E-Business ModelE-Business Model

E-Business ModelE-Business Modeldefinitiondefinition

• An e-and m- business model is an An e-and m- business model is an approach to conducting electronic approach to conducting electronic business through which a company business through which a company can sustain itself and generate can sustain itself and generate profitable revenue growthprofitable revenue growth• The business model spells out how The business model spells out how a company plans to make money a company plans to make money and how it is competitively and how it is competitively positioned in an industrypositioned in an industry

Innovationproduit

Gestion desrelations-clients

Gestion desinfrastructures

Aspectsfinanciers

Business modelBusiness model

Financialaspects

Financialaspects

HOW MUCH?What is the revenue model? the profit model? designed to last?

WHO?How to manage relationships with customers, satisfy them and generate revenues to be on the winning side?

CustomerRelationship

CustomerRelationship

WHAT?What is the scope of products and services, its value (its benefits) for the customer, the capabilties to deliver them in an innovating way?

Productinnovation

Productinnovation

HOW?How to organize the infrastructure, its resources, the knowledge and the structure of resulting costs, manage the value chain and processes, build alliances to achieve performance?

Infrastructurelogistics

Infrastructurelogistics

ClassificationsClassifications

Classifications may be according to:Classifications may be according to: Interacting participants Interacting participants

– B2C, B2B, C2CB2C, B2B, C2C, G2C, G2B, P2P, G2C, G2B, P2P Value proposition (offer)Value proposition (offer) Revenue modelRevenue model Main theme, key processesMain theme, key processes Customers’ roleCustomers’ role Type of e-commerce technologyType of e-commerce technology etc.etc.

B2CB2C B2C group is a much newer area and largely B2C group is a much newer area and largely

equates to electronic retailing over the Internet. equates to electronic retailing over the Internet. This category has expanded greatly in the late This category has expanded greatly in the late

1990s with the growth of public access to the 1990s with the growth of public access to the Internet.Internet.

The business-to-consumer category includes The business-to-consumer category includes electronic shopping, information searching (e.g. electronic shopping, information searching (e.g. railway timetables) but also interactive games railway timetables) but also interactive games delivered over the Internet.delivered over the Internet.

Examples?Examples?– Amazon.comAmazon.com– Egghead.comEgghead.com

Enterprise

User ProfilesWorkflow

Business rulesPaymentAnalytics

Internet

Intranet

Figure: A B2C e-business Model

B2C ApplicationsB2C Applications

Electronic storefrontElectronic storefront Electronic mallsElectronic malls Advertising onlineAdvertising online Service onlineService online

– selling books, toys, computersselling books, toys, computers– e-banking (cyberbanking)e-banking (cyberbanking)– online stock tradingonline stock trading– online job market, travel, real estateonline job market, travel, real estate

Figure : B2C and B2B Internet Commerce in the Figure : B2C and B2B Internet Commerce in the U.S. U.S. (Source: Forrester Research)(Source: Forrester Research)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

1998 1999 2000 2001 2002 2003

B2C

B2B

Billion

What is B2B?What is B2B?

““ B2B” is business-B2B” is business-to- business to- business commerce commerce conducted over the conducted over the Internet (called Internet (called B2B e-commerce B2B e-commerce space, or space, or e-e-marketplacesmarketplaces))

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business-to-businessbusiness-to-business The business-to-business (B2B) group includes all The business-to-business (B2B) group includes all

applications intended to enable or improve applications intended to enable or improve relationships within firms and between two or more relationships within firms and between two or more companies.companies.

In the past this has largely been based on the use In the past this has largely been based on the use of private networks and Electronic Data of private networks and Electronic Data Interchange (EDI). Interchange (EDI).

Examples from the business-business category are Examples from the business-business category are the use of the Internet the use of the Internet – for searching product catalogues, for searching product catalogues, – ordering from suppliers,ordering from suppliers,– receiving invoices and making electronic payments. receiving invoices and making electronic payments.

This category also includes collaborative design This category also includes collaborative design and engineering, and managing the logistics of and engineering, and managing the logistics of supply and delivery. supply and delivery.

business-to-businessbusiness-to-business The volume of B2B (Business-to-Business) The volume of B2B (Business-to-Business)

transactions is much higher than the volume of transactions is much higher than the volume of B2C transactions. B2C transactions.

The primary reason for this is that in a typical The primary reason for this is that in a typical supply chainsupply chain there will be many B2B transactions there will be many B2B transactions involving sub components or involving sub components or raw materialsraw materials, and , and only one B2C transaction, specifically sale of the only one B2C transaction, specifically sale of the finished product to the end customer.finished product to the end customer.

For example, an automobile manufacturer makes For example, an automobile manufacturer makes several B2B transactions such as buying tires, several B2B transactions such as buying tires, glass for windscreens, and rubber hoses for its glass for windscreens, and rubber hoses for its vehicles. The final transaction, a finished vehicle vehicles. The final transaction, a finished vehicle sold to the consumer, is a single (sold to the consumer, is a single (B2CB2C) ) transaction.transaction.

Figure : A B2B ModelFigure : A B2B Model(Source: Goldman Sachs Investment Research Report)(Source: Goldman Sachs Investment Research Report)

Banks,Financial Institutions

eCredit.com

Suppliers

Production materialsOperating goods, services

Enterprise Customers

LogisticsCelarix, NTE

B2B ApplicationsB2B Applications

AdvertisingAdvertising AuctioningAuctioning ProcurementProcurement Channel managementChannel management E-commerceE-commerce

– www.ework.comwww.ework.com (Exchange employee) (Exchange employee)– www.itoi.comwww.itoi.com (Industry to Industry) (Industry to Industry)– www.biz2biz.comwww.biz2biz.com (Business to Business) (Business to Business)– www.icgcommerce.comwww.icgcommerce.com, , www.tradeaccess.comwww.tradeaccess.com

B2C vs. B2BB2C vs. B2B

B2C B2B

Switching Costs Low with multiple suppliers High when integrated with e-frastructure;few qualified suppliers

RelationshipType

Transactional Long term, mission critical

Transaction Type Smaller average selling price Larger average selling priceRevenue Model Traffic volume is critical;

Large customer base is keyDon’t need every customer, only need theright customers

Source: Goldman Sachs Investmenet Research

Benefits of B2BBenefits of B2B

B2B solutions create competitive B2B solutions create competitive dynamics through:dynamics through:– cost savingscost savings

the composition of cost (product versus the composition of cost (product versus process costs)process costs)

the number of intermediaries in the supply the number of intermediaries in the supply chain.chain.

– new financial (revenue) opportunitiesnew financial (revenue) opportunitiesthe rate of industry-wide B2B adoptionthe rate of industry-wide B2B adoptionbusiness modelbusiness model

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