Itec410 e busness_case_lec

ITEC 410Current Technologies

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Further Explanation on:New Business ModelsCategories of E-Business ModelsFactors Affecting E-Business Success

Creating a Winning E-Business Second Edition, Chapter 1

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Learning Objectives

Discuss the New Trending e-Business Models:– Flash Sales

– Subscriptions

– Social Bookmarking Websites

– Collaborative Commerce

– Next Generation Marketplaces


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Learning Objectives (continued)

Discuss the Five Categories of e-Business Models:– B2C

– B2B

– B2G

– C2C

– C2B


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Learning Objectives (continued)

Discuss the Factors that affect e-Business Success – The Network Effect

– Innovative Marketing Ideas

– Scalability

– Ease of Entry into Electronic Markets

– Ability to quickly adapt to Marketplace Changes


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E-Business Basics E-commerce – Process of buying or selling

goods or services across a telecommunications network

E-business – Widest spectrum of business activities using Internet and Web technologies

Many technologies facilitate e-business– Electronic Funds Transfer (EFT)– Electronic Data Interchange (EDI)– Internet / World Wide Web


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Business models– How a company conducts business in order to

generate revenue– Companies can either adapt old models (e.g.

ecommerce) or create new ones E-business models are often categorized by

type of customer (business customer, individual customer, government customer)

E-Business Models

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Description: web application that collects all limited-offer deals from a number of e-commerce sites and display these deals to the user

Customer Value: customer goes to one place to find all discounted deals

Retail Value: companies get rid of old goods quickly Risks / Limitations:

– discounted deals finish quickly – Your e-Business spends a lot on network traffic

(lots of visitors) and marketing your site Daily Deals: Flash Sales for One-day offers

New E-Business ModelsFlash Sales

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Description: web application that delivers products (e.g. magazines, DVDs) or services (e.g. streaming videos, chatting subscriptions) weekly, monthly, quarterly, or yearly to customers

Customer Value: – Customer tries out and discovers new

products– Customer saves time on shopping (products

come to his home)

New E-Business ModelsSubscriptions

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Retail Value: – Companies don’t have to store extra goods in the

store (they know how much to store)– Companies always have cash because customers

subscribe for durations (not buy once). Example: Monthly subscriptions with annual contracts

Risks / Limitations: – Customers may feel bored from subscriptions if goods

and services look the same every time– Customers may have to pay shipping costs

New E-Business ModelsSubscriptions - Continue

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Description: web application that collects and organizes content found on social media sites, usually using the tags that users create for content

Customer Value: – Customer find all social media information about

an item in one place (using the item tag) – Customer can get related recommendations (e.g.

most users who search for #tag1 also search for tag2, so recommend #tag2 for a user who searched for #tag1)

New E-Business ModelsSocial Bookmarking

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Retail Value: – Companies can learn more about consumer

behavior (e.g. Which items that the same users like on social media? Who are the similar users?)

Risks / Limitations: – Chicken and Egg problem:

• In order for users to come to our site, we need content

• In order for us to bring content to the site, we need users to enter these content

New E-Business ModelsSocial Bookmarking - Continue

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Description: web application that allows the users to share a service and bills the user monthly or per use

Customer Value: – Customer doesn’t need to buy an expensive

service (e.g. cloud) as he can just pay for sharing the service

– Customer can spend the money on sharing many services instead of buying a single service, allowing him to discover many new services

New E-Business ModelsCollaborative Commerce

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Retail Value: – Companies who buy an expensive resource

(e.g. a cloud) can now distribute the cost of that resource on its customers, while stay using the resource for their business

Risks / Limitations: – When the economy is strong, customers will not

be interested to share, they just buy!

New E-Business ModelsCollaborative Commerce - Continue

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Description: web application that collects information from the internet about sellers and buyers, and match them together

Customer Value: – Buying Customer doesn’t need to search for

sellers. Selling customer doesn’t need to search for buyers

– Customers find what they need easily

New E-Business ModelsNext Generation Marketplaces

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Retail Value: – If customers are companies who do retails,

they do not need to spend on marketing Risks / Limitations:

– Chicken and Egg Problem: • Selling customers will not subscribe to our site if there

are no much buyers• Buying customers will not subscribe to our site if there

are no much sellers

New E-Business ModelsNext Generation Marketplaces -

Continue


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E-Business Model Categories

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Business-to-consumer (B2C)– Retail sales (e-retail) including airline tickets,

entertainment venue tickets, hotel rooms, stock purchases, diet and fitness programs

Brick-and-mortar (companies that have a physical presence and offer face-to-face customer experiences) are moving to brick-and click (companies selling offline and online)– Sears, Best Buy, Barnes & Noble, the Gap

Pure-play e-retailers and catalog merchants (they just sell goods & services. They do not own them)– Amazon.com, eBags, Harry and David

E-Business Models (continued)


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Business-to-business (B2B)– Businesses selling to other businesses– Online stores, such as Office Depot, Staples– Internet and Web technologies

• Web hosting• Web design• Hardware and software• Consulting


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Business-to-business (B2B) – Vertical markets (markets in which vendors offers

good and services specific to an industry, trade, profession, or other group of customers with specialized needs )

– Exchanges, aggregators, auctions (for groups)• Virtual market spaces for groups buyers and group

sellers• Elance, ATLA Exchange, Business.com,

HedgeHog


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Business-to-government (B2G)– Derived from B2B– Businesses provide various products and

services for government agencies– Example: A private company manages the

publications / updates of public e-newspapers– Bidmain, B2GMarkets


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Consumer-to-consumer (C2C)– Individual Consumers sell or exchange products

and services directly with other individual consumers

– Auctions, online classified ads, expert information exchanges

• eBay, American Boat Listing, TraderOnline.com, AllExperts


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Consumer-to-business (C2B)– Reverse auctions in which a single consumer

names his own price for his own products or services to businesses to buy

– Consumer’s offer made to multiple businesses, which can accept or decline offer

– Priceline.com


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Factors AffectingE-Business Success

The network effect (If people using your goods/service increase, the value of your goods/services increase, and vice versa)– Total value of a product, service, or technology

grows as more and more people use it• Telephone system example

– Single telephone has no value; as more people join the telephone system, the value of each telephone increases

• uBid online auction site example– As more people participate, the auction site becomes

more valuable to buyers and sellers

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Factors AffectingE-Business Success (continued)

Innovative marketing ideas (Your marketing ideas must be smart in order for your e-Business to succeed)– Viral marketing (the use of social networks to produce

increases in brand awareness). Hotmail example: • Hotmail users grew at a rapid rate because of

electronic word of mouth coupled with the network effect

• Electronic word of mouth or viral marketing spreads from user to user in the same way a human virus spreads from person to person

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Scalability (Your e-business must be able to function well in the face of rapid growth of customers)– Systems and procedures meet growing customers

needs– AllAdvantage e-business failure example

• E-business idea: Paying for users to browse the Web and view advertising

• Millions of customers signed on; but sadly most advertisers did not sign!

• The company did not have the scalability to meet the rapid growth in customers with small number of advertisers

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Ease of entry into electronic markets (Your e-business must not spend too much on creating the business!)– Low-cost technologies make it easy to create new e-

businesses– eBay and online auction example

• Easy for consumers to interact at auction site• Web auction software is cheap and easy to

install /maintain• E-businesses earn commissions without having to

manage, warehouse, and distribute products

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Ability to quickly adapt to marketplace changes (If customers suddenly became not interested in a certain product or service, your e-Business should be able to change them immediately )– Rapid knowledge transfer (you should rapidly know about consumer

shits in interests)– Need to make decisions quickly– Exploit new ideas and opportunities– Handle new challenges

• Amazon.com is an example of ongoing evolution from a basic e-business idea (book selling) to innovative e-business idea (selling almost everything)

End of Lecture

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Itec410 e busness_case_lec

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