Business Model Definition A business model embodies a

Business Model Definition A business model embodies a plan for offering : a value proposition to customers , a source of revenues , an identification of costs, and a detailed set of processes for execution. ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

Business Models (revenue based) n n Subscription models: charge monthly or annual subscription fee for service Transaction fee models: charge service fee based on the level of transaction offered Advertising-supported models: charge fee to advertisers instead of customers Sponsorship models: companies sponsor the business through donations (usually supplemental income) ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

E-Tailing Business Models Direct marketing—sell directly to consumers Indirect marketing Pure-play e-tailers—sell over the Internet without a physical sales channel Traditional retailers with Web sites ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

E-Tailing Business Models (cont. ) n Direct marketing—sell directly to consumers n Manufactures can sell directly to customers Disintermediation—removal of business process layers in the value chain n Shortens the distribution chain n n Eliminates inefficiencies Shortens delivery time Builds closer relationships with consumers Additional marketing channel (to the conventional one) is used(Click-and-mortar) n Effectively supports build-to-order requests n ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

Figure 3 -2 Disintermediation in the B 2 C Supply Chain Source: M. Warkentin, et al. (2000). Used with permission of Dr. Merrill Warkentin. ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

Disintermediation & Reintermediaries n n Disintermediation—manufacturer sells directly to consumer Reintermediaries—new intermediary roles in the digital environment offer new ways to: n n n Reach new customers Bring value to customers Generate revenues ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

E-Tailing Business Models (cont. ) n Pure-play e-tailers—sell over the Internet without a physical sales channel n General purpose e-tailers (Amazon. com) Broad range of products n Large number of consumers n n Specialty or niche e-tailers (Cat. Toys. com) One specific product area n Effective practices for customer appeal n ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

E-Tailing Business Models (cont. ) n Traditional retailers with Web sites(click & mortar) Traditional or physical store(brick & mortar) May include mail-order or telephone sales division n Multichannel store operates both n n n Physical store E-tail site ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

n On-Demand Delivery Services (ODDS) n n postal system or private shipper such as: Tiger, Fed. Ex, UPS, . . can be used based on demand. Own fleet of delivery vehicles Regular deliveries (weekly bases) n Delivery within short time period (1 hour or same day) n ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

Digital Delivery n Digital (“soft”) goods n n Music, movies, videos, software, newspapers, magazines, graphics, etc. Can be delivered in “hard” or “soft” form Computer program on CD-ROM with owner’s manual and warranty card n Download from Web site after payment n ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

Digital Delivery (cont. ) n Napster experience—person-to-person sharing tool n n Enables individual users to download music files from each other’s computers New version of its file-swapping software includes a “buy button” linked to CDNow ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

Successful Click-and-Mortar Strategies n Click-and-mortar hybrid strategies n n n Speak with one voice—link all back-end systems to create an integrated customer experience Empower the customer—powerful channel for service and information Leverage the channels—use advantages of each marketing channel to customers from all channels Return item purchased online at physical store n Order via the Web at the physical store items not available there n ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ

Successful Click-and-Mortar Strategies (cont. ) n Circuit City Case: transform to click-andmortar (Circuit. City. com) n n Educates customers about features and capabilities of products Customers can perform powerful searches to find most appropriate products Offers extensive amount of information on electronics etc. , organized very flexibly Online purchases are smooth, secure and seamless ﺩﻛﺘﺮ ﻓﺘﺤﻴﺎﻥ - ﻣﺒﺎﺣﺚ ﻣﻨﺘﺨﺐ