The document discusses various e-commerce business models including business-to-business, business-to-consumer, consumer-to-consumer, consumer-to-business, business-to-government, government-to-business, and government-to-citizen. It also covers key elements of a business model such as value proposition, revenue model, market opportunity, and competitive advantage. Additionally, it describes electronic data interchange and the advantages it provides for transferring business documents electronically.

1. Copyright © 2011 Pearson Education, Inc.
Copyright © 2007 Pearson Education, Inc. Slide 1-1
Chapter 2
E-commerce Business Models
Copyright © 2011 Pearson Education, Inc.

2. Copyright © 2011 Pearson Education, Inc.
E-commerce Business Models
 Business model
 Set of planned activities designed to result in a profit in a
marketplace
 Business plan
 Describes a firm’s business model
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3. Copyright © 2011 Pearson Education, Inc.
8 Key Elements of a Business Model
1. Value proposition
2. Revenue model
3. Market opportunity
4. Competitive environment
5. Competitive advantage
6. Market strategy
7. Organizational Development
8. Management team
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4. Copyright © 2011 Pearson Education, Inc.
1. Value Proposition
 It defines how a company’s product or service
fulfils the need of customers.
 you need to answer the following key
questions:
Why will customer choose your firm ?
What will your firm provides that other firms do
not ?
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5. Copyright © 2011 Pearson Education, Inc.
2. Revenue Model
 How will the firm earn revenue, generate
profits, and produce a superior return on
invested capital?
 Major types:
 Sales revenue model eg. AMAZON.COM
 Transaction fee revenue model eg. EBUY.COM
 Affiliate revenue model
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3. Market Opportunity
 What marketspace do you intend to
serve?
 Marketspace: Area of actual or potential commercial value
in which company intends to operate
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4. Competitive Environment
 Other companies selling similar products in the same
marketspace
 It has two types:-
 direct competitors and
 indirect competitors
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5. Competitive Advantage
 Achieved when firm:
Produces superior product or
Can bring product to market at lower price
than competitors
 related concepts:
Asymmetries
First-mover advantage
Unfair competitive advantage
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9. Copyright © 2011 Pearson Education, Inc.
6. Market Strategy
 How do you plan to promote your
products or services to attract your
target audience?
Details how a company intends to enter market
and attract customers
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7. Organizational Development
 Developing good organizational structure
to grow.
 Typically work divided into functional
departments such as shopping,
marketing, finance
 As company grows, it moves from
generalists to specialists
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11. 8. Management Team
 Management team is responsible for
making the model work
 A strong management team is needed
for an organization to be successful.
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12. MAJOR E-COMMERCE BUSINESS MODELS
 Business - to - Business (B2B)
 Business - to - Consumer (B2C)
 Consumer - to - Consumer (C2C)
 Consumer - to - Business (C2B)
 Business - to - Government (B2G)
 Government - to - Business (G2B)
 Government - to - Citizen (G2C)
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13. Copyright © 2011 Pearson Education, Inc.
B2C Business Models: Portal
 Website following B2B business model sells its product to an
intermediate buyer who then sells the product to the final
customer. As an example, a wholesaler places an order from a
company's website and after receiving the consignment, sells
the end product to final customer who comes to buy the
product at wholesaler's retail outlet.
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14. Cont’’’
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15. Business - to - Consumer(B2C)
 Website following B2C business model sells its product directly to
a customer. A customer can view products shown on the website
of business organization. The customer can choose a product and
order the same. Website will send a notification to the business
organization via email and organization will dispatch the
product/goods to the customer.
 In B2C Model, a consumer goes to the website, selects a catalog, orders the
catalog and an email is sent to business organization. After receiving the order,
goods would be dispatched to the customer. Following are the key features of
a B2C Model
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16. Cont’’’’’
 Heavy advertising required to attract large no. of customers.
 High investment in terms of hardware/software.
 Support or good customer care service
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17. Business - to - Consumer(B2C)
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18. Consumer Shopping Procedure
 Following are the steps used in B2C e-commerce:
 A consumer
determines the requirement
searches available items on the website meeting the requirement.
compares similar items for price, delivery date or any other terms.
gives the order.
pays the bill.
receives the delivered item and review/inspect them.
consults the vendor to get after service support or returns the product if
not satisfied with the delivered product.
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19. Consumer - to - Consumer (C2C)
 Website following C2C business model helps consumer to sell
their assets like residential property, cars, motorcycles etc. or
rent a room by publishing their information on the website.
Website may or may not charge the consumer for its services.
Another consumer may opt to buy the product of the first
customer by viewing the post/advertisement on the website.
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20. Consumer - to - Consumer (C2C)
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21. Consumer - to - Business (C2B)
 In this model, a consumer approaches website showing multiple business
organizations for a particular service. Consumer places an estimate of amount
he/she wants to spend for a particular service. For example, comparison of
interest rates of personal loan/ car loan provided by various banks via website.
Business organization who fulfills the consumer's requirement within specified
budget approaches the customer and provides its services.
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22. Consumer - to - Business (C2B)
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23. Business - to - Government (B2G)
 B2G model is a variant of B2B model. Such websites are used by
government to trade and exchange information with various business
organizations. Such websites are accredited by the government and
provide a medium to businesses to submit application forms to the
government.
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24. Business - to - Government (B2G)
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25. Government - to - Business (G2B)
Government uses B2G model website to approach business organizations.
Such websites support auctions, tenders and application submission
functionalities.
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26. Government - to - Citizen (G2C)
 Government uses G2C model website to approach citizen in general. Such
websites support auctions of vehicles, machinery or any other material.
Such website also provides services like registration for birth, marriage or
death certificates. Main objectives of G2C website are to reduce average
time for fulfilling people requests for various government services.
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27. Government - to - Citizen (G2C)
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28. E-Commerce EDI
 EDI stands for Electronic Data Exchange. EDI is an electronic way
of transferring business documents in an organization internally
between its various departments or externally with suppliers,
customers or any subsidiaries etc. In EDI, paper documents are
replaced with electronic documents like word documents,
spreadsheets etc.
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29. Cont’’’
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30. EDI Documents
 Following are few important documents used in EDI:
 Invoices
 Purchase orders
 Shipping Requests
 Acknowledgement
 Business Correspondence letters
 Financial information letters
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31. Steps in an EDI System
 Following are the steps in an EDI System.
 A program generates the file which contains the processed
document.
 The document is converted into an agreed standard format.
 The file containing the document is send electronically on
network.
 The trading partner receives the file.
 An acknowledgement document is generated and sent to the
originating organization.
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32. Advantages of an EDI System
 Reduction in data entry errors. - Chances of errors are much less being use of
computer in data entry.
 Shorter processing life cycle - As orders can be processed as soon as they are
entered into the system. This reduced the processing time of the transfer
documents.
 Electronic form of data - It is quite easy to transfer or share data being in
electronic format.
 Reduction in paperwork - As lot of paper documents are replaced with
electronic documents there is huge reduction in paperwork.
 Cost Effective - As time is saved and orders are processed very effectively, EDI
proves to be highly cost effective.
 Standard Means of communication - EDI enforces standards on the content of
data and its format which leads to clearer communication.
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33. Copyright © 2011 Pearson Education, Inc.
E-commerce Enablers:
 Companies, whose business model is focused on
providing infrastructure necessary for e- commerce
companies to exist, grow and do well
 They provide:
 Hardware
 software
 payment systems
 Databases
 Hosting services, etc.
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