E-business Models: Trends and Prospects in Hungary 2013

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Lecture at the Corvinus University of Budapest, at the MSc in Marketing program. Learning outcomes: Conceptualization of e-business models and model variants. Analyzing the recent trends globally and in Hungary. Discussing how business innovations rapidly change the industry setting, either in traditional or in online.

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E-business Models: Trends and Prospects in Hungary 2013

  1. 1. Faculty of Business Administration E-business Models: Trends and Prospects in Hungary Online and Digital Marketing March 6, 2013 Péter Móricz peter.moricz@uni-corvinus.hu Institute of Management Dept. of Management and Control H-1093 Budapest, Fővám tér 8.; H-1828 Budapest, PO Box 489. Phone.: (1)4825377, (1)4825263; fax: (1)4825118 Internet: http://mgmt.uni-corvinus.hu
  2. 2. Business models reveal the core logic of what, how and why are we doing ■ Business models are management tools that reveal, as an interconnected system of elements, – the policies and choices of the value creation (what to offer? why is it valuable?) > value proposition model – the network of the participating actors (forms of cooperation and governance) > architecture model – the sources and streams of revenues sustaining the value creation > revenue model E-business Models: Trends and Prospects in Hungary Péter Móricz 2.
  3. 3. During the last two decades, the Internet was the main driver of business model innovation ■ Radically improved and creative value prop’s (24/7/365, aggregation, long tail, customization, community building, brokerage etc.) ■ New ways of combining the roles of the value creation & delivery (C2C, web 2.0, direct-to-customer etc.) ■ Ongoing experimentation with the revenue flows (affiliate/PPC, freemium, advertising, subscription, dynamic pricing, etc.) New e-business models triggered fundamental changes in even more industries. Online business models increasingly challange the industry status quo. E-business Models: Trends and Prospects in Hungary Péter Móricz 3.
  4. 4. Four fundamental patterns of e-business models have specific characteristics PORTALS MARKETPLACES SHOPS UTILITIES E-business Models: Trends and Prospects in Hungary Péter Móricz 4.
  5. 5. The four fundamental e-business models have specific ways of sustaining the value proposition Content sources Portal: content User (e.g. visitor) Subscription, advertisement Sellers, buyers Marketplace: participants Transaction Commission, listing fees Products, services Shop: selection Customer Margin, service fees Infrastructure, know-how etc. Utility: value-added s. E-business participant Service fees, price packages E-business Models: Trends and Prospects in Hungary Péter Móricz 5.
  6. 6. Portals Main theme ■ Aggregation, rebundling ■ Community building Model versions ■ Horizontal/vertical portals (mainstream/longtail) ■ B2C/B2B portals ■ Navigators (search, link catalogs etc.) ■ Web 2.0 (blogs, social network etc.) ■ Mashups ■ Games, entertainment Revenue streams ■ ■ ■ ■ ■ Advertising and promotion User database yields Paid premium content or function Affiliate Commerce Trends ■ ■ ■ ■ ■ E-business Models: Trends and Prospects in Hungary Three screens Web 2.0 Open API Tablets Smartphones, location-based services Péter Móricz 6.
  7. 7. Marketplaces Main theme ■ Many to many ■ Intermediation Model versions ■ B2B marketplaces (catalogs, auctions, exchanges; horizontal/vertical) ■ Online malls ■ Price comparison ■ C2C auction, classifieds ■ Group buying, coupons and bonuses, “name your own price” ■ Public e-procurement and e-auction Revenue streams ■ ■ ■ ■ ■ Commission, PPC Listing fee, maintenance fee Extra services (shipment, payment) Advertisements, highlighted items Coupon fees Trends ■ ■ ■ ■ E-business Models: Trends and Prospects in Hungary Fixed price “auctions”, B2C Classifieds (C2C) Coupon sites First mover lock-in? Péter Móricz 7.
  8. 8. Shops Main theme ■ E-commerce ■ Online buyer-seller relationship Revenue streams ■ Margin, sales revenue ■ Subscription fee ■ Cross-selling Model versions ■ ■ ■ ■ ■ ■ Classic webshops Digital delivery webshops Direct to consumer Affiliate model Private shopping clubs B2B, e-procurement Trends ■ ■ ■ ■ ■ E-business Models: Trends and Prospects in Hungary From shops to malls Large players’ plans Straight-forward ordering methods Recommendation engines, self-service Consumer feedback, after-sales services Péter Móricz 8.
  9. 9. Utilities Main theme ■ Support activities ■ Standardized value creation ■ Know-how and/or economies of scale Revenue streams ■ ■ ■ ■ Fee based on usage/time Off-the-shelf packages Service fees Commission Model versions ■ ■ ■ ■ ■ ■ ■ Logistics Payment Ad brokerage Consultancy, SEO Webdesign, software Webshop building / hosting Hosting, ASP, SaaS Trends ■ ■ ■ ■ E-business Models: Trends and Prospects in Hungary Delivery tracking Straight-forward shipping methods Mobile payment, NFC Cloud computing Péter Móricz 9.
  10. 10. Summary ■ Content aggregation (portals), market making (marketplaces), online selling (shops) and related support services (utilities) are the four main areas of e-business models ■ Unpredictable dynamics: New (?) e-business models emerge rapidly (coupons) while others unexpectedly decline (e.g. C2C auctions); ■ Competitors are not only those with the same model but also the other ebusiness models (e.g. auction site eBay versus Craigslist classifieds) ■ Successful e-business companies have multiple stakes in different models and consciously experiment with new models (e.g. Amazon EC2/S3, Allegroup’s Grando.hu) ■ Extreme technology dynamics calls for continuous innovation and renewal (e.g. QR codes, tablets, smartphones, NFC, mashups) ■ In Hungary, incumbent companies have their strength in “sense-andrespond” to the local needs (e.g. GRoby), but multinational companies are about to enter and grab some key positions (e.g. Amazon, Tesco) ■ Global entrants may threaten local companies (e.g. iWiW-Facebook) but also enlarge the pie by mobilizing new users E-business Models: Trends and Prospects in Hungary Péter Móricz 10.
  11. 11. Further readings ■ Rappa’s e-business models: http://digitalenterprise.org/models/models.html ■ PhD thesis on Hungarian e-business models: http://phd.lib.uni-corvinus.hu/553/ ■ Amazon’s business model evolution: http://www.slideshare.net/faberNovel/amazoncom-the-hidden-empire ■ ■ ■ ■ ■ E-commerce market research worldwide: www.emarketer.com Online retail in Eastern Europe: http://ystats.com/en/press/release.php?id=182 E-commerce market research in Hungary: http://www.enet.hu/en/ Tesco Home Plus in South Korea: http://www.youtube.com/watch?v=fGaVFRzTTP4 Coop@home Drive-in: https://www.youtube.com/watch?v=QYKI8ZQkhbI – Auchan Drive [French]: http://www.youtube.com/watch?v=kSdOiuleqAc ■ Amazon Locker [funny!]: https://www.youtube.com/watch?v=hXokiEofKpQ – Deutsche Post Packstation [German]: http://www.youtube.com/watch?v=HUF3f4tvJnM E-business Models: Trends and Prospects in Hungary Péter Móricz 11.
  12. 12. Faculty of Business Administration Business Models’ Basics Retrospective backup Institute of Management Dept. of Management and Control H-1093 Budapest, Fővám tér 8.; H-1828 Budapest, PO Box 489. Phone.: (1)4825377, (1)4825263; fax: (1)4825118 Internet: http://mgmt.uni-corvinus.hu
  13. 13. Business models à la carte Value Proposition Architecture Revenue Model ■ Low-cost/discount ■ Full service/ aggregation ■ Long-tail ■ Involvement/creation ■ Customization ■ Acceleration ■ Feeling ■ … ■ Vertical integration ■ Integrated (dominated) supply chain ■ Value constellations, partnering ■ Community/selforganized, web 2.0 ■ … ■ Cross-subsidies/free: e.g. advertising, freemium, donations ■ Pay-per-use: e.g. commission, service ■ Flat rate: e.g. subscription ■ Selling: e.g. dynamic pricing ■ … E-business framework models: Portals, Marketplaces, Shops, Utilities E-business Models: Trends and Prospects in Hungary Péter Móricz 13.
  14. 14. Business models: The level of analysis Strategy Business model Business processes Competition & differentiation Value creation as a system: elements and connections Efficient and effective implementation and execution Reshaped strategic environment New e-business models Enabler of process transformation Internet had a profound effect at each level E-business Models: Trends and Prospects in Hungary Péter Móricz 14.
  15. 15. Business model representations 1 “Case” 2 “Map” 3 “Simulator” Type  Narrative  Graphic Focus  Qualitative patterns of a success or failure story  Mapping the inter-  Formal model of action between the relationship key elements and between elements factors and factors Typical  Recommendations,  Understanding applications advising & generalization Tools examples  Case study  Concept maps, benchmarking and value webs role playing E-business Models: Trends and Prospects in Hungary  Formal  Sensitivity test and scenario planning  Spreadsheets and business games Péter Móricz 15.
  16. 16. Visualization of business model maps Map element: Flexibility of application: Mainly factors Mainly actors Cause and effect map Value network map Business Model Generation e3value Fix specification Meta-model (Osterwalder, 2004) Guideline Adaptable Competing Through Business Models (Casadesus-Masanell & Ricart, 2008) E-business Models: Trends and Prospects in Hungary (Gordijn & Akkermans, 2001) E-Business Model Schematics (Weill & Vitale, 2001) Péter Móricz 16.

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