Online Business Models


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Different business models for online businesses

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Online Business Models

  1. 1. An Introduction toONLINE BUSINESS MODELS<br />Anand .G<br />II MBA<br />Dept. of Management Studies<br />Pondicherry University<br />From the book “Introduction to e-commerce” by Jeffrey F. Rayport & Bernard J. Jaworski<br />
  2. 2. Online vs. traditional<br />In online business, there is a shift from supply side to demand side<br />Customers are looking for core benefits and companies should respond accordingly<br />Customers can add value to an online business<br />Companies should facilitate C2C relationships <br />
  3. 3. 7 models for E-business<br />Metamarket Switchboard model<br />Traditional and Reverse Auction models<br />Freshest-Information model<br />Highest-Quality model<br />Widest-Assortment model<br />Lowest-Price model<br />Most-Personalized model<br />
  4. 4. Metamarket Switchboard model<br />It brings together buyers and sellers based upon the activities that customers engage in to meet particular goals<br />Example:<br />
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  6. 6.<br />Core benefit: Providing a single-point of access for all needs related to child development<br />Offering: Products, Services, Community, News on child rearing, Advice<br />Resources: A large, active customer base and a significant brand name<br />Revenues: Transactions, product sales, affiliate deals and advertising<br />
  7. 7. Traditional and Reverse Auction models<br />They bring together a large number of buyers and sellers<br />In traditional model, the buyer with the highest bid buys the item. In reverse model, the supplier with the lowest bid delivers the goods to the buyer.<br />Example:<br />
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  9. 9.<br />Core benefit: Large and deep product line, large no. of buyers & sellers<br />Offering: Trustworthy and easy transactions of products and cash<br />Resources: Large user community, brand name, credibility, technology and support<br />Revenues: Transaction fees, in-house auctions<br />
  10. 10. Freshest-Information model<br />Quickly and efficiently deliver information to users<br />Example:<br />
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  12. 12.<br />Core benefit: Timeliness, accuracy, quality reporting and passion for news<br />Offering: Local, national & world news; exclusive and breaking news<br />Resources: Best personnel, freshest information, archives etc<br />Revenues: Products, services, information and advertising revenue<br />
  13. 13. Highest -Quality model<br />High quality, premium-priced products, services or information<br />Across all consumer markets and categories, there is room for a high-quality offering<br />Example:<br />
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  15. 15.<br />Core benefit: High-quality products and their associated exclusivity<br />Offering: Toys, dolls, arts & crafts, collectibles etc to a niche market<br />Resources: Sourcing ability, brand exclusivity, an outstanding online experience that’s simply the best<br />Revenues: High margins for premium products<br />
  16. 16. Widest-Assortment model<br />Breadth and depth of product assortment, within and across product categories<br />Example:<br />
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  18. 18.<br />Core benefit: Large inventory and best prices, so shop here first<br />Offering: Internet&apos;s largest buyer and seller of used CD’s, DVD&apos;s, videos, games etc<br />Resources: Very strong logistics, quality control, large user base and brand name<br />Revenues: Product sales, premium pricing of most desired products<br />
  19. 19. Lowest-Price model<br />Offers the customer the lowest prices available online<br />Example:<br />
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  21. 21.<br />Core benefit: lowest prices above anything else<br />Offering: Large variety of products across many categories<br />Resources: Outstanding supply chain management and procurement, strong back-office systems, frugal culture<br />Revenue: Small percentage of product sales<br />
  22. 22. Most-Personalized model<br />Able to provide a highly personalized, truly unique, one-of-a-kind experience<br />Example:<br />
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  24. 24.<br />Core benefit: A unique experience or product, or a personalized solution to a problem<br />Offering: The offering is built on the demands of each customer<br />Resources: Exceptional customer knowledge, a good website, a combination of personnel and technology<br />Revenues: Premium prices for high cost service<br />
  25. 25. Conclusion<br />A company can pursue more than one model at a time<br />Never blindly follow any business model<br />Companies should think how each component - value proposition, online offering, resources, and revenue model - will fit together to form a successful business.<br />
  26. 26. Source: From the book “Introduction to e-commerce” by Jeffrey F. Rayport & Bernard J. Jaworski, Tata McGraw-Hill<br />