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McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 7-1 BUSINESS DRIVEN TECHNOLOGY Business Plug-In B7 E-Business Models

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Slide 1BUSINESS DRIVEN TECHNOLOGY
Business Plug-In B7
LEARNING OUTCOMES
Describe the four main areas where companies conduct business online
Differentiate between a vertical marketplace and a horizontal marketplace
Summarize the current trends for e-business models
1. Describe the business-to-business (B2B) and business-to-consumer (B2C) e-business models
Business-to-Business (B2B) applies to businesses buying from and selling to each other over the Internet
Business-to-Consumer (B2C) applies to any business that sells its products or services to consumers over the Internet
2. Describe the four main areas where companies conduct business online
Direct marketing, selling, and service - Businesses can improve their reach, offerings, and service by using the Internet to contact customers directly
Financial and information services - Financial and information services performed over the Internet help consumers, businesses, and financial institutions distribute information over the Internet with greater convenience and richness than is available using other channels
Maintenance, repair, and operations (MRO) - MRO goods include office supplies (such as pens and paper), office equipment, furniture, computers, and replacement parts. The Internet can transform corporate purchasing from a labor and paperwork inten­sive process into a self-service application
Intermediaries - Intermediaries are agents, software, or businesses that bring buyers and sellers together that provide a trading infrastructure in order to enhance e-business
3. Differentiate between a vertical marketplace and a horizontal marketplace
Horizontal marketplaces connect buyers and sellers across many industries, primarily by simplifying the purchasing process
Vertical marketplaces provide products that are specific to trading partners in a given industry (e.g., textile, oil and gas, and retail industries). They can also serve as hubs for integrating business processes between companies
4. Summarize the current and future trends for e-business models
Current and future trends for e-business models include:
An e-channel is a Web-based business channel
An e-portal (or enterprise information portal) is a single gateway through which to gain access to all the information, systems, and processes used by stakeholders of an organization
E-Government involves the use of strategies and technologies to transform government(s) by improving the delivery of services and enhancing the quality of interaction between the citizen-consumer within all branches of government(s)
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INTRODUCTION
Pure play – an Internet retailer that has no physical store, such as Expedia.com and Amazon.com
E-business – conducting business on the Internet, not only buying and selling, but also serving customers and collaborating with business partners
E-business model – an approach to conducting electronic business through which a company can become a profitable business on the Internet
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E-Business: Commerce on the Internet
The 4 main areas where companies conduct business online include:
Direct marketing, selling, and services
Financial and information services
Intermediaries
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DIRECT MARKETING, SELLING, AND SERVICES
Keys to success
Sales – allow personalized content and adaptive selling processes, integrate with back-office
Services – automate customer service features such as customer feedback, customer inquires, tracking information, and customized services
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FINANCIAL AND INFORMATION SERVICES
Online billing
Secure information distribution –
MAINTENANCE, REPAIR, AND OPERATIONS (MRO)
MRO goods include – office suppliers, office equipment, furniture, computers, and replacement parts
Internet transforms corporate purchasing from a labor-and paperwork-intensive process into a self-service application
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INTERMEDIARIES
Intermediaries – agents, software, or businesses that bring buyers and sellers together that provide a trading infrastructure to enhance e-business
Reintermediation – using the Internet to reassemble buyers, sellers, and other partners in a traditional supply chain in new ways
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INTERMEDIARIES
Common intermediaries
Content providers – companies that use the Internet to distribute copyrighted content, including news, music, games, books, movies, and many other types of information
Online brokers – intermediaries between buyers and sellers of goods and services
Market makers –intermediaries that aggregate three services for market participants
A place to trade
Rules to govern trading
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INTERMEDIARIES
E-BUSINESS MODELS
Business-to-business (B2B)
Business-to-consumer (B2C)
Consumer-to-business (C2B)
Consumer-to-consumer (C2C)
BUSINESS-TO-BUSINESS (B2B) MODELS
Business-to-business (B2B) – applies to businesses buying form and selling to each other over the Internet
E-procurement – the B2B purchase and sale of supplies and services over the Internet
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BUSINESS-TO-BUSINESS (B2B) MODELS
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BUSINESS-TO-BUSINESS (B2B) MODELS
BUSINESS-TO-BUSINESS (B2B) MODELS
B2B exchanges are new organizational forms in digital space that can take place in the following:
Buyer model (few buyers, many sellers)
Marketplace model (many buyers, many sellers)
Longer term relationship model (few buyers, few sellers)
Seller model (few sellers, many buyers)
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BUSINESS-TO-BUSINESS (B2B) MODELS
Buyer Model (Few Buyers, Many Sellers)
Reverse auction – the winning bid is the lowest, rather than the highest
English auction – the highest bid offer wins
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Marketplace Model (Many Buyers, Many Sellers)
Marketplace model – allows a virtually infinite number of businesses to transact electronically with minimal cost
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Longer Term Relationship Model (Few Buyers, Few Sellers)
Longer term relationship model – items requiring a high degree of planning between buyers and sellers either in the design stage or in fulfillment
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Seller Model (Few Sellers, Many Buyers)
Seller model – appropriate when the supplier hosts value-added services on its Web site such as suppliers’ product catalog and customers’ order information
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BUSINESS-TO-CONSUMER (B2C) BUSINESS MODELS
Business-to-consumer (B2C) – appliers to any business that sells its products or services to consumers over the Internet
e-shops (e-stores, e-tailers) – a version of a retail store where customers can shop at any hour of the day without leaving home or office
e-mall – consists of a number of e-shops
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CONSUMER-TO-BUSINESS (C2B) BUSINESS MODELS
Consumer-to-business (C2B) – applies to any consumer that sells a product or service to a business over the Internet
C2B facilitates the following:
CONSUMER-TO-BUSINESS (C2B) BUSINESS MODELS
C2C communities thriving on the Internet:
Communities of interest
Communities of relations
Communities of fantasy
E-BUSINESS CHALLENGES
Current Trends: E-Marketplaces and E-Markets
e-marketplaces – are interactive business communities providing a central market space where multiple buyers and sellers can engage in e-business activities
Horizontal marketplaces – connect buyers and sellers across many industries, primarily by simplifying the purchasing process
Vertical marketplaces – provide products that are specific to trading partners in a given industry
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Current Trends: E-Marketplaces and E-Markets
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E-MARKETPLACE BENEFITS AND REVENUE MODELS
Advantages and limitations of various e-marketplace revenue models
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THE “CONTENT” PERSPECTIVE OF E-MARKETPLACES
Content and product description establish the common understanding between parties in a transaction
The accessibility, usability, accuracy, and richness of the content directly affects the transaction
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Closing Case One
[email protected]
eBay.com is the world’s largest e-marketplace, offering everything from its trademark Pez dispensers and Beanie Babies to automobiles and homes
eBay.com enables trade on a local, national, and international basis with customized sites in markets around the world
Case is located on page 320
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Closing Case One Questions
Other major Web sites, like Amazon.com and Yahoo!, have entered the auction e-marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?
eBay is one of the only major Internet “pure plays” to consistently make a profit from its inception. What is eBay’s e-business model and why has it been so successful?
1. eBay is one of the only major Internet “pure plays” to consistently make a profit from its inception. What is eBay's e-business model and why has it been so successful?
eBay began in the C2C space, using the brokerage value model and collecting transaction fees in consumer-to-consumer auctions. Rapid user growth created community, content, and search value streams, which in turn created the critical mass for substantial advertising revenue. B2B followed by offering the Small Business Exchange. In addition, there is nothing that would prevent eBay from licensing its technology in the B2B space, for industry-specific auctions. eBay could potentially expand into the B2C space, providing firms the option of auctioning merchandise directly to consumers using the eBay infrastructure. Finally, while this would be the greatest stretch for eBay, it could choose to move into the C2B space, allowing consumers to “name their own price” for merchandise and services.
2. Other major Web sites, like Amazon.com and Yahoo!, have entered the auction marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?
The obvious answer is that eBay's first-mover advantage allowed it to dominate the online auction space. eBay also has an excellent reputation for superior customer service. Two priorities dominate eBay's operational strategy: keeping its buyer/seller community happy, and keeping its massive Web site up and running. Consumers flock there because of the great product selection. The result is a juggernaut that has vanquished latecomers, such as Yahoo! Auctions and Amazon Auctions. Both of those operations are still in business, but they have reduced expectations and make relatively small contributions to their parent companies' balance sheets.
3. eBay has long been an e-marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set-up shop on eBay?
Student’s response should refer to critical mass. The so-called "network effect" has bred a critical mass of customers, a group divided into buyers and sellers. Large and small merchants gravitate to eBay because that is where buyers are clustered.
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Closing Case One Questions
3. eBay has long been an e-marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set up shop on eBay?
1. eBay is one of the only major Internet “pure plays” to consistently make a profit from its inception. What is eBay's e-business model and why has it been so successful?
eBay began in the C2C space, using the brokerage value model and collecting transaction fees in consumer-to-consumer auctions. Rapid user growth created community, content, and search value streams, which in turn created the critical mass for substantial advertising revenue. B2B followed by offering the Small Business Exchange. In addition, there is nothing that would prevent eBay from licensing its technology in the B2B space, for industry-specific auctions. eBay could potentially expand into the B2C space, providing firms the option of auctioning merchandise directly to consumers using the eBay infrastructure. Finally, while this would be the greatest stretch for eBay, it could choose to move into the C2B space, allowing consumers to “name their own price” for merchandise and services.
2. Other major Web sites, like Amazon.com and Yahoo!, have entered the auction marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?
The obvious answer is that eBay's first-mover advantage allowed it to dominate the online auction space. eBay also has an excellent reputation for superior customer service. Two priorities dominate eBay's operational strategy: keeping its buyer/seller community happy, and keeping its massive Web site up and running. Consumers flock there because of the great product selection. The result is a juggernaut that has vanquished latecomers, such as Yahoo! Auctions and Amazon Auctions. Both of those operations are still in business, but they have reduced expectations and make relatively small contributions to their parent companies' balance sheets.
3. eBay has long been an e-marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set-up shop on eBay?
Student’s response should refer to critical mass. The so-called "network effect" has bred a critical mass of customers, a group divided into buyers and sellers. Large and small merchants gravitate to eBay because that is where buyers are clustered.
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Closing Case Two
Mail with PostalOne
United States Postal Service’s (USPS) productivity has grown by only 11 percent over the past three decades
USPS is pursuing several e-business projects to help increase growth including:
NetPost Mailing Online
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Closing Case Two Questions
Do you think the USPS’s steps are far-reaching enough to ensure its relevance in e-business?
What other strategic alliances, akin to its partnership with CheckFree, can the Postal Service develop to stay competitive?
Why would the USPS compete in a market that private companies already serve well?
1. Do you think the Postal Services steps are far-reaching enough to ensure its relevance in e-business?
PostalOne’s e-business is very relevant. The PostalOne system offers a Web-based alternative to existing manual mailing processes with an electronic suite of services designed exclusively for business mailers. It features an automated, streamlined alternative to the existing hardcopy documentation used in the business mail acceptance process. The system links a customer's mailing information electronically with Postal Service acceptance, verification, and payment systems, eliminating most of the paperwork. It also provides a wealth of online information customers can use to manage their businesses more efficiently.
2. What other strategic alliances, akin to its partnership with CheckFree, can the USPS develop to stay competitive?
The answers will vary here, however a few responses may include:
Forming an alliance with Staples, Office Max, Office Depot, or some other well-known office supplier. FedEx acquired Kinko’s and all 1,200 Kinko's locations worldwide that will offer new or expanded FedEx shipping options for greater customer convenience, including more than 400 stores that operate 24 hours a day, seven days a week.
Forming an alliance with Hewlett Packard, Epson, or some other well-known printing/copying manufacturer to provide customized printing services at major Postal Service offices.
Forming an alliance with Kodak or another well-known traditional and digital imaging company to provide access to these resources at major Postal Service offices.