Ecommerce Business Model

1. Comp2513
E-Commerce Business Models
Daniel L. Silver, Ph.D.

2. Outline
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Three fundamental categories of E-Commerce
business models
– B2C, B2B and C2C
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A B2C Scenario
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2002
Window Shopping
Step into the store (registration)
Filling the shopping cart
On to the checkout
Paying for the items
Fulfillment and shipment tracking
Daniel L. Silver
2

3. Three Fundamental Categories of
E-Commerce Business Models
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B2C – Business to Consumer
– What most people typically think of when they
think E-Commerce
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C2C – Consumer to Consumer
– Auctions, Bartering models
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B2B – Business to Business
– The original E-Commerce models – Why?
2002
Daniel L. Silver
3

4. B2C – Business to Consumer
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Storefront Model
– The best known form of E-Commerce
– Displays products (catalogs), takes orders,
accepts payment, fulfills order, manage
customer data
– Click and Mortar versus Internet Only
– Amazon.com, eToys.com, CDnow.com,
Chapters.ca
2002
Daniel L. Silver
4

5. B2C – Business to Consumer
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Online Shopping Mall Model
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Present wider selection of products and services
Searching and shopping convenience
Common shopping cart, payment and shipping
method
– Takes advantage of economies of scale
– Merchants are charged in various ways
– Mall.com, Canadashop.com, Shoptheshops.com
2002
Daniel L. Silver
5

6. B2C – Business to Consumer
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Portal Models
– Horizontal portals – general search engines
» Broad range of topics, shallow depth
» Links to various malls, stores, auctions, sources
» Altavista.com, Hotbot.com, Yahoo.com, Google
– Vertical portals – specialist
» Narrow range of topics, in-depth information
» See http://www.verticalportals.com/
– Help users collect information and purchase
– Charge merchants for advertisememts
2002
Daniel L. Silver
6

7. B2C – Business to Consumer
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Innovative/Dynamic Pricing Models
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Name-your-price – Priceline.com
Comparison pricing – Bottomdollar.com
Bulk-buy pricing – mercata.com, mobshop.com
Rebating – eBates.com. eCentives.com
Free products and services – iWon.com,
Freemerchant.com – free hosting, free store
building, free traffic logs, free auction tools, etc
Most would not be possible without the Internet
2002
Daniel L. Silver
7

8. C2C – Consumer to Consumer
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Auction Model
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Internet forum for sellers and bidders
Various auctions (reserve-price, reverse, Dutch)
eBay.com (1995, Pez dispenser collector)
4M simultaneous auctions, 450K new
items/day
– $3.8B spent in online auctions in 2000(Forrester)
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Bartering Model
– Offering one item in exchange for another
– Ubarter.com
2002
Daniel L. Silver
8

9. B2B – Business to Business
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Businesses have long done E-Commerce with
each other
– EFT – Electronic Funds Transfer (banks)
– EDI – Electronic Data Interchange (suppliers)
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Traditional EDI uses a VAN (value-added network)
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Closed networks, manufactures and suppliers
Purchase orders and invoices exchanged daily
Standards vary, VANs are costly, closed nets
Moving to the Internet, Web technology and XML
(upgrade of EDI)
2002
Daniel L. Silver
9

10. B2B – Business to Business
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B2B Internet exchanges provide standard methods
of buying, selling, bartering and partnering
2003: US$403 B
2004 projection:
– US$2.77 trillion
» (eMarketer)
– US$7.29 trillion
» (Gardner Group)
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B2B auctions:
– US$52 billion 2002
2002
Daniel L. Silver
10

11. The Traditional B2C
Commerce Scenario
1.
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4.
2002
Buyer and seller meet
Buyer chooses product and places order
Seller delivers product
Buyer pays for product
Daniel L. Silver
11

12. The E-Commerce B2C Scenario
Consumer Perspective
 Search the Internet
 Choose the right
product
 Place the order and
shipping info.
 Enter payment info.
 Receive product via
Internet or ground
shipment
2002
Business Perspective
 Advertising
 Inventory (product)
Management
 Order Processing
(shopping cart)
 Payment Mgmt
 Fulfillment and
Shipping
 Profile Management
Daniel L. Silver
12

13. A B2C Scenario
I would like to buy some hands-free
technology to work with my cellular phone
for my consulting business.
 Criteria:
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2002
It must be reliable
Inexpensive as possible
Light-weight
Small (able to fit into my pocket)
Daniel L. Silver
13

14. Typical B2C Shopping Trip
View Homepage
Search
Navigate
Registration
Product Advisor
Select Products
Shopping Cart
Enter Shipping Info.
Address Book
Enter Payment Info.
Submit Order
2002
Receive Ack.
Daniel L. Silver
14

15. A B2C Scenario
Technology Questions
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How does a browser connect to a server?
How does a search engine work?
What is a cookie?
How do those banner adds work?
Are there web pages for every item?
What is all that gobbledygook in the page
address?
What is a shopping cart? How long does it exist?
How does a web sites know who I am on return?
Should I register?
2002
Daniel L. Silver
15

16. A B2C Scenario
Technology Questions
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How does it find my password?
How does it automatically send me emails?
What are the messages concerning insecure
submissions all about?
What is authentication, certificate, encryption?
How do they know my credit card is good?
How do they know there is credit left?
How is software I have purchased downloaded?
How do they track my shipment?
2002
Daniel L. Silver
16

17. B2C Levels of Automation
Front-End
 Static Web content
 Dynamic Web content
 Secure ordering
 Shopping cart
 Persistent customer
Data
 Personalization of
Content
2002
Back-End
 Manual
 Non-integrated
computer
 Automatic entry
 Total Web integration
Daniel L. Silver
17

18. Business Evolution on the Web
Processes
Functionality
Web-enabled
applicatons
Transactions
Interactivity
Dynamic web pages
Publishing
Static web pages
Time or Maturity
2002
Daniel L. Silver
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19. THE END
danny.silver@acadiau.ca