Classification of E-Comm Companies
Classification of E-Comm Companies
Classification of E-Comm Companies
Classifications
Classification by seller/buyer Classification by product or activity Classification by sources of revenues
Classification by seller/buyer
Business to Consumer (B to C)
Southwest Airlines generates over 15% of its revenues from its online site.
http://www.southwestairlines.com/
Business to Business (B to B)
Automobile manufacturers organizing an exchange to buy components from suppliers.
http://www.generalmotors.com/cgi-bin/pr_display.pl?1202
Consumers to Consumers (C to C)
Auctions sites like E-Bay. http://www.ebay.com/
Consumers to Business (C to B)
Selling information to businesses like gorefer.
http://www.gorefer.com/ http://www.mercata.com/
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Advantages of Classifications
Classifications by seller/buyer emphasize the markets in which the firm operates. Classifications by product/activity emphasize the nature of the business. Classifications according to revenue sources focus on the underlying business model. An E-Commerce company is likely to be in more than one category. The analysis of categories helps in profiling the business (segments). 6
Warning
The Following Definitions of Various Business Models are not mine. They were developed by Professor Michael Rappa:
http://ecommerce.ncsu.edu/business_models.html
Brokerage
Bringing buyers and sellers together
Buy/sell fulfillment
Online stock trading
Market exchange
B2B (metals exchange)
Virtual mall
Internet fashion mall
Auction broker
E-Bay
Search agent
My Simon, Dealtime
Advertising
Free content or services to users. Content (service) providers get advertising revenues. Model in existence for radio and TV. Need very high volume or very specialized audience.
Generalized portals. Personalized and specialized portals. Attention/incentive marketing. Free products or services. Bargain discounters.
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Infomediary
Collecting and selling data about consumers, interests and buying habits. Sharing information among consumers
Book reviews on Amazon
Registration
Collecting information on users in exchange for access to content (newspapers, free phone services).
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Merchants
Wholesalers and retailers on the Web.
Web-based only, with no brick and mortar operations. Catalog services
New form of direct mail
Digital content
Music Software
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Manufacturer
Manufacturer bypasses the wholesaler to reach final customer.
Dell
Personalization
Flowerbud
Faster delivery
Affiliate
Referring to other sites Similar to Yellow Pages or referral fees for lawyers. Hitting the customer when the purse is open. Using information on current purchases to induce further purchases of complementary products and services.
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Community
Creating a community of similar users.
Soliciting donations from users and foundations
Subscription
Pay for content General reluctance to pay for content on the Web. Exceptions:
Wall Street Journal Premium content (detailed stock research reports) Archived information
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Utility
Pay per use or per time Similar to Pay Per View movies Renting software and applications Payment per data extracted
Credit reports Retrieving old publications
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Assess the required long-term volume to make a profit Assess the reasonableness of the required volume and costs to achieve it.
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Sources of Information
Forms filed with the SEC (http://www.sec.gov :
/)
Registration statement Form 10-K Form 10-Q Proxy statement Special reports
Interactive models
Merchants
Only if reduces transaction costs or increases the pie
Affiliates
Will it be pay per referral? Pay per listing (like Yellow Pages)?
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Long-Term Survival
Depends on the long-term tradeoff between revenues and costs. Cheap initial financing masks true longterm costs. The recent decline in prices of Internet stocks can force people to think through more carefully of the long-term viability of the business model.
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Summary
Classifications help think about the business model. Classifications also help in assessing the long-term viability of the business.
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