Value Chain
1. Case of cereal arrives at distribution center
2. Case of cereal is taken off the truck
3. The case of cereal is stored in distribution center
4. When the store needs cereal, a case is loaded on truck
5. Case of cereal arrives at the store
6. Store clerks store cereal case in the backroom
7. When needed, cereal case unpacked and stored in shelf
8. Old/outdated stock is removed
9. Customer put cereal in shopping cart
10. Cashier rings up the cereal
11. Clerk puts cereal in the bag
12. Customer transport cereal home

18. FOLLOW-UP “A fight for survival”
Due to run out of cash at the end of Fall’2001
A revamped business plan provided cash to Dec. 01
It will need between $40-60 M to fund 2002.
Stock has plummeted 95%
Feb 2000: Closed operations in Dallas

19. Big Picture
Demand
Chain
Management

20. Dell Model – Fulfillment Logistics

21. THE PRIMARY OBJECTIVES OF WEBVAN CASE STUDY WERE:
1) Discuss how to create value for the customers and
how e-businesses should tackle fulfillment issues.
2) Explore the issue of fulfillment: how to overcome
the physical distance from distribution center to
the customer’s doorstep.
3) Given that no model has yet become profitable,
speculate on when and if these models will turn a
profit.

22. interface for e-business
CEDIR Program
Summer 2001
Professor Ramiro Montealegre
The customer
interface for e-business

23. The 7Cs of the Customer Interface
Context
Site’s layout and design
Content
Text, pictures, sound and video that web pages contain
Commerce
Site’s capabilities to enable commercial transactions
Community
The ways sites enable user-to-user communication
Connection
Degree site is linked to other sites
Customization
Site’s ability to self-tailor to different users or to allow users to personalize the site
Communication
The ways sites enable site-to-user communication or two-way communication

24. Fit and Reinforcement of Cs
Business Model
Individually Supporting Fit
Context
Content
Community
Customization
Communication
Connection
Commerce
Consistent Reinforcement

25. Performance of Lands’ End Site

26. Form vs. Function: The Design Context Frontier
Integrated
High
Aesthetically Dominant
AESTHETIC/
FORM
Frontier is gradually moving outward as technology advances
Low
Functionally- Dominant
Low
High
FUNCTION

27. Aesthetic Example — KMGI.com

28. Functional Dominant — Brint.com

29. Integrated Approach Example — Patagonia.com

30. A Framework to Understand Offering-Dominating Archetypes
Multiple
Superstore
NUMBER OF PRODUCT CATEGORIES
Specialty Store
Category Killer
Single
Narrow
Broad
DEPTH OF PRODUCT LINE

31. Superstore Example — Amazon.com

32. Category Killer Example — Petsmart.com

33. Specialty Store Example — Frontgate.com

34. Information Dominant — Business 2.0 (www.business2.com)

35. Market Dominant Example — PlasticsNet.com