E-Commerce Programming

1. Chapter 2
e-Business Models
E-Commerce Programming
Mutah University
Faculty of IT, Department of Software Engineering
Dr. Ra’Fat A. AL-msie’deen
Part 2
Constructing an e-Business

2. This material is based on chapter 1 of “e-Business & e-Commerce
for Managers” by Harvey M. Deitel, Paul Deitel, Kate Steinbuhler.

3. Chapter 2, e-Business Models
Outline
2.1 Introduction
2.2 Storefront Model
2.2.1 Shopping-Cart Technology
2.2.2 Online Shopping Malls
2.3 Auction Model
2.4 Portal Model
2.5 Dynamic-Pricing Model
2.5.1 Name-Your-Price Model
2.5.2 Comparison-Pricing Model
2.5.3 Demand-Sensitive Pricing Model
2.5.4 Bartering Model
2.5.5 Rebates
2.5.6 Offering Free Products and Services
2.6 B2B e-Commerce and EDI
2.7 Click-and-Mortar Businesses

4. 2.1 Introduction
 There are many benefits of bringing a business to the Internet.
 An e-business can offer personalization, high-quality customer
service and improved supply-chain management—the strategic
management of distribution channels and the processes that
support them.
 In this chapter we explore the many business models currently
being implemented on the Web Models include:
– The Storefront Model
– The Auction Model
– The Portal Model
– The Name-Your-Price Model
– The Comparison Pricing Model
– The Demand Sensitive Pricing model
– The B2B Exchange Model

5. 2.1 Introduction
 e-Business
– A company that has an online presence.
 E-commerce businesses allow customers to sell, trade and
barter over the Web.
 A company’s policy, operations, technology and ideology
define its business model.

6. 2.2 Storefront Model
 Storefront model enables merchants to sell products on the
Web
– Transaction processing, security, online payment,
information storage
 E-commerce allows companies to conduct business 24-by-7,
all day everyday, worldwide
 An e-commerce storefront should include:
– Online catalog of products
– Order processing
– Secure payment
– Timely order fulfillment

7. 2.2.1 Shopping Cart Technology
 Shopping Cart
– An order-processing technology allowing customers to
accumulate lists of items they wish to buy as they continue
to shop
 Shopping cart is supported by
– Product catalog
– Merchant server
– Database technology
 Combine a number of purchasing methods to give customers
a wide array of options

8. 2.2.2 Online Shopping Malls
 Wide selection of products and services
 Offers greater convenience than shopping at multiple online
shops
 Consumers can make multiple purchases in one transaction

9. 2.3 Auction Model
 Online auction sites
– Act as forums through which Internet users can log-on and
assume the role of either bidder or seller
– Collect a commission on every successful auction
– Sellers post items they wish to sell and wait for buyers to
bid
 Reserve price
– The minimum price a seller will accept in a given auction
 Reverse auctions
– Allow the buyer to set a price as sellers compete to match
or even beat it

10. 2.3 Auction Model - eBay home page

11. 2.3 Auction Model - Placing a bid on eBay.

12. 2.4 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 information, as well
as the ability to search the Web.
– When most people hear the word "portal," they think of search
engines.
 Horizontal portals
– Portals that aggregate information on a broad range of topics
– Yahoo!, Google
 Vertical portals
– Portals that offer more specific information within a single area
of interest
– WebMD
• People can learn about and discuss medical issues at a
variety of Web sites (WebMD).

13. 2.5 Dynamic Pricing Models
 This section describes in depth the many ways in which
creative pricing is being used to generate business.
 Many of these methods would not be possible without the
Internet.
 Some companies enable customers to name the prices they
are willing to pay for travel, homes, automobiles and
consumer goods.
 The Web has changed the way products are priced and
purchased.

14. 2.5.1 Name-Your-Price Model
 Name-your-price for products and services.
 The name-your-price business model empowers customers by
allowing them to state the price they are willing to pay for
products and services.
 If the customer’s price is not accepted, the customer may
offer another price. If it is accepted, the customer is obligated
to make the purchase.

15. 2.5.2 Comparison-Pricing Model
 Web sites using shopping bot technology to find the lowest
price for a given item.
 The comparison-pricing model allows customers to poll a
variety of merchants and find a desired product or service at
the lowest price
 These sites often generate revenue from partnerships with
particular merchants.
 You need to be careful when using these services, though,
because you may not necessarily be getting the best price
available on the entire Web.

16. 2.5.3 Demand-Sensitive Pricing Model
 The Web has enabled customers to demand better, faster
service at cheaper prices.
 It also empowers buyers to shop in large groups to obtain
group discounts.
 Group buying reduces price as volume of sales increase.

17. 2.5.4 Bartering Model
 Another popular method of conducting e-business is
bartering, or offering one item in exchange for another.
 Individuals and business trade unneeded items for items they
desire.
 Ubarter.com, isolve.com

18. 2.5.5 Rebate Model
 Sites offer rebates on product at leading online retailers in
return for commission or advertising revenues.
 eBates

19. 2.5.6 Offering Free Products and Services
 Many entrepreneurs are forming their business models
around advertising-driven revenue streams.
 Television networks, radio stations, magazines and print
media use advertising to fund their operations and make a
profit.
 Many of the sites also form partnerships with companies to
exchange products and services for advertising space and vice
versa.
 The sites offer their products for free on the Web.
 Free products and services generate high traffic.
 Freemerchant, Start Sampling, FreeSamples.com

20. 2.6 B2B E-Commerce and EDI
 B2B e-business
– B2B, the acronym for "business-to-business,“.
– The electronic business relationship between two or more companies.
– Online or offline.
– Electronic Data Interchange (EDI) systems help businesses manage
their supply chains.
– A company’s supply chain refers to the relationship between original
equipment manufacturers, secondary manufacturers, distributors,
shipping companies, retailers and consumers.
 Traditional EDI uses a value-added network or VAN
– A closed network that includes all members of a production process.
 XML (eXtensible Markup Language)
– A development technology similar to HTML (Hypertext Markup
Language).
– Improves the compatibility between disparate systems, creating new
market opportunities.

21. 2.6 B2B E-Commerce and EDI ... (Cont.)
 B2B e-commerce and the use of exchange sites allow
businesses to reach their markets faster and more efficiently.
 Lead time
– The time it takes to receive a product from a supplier after
an order has been placed.
 Long lead times increase inventory costs, increase worker
stress levels and strain relationships between the
manufacturer and the supplier.

22. 2.6 B2B E-Commerce and EDI ... (Cont.)
 JIT (just-in-time) inventory management
– Supplies arrive at the exact time they are needed, thereby
limiting any unnecessary inventory expense.
 Enterprise Application Integration (EAI)
– The process of integrating traditional EDI systems with the
Web.
 Business-to-business integrators (B2Bi)
– Companies that use XML and similar technologies to help
other companies integrate their current systems with the
Web.
– www.excara.com, Webmethods.com, commerceone.com,
tibco.com, Freemarkets.com, mercator.com

23. 2.7 Click-and-Mortar Businesses
 Brick-and-mortar
– Companies that operate solely offline with traditional
business practices
 Click-and-mortar
– Companies operating with both an online and offline
presence.
 Click and mortar companies have brand recognition, and an
established customer base.
– Barnesandnoble.com
– Bestbuy.com

24. 2.7 Click-and-Mortar Businesses ... (Cont.)
 Key benefits to automotive industry
– Combined supplier base
– Connects automobile manufacturers, dealers and
consumers in a single marketplace
– Decreases lead time and production costs
 Key benefits to electronics industry
– Provides access to thousands of components from
hundreds of electronic suppliers
– Provides ability to search by part number, product type or
manufacturer
– Increases competitive pricing

25. 2.7 Click-and-Mortar Businesses ... (Cont.)
 Key benefits to energy industry
– Provides real time pricing data on energy commodities
– Provides access to hundreds of energy commodities
– Allows regional energy providers to gain access to a
worldwide market
 Key benefits to food industry
– Reduced lead time preserves perishables
– Provides access to real time pricing data
– Online auction technology allows for alternative pricing

26. 2.7 Click-and-Mortar Businesses ... (Cont.)
 Benefits to chemical industry
– Access to millions of chemical products from thousands of
suppliers
– Integrated supply chains provide faster, more reliable
transactions
 Benefits to construction industry
– Contracting and subcontracting are made simpler by
online bidding
– Construction companies can find raw materials from
suppliers worldwide

27. Thank you for your attention

28. Chapter 2
e-Business Models
E-Commerce Programming
Mutah University
Faculty of IT, Department of Software Engineering
Dr. Ra’Fat A. AL-msie’deen
Part 2
Constructing an e-Business