E-Commerce Business Plans

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E-Commerce Business Plans

• E-Commerce
• Prof. Sheizaf Rafaeli

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Why New Business Models?

• Business models are changing
• In five years time, all companies will be
  Internet companies, or they wont be companies at
  all.
• Andrew Grove (CEO, Intel) Economist, 1999
• Old measures dont apply
• Whats my ROI on e-commerce? Are you crazy? This
  is Columbus in the New World. What was his ROI?
• Andrew Grove

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What is E-Commerce?

• Is it electronic mail?
• Is it electronic data interchange (EDI)?
• Is it video on demand?, home shopping?,
  electronic publishing?
• Is it home banking? Or online personal financial
  information management?
• Is it a new way of organizing?
• Is it interactive advertising and marketing?
• Is it a new methodology that shows how to
  implement re-engineering and total quality?

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Buzzwords cheatsheet

• E-Commerce, E-business?
• Internet, Intranet, Extranet, VPN
• More, less innovation? Integration?
• Automational, Informational, Transformational
  Operational, Managerial

• Speed, Scope, Scale
• Content, Community, Commerce
• Sequential, Pooled, Reciprocal
• B2C, B2B, C2C, C2B, B2G
• Disintermediation/ Reintermediation

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Moving to More Interdependency
Sequential
Reciprocal
Pooled
from Thompson (1967)
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Definitions
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Definition of business model

• An architecture for the product, service, and
  information flows surrounding a value-creating
  activity
• Description of the various business stakeholders
  and the potential benefits to each
• Description of the revenue flows that sustain the
  model
• (Strategy as who we are and what we do)

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business models?
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E-Business on the Internet

• Business-to-consumer (B2C)
• Amazon, Dell
• Business-to-business (B2B)
• Freemarkets, CommerceOneVerticalnet
• Consumer-to-consumer (C2C)
• Ebay, QXL
• Consumer-to-Business (C2B)
• Priceline, Accompany, LastMinute

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E-Business on the Internet

• Business-to-government (B2G)
• E-commerce Resource Center
• Markets for Information
• infomarco, epinions, abuzz
• Markets for Bandwidth and Access
• Interorganizational Systems (Extranets)
• Enterprise-wide (Intranets)

Look for electronic commerce opportunities within
the enterprise, with business partners, and with
customers.
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E-Commerce, E-Business

• Electronic commerce is the integrated use of
  computing and communications technologies for
  business transactions.
• First generation e-commerce uses the web as an
  alternative channel for conducting business
  (e.g., placing orders).
• E-Business, in addition to encompassing
  e-commerce, includes both front- and back-office
  applications.

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Second-Generation E-commerce

• Allows the business to do something with
  electronic networks that cant be done
  effectively any other way
• Ties a business process to the Web as the primary
  mechanism for conducting daily business
• Is based upon full life-cycle business
  applications
• Provides adaptive, personalized, value-added
  services

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Sharing Information with Partners

• Interorganizational systems (IOS) are types of
  information systems that permit the coupling of
  transactions between organizations, making them
  more efficient and responsive.
• An Extranet is an application of Internet
  technology that provides specific external
  parties with controlled access to internal
  corporate information.

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Electronic Data Interchange (EDI)

• EDI has been used for 20 years, but it has
• High cost
• EDI applications are costly to develop and
  operate
• Limited accessibility
• Value-Added Networks (VANs) are often used
• Rigid requirements
• highly structured protocols and rigid meaning of
  data
• Partial solutions
• ordering and fulfillment, but not accounting or
  inventory

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Unbundling the Organization
Scope
Speed
Scale
Electronic commerce has low interaction cost, it
is natural for web-based businesses to focus on
a single core process. (Hagel and Singer,
1999)
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Content Community Commerce
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8 Business Model Examples

• Merchant model
• Subscription or Metered usage
• Infomediary
• Advertising
• Brokerage
• Affiliates
• Manufacturers
• Communities and Communication

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Business Model Examples

• Merchant model
• Virtual only or Catalog, Travelocity, Expedia
• Bricks Clicks
• Bits-only.
• Subscription or Metered usage
• Glassbook, Wall Street Journal, FatBrain,
  Consumer Reports -- BUT NYT, Slate, MP3, etc...
• Infomediary
• Portals, registration requests
• MyMealPlan, When, Evite, Versity, WebMD
• Iowa electronic, Hollywood, Cheathouse, Dr. Koop

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Business Model Examples

• Advertising models
• freebies BlueMountain, Freemerchant
• Specialized, personalized portals Yahoo, Excite,
  Lycos
• Brokerage models
• Aggregate buyers (Accompany)
• Fulfill Kozmo, E-trade, Carsdirect
• B2B bartering MetalSite, ChemConnect
• Search agent/bot MySimon, CareerCentralbottomdol
  lar,

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Business Model Examples

• Manufacturers
• Intel, Apple, Virtual Vineyards
• Communities
• VerticalNet, iVillage, ICQ, Firefly
• HumanClick, PeopleSupport
• ThirdVoice, Ubique, iMarkup, uToK
• Viral Marketing

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Customer Service Life Cycle
Requirements
Retirement
Need description Product offering
Transfer (Disposal) Review / Audit
Acquisition
Ownership
Order entry Payment / Settlement Delivery
logistics
Service and support Account management
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Business Models for Electronic MarketsPaul
Timmers
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Business Models for Electronic MarketsPaul
Timmers (2)
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Evaluation
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IT Business Value Metrics
Dimensions of IT Business Value
Business Processes
Automational
Informational
Transformational
Utilization Responsiveness Accuracy
Cycle Time Customer Relationships
Labor Cost Inventory Cost
Operational
Administrative Expense
Decision Quality Resource Usage
Competitive Flexibility Organizational Form
Management
Efficiency
Effectiveness
Adaptability
Doing things better
Doing better things
Doing different things
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Resources

• Business Models for Electronic Marketshttp//www.
  electronicmarkets.org/netacademy/publications.nsf/
  all_pk/949/file/v8n2_timmers.pdf?OpenElementid9
  49
• Whats your business model?http//www.eloquent.co
  m/cgi/eloweb.dll?id274-0
• Intermediaries and CyberMediarieshttp//www.ascus
  c.org/jcmc/vol1/issue3/sarkar.html
• Internet Business Model Patentshttp//www.jonesas
  kew.com/articles/99/s99modelpat.html

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Resources (2)

• The B2B Boom Business 2.0 9/99http//www.busine
  ss2.com/index/0999/
• The Truth About Business Modelshttp//www.strateg
  y-business.com/briefs/99301/
• The Journal of Computer-Mediated Communication
  (JCMC) http//www.ascusc.org/jcmc