1. Chapter 2, e-Business Models
Outline 2.1 Introduction 2.2 Storefront Model Shopping-Cart Technology Online Shopping Malls 2.3 Auction Model 2.4 Portal Model 2.5 Dynamic-Pricing Model Name-Your-Price Model Comparison-Pricing Model Demand-Sensitive Pricing Model Bartering Model Rebates Offering Free Products and Services 2.6 B2B e-Commerce and EDI 2.7 Click-and-Mortar Businesses

2. Introduction
In this chapter we explore the many business models currently being implemented on the Web Models include:
The Storefront Model
The Auction Model
The Portal Model
The Name-Your-Price Model
The Comparison Pricing Model
The Demand Sensitive Pricing model
The B2B Exchange Model

3. Introduction e-Business
A company that has an online presence
E-commerce businesses allow customers to sell, trade and barter over the Web
A company’s policy, operations, technology and ideology define its business model

4. Storefront Model
Storefront model enables merchants to sell products on the Web
What people hear most about e-business
Transaction processing, security, online payment, information storage
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

5. Shopping Cart Technology
An 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
Combine a number of purchasing methods to give customers a wide array of options

6. 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

7. 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

8. Auction Model Reverse-auction model Lowest-unique-bid auction
Allow the buyer to set a price as sellers compete to match or even beat it
If no bid meets the reverse price, the auction is unsuccessful
If a successful bid is made, the buyer and the seller must commit
Most auction sites do not involve themselves in payment or delivery, except they can get revenue and profit

9. Auction Model
Lowest-unique-bid auctions probably aren't auctions at all, but that's the common name for them. They work like this:
The seller places a high-value item up for "auction".
Each buyer makes one or more sealed bids.
Each bid costs the buyer some money (typically the cost of a premium-rate SMS or phone call).
The person who makes the lowest unique bid wins the item for that price.
So... as a buyer, what's the best approach? Bid low? Big high? Multiple bids?
Is there a "best" here at all, or is this a just a lottery by any other name?

10. Auction Model
eBay home page. (These materials have been reproduced by Prentice Hall with the permission of eBay, Inc. COPYRIGHT© EBAY, INC. All Rights Reserved.)

11. Portal Model Portal sites Horizontal portals Vertical portals
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
Vertical portals
Portals that offer more specific information within a single area of interest
WebMD, IMDB, FirstGov

12. Portal Model
Helps users collect information on an item for which they are looking for and allow users to browse independently owned storefronts

13. Dynamic Pricing Models
In the past, bargain hunter had to search for deals by visiting numerous local retailers and wholesalers.
Ways to generate pricing for business in Internet
Enable customers to name the prices they are willing to pay for travel, homes, automobiles, consumer goods, etc.
Find lower prices by joining with other buyers
Offer products and services free by selling advertising
Join with other buyers to purchase products in large quantities.
Etc.

14. Dynamic Pricing Models
The Web has changed the way products are priced and purchased
Comparison pricing model
Allow customers to poll a variety of merchants and find a desired product or service at the lowest price
Web sites using shopping bot technology to find the lowest price for a given item
Sites get revenue from partnerships with merchants
E.g. BottomDollar.com

15. Dynamic Pricing Models
Demand-sensitive pricing model
Group buying reduces price as volume of sales increase
Because pricing and products vary between these and other, similar sites, customers should visit several such sites before making a purchase.

16. Dynamic Pricing Models
Name-your-price model
Name-your-price for products and services
Empowers customers by allowing them to state the price they are willing to pay for products and services
Use Intelligent agent
Search and arrange large amounts of data and report answers based on the data

17. Dynamic Pricing Models
Bartering Model
Individuals and business trade unneeded items for items they desire
Ubarter.com, isolve.com

18. Dynamic Pricing Models
Rebate Model
Sites offer rebates on product at leading online retailers in return for commission or advertising revenues
pass discounts, e.g.
Help attract customers to the sites
E.g., “everyday low prices”, “buy one get one free”
eBates
Add value to a customer’s visit to build customer satisfaction and loyalty

19. Dynamic Pricing Models
Free offering model
Use advertising-driven revenue streams
Offer free products and services to generate high traffic
Obtain revenue from advertising
Freemerchant, Start Sampling, FreeSamples.com

20. B2B E-commerce and EDI B2B e-business
The electronic business relationship between two or more companies
Traditional EDI uses a value-added network or VAN
A closed network that includes all members of a production process
XML (eXtensible Markup Language)
A development technology similar to HTML (Hypertext Markup Language)
Improves the compatibility between disparate systems, creating new market opportunities

21. B2B E-commerce and EDI
B2B e-commerce and the use of exchange sites allow businesses to reach their markets faster and more efficiently
Lead time
The time it takes to receive a product from a supplier after an order has been placed
Long lead times increase inventory costs, increase worker stress levels and strain relationships between the manufacturer and the supplier

22. B2B E-commerce and EDI JIT (just-in-time) inventory management
Supplies arrive at the exact time they are needed, thereby limiting any unnecessary inventory expense
Enterprise Application Integration (EAI)
The process of integrating traditional EDI systems with the Web

23. B2B E-commerce and EDI Business-to-business integrators (B2Bi)
Companies that use XML and similar technologies to help other companies integrate their current systems with the Web
Webmethods.com, commerceone.com, tibco.com, Freemarkets.com, mercator.com

24. 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
Barnesandnoble.com
Bestbuy.com

25. 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

26. 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 a 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

27. 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