Comp2513 E-Commerce Business Models

1. Comp2513E-Commerce Business Models Daniel L. Silver, Ph.D.

2. Outline • Three fundamental categories of E-Commerce business models • B2C, B2B and C2C • A B2C Scenario • Window Shopping • Step into the store (registration) • Filling the shopping cart • On to the checkout • Paying for the items • Fulfillment and shipment tracking Daniel L. Silver

3. Three Fundamental Categories of E-Commerce Business Models • B2C – Business to Consumer • What most people typically think of when they think E-Commerce • C2C – Consumer to Consumer • Auctions, Bartering models • B2B – Business to Business • The original E-Commerce models – Why? Daniel L. Silver

4. B2C – Business to Consumer • Storefront Model • The best known form of E-Commerce • Displays products (catalogs), takes orders, accepts payment, fulfills order, manage customer data • Click and Mortar versus Internet Only • Amazon.com, eToys.com, CDnow.com, Chapters.ca Daniel L. Silver

5. B2C – Business to Consumer • Online Shopping Mall Model • Present wider selection of products and services • Searching and shopping convenience • Common shopping cart, payment and shipping method • Takes advantage of economies of scale • Merchants are charged in various ways • Mall.com, Canadashop.com, Shoptheshops.com Daniel L. Silver

6. B2C – Business to Consumer • Portal Models • Horizontal portals – general search engines • Broad range of topics, shallow depth • Links to various malls, stores, auctions, sources • Altavista.com, Hotbot.com, Yahoo.com, Google • Vertical portals – specialist • Narrow range of topics, in-depth information • See http://www.verticalportals.com/ • Help users collect information and purchase • Charge merchants for advertisememts Daniel L. Silver

7. B2C – Business to Consumer • Innovative/Dynamic Pricing Models • Name-your-price – Priceline.com • Comparison pricing – Bottomdollar.com • Bulk-buy pricing – mercata.com, mobshop.com • Rebating – eBates.com. eCentives.com • Free products and services – iWon.com, Freemerchant.com – free hosting, free store building, free traffic logs, free auction tools, etc Most would not be possible without the Internet Daniel L. Silver

8. C2C – Consumer to Consumer • Auction Model • Internet forum for sellers and bidders • Various auctions (reserve-price, reverse, Dutch) • eBay.com (1995, Pez dispenser collector) • 4M simultaneous auctions, 450K new items/day • $3.8B spent in online auctions in 2000(Forrester) • Bartering Model • Offering one item in exchange for another • Ubarter.com Daniel L. Silver

9. B2B – Business to Business • Businesses have long done E-Commerce with each other • EFT – Electronic Funds Transfer (banks) • EDI – Electronic Data Interchange (suppliers) • Traditional EDI uses a VAN (value-added network) • Closed networks, manufactures and suppliers • Purchase orders and invoices exchanged daily • Standards vary, VANs are costly, closed nets • Moving to the Internet, Web technology and XML (upgrade of EDI) Daniel L. Silver

10. B2B – Business to Business • B2B Internet exchanges provide standard methods of buying, selling, bartering and partnering • 2003: US$403 B • 2004 projection: • US$2.77 trillion • (eMarketer) • US$7.29 trillion • (Gardner Group) • B2B auctions: • US$52 billion 2002 Daniel L. Silver

11. The Traditional B2C Commerce Scenario • Buyer and seller meet • Buyer chooses product and places order • Seller delivers product • Buyer pays for product Daniel L. Silver

12. Consumer Perspective Search the Internet Choose the right product Place the order and shipping info. Enter payment info. Receive product via Internet or ground shipment Business Perspective Advertising Inventory (product) Management Order Processing (shopping cart) Payment Mgmt Fulfillment and Shipping Profile Management The E-Commerce B2C Scenario Daniel L. Silver

13. A B2C Scenario • I would like to buy some hands-free technology to work with my cellular phone for my consulting business. • Criteria: • It must be reliable • Inexpensive as possible • Light-weight • Small (able to fit into my pocket) Daniel L. Silver

14. Typical B2C Shopping Trip View Homepage Registration Navigate Product Advisor Search Select Products Shopping Cart Enter Shipping Info. Address Book Enter Payment Info. Submit Order Receive Ack. Daniel L. Silver

15. A B2C ScenarioTechnology Questions • How does a browser connect to a server? • How does a search engine work? • What is a cookie? • How do those banner adds work? • Are there web pages for every item? • What is all that gobbledygook in the page address? • What is a shopping cart? How long does it exist? • How does a web sites know who I am on return? • Should I register? Daniel L. Silver

16. A B2C ScenarioTechnology Questions • How does it find my password? • How does it automatically send me emails? • What are the messages concerning insecure submissions all about? • What is authentication, certificate, encryption? • How do they know my credit card is good? • How do they know there is credit left? • How is software I have purchased downloaded? • How do they track my shipment? Daniel L. Silver

17. Front-End Static Web content Dynamic Web content Secure ordering Shopping cart Persistent customer Data Personalization of Content Back-End Manual Non-integrated computer Automatic entry Total Web integration B2C Levels of Automation Daniel L. Silver

18. Business Evolution on the Web Processes Functionality Web-enabled applicatons Transactions Interactivity Dynamic web pages Publishing Static web pages Time or Maturity Daniel L. Silver

19. THE ENDdanny.silver@acadiau.ca