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E-BUSINESS MODELS
GENERAL
E-Business Model
definition
An e-and m- business model is an
approach to conducting electronic
business through which a company can
sustain itself and generate profitable
revenue growth
Business model-continued
• The business model spells out how
a company plans to make money
and how it is competitively
positioned in an industry
Internet
• Please reflect on the promise
of the Internet years ago
• And now?
Life
• Given the carnage among
dot-com stocks this year,
what online business
models are expected to
succeed in the future?
What we learned was what we
knew all along
• Businesses need to make more
money than they spend. The new
model is the old model, but
technology is essential to maintain a
competitive advantage, and cash
flow is more important than ever
Portals
• The idea behind portals is the
same as that behind television
advertising: aggregating
eyeballs and directing them
toward advertisements
But…
But…
• television viewers are passive:
people need to wait through
the ads to see the shows they
want to watch
But…
The Web doesn't work that way
WHY?
• Content presentation is not
serial
• Viewers are active, not passive
• There are always thousands of
places to go
Hard times
• Many portal sites, such as
Go.com and AltaVista.com,
have fallen on hard times
• For example, what happened to
Priceline.com?
First to market model
• Many of the failing companies
were operating on a first-tomarket strategy
Their hope was that by getting
their ideas out ahead of the
market, consumers would
develop brand loyalty before
competitors arrived
First-to-market as a
business model
First-to-market as a business model
has always been risky. You are
vulnerable because you have
nothing proprietary, need vast
funding and rely on rapid
deployment
Check
But sometimes it works…
http://www.deananddeluca.com/
So why did investors and
venture capitalists get caught
in such speculative and
irrational investments?
Investors
• Investors felt that they were
investing in technology, when
they were really investing in
retailers and distributors
Retailers and distributors have small
profit margins.
They couldn't justify their valuations
in typical price/earnings ratios.
When does it turn profitable?
Companies like Amazon.com are
starting to answer this
Consider
• One segment of the businessto-consumer world that's
thriving is in niche markets
Your examples?
Exercise
Please visit
http://www.redenvelope.com/
RedEnvelope Gifts Inc
•
RedEnvelope Gifts Inc., launched
in 1997 as REDENVELOPE, began
as a last-minute gift site but now
markets more than 1,000 items
that are unique to the site
RedEnvelope
Customers seem willing to pay a
premium for RedEnvelope-edited
selection and enhanced customer
service
The company has $30 million in
sales, with a 46-point profit margin
There needs to be a quick
path to profitability
• In the context discussed so far,
the ultimate metric is margin
There are three levers to
achieving margin:
•
edited selection
•
customer service
•
inspirational branding
Another look at ebusiness model
• Is the model buyer- or sellercentric?
• What is the driving force of the
business?
Strength of the
Internet?
• The greatest strength of the
Internet is its ability to bring
together people, governments
and businesses, and facilitate
the flow of information among
them
Internet and B2B
• Is that one of the main reasons
why business models for
business-to-business online
marketplaces are expected to
succeed?
B2B
• Is Internet viable platform for
B2B trade?
• Is web site just another
channel?
• Is the real surprise to discover
how hard it is to become
profitable?
M-business
• What elements make mobile business
viable?
• Which technologies allow mobile devices to
communicate easily with the Internet?
• Are there standards that ensure effective
transfer of information?
M-business
• From competition to cooperation
Example: Nokia and IBM
• Changing customer’s relationship
Example: culture of feedback and review
Power to the purchaser
Buying communities
M-business
• How is the market likely to develop?
• What are current strategies?
• Who is going to make money out of this and
how?
M-business
Will have to supply services that go beyond
traditional web-based systems
• Services that an enterprise offers to their
professional and private customers
• Services that help different enterprises to
effectively combine their business processes
• Services an enterprise provides to it's employees
to support the internal business processes
M-business
• Dependability of mobile information
systems
• Adaptability of systems to context
• Development of systems on a wide range of
client platforms
• Process support for mobile workers
M-business
iAnywhere m-Business Platform Demo Field Force Automation
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