Different business models for online businesses

1. An Introduction toONLINE BUSINESS MODELS Anand .G II MBA Dept. of Management Studies Pondicherry University From the book “Introduction to e-commerce” by Jeffrey F. Rayport & Bernard J. Jaworski

2. Online vs. traditional In online business, there is a shift from supply side to demand side Customers are looking for core benefits and companies should respond accordingly Customers can add value to an online business Companies should facilitate C2C relationships

3. 7 models for E-business Metamarket Switchboard model Traditional and Reverse Auction models Freshest-Information model Highest-Quality model Widest-Assortment model Lowest-Price model Most-Personalized model

4. Metamarket Switchboard model It brings together buyers and sellers based upon the activities that customers engage in to meet particular goals Example: babycenter.com

6. Babycenter.com Core benefit: Providing a single-point of access for all needs related to child development Offering: Products, Services, Community, News on child rearing, Advice Resources: A large, active customer base and a significant brand name Revenues: Transactions, product sales, affiliate deals and advertising

7. Traditional and Reverse Auction models They bring together a large number of buyers and sellers 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. Example: ebay.com

9. Ebay.com Core benefit: Large and deep product line, large no. of buyers & sellers Offering: Trustworthy and easy transactions of products and cash Resources: Large user community, brand name, credibility, technology and support Revenues: Transaction fees, in-house auctions

10. Freshest-Information model Quickly and efficiently deliver information to users Example: nytimes.com

12. Nytimes.com Core benefit: Timeliness, accuracy, quality reporting and passion for news Offering: Local, national & world news; exclusive and breaking news Resources: Best personnel, freshest information, archives etc Revenues: Products, services, information and advertising revenue

13. Highest -Quality model High quality, premium-priced products, services or information Across all consumer markets and categories, there is room for a high-quality offering Example: fao.com

15. Fao.com Core benefit: High-quality products and their associated exclusivity Offering: Toys, dolls, arts & crafts, collectibles etc to a niche market Resources: Sourcing ability, brand exclusivity, an outstanding online experience that’s simply the best Revenues: High margins for premium products

16. Widest-Assortment model Breadth and depth of product assortment, within and across product categories Example: secondspin.com

18. Secondspin.com Core benefit: Large inventory and best prices, so shop here first Offering: Internet's largest buyer and seller of used CD’s, DVD's, videos, games etc Resources: Very strong logistics, quality control, large user base and brand name Revenues: Product sales, premium pricing of most desired products

19. Lowest-Price model Offers the customer the lowest prices available online Example: buy.com

21. Buy.com Core benefit: lowest prices above anything else Offering: Large variety of products across many categories Resources: Outstanding supply chain management and procurement, strong back-office systems, frugal culture Revenue: Small percentage of product sales

22. Most-Personalized model Able to provide a highly personalized, truly unique, one-of-a-kind experience Example: reflect.com

24. Reflect.com Core benefit: A unique experience or product, or a personalized solution to a problem Offering: The offering is built on the demands of each customer Resources: Exceptional customer knowledge, a good website, a combination of personnel and technology Revenues: Premium prices for high cost service

25. Conclusion A company can pursue more than one model at a time Never blindly follow any business model Companies should think how each component - value proposition, online offering, resources, and revenue model - will fit together to form a successful business.

26. Source: From the book “Introduction to e-commerce” by Jeffrey F. Rayport & Bernard J. Jaworski, Tata McGraw-Hill