Chapter 2 Ecommerce Business Models and Concepts 2021917

Chapter 2 E-commerce Business Models and Concepts 2021/9/17 1

E-Commerce Chapter 2 E-commerce Business Models and Concepts OBJECTIVES • Identify the key components of e-commerce business models. • Describe the major B 2 C business models. • Describe the major B 2 B business models. • Describe business models in other emerging areas of e-commerce. • Explain the key business concepts and strategies applicable to e-commerce. 2021/9/17 2

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 2. 1. 1 Introduction • Business model • Set of planned activities designed to result in a profit in a marketplace • Business plan • Describes a firm’s business model • E-commerce business model • Uses/leverages unique qualities of Internet and Web • 2021/9/17 （独特的品质） 3

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 2. 1. 2 Eight Key Elements of A Business Model • Value proposition（价值定位） • Revenue model （盈利模式） • Market opportunity • Competitive environment • Competitive advantage • Market strategy • Organizational Development • Management team 2021/9/17 4

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 1. Value Proposition • Why should the customer buy from you? • To develop and /or analyze a firm’s value proposition, you need to understand why customer will choose to do business with the firm instead of another company and what the firm provides that other firms do not and cannot. 2021/9/17 5

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 1. Value Proposition • What’s the meaning of successful e-commerce value proposition? • Successful e-commerce value propositions: 2021/9/17 • Personalization/customization • Reduction of product search, price discovery costs • Facilitation of transactions by managing product delivery • Eg. Amazon’s primary value propositions are unparalleled （无与伦比的）selection and convenience. 6

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 2. Revenue Model • How will the firm earn revenue, generate profits, and produce a superior return（超常收益） on invested capital? • Major types: • Advertising revenue model • Subscription revenue model （订阅） • Transaction fee revenue model （交易费） • Sales revenue model • Affiliate revenue model(合作收益模式“撮合”) 2021/9/17 7

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 3. Market Opportunity • What marketspace do you intend to serve and what is its size? • Market opportunity: refers to the company’s intended marketspace and the overall potential financial opportunities available to the firm in that marketspace. • Marketspace: Area of actual or potential commercial value in which company intends to operate 2021/9/17 8

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 3. Market Opportunity • Market opportunity typically divided into smaller niches（利基市场，壁龛kān市场，大企业忽略的某些 细分市场） • Eg. Analyzing a software training company that create software-learning Systems for sale to corporations over the Internet 2021/9/17 9

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 4. Competitive Environment • Who else occupies your intended marketspace? • Other companies selling similar products in the same marketspace • Includes both direct and indirect competitors直接竞 争对手和间接竞争对手 • Direct Competitors: eg. Priceline and Travelocity • Indirect competitors: eg. Automobile manufactures and airline companies 2021/9/17 10

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 4. Competitive Environment • Influenced by: • Number and size of active competitors • Each competitor’s market share • Competitors’ profitability • Competitors’ pricing 2021/9/17 11

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 5. Competitive Advantage • Achieved when firm: • Produces superior product or • Can bring product to market at lower price than competitors • Important concepts: • Asymmetries（不对称）：exists whenever one participant in a market has more resources than other participants • First-mover advantage: a competitive market advantage for a firm that results from being the first into a marketplace with a serviceable product or service 2021/9/17 12

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 5. Competitive Advantage • Important concepts: • Complementary resources（互补资源）: resources and assets not directly involved in the production of the product but required for success, such as marketing, management, financial assets, and reputation. • Unfair competitive advantage: occurs when one firm develops an advantage based on a factor that other firms can not purchase • Leverage: when a company uses its competitive advantages to achieve more advantages in surrounding markets杠杆作用 2021/9/17 13

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 6. Market Strategy • How do you plan to promote your products or services to attract your target audience? • Details how a company intends to enter market and attract customers • Best business concepts will fail if not properly marketed to potential customers 2021/9/17 14

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 7. Organizational Development • What types of organizational structures within the firm are necessary to carry out the business plan? • Describes how firm will organize work • Typically divided into functional departments • As company grows, hiring moves from generalists to specialists 2021/9/17 15

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 8. Management Team • What kinds of experiences and background are important for the company’s leaders to have? • Employees are responsible for making the business model work • Strong management team gives instant credibility（ 可信） to outside investors • Strong management team may not be able to salvage（抢救） a weak business model, but should be able to change the model and redefine the business as it becomes necessary 2021/9/17 16

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 1 E-commerce Business Model 2. 1. 3 Categorizing E-commerce Business Models：Some Difficulties • No one correct way • We categorizebusiness models according to: • E-commerce sector (B 2 C, B 2 B, C 2 C) • Type of e-commerce technology; i. e. m-commerce • Similar business models appear in more than one sector • Some companies use multiple business models; e. g. e. Bay • 2021/9/17 ['kætəɡəraɪz] 17

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 2 Major Business-to-Consumer(B 2 C) Business Model 2. 2. 1 B 2 C Models: Portal • 门户网站 • Search plus an integrated package of content and services， such as news, e-mail, instant messaging, calendars, shopping, music downloads, video streaming（视频流）, and more, all in one place • Gateways to the Internet • 2021/9/17 A Destination Site (today) They are marketed as places where consumers will want to start their web searching and hopefully stay a long time to read news, find entertainment, and meet other people (think of destination resorts目的地) 18

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 2 Major Business-to-Consumer(B 2 C) Business Model 2. 2. 1 B 2 C Models: Portal（门户网站） • The market opportunity is very large. • Revenue models: • • • Advertising, referral fees（引荐费）, transaction fees, subscriptions Competitive advantage: First mover advantages / switching costs（切 换成本） Variations: • Horizontal / General水平的、综合的 • • Vertical / Specialized (Vortal)垂直的、专业化的 • • 2021/9/17 MSN Sailnet specializes in the consumer Sailboats market that contains about 8 million Americans who own or rent sailboats. Pure Search搜索 • Google 19

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 2 Major Business-to-Consumer(B 2 C) Business Model 2. 2. 2 B 2 C Models: E-tailer（电子商务零售商） • Online version of traditional retailer • Revenue model: Sales • Variations: • Virtual merchant • Bricks-and-clicks（click表示鼠标点击，代表电子商务，brick砖或 mortar灰，代表实体零售商店） • Catalog merchant • Manufacturer-direct • Low barriers to entry • Competitive advantage: brand name or experience • Online retail is covered in more depth in Chapter 11. 2021/9/17 20

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 2 Major Business-to-Consumer(B 2 C) Business Model 2. 2. 3 B 2 C Models: Content Provider • Digital content on the Web • News, music, video • Revenue models: • Subscription; • pay per download (micropayment); • advertising; • affiliate referral[ri‘fə: rəl] fees 合作介绍费 2021/9/17 21

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 2 Major Business-to-Consumer(B 2 C) Business Model 2. 2. 3 B 2 C Models: Content Provider • Variations: (变化形式) • Content owners • Syndication(辛迪加联合): distribute their content produced by others(辛迪加通过签订共同的供销协议而形成企业同盟。) • Web aggregators（聚合）: collect information from a variety of sources and then add value to that information through post-aggregation services • 2021/9/17 For instance, Shopping. com collects information on the prices of thousands of goods online, analyzes the information and presents users with tables showing the range of prices and Web locations. 22

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 2 Major Business-to-Consumer(B 2 C) Business Model 2. 2. 4 B 2 C Models: Transaction Broker（经纪人） • Process online transactions for consumers • Primary value proposition（价值定位）—saving time and money • Revenue model: • Transaction fees • Industries using this model: • Financial services • Travel services • Job placement services 2021/9/17 23

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 2 Major Business-to-Consumer(B 2 C) Business Model 2. 2. 5 B 2 C Models: Market Creator • Create digital environment where buyers and sellers can meet and transact, display products, search for products, and establish prices • Examples: • Priceline, which allows consumers to set the price they are willing to pay for various accommodations（住宿） and other products (reverse auction) • e. Bay • Revenue model: Transaction fees 2021/9/17 24

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 2 Major Business-to-Consumer(B 2 C) Business Model 2. 2. 6 B 2 C Models: Service Provider • Online services • e. g. Google: Google Maps, Gmail, etc. • Value proposition • Valuable, convenient, time-saving, low-cost alternatives to traditional service providers • Revenue models: • Sales of services, subscription fees（会员费，订阅费）, advertising, sales of marketing data 2021/9/17 25

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 2 Major Business-to-Consumer(B 2 C) Business Model 2. 2. 7 B 2 C Models: Community Provider • Provide online environment (social network) where people with similar interests can transact, share content, and communicate • E. g. Facebook, My. Space, Twitter，QQ，We. Chat • Revenue models: • Typically hybrid（混合的）, combining advertising, subscriptions, sales, transaction fees, affiliate fees 2021/9/17 26

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 3 Major Business-to-Business(B 2 B) Business Model • B 2 B is more than 10 times the size of B 2 C commerce, even the most of the public attention has focused on B 2 C. • Net marketplaces • E-distributor（电子分销） • E-procurement（电子采购） • Exchange（交易所） • Industry consortium（行业协会） • Private industrial network • Single firm • Industry-wide（全行业的） 2021/9/17 27

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 3 Major Business-to-Business(B 2 B) Business Model 2. 3. 1 B 2 B Models: E-distributor • E-distributor：a company that supplies products and services directly to individual business • Version of retail and wholesale store, MRO goods and indirect goods（间接 业品（生产设备、辅助设备、生产 消耗品）） • MRO: Maintenance、repair and operations • Owned by one company seeking to serve many customers • Revenue model: Sales of goods • Example: Grainger. com 2021/9/17 28

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 3 Major Business-to-Business(B 2 B) Business Model 2. 3. 2 B 2 B Models: E-procurement（电子采购） • E-procurement firm: creates and sells access（创建和销售路 径） to digital electronic markets. • Creates digital markets where participants transact for indirect goods • B 2 B service providers, application service providers (ASPs) • Revenue model: • Service fees, supply-chain management, fulfillment services（物流服务） 2021/9/17 29

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 3 Major Business-to-Business(B 2 B) Business Model 2. 3. 2 B 2 B Models: E-procurement • Example: Ariba • In the software world, firms such as Ariba are sometimes called ASPs; they are also able to offer firms much lower costs of software by achieving scale economics. • Scale economics are efficiencies that result from increasing the size of a business. 2021/9/17 30

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 3 Major Business-to-Business(B 2 B) Business Model 2. 3. 3 B 2 B Models: Exchanges • Independently owned vertical digital marketplace for direct inputs • Revenue model: Transaction, commission fees • Create powerful competition between suppliers • Tend to force suppliers into powerful price competition （low price）; number of exchanges has dropped dramatically • （商品交易所数量下降） 2021/9/17 31

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 3 Major Business-to-Business(B 2 B) Business Model 2. 3. 4 B 2 B Models: Industry Consortia（协会） • Industry-owned vertical digital marketplace open to select suppliers • More successful than exchanges • Sponsored by powerful industry players • Strengthen traditional purchasing behavior rather than seek to transform it • Revenue model: Transaction, commission fees • Example: Exostar 2021/9/17 32

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 3 Major Business-to-Business(B 2 B) Business Model 2. 3. 5 Private Industrial Networks • Designed to coordinate（调整） flow of communication among firms engaged in business together • Electronic data interchange (EDI) • Single firm networks • Most common form • Example: Wal-Mart’s network for suppliers • Industry-wide networks • Often evolve out of（从……而来） industry associations • Example: Agentrics 2021/9/17 33

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 4 Other E-commerce Business Models 2. 4. 1 Consumer-to-consumer (C 2 C) Business Models • Consumer-to-consumer (C 2 C) • Helps consumers connect with other consumes to conduct business（形成交易） • Revenue Models: Transaction fee • Example: e. Bay 2021/9/17 34

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 4 Other E-commerce Business Models 2. 4. 2 Peer-to-peer (P 2 P)Business Models • Peer-to-peer (P 2 P) • Technology enabling consumers to share files and services via the web, without a common server • The focus in P 2 P companies is on helping individuals make information available for anyone’s use by connecting users on the Web. • The challenge for P 2 P ventures（企业） is to develop viable( 可行的) and legal business models that enable them to make money. • The Pirate Bay, Cloudmark (P 2 P垃圾邮件解决方案) • Revenue Models: subscription fees, advertising, transaction fees 2021/9/17 35

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 4 Other E-commerce Business Models 2. 4. 3 Mobile Commerce Business Models • M-commerce: • Extending business applications using wireless technology • Technology platform continues to evolve • i. Phone, smartphones energizing interest（感兴趣） in mcommerce apps • Revenue models: sales of goods and service 2021/9/17 36

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 4 Other E-commerce Business Models 2. 4. 3 Mobile Commerce Business Models • What are the unique business functionalities of mobile digital devices and how do they contribute to business model innovation? • They are mobile and portable, permitting shopping from anywhere, anytime. • Smartphone has cameras that can be used to scan product codes while shopping. • Smartphones have built–in GPS capabilities that identify where the user is located. 2021/9/17 37

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 4 Other E-commerce Business Models 2. 4. 4 E-commerce Enablers(促成者): The Gold Rush Model • （淘金热模型） • E-commerce infrastructure companies have profited the most: • Hardware, software, networking, security • E-commerce software systems, payment systems • Media solutions, performance enhancement • CRM software • Databases • Hosting services（主机服务）, etc. 2021/9/17 38

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 1 Industry Structure（行业结构） • Industry structure refers to the nature of the players in an industry and their relative barging power. • A industry’s structure is characterized by five forces: • 波特五力分析模型(Michael Porter's Five Forces Model) • Rivalry（竞争） among existing competitors • The threat of substitute products • Barriers to entry into the industry • The bargaining power of suppliers • The bargaining power of buyers 2021/9/17 39

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 1 Industry Structure • How the Internet and the Web Change Business • E-commerce changes industry structure by changing: • Basis of competition among rivals（对手） • Barriers to entry • Threat of new substitute products • Strength of suppliers • Bargaining power of buyers 2021/9/17 40

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 1 Industry Structure • An industry structural analysis is an effort to understand describe the nature of competition in an industry, the nature of substitute products, the barriers to entry, and the relative strength of consumers and suppliers. 2021/9/17 41

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 1 Industry Structure • E-commerce can affect the structure and dynamics in very different ways • Eg. • Recorded music industry • The travel industry: new middlemen（中间商） such as Travellocity have entered the market to compete with traditional travel agents 2021/9/17 42

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 1 Industry Structure • Each industry is unique, so it is necessary to perform a separate analysis for each one. • Clearly, e-commerce has shaken the foundations of some industries, in particular, information product industries (such as the music, newspaper, book, and software industries) as well as other information-intense industries such as financial services. • In other industries, especially manufacturing, the Internet has not greatly changed the relationships with buyers, but has changed the relationships with suppliers. 2021/9/17 43

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 2 Industry Value Chains • One of the basic tools for understanding the impact of information technology on industry and firm operations is the value chain. 2021/9/17 44

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 2 Industry Value Chains • Value chain • Set of activities performed by suppliers, manufacturers, transporters, distributors, and retailers that transform raw inputs into final products and services • Each step in the process of production adds value to the final product 2021/9/17 45

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 2 Industry Value Chains • Internet reduces cost of information and other transactional costs • Leads to greater operational efficiencies, lowering cost, prices, adding value for customers • 图 2. 4 2021/9/17 46

E-commerce and Industry Value Chains 存货 Figure 2. 4 2021/9/17 47

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 3 Firm Value Chains • 企业价值链 • Activities that a firm engages in to create final products from raw inputs • Each step adds value 2021/9/17 48

E-commerce and Firm Value Chains 采购 采购 Figure 2. 5 出厂物流

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 2 Industry Value Chains • Effect of Internet: • The Internet offers firms many opportunities to increase their operational efficiency and differentiate their products. • For instance, firms can use the Internet’s communications efficiency to outsource（外包） some primary and secondary activities to specialize. • Firms can use the Internet to coordinate（调整） the steps in the value chain and reduce their costs. • Firms can use the Internet to provide users with more differentiated and high-value products. 2021/9/17 50

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 4 Firm Value Webs • Networked business ecosystem • Uses Internet technology to coordinate（调整） the value chains of business partners • Coordinates a firm’s suppliers with its own production needs using an Internet-based supply chain management system 2021/9/17 51

Internet-Enabled Value Web Maintenance、repair and operations Figure 2. 6

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 5 Business Strategy • 企业战略 • Plan for achieving superior long-term returns on the capital invested in a business firm • Four generic strategies • Differentiation • Cost • Scope（范围） • Focus 2021/9/17 53

E-Commerce Chapter 2 E-commerce Business Models and Concepts 2. 5 How the Internet and the Web Change Business 2. 5. 5 Business Strategy • Differentiation差异化 • Differentiation refers to all the ways producers can make their products unique and distinguish them from those of competitors. • The opposite of differentiation is commoditization（大宗 化）—a situation where there are no differences among products or services, and the only basis of choosing a product is price. 2021/9/17 54

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