This chapter discusses various e-business models including the storefront model, auction model, portal model, and dynamic pricing models. It explores how businesses can sell products online using shopping cart technology or online shopping malls. Auction sites allow users to bid on items as sellers or buyers. Portals provide aggregated content on broad topics. Dynamic pricing allows customers to name prices, find deals through comparison shopping, and receive volume discounts. The chapter also covers B2B e-commerce, EDI, and click-and-mortar businesses that have both online and offline presences.

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