E-Commerce Lecture 5 Online Business Models
Online business models: What do we mean by business models?
"an architecture for product, service and information flows, including a description of the various business actors and their roles;and a description of the potential benefits for the carious business actors;and a description of the sources of revenue" (Timmers 1999)
Examples of Revenue Models
1.Market Place Position: Manufacturer, retailer,marketplace,media owner, supply chain provider. 2. Revenue Model: Direct product sales, subscription, commission, based dales, advertising. 3.Commercial Model: Fixed price sale, auction or spot, loyalty based pricing and promotions.
Multi Sided Platforms
Bringing together two or more independent groups of customers :Value can only be attained by bringing groups together and working simultaneously e.g
Examples of online transactions
Consumer to consumer (C2C) -eBay :Consumer to business (C2B) - consumer feedback and communities :Consumer to Government (C2G) - government pressure groups :Business to Consumer (B2C) - Transnational e.g Amazon : Business to Business (B2B) - transactional e.g Euro office :Business to Government (B2G) - Feedback to government business :Government to Consumer (G2C) - National government e.g transaction tax :Government to Business (G2B) - Government services, legal regs :Government to Government (G2G) - Inter Gov services, exchange of information
Reintermediation;
Creates issues for suppliers who must ensure that the new intermediaries represent them. Draw graph below
Disintermediation
Draw tables
Business models
E-tailer/E-Shop - online version of traditional retailer, payng for products by means of credit card - types include virtual merchant and catalog merchant.. Content Provider : Providing content over the web,typically utilizes subscription,pay for download or advertising model B2B Business models - Transaction broker, process online transaction for consumers Primary Value Proposition - saving of time and money. Typical revenue model - transaction fee, using this model include travel services and financial services.
Revenue Models based on channel structures
How the manufacturer/seller delivers products/services to customer :Whether the organisations uses channel partners or bypasses them cutting out the middleman (DISINTERMEDIATION) : Thus reducing the cost of sale (Direct Selling)
Online Revenue Models
Revenue from subscription access to content :Revenue from Pay Per View access to document :Revenue from Cost per thousand (CPM) where M denotes Mile , shown for ads shown on visitor sites. : Revenue from advertising on site (PPC) Pay per Click. : Advertisers are charged not just for times ads are displayed but also clicked.
Long tail business model
The focus on offering a large number of product each of which sells relatively infrequently e.g Books
Freemium as a business model
This describes business models "Web Based" that blend free basic services with paid premium services (Micro transaction) : Patreon for example where most people wont pay however 10% will subscribe to premium services :Freemium key metrics - What is the average cost of serving a free user? The rate at which a free user converts to a a premium account?
Key ingredients of a business model "Put simply a business model is a plan for making model"
Value Proposition - Why a customer should buy from you? :Revenue model - How will you earn money? :Market Opportunity - What market you want to get in? :Competitive Environment - Who occupies the marketplace? :Market Strategy - How do you plan to promote your product? :Organisational Development - Changing structure to implement strategy :Management team - What kind of experiences and background are important for the company leaders to have.
