1. E-COMMERCE BUSINESS MODEL
E-commerce Business Models
Business Model
A set of planned activities designed to result in a marketplace
BUSINESS PLAN
A document that describes a firm’s business model.
E-COMMERCE BUSINESS MODEL
A business model that aims to use and leverage the unique qualities of the internet and web.

2. 1. Customer Value Proposition
Eight Key Elements of a Business model
VALUE = BENEFITS - COST
1. Customer Value Proposition
Why Should the customer buy from you?
How company’s product or service fulfills the need of customers?
Wall mart – Save Money live better
PizzaHut – In 17 n half minutes delivery

3. Value Preposition Include
Personalization
Customization
Reduction in Product search cost
Reduction of price discovery cost
Managing Product delivery

4. Examples: Fresh Direct http://www.freshdirect.com
Value Proposition: Fresh , convenience and saved time

8. Example Amazon http://www.amazon.com
Unparalleled Selection, Convenience, delivery in 24hrs

9. and this is done by customer/users
Social Marketing
and this is done by customer/users

11. Example Acer http://www.acer.com
Time saving , Customization , Personalization

14. Example Dell http://www.dell.com
Time saving , Customization , Personalization

16. 2. Revenue Model How will you earn Money
Describes how the firm will earn revenue, produce profits, and produce a superior return on invested capital
Profits are not sufficient to make a company successful but firm produce returns greater than alternative investments.

17. Example:
Retailers, sell a product, such as a personal computer to a customer , this generate revenue.
The profits from the business constitute the return on invested capital.
And this return is greater than the merchant could obtain by saving in account or by investing in real state

18. E-Commerce Primary Revenue Models
Advertising Revenue Model
Subscription Revenue Model
Transaction Revenue Model
Sales Revenue Model
Affiliate Revenue Model

19. Advertising Revenue Model
Examples
Yahoo-also its provide a forum / group
Msn
Google

22. Subscription Revenue Model
Examples
WSJ.COM -
Consumerreports.com - $5.95 monthly / $26 annual fee
Yahoo premium Services

25. Transaction Fee Revenue Model
Examples
eBay
Amazon.com

28. Sales Revenue Model
Examples
Amazon.com
LLBean.com
Gap.com

30. Affiliate Revenue Model
Examples
MyPoints.com

34. 3. Market Opportunity Refer to the company’s intended marketspace
And opportunity available for company to operate .
Marketspace(consist on multiple segments )
The market opportunity divided into small niche(sub segments).

37. Example: 3 A software training company that create software's learning systems for sale to corporations on the internet.
Over all size Computer training market 100 %
70%
30%
Realistic Market opportunity for start up firm

38. Competitive Environment
Refer to the other companies operating in the
same marketspace selling similar products.
Can we(our business) enter in that marketspace?
The competitive environment for a company influenced by several factors. Like
How many competitors are active.
How large their operations are.
What the market share of each.
How profitable these firms .
And how they price their products.

39. Direct & Indirect Competitors
Firms have both competitors (D & I)
Direct: that selling similar products/services in same market segment.
Example: Priceline.com & Travelocity.com
Indirect : may be in different industries but they compete indirectly
Example: Automobile manufactures and Airline companies
CNN & ESPN

44. Question? Existence of a large number of competitors
Market is Profitable?
If there is no Competitors In Marketspace.
Can we make money?

45. Competitive Advantage
Achieved BY a firm when it can produce a superior product to market at a lower price than most or all, of its competitors.
Some firms
Other firms
Develop Global market
Develop National or Regional markets
Firms that can provide superior products at lowest cost on a global basis are truly advantage

46. Competitive Advantage -> Asymmetry
May be firm has more experienced, knowledgeable, and loyal employees than any competitors ..
May be firm has a patent on a product that others cannot .
Asymmetry exists whenever one participant in market has more resources than other Competitors
Firms that can provide superior products at lowest cost on a global basis are truly advantage

47. Competitive Advantage -> First Mover Advantage
One unique competitive advantage derives from being first mover.
May be firm has a patent on a product that others cannot .
Advantage for a firm that results from being the first into a marketplace
As amazon.com first in books retailing
Offline example: Paktel(First Mover) -----but surviver--- Jazz(Follower)
Coke, Pepsi

48. Competitive Advantage -> Complimentary Resources
Resources and assets not directly involved in the production of a product but require
For Success
Reputation
Marketing
Management
Financial Assets

49. Competitive Advantage -> Unfair competitive advantage
Occurs when one firm develops an advantage based on a factor that other firms cannot purchase .
Charge Premium prices
Macromedia -> Adobe.com
Brand Name
Unfair C-Advantage
Quality
loyalty
trust
reliability

50. Competitive Advantage -> No competitive advantage (Perfect Market)
Perfect Market : a market in which there are no Competitive advantage or Asymmetries because all firms have equal access to all factors of production.
? Real markets are imperfect
Coca Cola CA IS LONG TERM BUT NOW CHALLENGED BY FRUIT, HEALTH AND UNIQUE FLAVOR DRINKS.

51. Competitive Advantage - LEVERAGE
WHEN A COMPANY USES ITS COMPETITIVE ADVANTAGES TO ACHIEVE MORE ADVANTAGE IN SURROUNDING MARKETS.
Telenor
Easypissa
AMAZON.COM Vs
Freshdirect.com
Have huge customer database -> Now he move into online Grocery business as well fresh foods (fresh.amazon.com)

52. Market Strategy
Marketing : Everything you do to promote your company’s products and services to potential customers is known as marketing .
The plan you put together that details exactly how you intend to enter a new market and attract new customer.
Mountain Dew: Give free bottles to attract customers.
Ufone give free Sims's at initial level
Microsoft office offer free trail version
Benefits

53. Free Shipping for New Customers on $75 purchase or more.
150000 active customers and more than 8500 products.
FRESH DIRECT PAYS TO SUPPLIER IN 4 BUSINESS DAYS AFTER DELIVERY , BUT INDUSTRY PATTEREN IS 35 DAYS.
Part of Freshdirect Strategy , is to develop close supply chain partnerships with growers and manufacturers so it purchase goods at lower prices directly from the source. And lower prices to customer .

54. CUSTOMER RELATIONSHIP MANAGEMENT
Salesforce.com Market strategy free trial for a month

55. And advertisement in magazines and news papers.
At start up ,AOL used sampling of millions of free CD-ROM’S to attract new users .
And advertisement in magazines and news papers.

56. Organizational Development
It is rare that one person alone can grow an idea into a multi-million dollar company.
Companies (phi
E-commerce Business
Employees and set of business Procedures

57. Organizational Development
IN short ,Every new business need an organization to efficiently implement their business plans and strategies.
Many firms fails due to lack of organizational structure .
Plan describes how the company will organize the work that needs to be worked.

58. Organizational Development
Typically , work is divided into functional departments, such as
Production
Shipping
Marketing
Customer Support
Finance
Jobs within these functional areas are defined,
Then recruitment begins for specific job titles and responsibilities

59. Organizational Development
Mostly , in the beginning those persons are hired who perform multiple tasks.
For example: At start up a company have one marketing manager.
But after two are three year
A marketing position broken down into seven separate jobs done by seven individual.

60. Organizational Development
Example: Ebay(an auctions site ) Founder
Pierre Omidyar
To help his friend PEZ
BUT within few months the volume of business exceeded . What he alone could handle?
So he hiring people with more business experience to help out . Soon company had many employees, departments and business managers.

61. A strong Management Team
Employees of the company responsible for making the business model work .
A strong Management Team
And Experience in Implementing business plan.
Market Specific Knowledge
Outside Investors

62. A strong Management Team
Google stanford grad students 1998 Sergey brin and larry page
A strong Management Team
May not be able to salvage a weak business model , but the team should be able to change the model and redefine the business

63. Management Team Identify good managers for a business startup,
First consider kind of experience
His/her Technical Background
His/her supervisory experience
How many year in a particular area
What job functions should be fulfilled first
Production
Finance
Marketing
Operations

64. typically thought of as a low-cost way for businesses to obtain rights to use software as needed versus licensing all devices with all applications.