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E-Commerce Business ModelsE-Commerce Business Models
Daniel L. Silver, Ph.D.Daniel L. Silver, Ph.D.
2002 Daniel L. Silver 2
OutlineOutline
Three fundamental categories of E-Commerce Three fundamental categories of E-Commerce business modelsbusiness models– B2C, B2B and C2CB2C, B2B and C2C
A B2C ScenarioA B2C Scenario– Window ShoppingWindow Shopping– Step into the store (registration)Step into the store (registration)– Filling the shopping cartFilling the shopping cart– On to the checkoutOn to the checkout– Paying for the itemsPaying for the items– Fulfillment and shipment trackingFulfillment and shipment tracking
2002 Daniel L. Silver 3
Three Fundamental Categories of Three Fundamental Categories of E-Commerce Business ModelsE-Commerce Business Models
B2C – Business to ConsumerB2C – Business to Consumer– What most people typically think of when they What most people typically think of when they
think E-Commercethink E-Commerce C2C – Consumer to ConsumerC2C – Consumer to Consumer
– Auctions, Bartering modelsAuctions, Bartering models B2B – Business to BusinessB2B – Business to Business
– The original E-Commerce models – Why?The original E-Commerce models – Why?
2002 Daniel L. Silver 4
B2C – Business to ConsumerB2C – Business to Consumer
Storefront Model Storefront Model – The best known form of E-CommerceThe best known form of E-Commerce– Displays products (catalogs), takes orders, Displays products (catalogs), takes orders,
accepts payment, fulfills order, manage accepts payment, fulfills order, manage customer datacustomer data
– Click and Mortar versus Internet OnlyClick and Mortar versus Internet Only– Amazon.com, eToys.com, CDnow.com, Amazon.com, eToys.com, CDnow.com,
Chapters.caChapters.ca
2002 Daniel L. Silver 5
B2C – Business to ConsumerB2C – Business to Consumer
Online Shopping Mall ModelOnline Shopping Mall Model– Present wider selection of products and servicesPresent wider selection of products and services– Searching and shopping convenienceSearching and shopping convenience– Common shopping cart, payment and shipping Common shopping cart, payment and shipping
methodmethod– Takes advantage of economies of scaleTakes advantage of economies of scale– Merchants are charged in various waysMerchants are charged in various ways– Mall.com, Canadashop.com, Shoptheshops.comMall.com, Canadashop.com, Shoptheshops.com
2002 Daniel L. Silver 6
B2C – Business to ConsumerB2C – Business to Consumer
Portal ModelsPortal Models– Horizontal portals – general search enginesHorizontal portals – general search engines
» Broad range of topics, shallow depthBroad range of topics, shallow depth» Links to various malls, stores, auctions, sourcesLinks to various malls, stores, auctions, sources» Altavista.com, Hotbot.com, Yahoo.com, GoogleAltavista.com, Hotbot.com, Yahoo.com, Google
– Vertical portals – specialistVertical portals – specialist» Narrow range of topics, in-depth informationNarrow range of topics, in-depth information» See See http://http://www.verticalportals.comwww.verticalportals.com//
– Help users collect information and purchaseHelp users collect information and purchase– Charge merchants for advertisememtsCharge merchants for advertisememts
2002 Daniel L. Silver 7
B2C – Business to ConsumerB2C – Business to Consumer
Innovative/Dynamic Pricing ModelsInnovative/Dynamic Pricing Models– Name-your-price – Priceline.comName-your-price – Priceline.com– Comparison pricing – Bottomdollar.comComparison pricing – Bottomdollar.com– Bulk-buy pricing – mercata.com, mobshop.comBulk-buy pricing – mercata.com, mobshop.com– Rebating – eBates.com. eCentives.comRebating – eBates.com. eCentives.com– Free products and services – iWon.com, Free products and services – iWon.com,
Freemerchant.com – free hosting, free store Freemerchant.com – free hosting, free store building, free traffic logs, free auction tools, etc building, free traffic logs, free auction tools, etc
Most would not be possible without the InternetMost would not be possible without the Internet
2002 Daniel L. Silver 8
C2C – Consumer to ConsumerC2C – Consumer to Consumer
Auction ModelAuction Model– Internet forum for sellers and biddersInternet forum for sellers and bidders– Various auctions (reserve-price, reverse, Dutch)Various auctions (reserve-price, reverse, Dutch)– eBay.com (1995, Pez dispenser collector)eBay.com (1995, Pez dispenser collector)– 4M simultaneous auctions, 450K new items/day4M simultaneous auctions, 450K new items/day– $3.8B spent in online auctions in 2000$3.8B spent in online auctions in 2000(Forrester)(Forrester)
Bartering ModelBartering Model– Offering one item in exchange for anotherOffering one item in exchange for another– Ubarter.comUbarter.com
2002 Daniel L. Silver 9
B2B – Business to BusinessB2B – Business to Business
Businesses have long done E-Commerce with Businesses have long done E-Commerce with each othereach other– EFT – Electronic Funds Transfer (banks)EFT – Electronic Funds Transfer (banks)– EDI – Electronic Data Interchange (suppliers)EDI – Electronic Data Interchange (suppliers)
Traditional EDI uses a VAN Traditional EDI uses a VAN (value-added network)(value-added network)
– Closed networks, manufactures and suppliers Closed networks, manufactures and suppliers – Purchase orders and invoices exchanged dailyPurchase orders and invoices exchanged daily– Standards vary, VANs are costly, closed netsStandards vary, VANs are costly, closed nets
Moving to the Internet, Web technology and XML Moving to the Internet, Web technology and XML (upgrade of EDI) (upgrade of EDI)
2002 Daniel L. Silver 10
B2B – Business to BusinessB2B – Business to Business
B2B Internet exchanges provide standard methods B2B Internet exchanges provide standard methods of buying, selling, bartering and partneringof buying, selling, bartering and partnering
2003: US$403 B 2003: US$403 B 2004 projection: 2004 projection:
– US$2.77 trillion US$2.77 trillion » (eMarketer)(eMarketer)
– US$7.29 trillion US$7.29 trillion » (Gardner Group)(Gardner Group)
B2B auctions:B2B auctions:– US$52 billion 2002US$52 billion 2002
2002 Daniel L. Silver 11
The Traditional B2C The Traditional B2C Commerce ScenarioCommerce Scenario
1.1. Buyer and seller meetBuyer and seller meet
2.2. Buyer chooses product and places orderBuyer chooses product and places order
3.3. Seller delivers productSeller delivers product
4.4. Buyer pays for productBuyer pays for product
2002 Daniel L. Silver 12
The E-Commerce B2C ScenarioThe E-Commerce B2C Scenario
Consumer PerspectiveConsumer Perspective Search the InternetSearch the Internet Choose the right Choose the right
productproduct Place the order and Place the order and
shipping info.shipping info. Enter payment info.Enter payment info. Receive product via Receive product via
Internet or ground Internet or ground shipmentshipment
Business PerspectiveBusiness Perspective AdvertisingAdvertising Inventory (product) Inventory (product)
ManagementManagement Order Processing Order Processing
(shopping cart)(shopping cart) Payment MgmtPayment Mgmt Fulfillment and Fulfillment and
ShippingShipping Profile ManagementProfile Management
2002 Daniel L. Silver 13
A B2C ScenarioA B2C Scenario
I would like to buy some hands-free I would like to buy some hands-free technology to work with my cellular phone technology to work with my cellular phone for my consulting business.for my consulting business.
Criteria:Criteria:– It must be reliableIt must be reliable– Inexpensive as possibleInexpensive as possible– Light-weightLight-weight– Small (able to fit into my pocket)Small (able to fit into my pocket)
2002 Daniel L. Silver 14
Typical B2C Shopping TripTypical B2C Shopping TripView Homepage Registration
Address Book
Shopping Cart
Product AdvisorSearch
Receive Ack.
Submit Order
Enter Payment Info.
Enter Shipping Info.
Select Products
Navigate
2002 Daniel L. Silver 15
A B2C ScenarioA B2C ScenarioTechnology QuestionsTechnology Questions
How does a browser connect to a server?How does a browser connect to a server? How does a search engine work?How does a search engine work? What is a cookie?What is a cookie? How do those banner adds work?How do those banner adds work? Are there web pages for every item?Are there web pages for every item? What is all that gobbledygook in the page address?What is all that gobbledygook in the page address? What is a shopping cart? How long does it exist?What is a shopping cart? How long does it exist? How does a web sites know who I am on return?How does a web sites know who I am on return? Should I register?Should I register?
2002 Daniel L. Silver 16
A B2C ScenarioA B2C ScenarioTechnology QuestionsTechnology Questions
How does it find my password?How does it find my password? How does it automatically send me emails?How does it automatically send me emails? What are the messages concerning insecure What are the messages concerning insecure
submissions all about?submissions all about? What is authentication, certificate, encryption?What is authentication, certificate, encryption? How do they know my credit card is good?How do they know my credit card is good? How do they know there is credit left?How do they know there is credit left? How is software I have purchased downloaded?How is software I have purchased downloaded? How do they track my shipment?How do they track my shipment?
2002 Daniel L. Silver 17
B2C Levels of AutomationB2C Levels of Automation
Front-EndFront-End Static Web contentStatic Web content Dynamic Web contentDynamic Web content Secure orderingSecure ordering Shopping cartShopping cart Persistent customer Persistent customer
DataData Personalization of Personalization of
ContentContent
Back-EndBack-End ManualManual Non-integrated Non-integrated
computercomputer Automatic entryAutomatic entry Total Web integrationTotal Web integration
2002 Daniel L. Silver 18
Business Evolution on the WebBusiness Evolution on the Web
Publishing
Time or Maturity
Functionality Interactivity
Transactions
Processes
Static web pages
Dynamic web pages
Web-enabled applicatons
THE ENDTHE END
[email protected]@acadiau.ca