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Electronic Commerce  Business Models and   Strategies  Minder Chen, Ph.D. Associate Professor of Management Information Sy...
Reference <ul><li>Net Ready , by Amir Hartman and John Sifonis, McGRaw-Hill, 2000.  </li></ul><ul><li>Now or Never , by Ma...
Cyber-Seminar Outline <ul><li> EC Introduction </li></ul><ul><ul><li> Introduction </li></ul></ul><ul><ul><li> The c...
EC Introduction <ul><li>Introduction </li></ul><ul><li>The cycle of electronic commerce </li></ul><ul><li>EC and business ...
Electronic Commerce: Introduction E-Business E-Commerce Internet  Commerce Commerce
Electronic Commerce  <ul><li>Electronic commerce is broadly as the ability to execute business activities ( transactions, ...
The Low-Friction Market  <ul><li>&quot;[The Internet] will carry us into a new world of low friction, low-overhead capital...
The Cycle of Electronic Commerce Customers Online Ads Online Orders Standard Orders Access Searches Queries Surfing Distri...
Components of Electronic Commerce Institution <ul><li>Government </li></ul><ul><li>Merchants </li></ul><ul><li>Manufacture...
EC and Business Processes  Seller Customer Corporate Databases Provide  Info Get  customer Provide  info Fulfill  order Su...
World Wide Internet Commerce Forester Research, Inc. June 1999
Business Internet Commerce Trends B2C: Business to Consumer B2B: Business to Business Reference: http://cyberatlas.interne...
Business-to-Business E-Commerce <ul><li>International Data Corporation forecasts that business-to-business e-commerce reve...
Statistics <ul><li>Holiday Season 1998  </li></ul><ul><ul><li>2.1 million households shopped online for the first time </l...
Retailing Trends 1950s  1960s-1970s  1980s  1990s Main street Malls Superstores Web <ul><li>Home Depot </li></ul><ul><li>C...
AOL Findings <ul><li>Buy brands </li></ul><ul><li>Seek convenience </li></ul><ul><li>Are increasingly  time-starving </li>...
Net Economy <ul><li>1940s - 1980s </li></ul><ul><ul><li>Manufacturing to information economy </li></ul></ul><ul><ul><li>Lo...
Internet Economy Driving Forces  <ul><li>Changing customer demands </li></ul><ul><li>Globalization </li></ul><ul><li>Inter...
Selling Points of Virtual Stores <ul><li>&quot;The Internet is going to become a channel of distribution.&quot; -- The pre...
Benefits to the Merchants <ul><li>Increased sales of existing products to generate additional revenues </li></ul><ul><li>U...
Benefits to the Consumers <ul><li>Convenience  </li></ul><ul><li>Informative  </li></ul><ul><li>Value presented upfront: D...
All 3 Steps in One Medium  <ul><li>Web and EC allows you to integrate three major steps of markting and sales in one mediu...
Internet Industry Internet Economy Consulting Content and Activity Electronic Commerce Infrastructure Client/Server Softwa...
EC Strategies  <ul><li>4Cs Strategy:  </li></ul><ul><ul><li>Customer </li></ul></ul><ul><ul><li>Content </li></ul></ul><ul...
<ul><li>Most Visited Retailers: </li></ul><ul><ul><li>1. Bluemountainarts.com </li></ul></ul><ul><ul><li>2. Amazon.com </l...
Moving Your Business Online <ul><li>Companies are motivated by either fear or greed to move to their businesses to the net...
Electronic Commerce Applications and the Cycle of Commerce Marketing Sales Production/Logistics Billing/Collections Servic...
Electronic Commerce Applications and the Cycle of Commerce Shopping/Testing Procurement Receiving/Logistics Payment Operat...
EC Strategies: 4 Cs Commerce Content Community Customers
Customers <ul><li>Obsess over your customers </li></ul><ul><li>Remember that the Web is an infant </li></ul><ul><ul><li>Wh...
Self Assessment: Customer Caring  What do your customers need? What requests do they make of you? How do you respond to cu...
5 Steps to Success in EC <ul><li>Set strategy </li></ul><ul><ul><li>Make it easy for customers to do business with you! </...
Foster Customer Loyalty  <ul><li>The key  to profitability in EC </li></ul><ul><li>Achieving higher revenues via customer ...
8 Critical Success Factors <ul><li>Target the right customers </li></ul><ul><li>Own customer's total experience </li></ul>...
Target the Right Customers <ul><li>Know who your customers and prospects are </li></ul><ul><li>Find out which customers ar...
Own the Customer's Total Experience <ul><li>Deliver a consist and branded experience </li></ul><ul><li>Focus on saving cus...
Creating Sustainable Value in EC <ul><li>Develop a brand based on consumer experiences </li></ul><ul><ul><li>The brand eme...
Virtual Communities Virtual  Community Users <ul><li>Money </li></ul><ul><li>Content </li></ul><ul><li>Demographics </li><...
Consumers' Needs for Community <ul><li>Communities of transaction: Facilitate the buying and selling of products and servi...
www.parentsoup.com
www.iVillage.com
Geocities: www.geocities.com <ul><li>This collection of themes cyberhoods is populated by a half-million &quot;homesteader...
Quick Test for Technographics  More Men  More Women  More Educated  Less Educated  High Income  Low Income Have Children  ...
Technology-Fit: Customer and Product  Customer Need for Product Information High Low Customer Demographics Match Poor High...
Challenge <ul><li>Consumers: Everything on the Internet should to be free. </li></ul><ul><li>Merchant: How can I make a pr...
Revenue Streams <ul><li>Advertising / Sponsorship </li></ul><ul><li>Transaction  </li></ul><ul><li>Subscription / Listing ...
Multifaceted Model for Web-Based EC Design <ul><li>ATTRACT: Hits </li></ul><ul><ul><li>Communities of interest </li></ul><...
EC Companies Transform the Revenue Mix Pricing Value Customers New Customers New Values New Pricing The mix:  Who  pays fo...
What To Do Now <ul><li>1.  Define your eBusiness strategy  FAST </li></ul><ul><li>2.  Assess readiness:  </li></ul><ul><ul...
What To Do Now <ul><li>3.  Identify the target: </li></ul><ul><ul><li>Business objectives </li></ul></ul><ul><ul><li>Custo...
Four Strategies to Start Online Business  <ul><li>Integration  </li></ul><ul><li>Subsidiary  </li></ul><ul><li>Partnership...
Top Three Concerns <ul><li>Retailers </li></ul><ul><ul><li>Conflict with investment in physical stores;  </li></ul></ul><u...
Becoming Virtual <ul><li>Egghead to Egghead.com </li></ul><ul><li>Computer Literacy to Fatbrain.com </li></ul><ul><li>Roma...
Your 3 Biggest Problems/Opportunities <ul><li>What should our strategy be? </li></ul><ul><li>How do we build it in 3 to 6 ...
Web Experiences for Consumers <ul><li>A many-to-many rather a one-to-many experience </li></ul><ul><li>Fresh content </li>...
E-Business Creation Process E-Vision Business Drivers Technology Drivers E-Business Strategy Rapid Implementation <ul><li>...
EC Development Process <ul><li>Knowledge building and market evaluation to identify a need and a niche </li></ul><ul><li>C...
Popularity  Adds Value in a Network Value to User Number of Compatible User Vicious cycle Virtuous cycle <ul><li>Networks ...
Keys to Long Term Success <ul><li>Fast deployment </li></ul><ul><li>Evolutionary implementation  </li></ul><ul><li>First m...
EC Business Models <ul><li>Virtual stores: physical and digital goods and services </li></ul><ul><li>Infomediaries: Seller...
Types of Virtual Stores <ul><li>Hard goods:  </li></ul><ul><ul><li>Food  </li></ul></ul><ul><ul><li>Clothes </li></ul></ul...
Is EC Appropriate for You?  Industries who set up  virtual storefronts
What Consumers Are Buying Online <ul><li>Computer-related products 49%  </li></ul><ul><li>Books 35%  </li></ul><ul><li>Con...
EC Business Models <ul><li>Payment direction:  </li></ul><ul><ul><li>Buy-side </li></ul></ul><ul><ul><li>Sell-side </li></...
Sell-Side E-Commerce Model Selling  Merchant Buyer A Buyer C Buyer B EDI HTML & Forms HTML & XML OBI Online  Selling Consu...
Sell-Side Storefront <ul><li>Primary model used in current business-to-consumer scenarios </li></ul><ul><li>Single seller,...
Buy-Side E-Commerce Model Buyer Seller A Seller C Seller B EDI HTML & Forms HTML & XML OBI Online  Procurement Business
Buy-Side eProcurement <ul><li>Buy-side applications generally consisting of a browser-based self-service front end to ERP ...
Marketplace E-Commerce Model Virtual Marketspace Seller A Seller C Seller B EDI HTML & Forms HTML & XML OBI Buyer A Buyer ...
Business-to-Business vs. Business-to-Consumer <ul><li>No vendor loyally </li></ul><ul><li>No switching costs </li></ul><ul...
B2B Marketspace <ul><li>Latest evolution of B2B eCommerce, enabling a  many-to-many  relationship between buyers and suppl...
Channel Conflict: How About the Distributors <ul><li>The concept of complete dis-intermediation - the elimination of the m...
Retailers and Manufacturers Co-exist on the Web   <ul><li>US retail sales revenues 1998: </li></ul><ul><ul><li>Brick-and-m...
Clicks-and-Mortar <ul><li>Clicks-and-mortar has become the new buzzword in retailing circles.  </li></ul><ul><li>It means ...
Business Channel: Multi-Channel Presence Buyer Seller <ul><li>Brick-and-mortar  </li></ul><ul><ul><li>Face-to-Face </li></...
Business Models Based on the Value Chain in the Marketplace Raw material producer Manufacturer Distributor Retailer Consum...
Business Models: Multiple Dimensions <ul><li>Buy-sell direction: Buyer-side, seller side, and marketplace </li></ul><ul><l...
Portfolio of Buying & Selling Strategies Big Buyer Big  Supplier Direct Sales Small Buyers Small Buyers Size of Buyers and...
Number of Sellers and Buyers
The Goldman Sachs B2B Windmill in the Age of Consortia
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The Value Chain of Electronic Commerce

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  • Business model classification are generally broken down into three distinct segments. The first, referred to as &amp;quot;buy-side&amp;quot; and &amp;quot;sell-side&amp;quot;, refers to payment direction - commerce being conducted with a company&apos;s suppliers or with its customers. And, in some cases, business is being transacted with both suppliers and customers. The second distinction is trade being conducted on a &amp;quot;Business to Business&amp;quot; or &amp;quot;Business to Consumer&amp;quot; environment. Most analysts predict the B2B model will have a more rapid adoption rate, but that the volume of transactions in the B2C model will, in the long run, greatly surpass that of B2B. The third business modeling segment relates to the type of product or service that is being provided. An example being &amp;quot;content delivery&amp;quot; where information, such as the online version of The Wall Street Journal , is sold and distributed directly over the Internet. This publication categorizes six different types of business models within this segment, but recognizes that different levels of hybridization and combinations make every business unique.
  • Transcript of "The Value Chain of Electronic Commerce"

    1. 1. Electronic Commerce Business Models and Strategies Minder Chen, Ph.D. Associate Professor of Management Information Systems and Decision Sciences School of Management, George Mason University [email_address]
    2. 2. Reference <ul><li>Net Ready , by Amir Hartman and John Sifonis, McGRaw-Hill, 2000. </li></ul><ul><li>Now or Never , by Mary Modahl, Harper Business, 2000 </li></ul><ul><li>Designing Systems for Internet Commerce by G. Winfield Treese, Lawrence C. Stewart (May 1998) Addison-Wesley Pub Co; ISBN: 0201571676 </li></ul><ul><li>Net Results: Web Marketing that Works by Rick E. Bruner (Editor), Cybernautics, Usweb Corporation Hayden Books; ISBN: 1568304145  </li></ul><ul><li>E-Business : Roadmap for Success by Ravi Kalakota, Marcia Robinson, Don Tapscott  (June 1999)  Addison-Wesley Pub Co (C); ISBN: 0201604809  </li></ul><ul><li>Customers.Com: How to Create a Profitable Business Strategy for the Internet and Beyond by Patricia B. Seybold (Contributor), R. T. Marshak, Ronni Marshak 1 Ed edition (November 1998) Times Books; ISBN: 0812930371 </li></ul><ul><li>Net Success : 24 Leaders in Web Commerce Show You How to Put the Web to Work for Your Business by Christina Ford Haylock, Len Muscarella, Ron Schultz, Steve Case  (May 1999) Adams Media Corporation; ISBN: 1580621147  </li></ul><ul><li>Creating the Virtual Store: Taking Your Web Site from Browsing to Buying , by Magdalena Yesil, Published by John Wiley & Sons, November 1, 1996 </li></ul><ul><li>Understanding Electronic Commerce (Strategic Technology Series) , by David R. Kosiur, Published by Microsoft Press, May 1, 1997. </li></ul>
    3. 3. Cyber-Seminar Outline <ul><li> EC Introduction </li></ul><ul><ul><li> Introduction </li></ul></ul><ul><ul><li> The cycle of electronic commerce </li></ul></ul><ul><ul><li> EC and Business Process </li></ul></ul><ul><ul><li> EC statistics </li></ul></ul><ul><li> EC Strategies </li></ul><ul><ul><li> 4Cs strategy: Customer, Content, Community, Commerce </li></ul></ul><ul><ul><li> Revenue streams </li></ul></ul><ul><ul><li> EC development process </li></ul></ul><ul><li> EC Business Models </li></ul><ul><ul><li> B2C Virtual stores: physical and digital goods and services </li></ul></ul><ul><ul><li> Infomediaries: Seller-side </li></ul></ul><ul><ul><li> Informediaries: Buyer-side </li></ul></ul><ul><ul><li> Infomediaries: B2B marketspace </li></ul></ul>
    4. 4. EC Introduction <ul><li>Introduction </li></ul><ul><li>The cycle of electronic commerce </li></ul><ul><li>EC and business process </li></ul><ul><li>EC statistics </li></ul>
    5. 5. Electronic Commerce: Introduction E-Business E-Commerce Internet Commerce Commerce
    6. 6. Electronic Commerce <ul><li>Electronic commerce is broadly as the ability to execute business activities ( transactions, contracts, and partnership ) over a computer network. The execution of these activities lead to the exchange of goods, services, and money. </li></ul><ul><li>Online business activities are changing market dynamics and structures of various industries. </li></ul><ul><li>Electronic commerce adds a new dimension &quot; information &quot; to business activities involving information goods, information services, and electronic money. </li></ul>
    7. 7. The Low-Friction Market <ul><li>&quot;[The Internet] will carry us into a new world of low friction, low-overhead capitalism, in which market information will be plentiful and transaction costs low.&quot; </li></ul><ul><li>-- Bill Gates, The Road Ahead </li></ul><ul><li>&quot;Where there is a friction, there is opportunity!&quot; </li></ul><ul><li>-- Net Ready. </li></ul>
    8. 8. The Cycle of Electronic Commerce Customers Online Ads Online Orders Standard Orders Access Searches Queries Surfing Distribution Online: soft goods Delivery: hard goods Electronic Customer Support Follow-on Sales Source: Understanding Electronic Commerce (Strategic Technology Series) , by David R. Kosiur, Published by Microsoft Press, May 1, 1997.
    9. 9. Components of Electronic Commerce Institution <ul><li>Government </li></ul><ul><li>Merchants </li></ul><ul><li>Manufacturers </li></ul><ul><li>Suppliers </li></ul><ul><li>Consumers </li></ul>Processes <ul><li>Marketing </li></ul><ul><li>Sales </li></ul><ul><li>Payment </li></ul><ul><li>Fulfillment </li></ul><ul><li>Support </li></ul>Networks <ul><li>Intranet </li></ul><ul><li>Extranet </li></ul><ul><li>Internet </li></ul>Source: adapted from David Kosiur, Understanding Electronic Commerce, Microsoft Press, 1997. Electronic Commerce
    10. 10. EC and Business Processes Seller Customer Corporate Databases Provide Info Get customer Provide info Fulfill order Support Identify need Find source Evaluate offerings Purchase Maintain, Repair, Operate Phone, fax, e-mail Web site Newsgroups Net communities Web site EDI Web site, phone, fax, e-mail, e-mailing list Credit cards, e-cash P.O.s Demos, reviews Send info Data sheets, catalogs, demos Request info Web surfing Web searches, web ads Deliver soft goods electronically Source: adapted from David Kosiur, Understanding Electronic Commerce, Microsoft Press, 1997.
    11. 11. World Wide Internet Commerce Forester Research, Inc. June 1999
    12. 12. Business Internet Commerce Trends B2C: Business to Consumer B2B: Business to Business Reference: http://cyberatlas.internet.com/
    13. 13. Business-to-Business E-Commerce <ul><li>International Data Corporation forecasts that business-to-business e-commerce revenue will jump from $80 billion worldwide in 1998 to $1.1 trillion in 2003. Forrester Research believes that number will go even higher to $1.3 trillion by 2003. </li></ul><ul><li>Business-to-Business -- Vertical Industries </li></ul><ul><ul><li>Computing and Electronics: For this year, businesses will invest $50 billion in computers and other electronic equipment online. Increase to $319 billion by 2002. </li></ul></ul><ul><ul><li>Motor vehicles: Companies will spend $9 billion online to purchase fleets of cars and trucks this year. 2002—grow to $114 billion—more than a 1000% increase. </li></ul></ul><ul><ul><li>Online utilities: Online trades of $15 billion in 1999 will grow to $110 billion by 2002. </li></ul></ul><ul><ul><li>Food and agriculture: Expected to be about $3 billion in 1999--$20 billion by 2002. </li></ul></ul><ul><ul><li>Pharmaceutical and medical: Forecasted $1 billion this year. Increase 20-fold by 2002. </li></ul></ul><ul><ul><li>Source: Business 2.0, March, 1999 re: Forrester Research </li></ul></ul>
    14. 14. Statistics <ul><li>Holiday Season 1998 </li></ul><ul><ul><li>2.1 million households shopped online for the first time </li></ul></ul><ul><ul><li>Generated $2.3 billion </li></ul></ul><ul><ul><li>Virtually all (98%) of AOL shoppers said they would shop online again in the next 6 months (Source: Jupiter Communications) </li></ul></ul><ul><li>By 2003 . . . </li></ul><ul><ul><li>Consumers on the Web will spend more than $177 billion worldwide. </li></ul></ul><ul><ul><li>There will be an eight-fold increase in Web buyers worldwide to 143 million (International Data Corporation, March 1999) </li></ul></ul><ul><ul><li>In Europe, 43 million households will be online. (Source: Nua Internet Surveys 12/98 re: DataMonitor) </li></ul></ul><ul><ul><li>In Japan, buyers will spend one trillion Yen online. (Source: Nikkei Multimedia, 12/98) </li></ul></ul><ul><li>1% of 5 million US merchants are able to collect payments via the Internet in 1999. </li></ul><ul><li>10% E-merchants by year 2003. </li></ul>
    15. 15. Retailing Trends 1950s 1960s-1970s 1980s 1990s Main street Malls Superstores Web <ul><li>Home Depot </li></ul><ul><li>CompUSA </li></ul><ul><li>Barnes and Nobles </li></ul><ul><li>Border </li></ul>
    16. 16. AOL Findings <ul><li>Buy brands </li></ul><ul><li>Seek convenience </li></ul><ul><li>Are increasingly time-starving </li></ul><ul><li>Are not solely motivated by price </li></ul><ul><li>Require simplicity </li></ul>Source: America Online, 1999
    17. 17. Net Economy <ul><li>1940s - 1980s </li></ul><ul><ul><li>Manufacturing to information economy </li></ul></ul><ul><ul><li>Local - regional - national - multinational </li></ul></ul><ul><ul><li>Tangible brick-and-mortar assets: offices, shops, service centers, and warehouse </li></ul></ul><ul><li>1990s - 21st Century </li></ul><ul><ul><li>Net economy: </li></ul></ul><ul><ul><ul><li>Information & Knowledge </li></ul></ul></ul><ul><ul><ul><li>Communication and interactions </li></ul></ul></ul><ul><ul><li>Global and virtual </li></ul></ul><ul><ul><li>Business Focus: Information, channel, flow, customer loyalty, reliable service, relationship </li></ul></ul><ul><ul><li>Intangible assets: Knowledge, experiences, relationships </li></ul></ul>
    18. 18. Internet Economy Driving Forces <ul><li>Changing customer demands </li></ul><ul><li>Globalization </li></ul><ul><li>Internet ubiquity </li></ul><ul><li>New technology </li></ul><ul><li>New marketplace and intermediacies </li></ul>
    19. 19. Selling Points of Virtual Stores <ul><li>&quot;The Internet is going to become a channel of distribution.&quot; -- The president of a major U.S. advertising agency </li></ul><ul><li>Another firm advertise its virtual store as &quot;The parking is easy, there are no checkout lines, we are open 24 hours a day, and we deliver right to your door.&quot; </li></ul><ul><li>The trend toward point-of-sale moving into the home is accelerating. </li></ul>
    20. 20. Benefits to the Merchants <ul><li>Increased sales of existing products to generate additional revenues </li></ul><ul><li>Use the web to target their offers to a niche market </li></ul><ul><li>&quot;The store is always open!&quot; </li></ul><ul><li>Establish better relationships with customers. </li></ul><ul><li>Low cost information distribution </li></ul><ul><li>Increased speed to market </li></ul><ul><li>Expanded delivery channels </li></ul><ul><li>Global exposure and reach </li></ul>
    21. 21. Benefits to the Consumers <ul><li>Convenience </li></ul><ul><li>Informative </li></ul><ul><li>Value presented upfront: Demo and free download </li></ul><ul><li>No long wait times </li></ul><ul><li>Easy flow and navigation </li></ul><ul><li>Search capabilities </li></ul><ul><li>Engaging presentation </li></ul><ul><li>Constant updates </li></ul><ul><li>Easy to buy </li></ul>
    22. 22. All 3 Steps in One Medium <ul><li>Web and EC allows you to integrate three major steps of markting and sales in one medium. </li></ul>Get Attention Give More Information/ Answer Questions Informing Selling <ul><li>TV Ads </li></ul><ul><li>Magazines </li></ul><ul><li>Brochures </li></ul><ul><li>Sales People </li></ul><ul><li>Print/editorial </li></ul><ul><li>Store </li></ul><ul><li>Telephone </li></ul><ul><li>Catalogue </li></ul>Transact/ Service Branding
    23. 23. Internet Industry Internet Economy Consulting Content and Activity Electronic Commerce Infrastructure Client/Server Software ISP Network Services Internet Equipment Commerce Instruments Portals Commerce Servers Sports Malls Entertainment Newsfeed Publications System Integration and Design Browsers Web Server Application Servers Security Tools Internet Service Consumer Services Carriers Backbone Router Access Equipment Server Computers
    24. 24. EC Strategies <ul><li>4Cs Strategy: </li></ul><ul><ul><li>Customer </li></ul></ul><ul><ul><li>Content </li></ul></ul><ul><ul><li>Community </li></ul></ul><ul><ul><li>Commerce </li></ul></ul><ul><li>Revenue Streams </li></ul><ul><li>EC Development Process </li></ul>
    25. 25. <ul><li>Most Visited Retailers: </li></ul><ul><ul><li>1. Bluemountainarts.com </li></ul></ul><ul><ul><li>2. Amazon.com </li></ul></ul><ul><ul><li>3. AOL.com </li></ul></ul><ul><ul><li>4. Ebay.com </li></ul></ul><ul><ul><li>5. Etoys.com </li></ul></ul><ul><ul><li>6. Barnesandnoble.com </li></ul></ul><ul><ul><li>7. CNet.com (software) </li></ul></ul><ul><ul><li>8. Egghead.com </li></ul></ul><ul><ul><li>9. CDNow.com </li></ul></ul><ul><ul><li>10. Musicblvd.com </li></ul></ul><ul><ul><li>11. ColumbiaHouse.com </li></ul></ul><ul><ul><li>12. Classifieds2000.com </li></ul></ul><ul><ul><li>13. Beyond.com </li></ul></ul><ul><ul><li>14. Coolsavings.com </li></ul></ul><ul><ul><li>15. Valupage.com </li></ul></ul>New Competition From Surprising Places <ul><li>Not in Top 25: </li></ul><ul><ul><li>Towerrecords.com </li></ul></ul><ul><ul><li>Borders.com </li></ul></ul><ul><ul><li>Toysrus.com </li></ul></ul><ul><ul><li>Target.com </li></ul></ul><ul><ul><li>Gap.com </li></ul></ul><ul><ul><li>Macys.com </li></ul></ul><ul><ul><li>Sears.com </li></ul></ul><ul><ul><li>WalMart.com </li></ul></ul><ul><ul><li>“ BigCompany.com” </li></ul></ul><ul><ul><li>YourCompany.com?? </li></ul></ul>
    26. 26. Moving Your Business Online <ul><li>Companies are motivated by either fear or greed to move to their businesses to the net. </li></ul><ul><li>To .com your company is becoming an imperative. </li></ul><ul><li>They have to obsolete their current business models and work very hard to search a new business model. </li></ul>Your competitor is just one-click away
    27. 27. Electronic Commerce Applications and the Cycle of Commerce Marketing Sales Production/Logistics Billing/Collections Service Seller's Cycle of Commerce Time
    28. 28. Electronic Commerce Applications and the Cycle of Commerce Shopping/Testing Procurement Receiving/Logistics Payment Operation Buyer's Cycle of Commerce Time
    29. 29. EC Strategies: 4 Cs Commerce Content Community Customers
    30. 30. Customers <ul><li>Obsess over your customers </li></ul><ul><li>Remember that the Web is an infant </li></ul><ul><ul><li>What do you have to offer that the physical world cannot in order to attract customers? </li></ul></ul><ul><li>If you make one customer unhappy, he won't tell five friends -- he'll tell 5,000 on newsgroups, list servers, and so on. </li></ul><ul><ul><li>&quot;Word of mouth&quot; factor gets amplified on the Net </li></ul></ul><ul><li>The shifts of balance of power away from business and toward customer. </li></ul><ul><li>- Jeff Bezos </li></ul>
    31. 31. Self Assessment: Customer Caring What do your customers need? What requests do they make of you? How do you respond to customer’s requests? What kind of information can they get from you? What process do they go through? How do you produce and distribute it to them? What are the steps that your customers have to take to complete a purchase transactions? How do they get shipment status? How are exceptions handled? What do you need from customer? What do you know about customer preferences? What information could you use to better target your product and service offerings? What can you do to build relationships? How can you engage customers in an ongoing dialog? How can you continue to provide information, products, and services to reinforce your ongoing relationships?
    32. 32. 5 Steps to Success in EC <ul><li>Set strategy </li></ul><ul><ul><li>Make it easy for customers to do business with you! </li></ul></ul><ul><li>Focus on the end-customer </li></ul><ul><ul><li>Identify end-customers and their needs </li></ul></ul><ul><ul><li>Distinguish from channel partners </li></ul></ul><ul><ul><li>Identify other internal and external stakeholders </li></ul></ul><ul><li>Redesign customer-facing business processes </li></ul><ul><li>Wire your company for profit and success </li></ul><ul><li>Foster customer loyalty </li></ul><ul><ul><li>Determine and prioritize objectives </li></ul></ul><ul><ul><li>Decide what to measure and how to measure </li></ul></ul><ul><ul><li>Measure profitability and other critical success indicators </li></ul></ul>Source: Adapted from Customer.com by Patricia Seybold, 1998
    33. 33. Foster Customer Loyalty <ul><li>The key to profitability in EC </li></ul><ul><li>Achieving higher revenues via customer acquisition and customer retention </li></ul><ul><ul><li>Acquisition costs </li></ul></ul><ul><ul><li>Base profit </li></ul></ul><ul><ul><li>Revenue growth </li></ul></ul><ul><ul><li>Cost savings </li></ul></ul><ul><ul><li>Referrals </li></ul></ul><ul><ul><li>Price premium </li></ul></ul><ul><li>Benefits: </li></ul><ul><ul><li>No-cost acquisition </li></ul></ul><ul><ul><li>Experienced customer </li></ul></ul><ul><li>Strategies </li></ul><ul><ul><li>Increase customer &quot;inventory&quot; </li></ul></ul><ul><ul><li>Increase customer &quot;tenure&quot; </li></ul></ul>
    34. 34. 8 Critical Success Factors <ul><li>Target the right customers </li></ul><ul><li>Own customer's total experience </li></ul><ul><li>Streamline business processes that impact the customer </li></ul><ul><li>Provide a 360-degree view of relationships with your customers </li></ul><ul><li>Let customers help themselves </li></ul><ul><li>Help customers do their jobs </li></ul><ul><li>Deliver personalized services </li></ul><ul><li>Foster community </li></ul>
    35. 35. Target the Right Customers <ul><li>Know who your customers and prospects are </li></ul><ul><li>Find out which customers are profitable </li></ul><ul><li>Decide which customers you want to attract (or keep from losing) </li></ul><ul><li>Decide which customers influence key purchases </li></ul><ul><li>Find out which customers generate referrals </li></ul><ul><li>Don't confuse customers, partners, and stakeholders </li></ul>
    36. 36. Own the Customer's Total Experience <ul><li>Deliver a consist and branded experience </li></ul><ul><li>Focus on saving customer time and irritation </li></ul><ul><li>Offer a peace of mind </li></ul><ul><li>Work with partner to deliver consistent service and quality </li></ul><ul><li>Respect the customer individuality </li></ul><ul><li>Give customers control over their experience </li></ul>
    37. 37. Creating Sustainable Value in EC <ul><li>Develop a brand based on consumer experiences </li></ul><ul><ul><li>The brand emerges as the two-way communication on the net and off the net. </li></ul></ul><ul><li>Develop superior physical distribution </li></ul><ul><ul><li>Physical distribution is a choke point in EC </li></ul></ul><ul><li>Leverage customer information </li></ul><ul><ul><li>Use personal information to more convenience shopping and customized services </li></ul></ul><ul><ul><ul><li>Privacy issue </li></ul></ul></ul><ul><ul><ul><li>Ask customer explicitly for such data </li></ul></ul></ul><ul><ul><ul><li>Require a more subtle approach </li></ul></ul></ul><ul><ul><li>Use collective data </li></ul></ul><ul><ul><ul><li>Use it to adjust pricing, product offering, and target market </li></ul></ul></ul>
    38. 38. Virtual Communities Virtual Community Users <ul><li>Money </li></ul><ul><li>Content </li></ul><ul><li>Demographics </li></ul>Providers <ul><li>Content </li></ul><ul><li>Hard goods </li></ul><ul><li>Games </li></ul><ul><li>Services </li></ul>Other Websites Advertisers <ul><li>Advertising </li></ul>
    39. 39. Consumers' Needs for Community <ul><li>Communities of transaction: Facilitate the buying and selling of products and services and deliver information related to those transactions. </li></ul><ul><ul><li>Bring in a critical mass of sellers and buyers to facilitate certain types of transactions. </li></ul></ul><ul><ul><li>Virtual Vineyards (wine.com) </li></ul></ul><ul><li>Communities of Interest: Bring together participants who interact extensively with one another on specific topics. </li></ul><ul><ul><li>Higher degree of interpersonal communication. </li></ul></ul><ul><ul><li>GardenWeb: www.gardenweb.com </li></ul></ul><ul><ul><li>Motley Fool created by David and Tom Gardners on AOL (fool.com) </li></ul></ul><ul><ul><li>Parents Place: www.parentsplace.com </li></ul></ul><ul><li>Communities of Fantasy </li></ul><ul><ul><li>Chat rooms: Red Dragon Inn </li></ul></ul><ul><ul><li>Virtual Team competition at ESPNet: espnet.sportszone.com </li></ul></ul><ul><li>Communities of Relationship: People come together around certain life experiences that are very intense and can lead to the formation of deep personal connections. </li></ul><ul><ul><li>Cancer Forum on CompuServe </li></ul></ul>
    40. 40. www.parentsoup.com
    41. 41. www.iVillage.com
    42. 42. Geocities: www.geocities.com <ul><li>This collection of themes cyberhoods is populated by a half-million &quot;homesteaders&quot; who get free home pages. </li></ul>http://geocities.yahoo.com/home/
    43. 43. Quick Test for Technographics More Men More Women More Educated Less Educated High Income Low Income Have Children No Children Younger Age Older Laggards Early Adopter Mainstreams Time Number of new users Source: Now or Never, 2000
    44. 44. Technology-Fit: Customer and Product Customer Need for Product Information High Low Customer Demographics Match Poor High Earlier Adopter Second Wave Second Wave Web Laggards Tide Denny's AA FedExp Microsoft Nike Pepsi Jenny Craig Chrysler Source: Forrester Research
    45. 45. Challenge <ul><li>Consumers: Everything on the Internet should to be free. </li></ul><ul><li>Merchant: How can I make a profit if everything is free. </li></ul><ul><li>Examples: </li></ul><ul><ul><li>Free web browsers: Netscape Communicator and Internet Explorer </li></ul></ul><ul><ul><li>Free email: Juno, mail.yahoo.com and hotmail.com </li></ul></ul><ul><ul><li>Free Internet Access: Freeserve in Britain </li></ul></ul><ul><ul><li>Free PC: eMachine and CompuServe; Free-PC </li></ul></ul><ul><ul><li>Free web hosting: Geocities, Angelfire, Zoom </li></ul></ul><ul><ul><li>Free ... </li></ul></ul>Price Year $250 $0 1930 1999 Cost of a 3-minute Long Distance Call Gilder's Law All tangible and intangible items that can be copied adhere to the law of inverted pricing and become cheaper as they improve. Anticipate this cheapness in your pricing strategy and product/service development strategy
    46. 46. Revenue Streams <ul><li>Advertising / Sponsorship </li></ul><ul><li>Transaction </li></ul><ul><li>Subscription / Listing Fee </li></ul><ul><li>Value-added services </li></ul>
    47. 47. Multifaceted Model for Web-Based EC Design <ul><li>ATTRACT: Hits </li></ul><ul><ul><li>Communities of interest </li></ul></ul><ul><ul><li>Changing topics for repeat customers </li></ul></ul><ul><ul><li>Features that encourage customers to explore </li></ul></ul><ul><li>ENGAGE: Leads </li></ul><ul><ul><li>Special areas encourage customer to register (i.e. selection of articles customized for visitors interests) </li></ul></ul><ul><li>PARTICIPATE: Sales revenue </li></ul><ul><ul><li>Free download (video, audio, & software) </li></ul></ul><ul><ul><li>Shopping </li></ul></ul><ul><ul><li>Chat and News </li></ul></ul><ul><ul><li>Subscription </li></ul></ul><ul><li>JUMP: Advertising revenue </li></ul><ul><ul><li>Other products of interest to customer </li></ul></ul><ul><ul><li>Other sites of interest to customer </li></ul></ul>Adapted from Netscape Communications Inc., 1996. Attract Engage Participate Jump
    48. 48. EC Companies Transform the Revenue Mix Pricing Value Customers New Customers New Values New Pricing The mix: Who pays for what and how much. Highly interrelated! Source: Now or Never, 2000
    49. 49. What To Do Now <ul><li>1. Define your eBusiness strategy FAST </li></ul><ul><li>2. Assess readiness: </li></ul><ul><ul><li>customers </li></ul></ul><ul><ul><li>products/services </li></ul></ul><ul><ul><li>organization </li></ul></ul><ul><ul><li>technology </li></ul></ul><ul><ul><li>infrastructure </li></ul></ul>Rapid innovation
    50. 50. What To Do Now <ul><li>3. Identify the target: </li></ul><ul><ul><li>Business objectives </li></ul></ul><ul><ul><li>Customer segment </li></ul></ul><ul><ul><li>Application area </li></ul></ul><ul><li>4. Build it in less than 6 months </li></ul><ul><li> -- Flexibility </li></ul><ul><li> -- Scalability </li></ul><ul><li> -- Extendibility </li></ul><ul><li>5. Keep extending the function -- new products and services, new customer interfaces, enhance performance, security and capability </li></ul><ul><li>6. START NOW ! </li></ul><ul><li>You are never done! </li></ul>
    51. 51. Four Strategies to Start Online Business <ul><li>Integration </li></ul><ul><li>Subsidiary </li></ul><ul><li>Partnership </li></ul><ul><li>Buyout </li></ul>Cost Low High Time to Market Slow Fast Risk Low High
    52. 52. Top Three Concerns <ul><li>Retailers </li></ul><ul><ul><li>Conflict with investment in physical stores; </li></ul></ul><ul><ul><li>Technology issues; and </li></ul></ul><ul><ul><li>Lack of distribution and fulfillment network. </li></ul></ul><ul><li>Manufacturers </li></ul><ul><ul><li>Products not appropriate for online sales; </li></ul></ul><ul><ul><li>Potential risk to channel relationships; and </li></ul></ul><ul><ul><li>Consumers won’t buy online </li></ul></ul><ul><ul><li>Many manufacturers simply weren't capable of shipping a single box of Tide or a bottle of Advil. They had no experience in dealing directly with consumers. </li></ul></ul>
    53. 53. Becoming Virtual <ul><li>Egghead to Egghead.com </li></ul><ul><li>Computer Literacy to Fatbrain.com </li></ul><ul><li>Romac International to KForce.com </li></ul>Kinder Toys is Moving to www.toydomain.com (Find us on the web after June 1st)
    54. 54. Your 3 Biggest Problems/Opportunities <ul><li>What should our strategy be? </li></ul><ul><li>How do we build it in 3 to 6 months? </li></ul><ul><li>How do we stay on the edge of innovation for life? </li></ul>
    55. 55. Web Experiences for Consumers <ul><li>A many-to-many rather a one-to-many experience </li></ul><ul><li>Fresh content </li></ul><ul><li>Access to detail information </li></ul><ul><li>Communities unbounded by space and time </li></ul><ul><li>The multimedia appeal of TV </li></ul><ul><li>A redefinition of privacy and identity </li></ul><ul><li>Hyper-impulsivity: The web permits a closer conjunction of desire, transaction, and payment than any other environment. </li></ul>
    56. 56. E-Business Creation Process E-Vision Business Drivers Technology Drivers E-Business Strategy Rapid Implementation <ul><li>Customer feedback </li></ul><ul><li>Benchmark data </li></ul><ul><li>Competitive analysis </li></ul><ul><li>Market forces </li></ul><ul><li>Usage statistics </li></ul><ul><li>Customer needs </li></ul><ul><li>Current capabilities </li></ul><ul><li>Personalization </li></ul><ul><li>ROI </li></ul><ul><li>Profiling </li></ul><ul><li>Segmentation </li></ul><ul><li>Experience modeling </li></ul><ul><li>Expanded business opportunities </li></ul><ul><li>Systems and networks </li></ul><ul><li>Web architecture </li></ul><ul><li>Business infrastructure </li></ul><ul><li>Technology components </li></ul><ul><li>Web technology strategy </li></ul>Source: Adapted from Digital Transformation, 2000
    57. 57. EC Development Process <ul><li>Knowledge building and market evaluation to identify a need and a niche </li></ul><ul><li>Competitive and capability analysis </li></ul><ul><li>EC Business model design and feature identification </li></ul><ul><li>Determine what you have to offer (merchandizing) </li></ul><ul><li>Set your e-business goals and priorities </li></ul><ul><li>Design your EC architecture </li></ul><ul><li>Assemble your EC teams </li></ul><ul><li>Build your web site </li></ul><ul><li>Set up a system to handle sales </li></ul><ul><li>Provide customer services </li></ul><ul><li>Advertise your online business (online and offline) </li></ul><ul><li>Evaluate your performance and moving on </li></ul>
    58. 58. Popularity Adds Value in a Network Value to User Number of Compatible User Vicious cycle Virtuous cycle <ul><li>Networks </li></ul><ul><ul><li>Real: LAN, Internet, Fax </li></ul></ul><ul><ul><li>Virtual: Virtual community, Chat room, Instant messenger </li></ul></ul>Positive Network Externality
    59. 59. Keys to Long Term Success <ul><li>Fast deployment </li></ul><ul><li>Evolutionary implementation </li></ul><ul><li>First mover advantages </li></ul><ul><li>Promotion, promotion, promotion </li></ul><ul><li>Customer focus and services </li></ul><ul><li>Interaction with customers </li></ul><ul><li>Integrating emerging technologies </li></ul><ul><li>Redefining and redesigning business models </li></ul><ul><li>Comprehensive database and data warehouse design </li></ul><ul><li>Integrating back office operations with the virtual store fronts </li></ul>
    60. 60. EC Business Models <ul><li>Virtual stores: physical and digital goods and services </li></ul><ul><li>Infomediaries: Seller-side </li></ul><ul><li>Informediaries: Buyer-side </li></ul><ul><li>Infomediaries: B2B marketspace </li></ul>
    61. 61. Types of Virtual Stores <ul><li>Hard goods: </li></ul><ul><ul><li>Food </li></ul></ul><ul><ul><li>Clothes </li></ul></ul><ul><ul><li>Computer hardware and Electronics </li></ul></ul><ul><ul><li>Packaged software </li></ul></ul><ul><li>Soft goods (Bits delivered on-line) </li></ul><ul><ul><li>Information </li></ul></ul><ul><ul><ul><li>Database </li></ul></ul></ul><ul><ul><ul><li>Publishing </li></ul></ul></ul><ul><ul><ul><li>Research </li></ul></ul></ul><ul><ul><li>Software </li></ul></ul><ul><ul><ul><li>Computer games </li></ul></ul></ul><ul><ul><ul><li>Java applets </li></ul></ul></ul><ul><ul><ul><li>Application software </li></ul></ul></ul><ul><li>Services </li></ul><ul><ul><li>Selling time: </li></ul></ul><ul><ul><ul><li>Computer game play </li></ul></ul></ul><ul><ul><ul><li>Consulting </li></ul></ul></ul><ul><ul><ul><li>Legal and medical services </li></ul></ul></ul><ul><ul><li>Selling information (subscriptions) </li></ul></ul><ul><ul><ul><li>Dating services </li></ul></ul></ul><ul><ul><ul><li>Legal and medical advice </li></ul></ul></ul><ul><ul><li>Reservations and tickets </li></ul></ul><ul><ul><ul><li>Airline tickets </li></ul></ul></ul><ul><ul><ul><li>Event tickets </li></ul></ul></ul><ul><ul><ul><li>Hotel and restaurant </li></ul></ul></ul>
    62. 62. Is EC Appropriate for You? Industries who set up virtual storefronts
    63. 63. What Consumers Are Buying Online <ul><li>Computer-related products 49% </li></ul><ul><li>Books 35% </li></ul><ul><li>Consumer electronics 34% </li></ul><ul><li>Travel Reservations 28% </li></ul><ul><li>Cars, boats 19% </li></ul><ul><li>Clothing and apparel 18% </li></ul><ul><li>Recorded music, CDs 18% </li></ul><ul><li>Larger household goods (furniture, major appliances) 15% </li></ul><ul><li>Filmed entertainment, videos 13% </li></ul><ul><li>Gifts delivered by mail (flowers, candy) 12% </li></ul><ul><li>Publication subscriptions 8% </li></ul><ul><li>Investment or financial services 8% </li></ul><ul><li>Food and drink 8% </li></ul><ul><li>Artwork, poster, etc 4% </li></ul><ul><li>Other 13% </li></ul><ul><ul><ul><li>Source: Ernst & Young Internet Shopping Study 1998 </li></ul></ul></ul>
    64. 64. EC Business Models <ul><li>Payment direction: </li></ul><ul><ul><li>Buy-side </li></ul></ul><ul><ul><li>Sell-side </li></ul></ul><ul><ul><li>Marketspace: Business is being transacted with both suppliers and customers. </li></ul></ul><ul><li>Trading parties: Most analysts predict the B2B model will have a more rapid adoption rate, but that the volume of transactions in the B2C model will, in the long run, greatly surpass that of B2B. </li></ul><ul><ul><li>Business to Business </li></ul></ul><ul><ul><li>Business to Consumer </li></ul></ul><ul><li>Type of product or service that is being provided. </li></ul><ul><ul><li>Physical goods and services </li></ul></ul><ul><ul><li>Digital goods (contents) </li></ul></ul><ul><ul><li>Digital services </li></ul></ul>
    65. 65. Sell-Side E-Commerce Model Selling Merchant Buyer A Buyer C Buyer B EDI HTML & Forms HTML & XML OBI Online Selling Consumer or Business
    66. 66. Sell-Side Storefront <ul><li>Primary model used in current business-to-consumer scenarios </li></ul><ul><li>Single seller, typically a distributor, constructs a Web storefront to sell to many consumers (i.e. Amazon.com) </li></ul><ul><li>Unless a single distributor can aggregate all the suppliers in a given industry, the buyer remains responsible for comparison shopping between stores </li></ul><ul><li>Expensive for buyer; does not meet the needs of corporate procurement organizations. </li></ul>
    67. 67. Buy-Side E-Commerce Model Buyer Seller A Seller C Seller B EDI HTML & Forms HTML & XML OBI Online Procurement Business
    68. 68. Buy-Side eProcurement <ul><li>Buy-side applications generally consisting of a browser-based self-service front end to ERP and legacy purchasing systems </li></ul><ul><li>Corporate procurement aggregates many supplier catalogs into a single “universal” catalog and allows end-user requisitioning from the desktop, facilitating standard procurement for the organization and cutting down on “maverick” purchasing </li></ul><ul><li>Purchases made through this system are linked to the back-office ERP or accounting system, cutting time and expense from the transaction and avoiding potential bookkeeping errors </li></ul><ul><li>Model yields reduced transaction costs but not lower purchase costs; no impact on size of supplier base, no enablement of dynamic trade; buying organizations must set-up and maintain catalogs for each of their suppliers; too costly and technically demanding for most medium and small-sized businesses. </li></ul>
    69. 69. Marketplace E-Commerce Model Virtual Marketspace Seller A Seller C Seller B EDI HTML & Forms HTML & XML OBI Buyer A Buyer C Buyer B EDI HTML & Forms HTML & XML OBI <ul><li>eBay.com </li></ul><ul><li>Pricelines.com </li></ul><ul><li>Egghead.com </li></ul><ul><li>Amazom.com Auction </li></ul><ul><li>www.chemdex.com </li></ul>Infomediacy (Content Aggregator)
    70. 70. Business-to-Business vs. Business-to-Consumer <ul><li>No vendor loyally </li></ul><ul><li>No switching costs </li></ul><ul><li>Time-insensitive </li></ul><ul><li>Short-term </li></ul><ul><li>Casual </li></ul><ul><li>Many vendors </li></ul><ul><li>Products differentiated on price, image </li></ul><ul><li>Relationship-based </li></ul><ul><li>Very high switching costs </li></ul><ul><li>Extremely time-sensitive </li></ul><ul><li>Long-term </li></ul><ul><li>Mission-critical </li></ul><ul><li>Few partners </li></ul><ul><li>Partners differentiated on reliability, flexibility </li></ul>Business-to-Consumer Business-to-Business
    71. 71. B2B Marketspace <ul><li>Latest evolution of B2B eCommerce, enabling a many-to-many relationship between buyers and suppliers </li></ul><ul><li>Buyers and suppliers leverage economies of scale in their trading relationships and access a more “liquid” marketplace </li></ul><ul><li>Sellers find buyers for their goods, buyers find suppliers with goods to sell </li></ul><ul><li>Many-to-many liquidity allows the use of dynamic pricing models such as auctions and exchanges, further improving the economic efficiency of the market. </li></ul><ul><li>Examples: </li></ul><ul><ul><li>E-Steel.com </li></ul></ul><ul><ul><li>verticalnet.com </li></ul></ul>
    72. 72. Channel Conflict: How About the Distributors <ul><li>The concept of complete dis-intermediation - the elimination of the middleman - remains a theory. New intermediaries are emerging. </li></ul><ul><li>Cisco System has 2 billion dollars annual sales on the Web. </li></ul><ul><li>70% of Cisco online business comes from VARs and distributors. </li></ul><ul><li>Fruit of Loom Inc. has 31 of its 55 distributors up on its extranet called Activewear Online. Distributors have to do lot of value-add and customer support to survive. </li></ul>
    73. 73. Retailers and Manufacturers Co-exist on the Web <ul><li>US retail sales revenues 1998: </li></ul><ul><ul><li>Brick-and-mortar stores 93% </li></ul></ul><ul><ul><li>Catalog sales: 6% </li></ul></ul><ul><ul><li>E-commerce 1% </li></ul></ul><ul><li>Cases: </li></ul><ul><ul><li>Levi Strauss sells jeans at www.levis.com but won't allow retailers to sell them online. </li></ul></ul><ul><ul><li>Estee Lauder sells Clinique cosmetics at www.clinque.com but doesn't offer retail promotion. </li></ul></ul><ul><ul><li>Waterford sells a limited selection at www.waterford.com like chandeliers and corporate gifts. </li></ul></ul><ul><li>Strategies: </li></ul><ul><ul><li>Manufacturers want to maintain channels while stay in direct touch with their customers. </li></ul></ul><ul><ul><li>Provide online dealer locators. </li></ul></ul><ul><ul><li>Share customers information back and forth. </li></ul></ul>
    74. 74. Clicks-and-Mortar <ul><li>Clicks-and-mortar has become the new buzzword in retailing circles. </li></ul><ul><li>It means having an integrated, multi-touchpoint strategy that takes advantage of your physical retail outlets and integrates them seamlessly into your Web strategy. </li></ul><ul><li>A good clicks-and-mortar strategy uses the Web to drive traffic to your stores and uses your stores to drive traffic to the Web. </li></ul>YourSherpa.com Brick-and-Click
    75. 75. Business Channel: Multi-Channel Presence Buyer Seller <ul><li>Brick-and-mortar </li></ul><ul><ul><li>Face-to-Face </li></ul></ul><ul><li>Mail order </li></ul><ul><ul><li>Mail </li></ul></ul><ul><ul><li>Printed catalog </li></ul></ul><ul><li>Phone order </li></ul><ul><ul><li>Telex </li></ul></ul><ul><ul><li>Phone </li></ul></ul><ul><ul><li>Fax </li></ul></ul><ul><li>Electronic commerce </li></ul><ul><ul><li>EDI </li></ul></ul><ul><ul><li>Email </li></ul></ul><ul><ul><li>Web </li></ul></ul>Multi-channel plays will have extraordinary power if companies elegantly blend and synchronize those channels. Click and Mortar Pure Play
    76. 76. Business Models Based on the Value Chain in the Marketplace Raw material producer Manufacturer Distributor Retailer Consumer Exchange <ul><li>B2B: Vericalnet.com </li></ul><ul><li>B2C: Amazon.com </li></ul><ul><li>C2B: Priceline.com </li></ul><ul><li>C2C: eBay.com </li></ul>C2B B2C B2C C2C New Middleman
    77. 77. Business Models: Multiple Dimensions <ul><li>Buy-sell direction: Buyer-side, seller side, and marketplace </li></ul><ul><li>Industry covered: single vs. multiple (Vertical vs. Horizontal) </li></ul><ul><li>Ownership: Buyer, seller, independent, software vendor, consortia </li></ul><ul><li>Service: Core vs. extended services </li></ul><ul><li>Products: Core vs. MRO; Direct vs. Indirect; </li></ul><ul><li>Pricing: Fixed price, Auction, Reversed auction, negotiated </li></ul><ul><li>Timing of purchase: Contact vs. spot vs. ad hoc </li></ul>
    78. 78. Portfolio of Buying & Selling Strategies Big Buyer Big Supplier Direct Sales Small Buyers Small Buyers Size of Buyers and Seller e-Procurement Net Market Small Suppliers Small Suppliers Small Suppliers
    79. 79. Number of Sellers and Buyers
    80. 80. The Goldman Sachs B2B Windmill in the Age of Consortia
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