1. 1
ITEC 410
Current Technologies
Further Explanation on:
New Business Models
Categories of E-Business Models
Factors Affecting E-Business Success

2. Learning Objectives
 Discuss the New Trending e-Business Models:
– Flash Sales
– Subscriptions
– Social Bookmarking Websites
– Collaborative Commerce
– Next Generation Marketplaces
Creating a Winning E-Business 2
Second Edition, Chapter 1

3. Learning Objectives
(continued)
 Discuss the Five Categories of e-Business Models:
– B2C
– B2B
– B2G
– C2C
– C2B
Creating a Winning E-Business 3
Second Edition, Chapter 1

4. Learning Objectives
(continued)
 Discuss the Factors that affect e-Business
Success
– The Network Effect
– Innovative Marketing Ideas
– Scalability
– Ease of Entry into Electronic Markets
– Ability to quickly adapt to Marketplace Changes
Creating a Winning E-Business 4
Second Edition, Chapter 1

5. E-Business Basics
 E-commerce – Process of buying or selling
goods or services across a telecommunications
network
 E-business – Widest spectrum of business
activities using Internet and Web technologies
 Many technologies facilitate e-business
– Electronic Funds Transfer (EFT)
– Electronic Data Interchange (EDI)
– Internet / World Wide Web
Creating a Winning E-Business 5
Second Edition, Chapter 1

6. E-Business Models
 Business models
– How a company conducts business in order to
generate revenue
– Companies can either adapt old models (e.g.
ecommerce) or create new ones
 E-business models are often categorized by
type of customer (business customer,
individual customer, government customer)
Creating a Winning E-Business 6
Second Edition, Chapter 1

7. New E-Business Models
Flash Sales
 Description: web application that collects all
limited-offer deals from a number of e-commerce
sites and display these deals to the user
 Customer Value: customer goes to one place to
find all discounted deals
 Retail Value: companies get rid of old goods
quickly
 Risks / Limitations:
– discounted deals finish quickly
– Your e-Business spends a lot on network
traffic (lots of visitors) and marketing your site
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 Daily Deals: Flash Sales for One-day offers

8. New E-Business Models
Subscriptions
 Description: web application that delivers
products (e.g. magazines, DVDs) or services
(e.g. streaming videos, chatting
subscriptions) weekly, monthly, quarterly, or
yearly to customers
 Customer Value:
– Customer tries out and discovers new
products
– Customer saves time on shopping (products
come to his home)
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9. New E-Business Models
Subscriptions - Continue
 Retail Value:
– Companies don’t have to store extra goods in
the store (they know how much to store)
– Companies always have cash because
customers subscribe for durations (not buy
once). Example: Monthly subscriptions with
annual contracts
 Risks / Limitations:
– Customers may feel bored from subscriptions if
goods and services look the same every time
– Customers may have to pay shipping costs
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10. New E-Business Models
Social Bookmarking
 Description: web application that collects and
organizes content found on social media
sites, usually using the tags that users create
for content
 Customer Value:
– Customer find all social media information
about an item in one place (using the item tag)
– Customer can get related recommendations
(e.g. most users who search for #tag1 also
search for tag2, so recommend #tag2 for a
user who searched for #tag1)
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11. New E-Business Models
Social Bookmarking - Continue
 Retail Value:
– Companies can learn more about consumer
behavior (e.g. Which items that the same
users like on social media? Who are the
similar users?)
 Risks / Limitations:
– Chicken and Egg problem:
• In order for users to come to our site, we need
content
• In order for us to bring content to the site, we need
users to enter these content
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12. New E-Business Models
Collaborative Commerce
 Description: web application that allows the
users to share a service and bills the user
monthly or per use
 Customer Value:
– Customer doesn’t need to buy an expensive
service (e.g. cloud) as he can just pay for
sharing the service
– Customer can spend the money on sharing
many services instead of buying a single
service, allowing him to discover many new
services
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13. New E-Business Models
Collaborative Commerce - Continue
 Retail Value:
– Companies who buy an expensive resource
(e.g. a cloud) can now distribute the cost of
that resource on its customers, while stay
using the resource for their business
 Risks / Limitations:
– When the economy is strong, customers will not
be interested to share, they just buy!
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14. New E-Business Models
Next Generation Marketplaces
 Description: web application that collects
information from the internet about sellers
and buyers, and match them together
 Customer Value:
– Buying Customer doesn’t need to search for
sellers. Selling customer doesn’t need to
search for buyers
– Customers find what they need easily
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15. New E-Business Models
Next Generation Marketplaces -
Continue
 Retail Value:
– If customers are companies who do retails,
they do not need to spend on marketing
 Risks / Limitations:
– Chicken and Egg Problem:
• Selling customers will not subscribe to our site if there
are no much buyers
• Buying customers will not subscribe to our site if there
are no much sellers
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16. E-Business Model Categories
Creating a Winning E-Business 16
Second Edition, Chapter 1

17. E-Business Models
(continued)
 Business-to-consumer (B2C)
– Retail sales (e-retail) including airline tickets,
entertainment venue tickets, hotel rooms, stock
purchases, diet and fitness programs
 Brick-and-mortar (companies that have a physical
presence and offer face-to-face customer experiences)
are moving to brick-and click (companies selling offline
and online)
– Sears, Best Buy, Barnes & Noble, the Gap
 Pure-play e-retailers and catalog merchants (they just
sell goods & services. They do not own them)
– Amazon.com, eBags, Harry and David 17

18. E-Business Models
(continued)
 Business-to-business (B2B)
– Businesses selling to other businesses
– Online stores, such as Office Depot, Staples
– Internet and Web technologies
• Web hosting
• Web design
• Hardware and software
• Consulting
Creating a Winning E-Business 18
Second Edition, Chapter 1

19. E-Business Models
(continued)
 Business-to-business (B2B)
– Vertical markets (markets in which vendors offers
good and services specific to an industry, trade,
profession, or other group of customers with
specialized needs )
– Exchanges, aggregators, auctions (for groups)
• Virtual market spaces for groups buyers and group
sellers
• Elance, ATLA Exchange, Business.com,
HedgeHog
Creating a Winning E-Business 19
Second Edition, Chapter 1

20. E-Business Models
(continued)
 Business-to-government (B2G)
– Derived from B2B
– Businesses provide various products and
services for government agencies
– Example: A private company manages the
publications / updates of public e-newspapers
– Bidmain, B2GMarkets
Creating a Winning E-Business 20
Second Edition, Chapter 1

21. E-Business Models
(continued)
 Consumer-to-consumer (C2C)
– Individual Consumers sell or exchange products
and services directly with other individual
consumers
– Auctions, online classified ads, expert information
exchanges
• eBay, American Boat Listing, TraderOnline.com,
AllExperts
Creating a Winning E-Business 21
Second Edition, Chapter 1

22. E-Business Models
(continued)
 Consumer-to-business (C2B)
– Reverse auctions in which a single consumer
names his own price for his own products or
services to businesses to buy
– Consumer’s offer made to multiple businesses,
which can accept or decline offer
– Priceline.com
Creating a Winning E-Business 22
Second Edition, Chapter 1

23. Factors Affecting
E-Business Success
 The network effect (If people using your
goods/service increase, the value of your
goods/services increase, and vice versa)
– Total value of a product, service, or technology
grows as more and more people use it
• Telephone system example
– Single telephone has no value; as more people join the
telephone system, the value of each telephone increases
• uBid online auction site example
– As more people participate, the auction site becomes
more valuable to buyers and sellers
Creating a Winning E-Business 23
Second Edition, Chapter 2

24. Factors Affecting
E-Business Success (continued)
 Innovative marketing ideas (Your marketing
ideas must be smart in order for your e-Business
to succeed)
– Viral marketing (the use of social networks to
produce increases in brand awareness). Hotmail
example:
• Hotmail users grew at a rapid rate because of
electronic word of mouth coupled with the
network effect
• Electronic word of mouth or viral marketing
spreads from user to user in the same way a
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human virus spreads from person to person

25. Factors Affecting
E-Business Success (continued)
 Scalability (Your e-business must be able to function
well in the face of rapid growth of customers)
– Systems and procedures meet growing
customers needs
– AllAdvantage e-business failure example
• E-business idea: Paying for users to browse the
Web and view advertising
• Millions of customers signed on; but sadly most
advertisers did not sign!
• The company did not have the scalability to meet
the rapid growth in customers with small number of
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advertisers

26. Factors Affecting
E-Business Success (continued)
 Ease of entry into electronic markets (Your e-
business must not spend too much on creating
the business!)
– Low-cost technologies make it easy to create new
e-businesses
– eBay and online auction example
• Easy for consumers to interact at auction site
• Web auction software is cheap and easy to
install /maintain
• E-businesses earn commissions without having to
manage, warehouse, and distribute products 26

27. Factors Affecting
E-Business Success (continued)
 Ability to quickly adapt to marketplace
changes (If customers suddenly became not
interested in a certain product or service, your e-
Business should be able to change them
immediately )
– Rapid knowledge transfer (you should rapidly know about
consumer shits in interests)
– Need to make decisions quickly
– Exploit new ideas and opportunities
– Handle new challenges
• Amazon.com is an example of ongoing evolution from a
basic e-business idea (book selling) to innovative e-business
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idea (selling almost everything)

28. End of Lecture
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