Electronic Commerce The eTrading Business Models B 2

Electronic Commerce The e-Trading Business Models B 2 C

Agenda E-Commerce – A Business Perspective: E-commerce classification and models. The Retail/Consumer Marketplace EC models (B 2 C). 2

e-Trading Implementation Domains 1. Business-to-Consumer (B 2 C)

B 2 C Electronic Marketing Business-to-consumer (B 2 C) Ability to create direct relationships with consumer without intermediaries like distributors, wholesalers, or dealers 4

B 2 C Electronic Markets B 2 C business model where customers look for: High quality Low price Fast shipment Good return policy Helpful customer service 5

What Sells Better on the Internet? Goods that can be transformed to digitized goods like books, music, and video Items with high brand recognition Items with security guarantee given by highly reliable or known vendors Relatively cheap items Repetitively purchased items such as groceries Commodities with standard specification Items whose operating procedures can be more effectively demonstrated by a video Packaged items which are well known to customers and which cannot be opened even when customers physically visit the store 6

B 2 C Different EC Models

Business Models of Electronic Marketing Direct Marketing Manufacturers Vs. Indirect Marketing Manufacturers Proactive Strategic Posture Vs. Reactive Strategic Posture Electronic Mall Vs. Electronic Store Sales Vs. Customer Services Full Cybermarketing Vs. Partial Cybermarketing Global Marketing Electronic Distributor Generalized Mall Vs. Vs. Regional Marketing Electronic Broker Specialized 9 Mall/Store

Business Models of Electronic Marketing (Cont. ) E-store vs. E-mall. E-store. § An electronic distributor whose dealing items are handled by a single store. E-mall. § An electronic distributor or broker whose dealing items are handled by more than a single electronic store. 10

Active Electronic Intermediaries (Cont. ) Pure Vs. Partial E-Mall Strategy Pure electronic mall Cybermall Company’s retailing business exists only on the internet Partial electronic mall Electronic mall as one of existing distribution channels 11

Business Models of Electronic Marketing (Cont. ) Generalized vs. Specialized e-malls/stores Generalized e-malls/stores § Deal with various categories of items, so supply items is very wide, e. g. , electronic department stores. Specialized e-malls/stores § Focus on only special types of items, e. g. , cyber-bookstores like Amazon and computer vendors like Dell. 12

Business Models of Electronic Marketing (Cont. ) E-distributor vs. E-broker E-distributor § Responsible of order fulfillment and guarantee, e. g. , Amazon, e. Toys, Wal-mart online. E-broker § Introduce suppliers who deal with the items that the customers are looking for, e. g. , Choice mall, Best. Book. Buys, compare. Net, and directory sites like yahoo. § Payments can be either collected by suppliers or brokers depending on their agreements. 13

Active Electronic Intermediaries (Cont. ) Pure Electronic Malls E-Distributors E-Brokers CDNow Shop. Now §Take full responsibility of fulfilling orders and collecting payments §Narrow scope of products usually specialized §Scope of products is broad and can link stores worldwide. §Assist the search process of finding the appropriate products and their vendors §May receive commissions from vendors to whom the orders are §Needs expertise in merchandizing, channeled §Main expertise is technical quality assurance, and customer (Internet technology and support) service 14

CD NOW: Specialized e-Distributers 15

1 -800 -Flowers: Specialized e-Distributers 16

1 -800 -Flowers 17

Anniversary Flowers 18

Flower e-shop 19

Shop. Now: e-Brokers 20

Shop. Now: e-Brokers 21

Business Models of Electronic Marketing (Cont. ) Direct marketing vs. Indirect marketing. Direct marketing. § Manufacturers advertise and distribute their own products directly to their customers via their internetbased stores without intervention of any intermediaries, e. g. , Dell. Com. § E-stores must be highly visible (high visibility of the company and the brand). Indirect marketing. § Products are distributed through third party intermediaries, e. g. , E-malls. § Low visibility of products should be balanced by high visibility of the intermediary. 22

Disintermediation in B 2 C Distribution Source: M. Warkentin, et al. (2000). Used with permission of Dr. Merrill Warkentin. 23

Business Models of Electronic Marketing (Cont. ) Full cybermarketing vs. Partial cybermarketing. Full cybermarketing. § Companies sell their products and services only through the internet, e. g. , Amazon. § Mostly new companies born in the era of e-commerce. § Proactive e-commerce strategy Partial cybermarketing (Click & Mortar). § Companies sell not only through the internet but also through physical stores, e. g. , Barns & Noble. § Reactive response of existing companies having physical distribution channels. 24

Business Models of Electronic Marketing (Cont. ) Proactive vs. Reactive strategic posture toward cybermarketing Proactive strategic posture toward cybermarketing § A company’s main distribution channel is the internet, and internal management such as inventory and operations management is focused to affect the benefit of cybermarketing Reactive strategic posture toward cybermarketing § The traditional physical distribution channel is left as the company’s main distribution channel even though the company has opened another online distribution channel 25

JCPenney: Reactive e-Department Stores 26

Reactive Electronic Department Stores (Cont. ) The J. C. Penney case The Internet-based revenue amounts a small percentage of the total revenue Updating prices and adding new items to the electronic catalogs is convenient and inexpensive Overcoming the limitations of paper catalogs without incurring extra distribution cost 27

JCPenney 28

Dell. COM: Proactive Direct Marketing 29

Ford. com Reactive Partial Direct Marketing 30