1. Business & REVENUE MODELS
E-COmmerce
Business & REVENUE MODELS

2. BUSINESS MODELS business model involves the following choices:
Value proposition – how to deliver value to the customer
Market offering – what will sell, where, …
Resource system – what facilities, …
Financial model – how will you charge for your product or service

3. Value Proposition Choice of target segment
Choice of what benefits you will offer
Choice of capabilities
Choice of target segment
Market Opportunity analysis (area, demographics, ..)
Market attractiveness (can you make money?)
Ability to compete (what is your usp?)
Degree of fit with existing channels (
Choice of what benefits you will offer:
Single benefit vs. multiple benefits
Conflicting benefits lead to average performance
What are the customer preferences (service, ease of access, … price only 10th preferred attribute)
Choice of capabilities
What unique and differentiating capabilities do you need to possess? (Capabilities need to be linked to the benefits which form the value proposition
Choice of tangible assets (plant, machinery, …
Choice of intangible assets (brand),
Core competencies (C K Prahlad) vs. external partners

4. Market Offering Identify scope of the offering
Address customer decision process
Match product/services to customer decision process:
Identify scope of the offering
What categories – single/multiple (books, CD’s)
Cross-category – metamarkets; cluster of goods and services; (e.g., Travel: airline, hotel, car rental, …)
Address customer decision process
Pre-purchase: Identify the need for the product, search, evaluate alternatives
Purchase: Purchase decision
Post-purchase: Satisfaction, loyalty, disposal
Match product/services to customer decision process:
Web site should “walk the customer through”
Encourage the customer to revisit the decision cycle
Repeat the cycle for every category
Recognize the need: reminders for birthdays
Search: store locator, price lists
Evaluate alternatives: comparisons
Purchase decision: shopping cart, credit card
Satisfaction/loyalty: cust. support, incentives

5. What resources to deploy ?
Resource system shows how a co must align its internal “systems” and partners to deliver the benefits of the value proposition
Value proposition and offering dictate resource system
Resource system shows how a co must align its internal “systems” and partners to deliver the benefits of the value proposition
It is the choice of actions/assets used to deliver the value proposition

6. Financial Models
Revenue Model
Shareholder value models
Growth models

7. Revenue Models P roduct/service information (infomediary)
A dvertising (Google Adwords, Adsense)
S ale/transaction (eCommerce – buy/sell)
S ubscription (to a service – Bloomberg, Dunn & Bradstreet, Prowess DB, …)

8. Shareholder Value Models
User Derived:
Metamarket- hub for many buyers/sellers, multiple categories; e.g., BabyCenter.com
Auctions- competitive bid hub: eBay, Freemarket
Category switchboard- aggreg brands: PlanetRX
Company Derived:
Best Information- Zagat, NYTimes
Wildest assortment- Secondspin.com
Lowest Price- Buy.com, Lowestfares.com
Most Personalized- Reflect.com

9. Revenue Growth Models
Deeper penetration into current market (existing product)
New product development (existing market)
New market development (existing product)
New products and new markets
On-line and off-line space

10. Types of e-business models
generally they are classified on the following basis :- 1. 2.
Basics: Method of doing business by which a company can sustain itself
E-commerce gives rise to new models or re-invent tried-and-true models (e.g., Auctions)
No comprehensive and cogent taxonomy of web business models exists – combination of models
Intellectual Property protection perspective
Types of models based on parties connected: B2B, B2C, …
Types of models based on transaction types are classified by two parameters: Value Addition and Control on business
Parties connected
e.g B2B, B2C etc
transaction types

11. business models : transaction types
Aggregator Brokerage Value chain
Manufacturer Info-mediary Advertising
Subscription Affiliate Community
Low CONTROL High
Low VALUE INTEGRATION High

12. Agregator Model Virtual Merchant – Pure Play e-tailers (Amazon)
Catalog Merchant – Levenger
Bit Vendor – Avast
 Surf-and-turf 

13. Brokerage Model Market Exchange (ChemConnect)
Buyer Aggregator
Virtual Mall (Yahoo!Store)
Auction Broker (eBay)
Classifieds
Search Agent (DealTime)
Buy/Sell Fulfillment (eTrade,TradeIndia)
Trading Community (VerticalNet,Goozex)
Distributor (ConvergeTrade)
Metamediary (Zshops)
Reverse Auctions (priceline.com)
Bounty Broker

14. Value Chain Model
Value chain moves business away from discrete streams of data about the product being made to one unified pool of information

15. Infomediary Model Recommender System – ePinions
Registration Model – NYTimes.com

16. Advertising Model Generalized Portal – AOL Personalized Portal – MyMSN
Specialized Portal / Vortal
Attention/Incentive Marketing – CyberGold
Free Model – Blue Mountain
Bargain Discounter – Buy.com

17. Other Models Manufacturer Model – Intel, Apple Affiliate Model
-Banner Exchange, Pay-per-click,
-Revenue Sharing
Community Model:
- Voluntary contributor model (NPR)
- Knowledge Networks (Deja, Guru, ..)
Subscription Model (WSJ)
Utility Model – use based

18. business models: parties involved
B2B (Business-to-Business)
B2C (Business-to-Consumer)
C2B (Consumer-to-Business)
C2C (Consumer-to-Consumer)

19. Revenue Model
Revenue Is the amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income. Revenue = Price of goods and services X no. of units

20. Five Cases revenue models:
Advertising model
Subscription model
Transaction fee model
Sales model
Affiliate model

21. Advertising model
Simply you have website and provides a contents and forum for advertisements and get fees from advertisers.
The advertising model is an addition of the traditional media model. The web site, provides content which always free and services like , IM, blogs and users accepts advertising messages in the form of banner ads.

22. To attract users to its site, leading Web portal Yahoo
To attract users to its site, leading Web portal Yahoo! offers things like free , extensive content, and travel services. The firm got its start in early 1995 when founders Jerry Yang and David Filo put together a simple list of favorite Web sites.

23. Subscription model
A company offers it users content or services and charges a subscription fee for access to some or all of it offerings.
where a customer must pay a subscription price to have access to the product/service. The model was pioneered by magazines and newspapers, but is now used by many businesses and website.

24. Industries that use this model include mail order book sales clubs and music sales clubs, cable television, satellite television providers with pay-TV channels, satellite radio, telephone companies, cell phone companies, internet providers, software providers, business solutions providers, financial services firms, fitness clubs, and pharmaceuticals, as well as the traditional newspapers, magazines and academic journals.

25. Transaction fee model
There are businesses offering services for which they charge a fee based on the number or size of transactions they process. The business provides information to the customers which is required to complete a transaction and revenue is purely earned on that basis.

26. For example, online travel agents receive a fee for facilitating a transaction that includes the making of travel arrangement for their clients, as well as, advising them about lodging, transportation etc. Stock brokerage firms also use this model as they charge their customers a commission for each transaction of stocks/shares executed through them.

27. Sales model
A company derives revenue by selling goods, information, or services.
Here the merchants provide goods and services online but based on list prices or via auction.
Examples: wwww.1800flowers.com
This site sells the flowers online, and deliver your order almost everywhere in US.

28. Affiliate model
A company steers business to an affiliate and receives a referral fee or percentage of the revenue from any resulting sales.
Example:
This site uses Amazon Associates Web Services to deliver a complete marketplace of DVDs.