Lesson-2-E-commerce-Business-Models

SunTengFeiLearningObjectives1.Identifythekeycomponentsofe-commercebusinessmodels2.DescribethemajorB2Cbusinessmodels3.DescribethemajorB2Bbusinessmodels4.Understandkeybusinessconceptsandstrategiesapplicabletoe-commerce2TweetTweet:What’sYourBusinessModel?ThestoryofTwitterillustratedthedifficultiesofturningagoodbusinessideawithahugeaudienceintoasuccessfulbusinessmodelthatproducerevenuesandevenprofits.Companiescouldspendinvestedcapitalmuchfasterthantheycouldgetcustomerstopayfortheirproductsorservices.31.E-commerceBusinessModels1.E-commerceBusinessModelsEightKeyElementsofaBusinessModel2.MajorBusiness-to-Consumer(B2C)BusinessModels3.MajorBusiness-to-Business(B2B)BusinessModels4.HowtheInternetandtheWebChangeBusiness5.CaseStudy:PandoraandtheFreemiumBusinessModel41.E-commerceBusinessModelsBusinessmodelSetofplannedactivitiesdesignedtoresultinaprofitinamarketplaceBusinessplanDescribesafirm’sbusinessmodelE-commercebusinessmodelUses/leveragesuniquequalitiesofInternetandWeb5KeyElementsofABusinessModelComponentsKeyQuestionsValuepropositionWhyshouldthecustomerbuyfromyou?RevenueModelHowwillyouearnmoney?MarketopportunityWhatmarketspacedoyouintendtoserve,andwhatisitssize?CompetitiveenvironmentWhoelseoccupiesyourintendedmarketspace?6KeyElementsofABusinessModelComponentsKeyQuestionsCompetitiveadvantageWhatspecialadvantagesdoesyourfirmbringtothemarketspace?MarketstrategyHowdoyouplantopromoteyourproductsorservicestoattractyourtargetaudience?OrganizationaldevelopmentWhattypesoforganizationalstructureswithinthefirmarenecessarytocarryoutthebusinessplan?ManagementteamWhatkindsofexperiencesandbackgroundareimportantforthecompany’sleaderstohave?7(1)ValuePropositionItdefineshowacompany’sproductorservicefulfillstheneedsofcustomers.“Whyshouldthecustomerbuyfromyou?”Successfule-commercevaluepropositions:1.Personalization/customization2.Reductionofproductsearch,pricediscoverycosts3.Facilitationoftransactionsbymanagingproductdelivery8Example-AmazonBeforeAmazonexisted:CustomerstraveledtobookretailerstoplaceanorderThedesiredbookmightbeunavailableCustomerswouldhavetowaitseveraldaysorweeksAndthenreturntothebookstoretopickitup9Example–AmazonNowbookloverscouldshopforvirtualyanybookinprintfromthecomfortoftheirhomeoroffice,24hoursaday,andtoknowimmediatelywhetherabookisinstock.Amazon’sKindletakesthisonestepfurtherbymarkinge-booksinstantlyavailablewithnoshippingwait.10What’reAmazon’sPrimaryValuePropositions?1.Unparalleledselection2.Convenience11(2)RevenueModelItdescribeshowthefirmwillearnrevenue,generateprofits,andproduceasuperiorreturnoninvestedcapital.Majortypes:1.Advertisingrevenuemodel2.Subscriptionrevenuemodel3.Transactionfeerevenuemodel4.Salesrevenuemodel5.Affiliaterevenuemodel12FivePrimaryRevenueModelsRevenueModelExamplesRevenueSourceAdvertisingYahooFeesfromadvertisersinexchangeforadvertisementsSubscriptionWSJ.comConsumerreports.orgFeesfromsubscribersinexchangeforaccesstocontentorservicesTransactionFeeeBayE*TradeFees(commissions)forenablingorexecutingatransactionSalesAmazonGapiTunesSalesofgoods,information,orservicesAffiliateMyPointsFeesforbusinessreferrals13(3)MarketOpportunityItreferstothecompany’sintendedmarketspaceandtheoverallpotentialfinancialopportunitiesavailabletothefirminthatmarketspace.Marketspace:Areaofactualorpotentialcommercialvalueinwhichcompanyintendstooperate14(4)CompetitiveEnvironmentItreferstotheothercompaniessellingsimilarproductsandoperatinginthesamemarketspace.Directandindirectcompetitors:Directcompetitors–thosecompaniesthatsellproductsandservicesthatareverysimilarandintothesamemarketsegment.Indirectcompetitors–companiesthatmaybeindifferentindustriesbutstillcompeteindirectlybecausetheirproductscansubstituteforoneanother.Automobilemanufacturersandairlinecompaniesoperateindifferentindustries,theycompeteindirectlyTheyofferconsumersalternativemeansoftransportation.15(5)CompetitiveAdvantageFirmsachieveacompetitiveadvantagewhentheycanproduceasuperiorproductand/orbringtheproducttomarketatalowerpricethanmost(orall)ofthetheircompetitors.16Example–AppleiTunesAserviceofferinglegal,downloadableindividualsongtracksfor99centsatrackthatwouldbeplayableonanyPCordigitaldevicewithiTunessoftware.Ithadbetter-than-averageoddsofsuccessbecauseofApple’spriorsuccesswithinnovativehardwaredesigns,thelargestableofmusicfirmthatApplehadlineduptosupportitsonlinemusiccatalog.Fewcompetitorscouldmatchthecombinationofcheap,legalsongspowerfulhardwaretoplaythemon.17(6)MarketStrategyItistheplanyouputtogetherthatyouputtogetherthatdetailsexactlyhowyouintendtoenteranewmarketandattractnewcustomersDetailshowacompanyintendstoentermarketandattractcustomersBestbusinessconceptswillfailifnotproperlymarketedtopotentialcustomers18ExamplesTwitterandYouTubehaveasocialnetworkmarketingstrategythatencouragesuserstoposttheircontentonthesitesforfreebuildpersonalprofilepagescontacttheirfriendsbuildacommunity.Inthesecases,thecustomeristhemarketingstaff.19(7)OrganizationalDevelopmentAllfirms–newonesinparticular–needanorganizationtoeffic