Ecommerce Business Models and Concepts B 2 B

E-commerce Business Models and Concepts B 2 B, C 2 C and M-commerce E-Commerce Business Models

B 2 B Business Models

B 2 B Business Models n Net marketplaces v E-distributor v E-procurement Systems v Digital Exchanges v Industry consortium n Private industrial network v Single Firm Private Industrial Network v Industry-Wide Private Industrial Network

Difference b/w b 2 b Business Models Purchase/Input Type Spot Purchasing Contractual Purchasing Type of Market Direct Inputs Independent Exchanges Industry Consortia Vertical Markets Indirect Inputs e. Distributors e. Procurement Horizontal Markets A vertical market is a market in which vendors offer good and services specific to an industry, trade, profession, or other group of customers with specialized needs. A horizontal market, in which vendors offer a broad range of goods and services to a large group of customers with wide range of needs, such as businesses as a whole, men, women, households, or, in the broadest horizontal market, everyone. 'Spot' buying is purchase for immediate delivery, as opposed to delivery in three or six months' time (contractual buying).

B 2 B Models: E-distributor n Supplies products and services directly to individual businesses n Owned by one company seeking to serve many customers (Businesses) n Revenue model: Sales of goods, Advertisement n Example: tradekey. com. pk, Grainger. com, Cisco, Dell. inc, Best. Buy. com, pakbiz. com, pakimpex. com Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 2 -5

Example : grainger. com - 1927 n www. Grainger. com, for example, is the largest distributor of maintenance, repair, and operations (MRO) supplies are thought of as indirect input to the production process – as opposed to direct inputs. In the past, Grainger relied on catalog sales and physical distribution centers in metropolitan areas. Its catalog of equipment went online in 1995 at Grainger. com, giving businesses access to more than 900000 items. Company purchasing agents can search by type of product, such as motors, HVAC, or fluids, or by specific brand name. Copyright © 2010 Pearson Education, Inc. Slide 2 -6

B 2 B Models: E-procurement e. Procurement is a fully capable electronic web application for purchasing goods and services. e. Procurement allows shoppers to browse online catalogs, add items to a shopping cart and submit the requisition electronically. E-procurement is the b 2 b purchase and sale of supplies and services over the Internet. n Implementation of E-Procurement System allow your organization to reach and interact with global suppliers or providers. n Typically, e-procurement Web sites allow qualified and registered users to look for buyers or sellers of goods and services. n Depending on the approach, buyers or sellers may specify prices or invite bids. n n Revenue model: v Transaction fees, usage fees, annual licensing fees Examples www. eva. virginia. gov, www. ariba. com Ariba - a application service providers (ASPs) – A SAP Company n

Ariba creates custom integrated online catalogs (where supplier firms can list their offerings) for purchasing firms. On the sell side, Ariba helps vendors sell to large purchasers by providing software to handle catalog creation shipping, insurance, and finance. Copyright © 2010 Pearson Education, Inc. Slide 2 -8

BENEFITS OF E-PROCUREMENT • • • Better Products One Stop Shop More product choices Faster Product Find Reduces Paper Cost Purchases can be tracked and made to comply with company guidelines. Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 2 -9

B 2 B Models: Exchanges n n Digital exchanges are independently-owned marketplaces that allow multiple suppliers and purchasers to trade in real time. v Usually owned by independent firms whose business is making a market v v Usually serve a single vertical industry for spot-purchasing by large companies in the IT, food and industrial equipment sectors. Revenue model: Transaction, commission fees Create powerful competition between suppliers Number has dropped dramatically v Many exchanges were launched in the dotcom boom, probably some 1, 500, but failed because the larger purchasers preferred to deal with a selected list of suppliers through private industrial networks. Digital exchanges may stabilize at some 200 odd. Copyright © 2010 Pearson Education, Inc. Slide 2 -10

Example: http: //www. liquidation. com/ Copyright © 2010 Pearson Education, Inc. Slide 2 -11

B 2 B Models: Industry Consortia Industry-owned vertical marketplaces that serve specific industries (e. g. , automobile, chemical) n More successful than exchanges n v v n Sponsored by powerful industry players Strengthen traditional purchasing behavior Example: Exostar v Exostar's founding partners included BAE Systems, Rolls Royce, Boeing, Lockheed Martin and Raytheon. n In July 2010, Exostar was fulfilling the needs of over 70, 000 companies in 95 countries with transactions totalling $35 billion annually. Copyright © 2010 Pearson Education, Inc. Slide 2 -12

INDUSTRY CONSORTIUM Revenue Model: Charging subscription and transaction fees. Copyright © 2010 Pearson Education,

INDUSTRY CONSORTIUM (Examples) Industrial Consortia Exostar Industry Aerospace Supply. On Automotive, Aerospace and Manufacturing Elemica Dairy. Com Global Healthcare Exchange Quadrem Chemical Dairy Products Medical Services and Supplies Metals, Minerals and Mining Risk Management for Ship Owners, Traders, Refiners, and Financial Institutions Food and Beverage Freight and Carrier Services Ocean. Connect The. Seam Transplace Exostar connects with over 300 procurement systems in 20 different countries and has registered more than 24, 000 trading partners worldwide. Most Fortune 500 and other large companies belong to industrial consortia, sometimes to several. Copyright © 2010 Pearson Education, Inc. Slide 2 -14

Private Industrial Networks As the name suggests, private industrial networks are web -enabled networks that coordinate transactions between specific companies — in all aspects and all divisions: suppliers, distributors, retail, procurement, delivery and so on. Such systems are also called collaborative, as they facilitate efficiencies throughout the network. Many large companies (Wal-mart, Agentrics, Coca-Cola, Nike, Hewlett. Packard, IBM, Microsoft, Cisco Systems, Dell and General Electric) operate private industrial networks, which indeed form the largest part of B 2 B ecommerce today. Copyright © 2010 Pearson Education, Inc. Slide 2 -15

Specific objectives include: More efficient buying and selling throughout an industry. n Resource planning on an enterprise- and industrywide scale. n Increased supply chain visibility to all interested parties, i. e. inventory levels of buyers and suppliers can be monitored and kept to efficient levels. n Closer relationships between buyers and suppliers, improving demand forecasting, communications and conflict resolution. n Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 2 -16

Private Industrial Networks Unlike industrial consortia, which are collectively owned by several major companies, private industrial networks generally have a single, sponsoring company that sets and enforces the rules, only inviting other companies to participate at its own will. Copyright © 2010 Pearson Education, Inc. Slide 2 -17

Example : Ace Hardware, a cooperative of 5, 100 retail stores employs a private industrial network to manage inventory levels and link with suppliers. Previously, some 30 procurement managers were employed and some 7 -10 days were required to process an order. These have been replaced with 14 Ace distribution centers and 9 key suppliers. And whereas suppliers previously had no access to Ace inventory levels, they can now forecast demand with some accuracy. Manco, one supplier of 200 products, has been able to reduce distribution costs by 28% and freight costs by 18%. Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 2 -18

Private Industrial Networks Designed to coordinate flow of communication among firms engaged in business together v Electronic data interchange (EDI) n Single firm networks v Most common form v Example: Wal-Mart’s network for suppliers n Industry-wide networks v Often evolve out of industry associations v Example: Agentrics (initiate by Sears) Copyright © 2010 Pearson Education, Inc. Slide 2 -19

Why Industry Wide Private Industrial Network ? (A response to Single Firm Industrial Network like wall- mart) wal-mart has refused to open its very successful network to other members of the retail industry, in effect to become an industry standard, for fear it will be sharing technology secrets with other retailers like Sears and other retailers around the world have created their own set of organizations and networks that are open to all in the industry. Agentrics is an industry-wide private industrial network for retailers and suppliers designed to facilitate and simplify trading among retailers, suppliers, partners and distributors. Copyright © 2010 Pearson Education, Inc. Slide 2 -20

Business Models in Emerging E-commerce Areas n Consumer-to-consumer (C 2 C) v Examples: e.

Business Models in Emerging E-commerce Areas n M-commerce: v v v Mobile e-commerce (m-commerce) is a term that describes online sales transactions that use wireless electronic devices such as hand-held computers, mobile phones or laptops. E-commerce models using wireless technologies (2 G EDGE, 3 G, 4 G & LTE) 3 G, 4 G, and LTE refers to the generation of network technology. Technology platform continues to CHANGE, The basic difference between them is the speed of the network. the older models may not support the newer data network technology. i. Phone 6 Plus, i. Phone 6, i. Phone 5 S, and the i. Phone 5 c. All these models support LTE. In the PAKISTAN, demand highest for digital content such as email, maps, ecommerce, social media and Internet browsing. So Mobile Companies continue to upgrade their Networks for 3 G, 4 G & LTE technology. Copyright © 2010 Pearson Education, Inc. Slide 2 -22