1.  2001 Prentice Hall, Inc. All rights reserved. 1 Chapter 2, e-Business Models Outline 2.1Introduction 2.2Storefront Model 2.2.1Shopping-Cart Technology 2.2.2Online Shopping Malls 2.3Auction Model 2.4Portal Model 2.5Dynamic-Pricing Model 2.5.1Name-Your-Price Model 2.5.2Comparison-Pricing Model 2.5.3Demand-Sensitive Pricing Model 2.5.4Bartering Model 2.5.5Rebates 2.5.6Offering Free Products and Services 2.6B2B e-Commerce and EDI 2.7Click-and-Mortar Businesses

2.  2001 Prentice Hall, Inc. All rights reserved. 2 2.1 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.  2001 Prentice Hall, Inc. All rights reserved. 3 2.1 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.  2001 Prentice Hall, Inc. All rights reserved. 4 2.2 Storefront Model Storefront model enables merchants to sell products on the Web –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.  2001 Prentice Hall, Inc. All rights reserved. 5 2.2.1 Shopping Cart Technology Shopping Cart –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.  2001 Prentice Hall, Inc. All rights reserved. 6 2.2.2 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.  2001 Prentice Hall, Inc. All rights reserved. 7 2.3 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

8.  2001 Prentice Hall, Inc. All rights reserved. 8 2.3 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.)

9.  2001 Prentice Hall, Inc. All rights reserved. 9 2.3 Auction Model Placing a bid on eBay. (These materials have been reproduced by Prentice Hall with the permission of eBay, Inc. COPYRIGHT© EBAY, INC. All Rights Reserved.)

10.  2001 Prentice Hall, Inc. All rights reserved. 10 2.4 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, GoogleYahoo!AltaVistaGoogle Vertical portals –Portals that offer more specific information within a single area of interest –WebMD, IMDB, FirstGovWebMDIMDBFirstGov

11.  2001 Prentice Hall, Inc. All rights reserved. 11 2.5 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 increase Name-your-price model –Name-your-price for products and services

12.  2001 Prentice Hall, Inc. All rights reserved. 12 2.5 Dynamic Pricing Models Bartering Model –Individuals and business trade unneeded items for items they desire –Ubarter.com, isolve.comUbarter.com isolve.com Rebate Model –Sites offer rebates on product at leading online retailers in return for commission or advertising revenues –eBateseBates Free offering model –Free products and services generate high traffic –Freemerchant, Start Sampling, FreeSamples.comFreemerchantStart Sampling FreeSamples.com

13.  2001 Prentice Hall, Inc. All rights reserved. 13 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

14.  2001 Prentice Hall, Inc. All rights reserved. 14 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

15.  2001 Prentice Hall, Inc. All rights reserved. 15 2.6 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 Business-to-business integrators (B2Bi) –Companies that use XML and similar technologies to help other companies integrate their current systems with the Web –www.excara.com, Webmethods.com, commerceone.com, tibco.com, Freemarkets.com, mercator.comwww.excara.comWebmethods.comcommerceone.com tibco.comFreemarkets.commercator.com

16.  2001 Prentice Hall, Inc. All rights reserved. 16 2.7 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.comBarnesandnoble.com –Bestbuy.comBestbuy.com

17.  2001 Prentice Hall, Inc. All rights reserved. 17 2.7 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

18.  2001 Prentice Hall, Inc. All rights reserved. 18 2.7 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

19.  2001 Prentice Hall, Inc. All rights reserved. 19 2.7 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