ch02 - Ec

Getting to know you
• Name?
• Why is your major?
• What do you know about E-commerce?
Syllabus
• Mid-Exam is going to be on 13/2/2023
4-Schedule of Assessment Tasks for Students During the Semester:
Aligned Course
Learning
Proportion of Outcomes (CILOs symbols)
No Assessment Method Week Due Mark Final Assessment
1 Attendance , Quizzes and participation 10 10% A-B-C-D
2 Mid-term written exam 6th 20 20% A-B-C-D
3 Projects reports & Presentation 11– 12 10 10% A-B-C-D
4 Final Exam (theoretical) 60 60% A-B-C-D
Total
100 100%
E- Commerce Projects
• The FIVE student in each group as maximum.

• The student’s group should create website for e-
business for goods or services
https://www.blogger.com/
• It is NOT allowed two groups to choose the same
idea.
• NO Excuse for projects.
• Last Week, you should present your online business
as presentation.
Discussion
 Social Media Manager
 Digital Marketer
 Digital Advertiser
 Influencers
 Content Creator
 Online Jobs
 AdSense – AdMob
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 2-5
E-commerce 2014
business. technology. society.
tenth edition
Kenneth C. Laudon
Carol Guercio Traver
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 2
E-commerce Business Models
and Concepts
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

Class Discussion
Tweet Tweet: Twitter’s Business Model

 What characteristics or benchmarks can be used to
assess the business value of a company such as
Twitter?
 Have you used Twitter to communicate with friends
or family? What are your thoughts on this service?
 What are Twitter’s most important assets?
 Which of the various methods described for
monetizing Twitter’s assets do you feel might be
most successful?
E-commerce Business Models
 Business model
 Set of planned activities designed to result in a
profit in a marketplace

Examples http://articles.bplans.co.uk/starting-a-business/examples-of-well-known-business-models/1040
 Business plan
 Describes a firm’s business model
 Examples; http://articles.bplans.com/a-standard-business-plan-outline/
 E-commerce business model

 Uses/leverages unique qualities of Internet and
Web http://www.tutorialspoint.com/e_commerce/e_commerce_business_models.htm
Eight Key Elements of a Business Model
1. Value proposition
2. Revenue model
3. Market opportunity
4. Competitive environment
5. Competitive advantage
6. Market strategy
7. Organizational development
8. Management team
1. Value Proposition
 How does the product or service fulfill
customer needs
 E-commerce value propositions:
 Personalization/customization
 Convenience
 Price/No shipping cost
 Quick delivery
 Unparalleled Selection
 Product/service quality
Copyright © 2014 PearsonEducation, Inc. Publishing as Prentice Hall Slide 2-11

2. Revenue Model
 How will the company earn money
 Major types of revenue models:
 Advertising revenue model- Facebook
 Subscription revenue model –Anti virus, Consumer
Reports, Wall Street News Subscription, Online Dating
 Transaction fee revenue model- ebay, E-trade, Credit
cards
 Sales revenue model – AmazonMP3, Amazon, Gap
 Affiliate revenue model – airlines/car rentals/hotels
Insight on Society: Class Discussion
Foursquare: Check Your Privacy at the Door

 What revenue model does Foursquare use?
What other revenue models might be
appropriate?
 Are privacy concerns the only shortcoming of
location-based mobile services?
 Should business firms be allowed to call cell
phones with advertising messages based on
location?
3. Market Opportunity
 The intended Marketspace of the
company
 Marketspace: Area of actual or potential commercial
value in which company intends to operate
 Realistic market opportunity: Defined by revenue
potential in each market niche in which company hopes
to compete
 Market opportunity typically divided
into smaller niches
4. Competitive Environment
 Who else occupies your intended marketspace?”
 Other companies selling similar products in the same
marketspace
 New entrants into market, substitute products, and
power of consumers and suppliers (nature of competition)
 Includes both direct and indirect competitors (e.g.,
Netflix vs Xfinity or DirectTV)
 Influenced by:
 Number and size of active competitors
 Each competitor’s market share
 Competitors’profitability
 Competitors’pricing
5. Competitive Advantage
 The special advantages of a firm
 Superior or cheaper product than competitors
 What makes a product superior?
 Important concepts:
 Asymmetries exist when one competitor has more resources or
differential access to them compared to other competitors
 First-mover advantage
 Unfair competitive advantage results from factors of production
that are hard to duplicate or acquire (brands, natural resources,
capital investments)
 Leverage using vast resources to move in other markets –
leveraging a large customer base, or lots of money (Apple car)
 Perfect markets do not allow for competitive advantage as all firms
have equal access to all factors of production
6. Market Strategy
 How do you plan to promote your
products or services to attract the
target audience
 Details how a company intends to enter
market and attract customers
 Best business concepts will fail if not
properly marketed to potential customers -
IBM OS 2
7. Organizational Development
 The types of organizational structures within
the firm necessary to carry out the business
plan
 Describes how firm will organize work
 Typically, divided into functional departments,
some organize around products, combination of
both (auto manufacturers)
 As company grows, hiring moves from
generalists to specialists
8. Management Team
 “What kind of backgrounds should the
company’leaders have?”
 A strong management team:
 Make the business model work
 Give credibility to outside investors
 Has market-specific knowledge
 Has experience in implementing business plans
Categorizing E-commerce
Business Models
 No one correct way (explained on upcoming slides)
 The book categorizes them based on:
 E-commerce sectors (B2B, and B2C)
 E-commerce technology (e.g., m-commerce)
 Similar business models appear in more than

one sector
 Some companies use multiple business
models (e.g., eBay, Amazon)
B2C Business Models
 E-tailer
 Community providers create communities for
like minded people (social networks eg. Facebook)
 Content provider disseminate info (CNN, ESPN etc)
 Portal enable searching to provide info (Yahoo,
Google)
 Transaction broker (E*TRADE, Hotels.com)
 Market creator creates market spaces (Ebay,
Amazon)
 Service provider (Gmail, Verizon, PayPal, VisaNow.com)
B2C Models: E-tailer
 Online version of traditional retailer
(Walmart, Macys)
 Revenue model: Sales

 Variations:
 Virtual merchant (online bank)
 Bricks-and-clicks
 Catalog merchant (home shopping network)
 Sells large variety of household and personal products
 Manufacturer-direct
 Low barriers to entry

B2C Models: Community Provider
 Provide online environment (social network) where
people with similar interests can transact,
share content, and communicate
 Examples: Facebook, LinkedIn, Twitter,
Pinterest
 Revenue models:
 Typically hybrid, combining advertising,
subscriptions, sales, transaction fees, and so on
B2C Models: Content Provider
 Digital content on the Web:
 News, music, video, text, artwork
 Revenue models:
 Subscription; pay per download (micropayment);
advertising; affiliate referral
 Variations:
 Syndication- firm does not own material just distributes
it (newspaper horoscopes and crossword puzzles are syndicated
content)
 Web aggregators (shopping.com, Travelocity, Priceline)
aggregate info and add value to it
B2C Business Models: Portal
 Searching capability plus an integrated package of
content and services
 Revenue models:
 Advertising, referral fees, transaction fees,
subscriptions
 Variations:
 Horizontal/general includes all internet users
 Vertical/specialized (vortal) provides a directory of
links to information related to a particular industry or subject
matter
 Searching capabilities
B2C Models: Transaction Broker
 Process online transactions for consumers
 Primary value proposition—saving time and money,
and enabling online transactions (stocks, credit card
and PayPal payments)
 Revenue model:
 Transaction fees
 Industries using this model:

 Financial services
 Travel services and entertainment
 Job placement services
B2C Models: Market Creator
 Create digital environments where buyers and
sellers can meet and transact business
 Examples:
 Priceline
 eBay
 E*trade
 Revenue model:
 Transaction fees, fees to merchants for access
B2C Models: Service Provider
 Online services
 Example: Google—Google Maps, Gmail, and so
on
 Value proposition
 Valuable, convenient, time-saving, low-cost
alternatives to traditional service providers
 Revenue models:
 Sales of services, subscription fees, advertising,
sale of marketing data
B2B Business Models
 B2B relies on EDI (electronic data interchange)
 Net marketplaces (explained in upcoming slides)
 E-distributor
 E-procurement
 Exchange
 Industry consortium
 Private industrial network
B2B Models: E-distributor
 Version of retail and wholesale store,
MRO (explain next slide) goods, and indirect
goods
 Owned by one company seeking to
serve many customers
 Revenue model: Sales of goods
 Example: Grainger.com
B2B Models: E-procurement
 Creates and sells access to digital markets where
participants transact for indirect goods
 B2B service providers, application service
providers (ASPs)
 Revenue model:
 Service fees, supply-chain management,
fulfillment services
 Example: Ariba- system provides sellers with the ability to manage
catalogs, bids, purchases and invoices and provides buyers with the ability
to search for suppliers, negotiate savings, procure goods and services and
track spending.
 http://www.ariba.com/about/our-story
B2B Models: Exchanges
 Independently owned vertical digital marketplace
where hundreds of suppliers meet a small number
of large commercial purchasers
 Revenue model: Transaction, commission fees
 Create powerful competition between suppliers
 Tend to force suppliers into powerful price
competition; number of exchanges has dropped
dramatically
 Example, Walmart has the ability to negotiate the
best prices in the industry
B2B Models: Industry Consortia
 Industry-owned vertical digital marketplace
open to select suppliers
 More successful than exchanges
 Sponsored by powerful industry players
 Strengthen traditional purchasing behavior
 Revenue model: Transaction, commission fees
 Example: Exostar used by defense industry -
http://www.exostar.com/Mission/
 ICAMR: International Consortium for Advanced Manufacturing Research
Business Strategy
 Plan for achieving superior long-term returns on
capital invested: that is, profit
 Five generic strategies
 Product/service differentiation
 Cost competition
 Scope
 Focus
 Customer intimacy: A marketing strategy where a service
supplier or product retailer gets close to customers. The benefits
include improved highly tailored problem solving capabilities,
greater customization of products to customer needs, as well as
higher customer loyalty.

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Getting to know you

1 Attendance , Quizzes and participation 10 10% A-B-C-D

2 Mid-term written exam 6th 20 20% A-B-C-D

3 Projects reports & Presentation 11– 12 10 10% A-B-C-D

4 Final Exam (theoretical) 60 60% A-B-C-D

• The FIVE student in each group as maximum.

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

Tweet Tweet: Twitter’s Business Model

 E-commerce business model

Copyright © 2014 PearsonEducation, Inc. Publishing as Prentice Hall Slide 2-11

Foursquare: Check Your Privacy at the Door

 Similar business models appear in more than

 Revenue model: Sales

 Low barriers to entry

 Industries using this model:

 Private industrial network

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