E-Business Models[1]

Lecture 02E-Business ModelsJaeki Song2Learning ObjectivesIdentify the key components of e-commerce business models.Describe the major B2C business models.Describe the major B2B business models.Recognize business models in other emerging areas of e-commerce.Understand key business concepts and strategies applicable to e-commerce.Components of e-Business ModelsBusiness Model-Customer value-Scope-Price-Resources-Capabilities-ImplementationsEnvironmentInternetPerformancePrice CompetitionPrice for books and CDs sold on the Internet less than conventional channel–Average 9-16%Price increments–Price change on the Internet is smaller than conventional channelPrice dispersion–Substantial differences in price across retailers on the Internet–Heterogeneity in consumer awareness–Heterogeneity in retailer branding and trustDriving FactorsLower buyer search costs–Promote price competitionLow entry costs or low operational costsOther factors–Tax–Shipping and handling fees6E-Commerce Business ModelsBusiness model–a set of planned activities designed to result in a profit in a marketplaceE-commerce business model–a business model that aims to use and leverage the unique qualities of the Internet and the World Wide Web.Eight Key Ingredients of a Business Model13Competitive EnvironmentRefers to the other companies operating in the same marketplace selling similar productsInfluenced by:how many competitors are activehow large are their operationsthe market share of each competitorhow profitable these firms arehow they price their products18Organizational DevelopmentDescribes how the company will organize the work that needs to be accomplishedWork is typically divided into functional departmentsMove from generalists to specialists as the company grows