3. What Is an e-Business Model?
• The e-Business model, like any business
– how a company functions;
– how it provides a product or service,
– how it generates revenue, and
– how it will create and adapt to new markets and
5. Components of Ebusiness models
• Customer Value
6. Storefront Model
• The storefront combines transaction processing,
security, online payment and information storage
to enable merchants to sell their products on the
• This is a basic form of e-commerce where the
buyer and the seller interact directly.
• To conduct storefront e-commerce, merchants
need to organize an online catalogue of products,
take orders through their Web sites, accept
payments in a secure environment, send
merchandise to customers and manage customer
7. Storefront Model
• Some of the most successful e-businesses
are using the storefront model.
• Many of the leading storefront model
companies are B2C companies
• Companies use a shopping cart and
supporting technologies to offer their products
and services to customers
8. Shopping Cart Technology
• This order processing technology allows customers
to accumulate items they wish to buy as they
continue to shop.
• Supporting the shopping cart is a product catalogue,
which is hosted on the merchant server in the form
of a database
• Databases also store customer information, such as
names, addresses, credit-card information and past
9. Auction Model
• Auction sites act as forums through which Internet
users can log-on and assume the role of either
bidder or seller.
• As a seller, you are able to post an item you wish to
sell, the minimum price you require to sell your item
and a deadline to close the auction.
• Some sites allow you to add features, such as a
photograph or a description of the item’s condition.
10. Auction Model
• As a bidder, you may search the site for availability
of the item you are seeking, view the current bidding
activity and place a bid (bids are usually in
• Some sites allow you to submit a maximum bidding
price and will continue bidding for you.
11. Portal Model
• Portal sites give visitors the chance to find almost
everything they are looking for in one place.
• They often offer news, sports and weather, as well
as the ability to search the Web.
• Search engines are horizontal portals, or portals that
aggregate information on a broad range of topics.
• Other portals are more specific, offering a great deal
of information pertaining to a single area of interest
these are called vertical portals.
12. Dynamic Pricing Model
• The web has changed the way business is done and
the way products are priced.
• In the past, bargain hunters had to search out deals
by visiting numerous local retailers and wholesalers.
Today it just few click away.
13. Name Your Price Model
• The name your price model empowers customers by
allowing them to choose their price for products and
• Many of the businesses that offer this services have
formed partnerships with leaders of industries such
as travel, lending and retail.
• These industry leaders receive the customer’s
desired price from the intermediary and decide
whether or not to sell the product or service.
• If the customer price is not reasonable then that
customer can ask for another price.
14. Comparison Pricing Model
• It allows the customer to poll a variety of merchants
and find a desired product or service at the lowest
• These sites gets their revenue from the partnerships
with particular merchants.
15. Demand Sensitive Pricing Model
• The more people who buy a product in a single
purchase, the lower the cost-per-person becomes.
• Selling products individually can be expensive
because the vendor must price a product so that it
covers selling and overhead cost while still
generating a profit.
• When customers buy in bulk, the cost is shared and
the profit margin is increased.
16. Bartering Model
• Offering one item in exchange for another.
• The seller makes an initial offer with the intention of
bartering to reach a final agreement with the buyer.
17. Rebate Model
• eBates is a shopping site where customers receive
a rebate on every purchase.
• eBates have formed partnership with wholesalers
and retailers who will offer discount.
18. Offering Free Products and Service
• They offer their products for free on the web.
• Many of these sites also form partnership with
companies to exchange products and services for
advertisement space and vice versa.
22. Revenue Models
• In business, revenue typically consists of the total
amount of money received by the company for
goods sold or services provided during a certain
• Therefore, revenue models are a part of the
23. Revenue Models
• Many online companies generate revenues
from multiple income streams such as
– affiliate marketing etc.
– Online models not only sell goods or services
• also contacts (e.g. banner)
• information (e.g. user-data)
24. Revenue Models
• The type of revenue model you choose will
depend on the type of product or service you
intend to sell.
25. Two types of products you can sell
• products you make, which you should
sell at a higher price than they cost to
• products you buy, which you should sell
at a higher price than you paid for them
26. Advertising Revenue Model
• Fees are generated from advertisers in exchange for
advertisements, which is ultimately the classic
principal among the revenue models besides sales
27. Affiliate Revenue Model
• In exchange for bringing business to your
affiliates, you receive a commission, or a
percentage of the sales they make on that
28. Licensing Revenue Model
• Assume you have created a product.
Companies would pay you a licensing fee for
the right to market, copy, or use the product.
• Licensing is the granting of permission to use
intellectual property, such as music, photos,
software programs, and inventions
29. Subscription Revenue Model
• Users are charged a periodic (daily, monthly or
annual) fee to subscribe to a service.
• Many sites combine free content with premium
30. Transaction Fee Revenue Model
• A company receives commissions based on volume
for enabling or executing transactions
• The revenue is generated through transaction fees
by the customer paying a fee for a transaction to the
operator of a platform.
• The company is a market place operator providing
the customer with a platform to place his
• During this process the customer may be presented
as a buyer as well as a seller.
31. Sales Revenue Model
• Wholesalers and retailers of goods and services sell
their products online.
• The main benefits for the customer are the
convenience, time savings, fast information etc.
• The prices are often more competitive.
• In terms of online sales there are different models
such as market places as common entry points for
various products from multiple vendors
33. Industry Value Chains
• Set of activities performed by suppliers,
manufacturers, transporters, distributors, and
retailers that transform raw inputs into final products
• Internet reduces cost of information and other
• Leads to greater operational efficiencies, lowering
cost, prices, adding value for customers
35. Firm Value Chains
• Activities that a firm engages in to create final
products from raw inputs
• Effect of Internet:
– Increases operational efficiency
– Enables product differentiation
– Enables precise coordination of steps in chain