Business Models for Internet-Based E-Commerce

1. Business Models for Internet-Based E-Commerce B. Mahadevan Presented by: Kevin Ruane Justin Farrell Steven Perry

2. Key Issues Development of Business Models for Internet-based business Frameworks Emerging market structures Factors affecting business models Porter article

3. Four �Layer Framework Infrastructure Layer Applications Layer Intermediary Layer Commerce Layer

4. Four �Layer Framework Focus on Intermediary and Commerce Layers Extensive customer interaction > more scope for unconventional business models

5. The Emerging Market Structure Portals � attract consumers Market Makers � bring suppliers and buyers together Product/Service Providers � companies using dedicated web sites to deal directly with consumers

6. Characteristics of Internet-based e-Commerce Applications Each structure addresses a key component in the business that is carried out over net These structures exist in both B2B and B2C segments Interdependency and over-lap exist among players.

7. Business Models for Internet �Based e-Commerce Business model, blend of three streams Value Stream � identifies value proposition Revenue Stream � plan for assuring revenue generation Logistical Stream � issues regarding design of supply chain

8. Value Streams in Internet-Based Business Long term viability is related to the robustness of the value stream. Buyers value � reduced product search costs & transaction costs Suppliers value � reduced customer search costs, promotion costs & transaction costs Pigsback.com

9. Value Streams in Internet-Based Business Four possible value streams in an Internet-based business: Virtual Communities - eg Ireland2.org Dramatic Reduction in Transaction Costs Leads to reduction in prices

10. Value Streams in Internet-Based Business Gainful Exploitation of Information Asymmetry eg Travel Industry Value-Added Market-making Process -eg eBay

11. Revenue Streams in Internet- Based Business Increased margins over brick and mortar operations e.g. South-West Airlines, Ryanair, Easyjet Advertising e.g. Yahoo, Football365

12. Revenue Streams in Internet- Based Business Variable Pricing Strategies e.g internet based marketing research firm Free Offerings e.g. real-player.com

13. Logistic Streams for Internet-Based Business Dis-Intermediation: Process by which the logistical stream is shortened e.g. Banking 365 Infomediation: Storing and giving out of information to an individual web user e.g. Google,Yahoo & Alta Vista

14. Logistic Streams for Internet-Based Business Meta Mediation: Obtaining and providing the missing link in a value chain when possible e.g. Innoverse an e-commerce infrastructure provider

15. Choosing an Appropriate Business Model Role in the Market Structure e.g. Tesco cannot expect success of South-West & Ryanair Physical Attributes of Goods Traded soft v hard goods Personal Involvement Required in Buying/Selling Process experience v commodity goods

16. Porter Article �Strategy and the Internet� Greater emphasis on strategy development Internet as a complement �In our quest to see how the Internet is different, we have failed to see how the Internet is the same�

17. Mahadevan vs Porter Perspectives on Business Models Strategy Five Forces Model. Creating Sustainable Competitive Advantages

18. Mahadevan vs Porter Flawed thinking e-commerce, e-business and e-strategy Isolating Internet operations Simplistic approaches However, if companies employ a business model, as proposed by Mahadevan, will they not have more robust techniques for competing using the Internet??

19. Conclusion Develops a framework for business model Portals, Market Makers and Product/ Services Providers Value, Revenue and Logistics streams Both authors provide valid arguments Two extremes � integrate both aspects

20. Critique Growth of Internet based companies �meteoric�? Easy to read and well illustrated Concepts well defined Provides clear concise alternatives for companies to develop a business plan. Table 2 � good summary