Chapter3:SellingontheWeb:RevenueModelsandBuildingaWebPresenceElectronicCommerce,SeventhAnnualEditionElectronicCommerce,SeventhAnnualEdition2ObjectivesInthischapter,youwilllearnabout:1.Revenuemodels2.Howsomecompaniesmovefromonerevenuemodeltoanothertoachievesuccess3.RevenuestrategyissuesthatcompaniesfacewhensellingontheWeb4.CreatinganeffectivebusinesspresenceontheWeb5.Websiteusability6.CommunicatingeffectivelywithcustomersontheWebElectronicCommerce,SeventhAnnualEdition33.1RevenueModels•Revenuemodel–Definition1:Aspecificcollectionofbusinessprocessesusedto:•Identifycustomers•Markettothosecustomers•Generatesalestothosecustomers–Definition2:descriptionofhowthecompanyoranECprojectwillearnrevenue,forexample:•Sales•Transactionfees•Subscriptionfees•Advertising•Affiliatefees(会员费)ElectronicCommerce,SeventhAnnualEdition4RevenueModels•ausefulwaytothinkaboutelectroniccommerceimplementationsistoconsiderhowtheycangeneraterevenue.•Notallelectroniccommerceinitiativeshavethegoalofprovidingrevenue;someareundertakentoreducecostsorimprovecustomerservice.ElectronicCommerce,SeventhAnnualEdition5RevenueModels•MainmodelsforgeneratingrevenueusedbyWebbusinessestoday:–Webcatalog,–digitalcontent,–advertising-supported,–advertising-subscriptionmixed,–fee-basedmodel(fee-for-transactionandfee-for-service).•Theseapproachescanworkforbothbusiness-to-consumer(B2C)andbusiness-to-business(B2B)electroniccommerce.–ManycompaniescreateoneWebsitetohandlebothB2CandB2Bsales.–Evenwhencompaniescreateseparatesites(orseparatepageswithinonesite),theyoftenusethesamerevenuemodelforbothtypesofsales.ElectronicCommerce,SeventhAnnualEdition63.1.1Webcatalogrevenuemodel•mailordercatalogrevenuemodelismorethan100yearsold.–1872,AaronMontgomeryWardstartedsellingdrygoodstofarmersthroughaone-pagelist.–1895:RichardSearsandAlvahRoebuckbeganmailingcatalogstofarmersandsmall-townresidents–retailstoresservingurbanmarketsinadditiontothecatalogbusinessthatservedtheirruralandsmall-townmarkets.•mailorderorcatalogmodel–thesellerestablishesabrandimage,and–thenusesthestrengthofthatimagetosellthroughprintedinformationmailedtoprospectivebuyers.–Buyersplaceordersbymailorbycallingtheseller’stoll-freetelephonenumber.–Proventobesuccessfulforawidevarietyofconsumeritems,includingapparel,computers,electronics,housewares,andgiftsElectronicCommerce,SeventhAnnualEdition73.1.1Webcatalogrevenuemodel•Webcatalogrevenuemodel–takecatalogmodelonlinebyreplacingorsupplementingtheirprintcatalogswithinformationontheirWebsites.–CustomerscanplaceordersthroughtheWebsiteorbytelephone.–flexibilityisimportant•Typesofthismodel:–ManyofthemostsuccessfulWebcatalogsalesbusinessesarefirmsthatwerealreadyoperatinginthemailorderbusinessandsimplyexpandedtheiroperationstotheWeb.–OthercompaniesthatusetheWebcatalogrevenuemodeladopteditafterrealizingthattheproductstheysoldintheirphysicalstorescouldalsobesoldontheWeb.ElectronicCommerce,SeventhAnnualEdition83.1.1Webcatalogrevenuemodel(1)ComputersandConsumerElectronics•Apple,Dell,Gateway,andSunMicrosystemshavehadgreatsuccesssellingontheWeb•Dellcreatedvaluebydesigningitsentirebusinessaroundofferingahighdegreeofconfigurationflexibilitytoitscustomers•offeringvisitorsdifferentwaystoaccessproductinformation.ElectronicCommerce,SeventhAnnualEdition93.1.1Webcatalogrevenuemodel(1)ComputersandConsumerElectronics•RetailersofconsumerelectronicsproductshavealsobeenactiveinundertakingelectroniccommerceusingtheWebcatalogrevenuemodel.–expandedtheirsuccessfulmailordercatalogoperationstoWebsites–openedWebsitestosellthesameproductsthattheyhadbeensellingintheirstores.ElectronicCommerce,SeventhAnnualEdition103.1.1Webcatalogrevenuemodel(2)Books,Music,andVideos•RetailersusetheWebcatalogmodeltosellbooks,music,andvideos–Amongthemostvisibleexamplesofelectroniccommerce–theAmazon.com•booksweresmall-ticketcommodityitemsandwereeasyandinexpensivetoship.•manycustomerswouldbewillingtobuybookswithoutinspectingtheminperson•bookscouldbeimpulsepurchaseitemsifproperlypromoted.•Largerspaceforpresentation•JeffBezoshadidentifiedastrategicopportunityforsellingonline.ElectronicCommerce,SeventhAnnualEdition11•TherapidgrowthofAmazon.cominspiredmanybooksellerstoundertakeelectroniccommerce.–Anumberofwell-establishedcompaniesthatoperatedphysicalbookstores,adoptedtheWebcatalogmodelintheironlinesalesendeavors.•1994:JasonandMatthewOlim–FormedanonlinemusicstoretheycalledCDnow–UsedtheWebcatalogrevenuemodel–By1997,CDnowhadone-thirdoftheonlinemusicbusiness.–Itssuccessattractedmanycompetitors.–CDnow’sfounderssoldtheircompanytoBertelsmannAG,–createdanalliancewithAmazon.comtouseAmazon.com’selectroniccommerceplatformforitssales.3.1.1Webcatalogrevenuemodel(2)Books,Music,andVideosElectronicCommerce,SeventhAnnualEdition123.1.1Webcatalogrevenuemodel(3)LuxuryGoods•PeoplearestillreluctanttobuythroughaWebsite:suchasluxurygoodsandhigh-fashionclothingitems.–TheWebsitesofVeraWangandVersacewereconstructedtoprovideinformationtoshoppers,nottogeneraterevenue–Suchsitestendtomakeheavyuseofgraphicsandanimation.–TheEvianWebsitewasdesignedforaselect,afflue