business models u brokerage u advertising u infomediary u merchant u manufacturer u affiliate u...

Business ModelsBusiness Models

Brokerage Advertising Infomediary Merchant Manufacturer

Affiliate Community Subscription Utility

Rappa

BrokerageBrokerage Bringing together buyers and sellers

Fulfillment (e.g., Etrade) Market Exchange (charge seller a fee; e.g., Metalsite) Business Trading Community (vertical web community) Buyer aggregator (buying group; Mobshop) Distibutor (multi-vendor catalog; NECX) Virtual Mall (hosts merchants via portal; Yahoo! Stores) Metamediary (VM+processing+protection; zShops) Auction Broker (conducts auctions for sellers; eBay) Reverse auction (broker can earn spread; Priceline) Classifieds (price may or may not be specified) Search Agent (seeks goods/prices; MySimon) Bounty Broker (reward for finding items; BountyQuest)

AdvertisingAdvertising

Extension of traditional broadcasting model Generalized Portal (high-volume; Yahoo!) Personalized Portal (customized; My.Yahoo!) Specialized Portal (vortal, targeted) Attention/Incentive Marketing (pay for

viewing; CyberGold, IWon) Free Model (hosting, access, greeting cards;

BlueMountain)

InfomediaryInfomediary

Collect and sell information about consumers Recommender System (users

exchange information about products/services; Deja.com; ePinions)

Registration Model (Content site, free to viewers, registration required; NYTimes.com)

Merchant ModelMerchant Model

Classic wholesalers & retailers (auction or fixed price) Virtual Merchant (Amazon; OnSale) Catalog Merchant (Mail order

migrated to the web; Levenger) Click and Mortar (traditional + Web;

Gap, Lands End; B&N) Bit Vendor (Strictly digital, most often

downloaded only; Eyewire)

The OthersThe Others

Manufacturing Model: Eliminating an intermediary (Flowerbud, Dell)

Affiliate Model: Distributed sites provide click-through; (Amazon; BeFree)

Community Model: Users contribute content, funding, or knowledge on demand; newsgroups (fee version: Guru)

Subscription Model: Pay access; high value is essential (because 46% won’t pay)

Utility Model: Metered usage; pay as you go (Fatbrain)

Why do Why do any E-Businessany E-Business??

0% 10% 20% 30% 40% 50% 60% 70%

New Sales

Competitive pressure

Customer pressure

Cost savings

Internal efficiency

Staff productivity

Value chain integration

Product differentiation

Partner Pressure

New Prospect base

Meta Group study (Infoworld; 3-27-2000, p.24)

The The Landscape: Landscape: Business Business ModelsModels

TargetB C

BSource ofGoods, Info

C

B to B: E-Steel, Free Markets

B to C:Amazon, Dell

C to B:Priceline

C to C:Ebay, QXL

Economist, Feb 26, 2000

The ModelsThe Models

B to C: Generates transactions from consumers.

B to B: Interbusiness transactions. B to B to C: Integration of activities

from the supply chain to the consumer.

Infoworld, 4-3-2000, p. 111 (M. Vizard)

Alphabet Soup?Alphabet Soup?

Target of Goods, Information

B C G

Source

B B to B B to C B to G

C C to B C to C C to G

G G to B G to C G to G

Movement Toward Movement Toward Integration: B to B to Integration: B to B to CC

Target of Goods, Information

B C G

Source

B B to B B to C B to G

C C to B C to C C to G

G G to B G to C G to G

Creative Cash Flow Creative Cash Flow ModelsModels

Amazon.com has a unique advantage…

Shared by others?

Creative Approach: Creative Approach: Business Method Business Method Patents!Patents!

Amazon: One-Click shopping Amazon: Affiliates program Open Market: shopping carts Open Market: secure credit card trans. Priceline.com: name-your-own-price

auction Sightsound.com: selling digital content

for download (asking for 1% royalty)

Actual Patents Owned (Infoworld, 3-6-2000, p. 30)

Amazon’s PatentAmazon’s Patent

July 1998: Federal Appeals Judge rules that business processes can be patented.

October 1999: Amazon sues Barnes and Noble for one-click orders.

December: Judge agrees with Amazon, forcing B&N to add a step to its checkout process.

March 2000: Patent Office announces plans for tighter oversight of e-commerce patents.

Feb 2001: Judge allows Barnes & Noble to return to one-click ordering! Case still in lower court

PC Week: 4-17-2000, pg. 80, Wall St. Journal Feb 2001