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Chapter 5 – Part2E-commerce Business Strategies
Copyright © 2015 Pearson Education, Inc.Copyright © 2016 Pearson Education, Ltd.
Learning Objectives
Identify the key components of e-commerce business models.
Describe the major B2C business models.
Describe the major B2B business models.
Understand key business concepts and strategies applicable to e-commerce.
Copyright © 2016 Pearson Education, Ltd. Slide 1-2
B2C Business Models
E-tailer
Community provider (social network)
Content provider
Portal
Transaction broker
Market creator
Service provider
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B2C Models: E-tailer
Online version of traditional retailer
Revenue model: Sales
The e-tail revenue model is product-based
Variations: Virtual merchant
Bricks-and-clicks
Catalog merchant
Manufacturer-direct
Internet Mall
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B2C Models: E-tailer
Every Internet and smartphone user is a potentialcustomer (time-starved customers)
This sector, is extremely competitive.
Because barriers to entry (the total cost of entering a new marketplace) into the e-tail market are low
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B2C Models: E-tailer
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B2C Models: Community Provider
Provide online environment (social network) wherepeople with similar interests can transact (buy andsell), share content, and communicate
Sites offer users community-building tools andservices.
Examples: Facebook, LinkedIn, Twitter, Pinterest
Revenue models:
Typically hybrid, combining advertising, subscriptions,sales, transaction fees, and so on
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B2C Models: Community Provider
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B2C Models: Content Provider
Digital content on the Web: Distribute information content, such as digital video, music, photos,
text, and artwork.
Revenue models: Use variety of models, including advertising, subscription; sales of
digital goods
Variations: Syndication
Web aggregators
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B2C Models: Content Provider
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B2C Business Models: Portal
such as Yahoo, MSN, and AOL offer users powerful search tools as well as an integrated package of content and services, such as news, e-mail, instant messaging, calendars, shopping, music downloads, video streaming, and more, all in one place.
Revenue models: Advertising, referral fees, transaction fees, subscriptions for premium
services
Variations: Horizontal/general
Vertical/specialized (vortal)
Search
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B2C Business Models: Portal
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B2C Models: Transaction Broker
Process online transactions for consumers
Companies that process transactions for consumers normally handled in person, by phone, or by mail Primary value proposition—saving time and money
Revenue model: Transaction fees
Industries using this model: Financial services
Travel services
Job placement services
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B2C Models: Transaction Broker
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B2C Models: Market Creator
Create digital environment where buyers and sellers canmeet and transact
Examples: Priceline, eBay
Revenue model: Transaction fees, fees to merchants for access themarket.
Sharing economy (mesh economy): platforms that allowpeople to sell services (they could also be categorized asservice providers)
Examples: Uber, Airbnb
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B2C Models: Market Creator
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B2C Models: Service Provider
Offers Online services Example: Google—Google Maps, Gmail, and so on
Value proposition Valuable, convenient, time-saving, low-cost alternatives
to traditional service providers
Revenue models: Sales of services, subscription fees, advertising, sales of
marketing data
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B2C Models: Service Provider
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B2B Business Models
Net marketplacesE-distributor
E-procurement,?n
Exchange
Industry consortium
Private industrial network
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B2B Business Models
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B2B Models: E-distributor
a company that supplies products and servicesdirectly to individual businesses
E-distributor owned by one company seeking toserve many customers
Revenue model: Sales of goods
Example: Grainger
Grainger, for example, is the largest distributor ofmaintenance, repair, and operations (MRO) supplies
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B2B Models: E-procurement
creates and sells access to digital markets
Creates digital markets where participants transactfor indirect goods B2B service providers, SaaS and PaaS providers
Revenue model: Service fees, supply-chain management, fulfillment services
Example: Ariba
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B2B Models: Exchanges
is an independent digital marketplace where hundreds ofsuppliers meet commercial purchasers to conducttransactions.
Independently owned vertical digital marketplace for directinputs
Revenue model: Transaction, commission fees
Create powerful competition between suppliers
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B2B Models: Industry Consortia
are industry-owned vertical marketplaces that serve specificindustries, such as the automobile, aerospace, chemical,floral, or logging industries.
More successful than exchanges Sponsored by powerful industry players
Strengthen traditional purchasing behavior
Revenue model: Transaction, commission fees
Example: SupplyOn
horizontal marketplaces supply companies in different industries witha particular type of product and service, such as marketing-related,financial, or computing services.
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Private Industrial Networks
sometimes referred to as a “private trading exchange orPTX” is a digital network designed to coordinate the flow ofcommunications among firms engaged in business together.
Typically evolve out of company’s internal enterprise system
Example: Walmart’s network for suppliers
Cost absorbed by network owner and recovered throughproduction and distribution efficiencies
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Industry Value Chains
Value Chain: Set of activities performed by suppliers,manufacturers, transporters, distributors, and retailers thattransform raw inputs into final products and services
Internet reduces cost of information and other transactionalcosts
Leads to greater operational efficiencies, lowering cost,prices, adding value for customers
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E-commerce and Industry Value Chains
Figure 5.4, Page 354
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Firm Value Chains
Firm Value chain: Activities that a firm engages in to create final products from raw inputs
Each step adds value to the final product
Effect of E-Commerce: Increases operational efficiency
Enables product differentiation
Enables precise coordination of steps in chain
Provide users with more differentiated and high-value products
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E-commerce and Firm Value Chains
Figure 5.5, Page 349
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Firm Value Webs
While firms produce value through their value chains, theyalso rely on the value chains of their partners—theirsuppliers, distributors, and delivery firms.
A value web is a networked business ecosystem that uses e-commerce technology to coordinate the value chains ofbusiness partners within an industry, or at the first level, tocoordinate the value chains of a group of firms.
Coordinates a firm’s suppliers with its own production needsusing an Internet-based supply chain management system
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Internet-enabled Value Web
Figure 5.6, Page 350
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