Business ModelsBusiness Models

Risanuri Hidayat, Ir.,M.Sc.Risanuri Hidayat, Ir.,M.Sc.

Table of ContentsTable of Contents3.1 Introduction

3.2 Storefront Model

3.2.1 Shopping Cart Technology

3.2.2 Online Shopping Malls

3.3 Auction Model

3.4 Portal Model

3.6 Dynamic Pricing Models

3.6.1 Name-Your-Price Model

3.6.2 Comparison Pricing Model

3.6.3 Demand-Sensitive Pricing Model

3.6.6 Offering Products and Services for Free

Table of ContentsTable of Contents3.7 B2B Exchanges.3.7 B2B Exchanges.

3.8 B2B Service Providers3.8 B2B Service Providers

3.9 Online Trading and Lending Models3.9 Online Trading and Lending Models

3.10 Getting a Loan Online3.10 Getting a Loan Online

3.11 Recruiting on the Web3.11 Recruiting on the Web

3.12 Online News Services3.12 Online News Services

3.13 Online Travel Services3.13 Online Travel Services

3.14 Online Entertainment3.14 Online Entertainment

3.15 Online Automotive Sites3.15 Online Automotive Sites

3.16 Energy Online3.16 Energy Online

3.17 Selling Brainpower3.17 Selling Brainpower

3.18 Online Art Dealers3.18 Online Art Dealers

3.19 Education Online3.19 Education Online

3.20 Click-and-Mortar Businesses3.20 Click-and-Mortar Businesses

3.1 Introduction3.1 Introduction

In this chapter we explore the many business In this chapter we explore the many business models currently being implemented on the models currently being implemented on the Web. These models include:Web. These models include: The Storefront ModelThe Storefront Model The Auction ModelThe Auction Model The Portal ModelThe Portal Model The Name-Your-Price ModelThe Name-Your-Price Model The Comparison Pricing ModelThe Comparison Pricing Model The Demand Sensitive Pricing modelThe Demand Sensitive Pricing model The B2B Exchange Model The B2B Exchange Model

3.1 Introduction3.1 Introduction

An An e-business e-business can be defined as a company can be defined as a company that has an online presence.that has an online presence.

E-commerce businesses allow customers to E-commerce businesses allow customers to sell, trade, barter over the Websell, trade, barter over the Web

A companies policy, operations, technology A companies policy, operations, technology and ideology define its business modeland ideology define its business model

3.2 Storefront Model3.2 Storefront Model

Storefront model enables merchants to sell Storefront model enables merchants to sell products on the Webproducts on the Web transaction processing, security, online payment, transaction processing, security, online payment,

information storageinformation storage

E-commerce allows companies to conduct E-commerce allows companies to conduct business business 24-by-724-by-7, all day everyday, all day everyday, , worldwide worldwide

An e-commerce storefront should include An e-commerce storefront should include online catalog of products, order processing, online catalog of products, order processing,

secure payment, timely order fulfillment.secure payment, timely order fulfillment.

3.2.1 Shopping Cart Technology3.2.1 Shopping Cart Technology

Shopping CartShopping Cart An order-processing technology allows customers to An order-processing technology allows customers to

accumulate lists of items they wish to buy as they accumulate lists of items they wish to buy as they continue to shop.continue to shop.

The shopping cart is supported by The shopping cart is supported by the product catalog, merchant server, database the product catalog, merchant server, database

technologytechnology

Many companies combine a number of Many companies combine a number of purchasing methods to give their customers a purchasing methods to give their customers a wide array of options.wide array of options.

3.2.2 Online Shopping Malls3.2.2 Online Shopping Malls

Online MallOnline Mall A collection of online retailers that offer their products A collection of online retailers that offer their products

and services on a single site.and services on a single site.

In an online mall, consumers can use the mall’s In an online mall, consumers can use the mall’s shopping cart technology to purchase items from shopping cart technology to purchase items from many stores in a single transaction.many stores in a single transaction. Online malls act as shopping portals directing Online malls act as shopping portals directing traffic to the leading shopping retailers for a traffic to the leading shopping retailers for a specific product.specific product. Online malls offer speed and added Online malls offer speed and added convenience to a customers shopping convenience to a customers shopping experience.experience.

3.3 Auction Model3.3 Auction Model

Online auction sites act as forums through which Internet Online auction sites act as forums through which Internet users can log-on and assume the role of either bidder or users can log-on and assume the role of either bidder or seller.seller. Sellers post items they wish to sell and wait for buyers to Sellers post items they wish to sell and wait for buyers to bid.bid.Reserve priceReserve price

The minimum price a seller will accept in a given auction.The minimum price a seller will accept in a given auction.

Reverse auctionsReverse auctions allow the buyer to set a price as sellers compete to match or allow the buyer to set a price as sellers compete to match or

even beat it.even beat it.

Auction sites collect a commission on every successful Auction sites collect a commission on every successful auction.auction.

3.3 Portal Model3.3 Portal Model

Portal sites give visitors the chance to find Portal sites give visitors the chance to find almost everything they are looking for in one almost everything they are looking for in one place. place. horizontal portalshorizontal portals portals that aggregate information on a broad range of portals that aggregate information on a broad range of

topics.topics. Yahoo!Yahoo!, , AltaVistaAltaVista, , GoogleGoogle

vertical portalsvertical portals portals that offer more specific information within a portals that offer more specific information within a

single area of interest.single area of interest. WebMDWebMD, , IMDBIMDB, , FirstGovFirstGov

3.6 Dynamic Pricing Models3.6 Dynamic Pricing Models

The Web has changed the way products are The Web has changed the way products are priced and purchasedpriced and purchased

Comparison pricing modelComparison pricing model Comparison pricing Web sites using shopping bot Comparison pricing Web sites using shopping bot

technology to find the lowest price for a given itemtechnology to find the lowest price for a given item

Demand-sensitive pricing modelDemand-sensitive pricing model Group buying reduces price as volume sales increaseGroup buying reduces price as volume sales increase

Name-your-price modelName-your-price model Name-your-price for products and services.Name-your-price for products and services.

3.6 Dynamic Pricing Models3.6 Dynamic Pricing Models

Bartering ModelBartering Model Individuals and business trade unneeded items for Individuals and business trade unneeded items for

items they desire.items they desire. Ubarter.comUbarter.com, , isolve.comisolve.com

Rebate ModelRebate Model Sites offer rebates on product at leading online Sites offer rebates on product at leading online

retailers in return for commission or advertising retailers in return for commission or advertising revenues.revenues.

eBateseBates

Free offering modelFree offering model Free products and services generate high trafficFree products and services generate high traffic FreemerchantFreemerchant, , Start SamplingStart Sampling, , FreeSamples.comFreeSamples.com

3.7 B2B Exchanges3.7 B2B Exchanges

B2B exchanges B2B exchanges businesses buy, sell, auction, barter, businesses buy, sell, auction, barter,

distribute and ship products and services distribute and ship products and services onlineonline

B2BB2B e-commercee-commerce buying, selling, partnering, bartering or trading buying, selling, partnering, bartering or trading

conducted between two or more businessesconducted between two or more businesses

3.9 Online Lending and Trading 3.9 Online Lending and Trading ModelsModels

Online trading empowers the average investor to handle Online trading empowers the average investor to handle their own investmentstheir own investmentsTrading sites offerTrading sites offer

ResearchResearch Investments analysisInvestments analysis Stock historyStock history Simple buying and selling Simple buying and selling

Online Trading sites include:Online Trading sites include: E*TRADEE*TRADE AmeritradeAmeritrade CharlesSchwabCharlesSchwab Fidelity.comFidelity.com

Getting a Loan OnlineGetting a Loan Online

Find, research and apply for loans online.Find, research and apply for loans online.

Many online lenders offer lower rates to attract Many online lenders offer lower rates to attract customers.customers.

Online lending services include free quotes, Online lending services include free quotes, calculators and tutorials for borrowers.calculators and tutorials for borrowers.

Examples:Examples: E-LOANE-LOAN eCredit.comeCredit.com Mortgagebot.comMortgagebot.com

Recruiting on the WebRecruiting on the Web

Resume tutorials, cover letter help, and free job Resume tutorials, cover letter help, and free job searching available on the Websearching available on the WebEmployers can find new employees from a Employers can find new employees from a global pool of applicantsglobal pool of applicantsEarn rewards for refering new hires to recruitersEarn rewards for refering new hires to recruitersExamples:Examples: Guru.comGuru.com Dice.comDice.com Refer.comRefer.com Sixfigurejobs.comSixfigurejobs.com Monster.comMonster.com

Online News ServicesOnline News Services

Internet and Web offer a 24-by-7 news sourceInternet and Web offer a 24-by-7 news sourceIt is important to check the information source as It is important to check the information source as rumors are often passed onlinerumors are often passed onlineIndependent and freelance content creators Independent and freelance content creators compete with large scale industry playerscompete with large scale industry players CNN.comCNN.com ESPN.comESPN.com Drudge ReportDrudge Report Boston.comBoston.com Salon.comSalon.com

Online Travel ServicesOnline Travel Services

Customers now have the power to bypass a Customers now have the power to bypass a travel agenttravel agentDiscounts and low fares available onlineDiscounts and low fares available onlineName-your-price for tickets, hotels and car Name-your-price for tickets, hotels and car rentalsrentals““Last minute” fares often lower onlineLast minute” fares often lower onlineExamples:Examples: Expedia.comExpedia.com TravelocityTravelocity Cheaptickets.comCheaptickets.com

Online EntertainmentOnline Entertainment

The Web is a form of entertainmentThe Web is a form of entertainmentInteractive television will use the Internet to offer Interactive television will use the Internet to offer interactivity to the worldinteractivity to the worldMP3 and file-transfer technology threaten MP3 and file-transfer technology threaten copyright lawcopyright lawExamples:Examples: IMDBIMDB Farmclub.comFarmclub.com MP3.comMP3.com Ain’tAin’t It Cool News It Cool News

Online Automotive SitesOnline Automotive Sites

Consumers access automobile information Consumers access automobile information empowering them to make an informed buying empowering them to make an informed buying decisiondecision

Dealers use the Web to showcase vehiclesDealers use the Web to showcase vehicles

Online auto auctions give buyers more optionsOnline auto auctions give buyers more options

Examples:Examples: Auto.comAuto.com Autobytel.comAutobytel.com Autoparts.comAutoparts.com

Energy OnlineEnergy Online

Energy exchange sites allow energy providers to Energy exchange sites allow energy providers to trade excess energy commodities, buy on trade excess energy commodities, buy on auction and sell materials.auction and sell materials.1000’s of energy commodities are sold online.1000’s of energy commodities are sold online.Efficiency increases as supply chains are Efficiency increases as supply chains are simplifiedsimplifiedExamples:Examples: Houstonstreet.comHoustonstreet.com AltranetAltranet Retailenergy.comRetailenergy.com

Selling BrainpowerSelling Brainpower

Unused patents and trademarks can be sold Unused patents and trademarks can be sold onlineonlineOutrsourcingOutrsourcing Hiring outside contractors or companies to complete Hiring outside contractors or companies to complete

projects and offer consulting.projects and offer consulting.

Contractors can find projects to match their Contractors can find projects to match their needs on the Webneeds on the WebExamples:Examples: HellobrainHellobrain Yet2.comYet2.com Question ExchangeQuestion Exchange

Online Art DealersOnline Art Dealers

Artists have access to a global audienceArtists have access to a global audienceThe Web itself is a new medium for artThe Web itself is a new medium for artVirtual galleries give artists a chance to Virtual galleries give artists a chance to showcase their workshowcase their workShortfilms are finding new fans online Shortfilms are finding new fans online Examples:Examples: Art.comArt.com Guild.comGuild.com AtomFilmsAtomFilms art.netart.net

Education OnlineEducation Online

E-learning is changing the way people learn.E-learning is changing the way people learn.Web-based training and education give the Web-based training and education give the world access to continuing education form their world access to continuing education form their homehomeMany colleges and universities offer distance Many colleges and universities offer distance learning and degree programs onlinelearning and degree programs onlineExamples:Examples: Click2learnClick2learn SabaSaba SmartforceSmartforce Varsitybooks.comVarsitybooks.com

Click-and-Mortar BusinessesClick-and-Mortar Businesses

Brick-and-mortarBrick-and-mortar Companies that operate solely offline with traditional Companies that operate solely offline with traditional

business practicesbusiness practices

Click-and-mortarClick-and-mortar Companies operating with both an online and offline Companies operating with both an online and offline

presencepresence

Click and mortar companies have brand Click and mortar companies have brand recognition, and an established customer baserecognition, and an established customer baseExamples:Examples: Barnesandnoble.comBarnesandnoble.com Bestbuy.comBestbuy.com