Ecommerce: Week 2 Business Models

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E-commerce Week 2 Business Models

• Types of e-commerce
• E-commerce business models
• Typologies of business models
• Evaluating business models

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3.1 What is a business model?

• A plan to make money
• What will we sell (our value offering)
• Who will we sell it to (our target markets)
• What resources will we need (our input costs)
• Competitive advantage
• Porters Five forces the power of customers,
  suppliers, threat of new entrants, threat of
  substitutes, competitors and collaborators
• Porter low cost or differentiation?
• Evaluating a business model
• Profit (P-V)Q-F
• (Price per unit variable cost per unit) total
  number of units sold - fixed costs
• How do you evaluate potential cash flow on an
  unproven model?
• Income projections and Price Earnings Ratio

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3.2 Types of e-commerce

• Business to business
• Business to consumer
• Consumer to business
• Consumer to consumer

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3.2 Value offerings e-tailers
e-Tailing
Manufacturer and retailers
Brokers

• Selling of physical and digital goods, services
  or information
• Aggregators Amazon or category killers Toys R Us
• Just in time stock, mass customisation
• Includes payment gateways, fulfillment, returns
  policy
• Standards set by Direct Marketing Association
• Limitations in SA limited online payment
  methods, poor postal system, limited user
  universe
• Dangers of comparative pricing systems and piracy

• Threat to offline disintermediation and
  re-intermediation
• Auctions and reverse auction sites
• Search agents
• Virtual malls

Market makers

• Trade space, regulation, matching and back-office
• New futures exchanges (grapex.com)
• Employment sites (careerjunction pnet)
• Industry clusters (proudlysouthafrica.com)

What are the benefits and challenges of these
models?
?
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3.2 Value offerings virtual communities
Virtual communities
Communities of interest
Digital research panels

• Content rich sites supplemented by member
  generated content
• Relationships are build between members
  increasing site stickiness

• Reward respondents through information, payments,
  product trials, influence
• Charge companies to use respondents for research
• Affiliation with media owners to draw traffic

Expert knowledge networks
Social networking applications

• Specialist and special interest sites
• Sites where experts give free advice to users
  (marketingprofs know how exchange, ask.com)

• SNAPS - 6degrees, firefly, spoke
• BAPS Ecademy, linkedin
• Subscription, advertising and content syndication

What are the benefits and challenges of these
models?
?
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3.3 Target markets
Business to business
Consumer to consumer

• Vertical and horizontal market integration
• E-commerce is also used to save money, increase
  customer and supplier loyalty and influence media
  and investor perceptions
• Intranets close the expectation gap
• Extranets - supplier and customer integration
• Investor relations management

• Online sales through auctions
• Communities of interest (online gaming, expert
  networks)
• Social networking applications (SNAPs)
• File sharing (Khaza)
• Real-time communication (Skype)

Business to consumer
Consumer to business

• Facilitate purchase (e-tailing)
• Encourage two-way communication (post and pre
  sales service)
• Cross and up-sell opportunities
• Cost saving through digital targeted
  communications

• Co-operative buying (priceline.com)
• Compliments and complaints (hellopeter.com)
• Social activism (adbusters.com)

?

• Can one site have many target markets?
• How do you control access to confidential
  information?