Institute of Management Dept. of Management and Control

H-1093 Budapest, Fővám tér 8.; H-1828 Budapest, PO Box 489. Phone.: (1)4825377, (1)4825263; fax: (1)4825118 Internet: http://mgmt.uni-corvinus.hu

Faculty of Business Administration

E-business Models: Trends and Prospects in

Hungary

Online and Digital Marketing

March 6, 2013

Péter Móricz

peter.moricz@uni-corvinus.hu

Business models reveal the core logic of what,

how and why are we doing

■ Business models are management tools that reveal, as an interconnected

system of elements,

– the policies and choices of the value creation (what to offer? why is it

valuable?) > value proposition model

– the network of the participating actors (forms of cooperation and

governance) > architecture model

– the sources and streams of revenues sustaining the value creation >

revenue model

Péter Móricz 2. E-business Models: Trends and Prospects in Hungary

■ Radically improved and

creative value prop’s

(24/7/365, aggregation,

long tail, customization,

community building,

brokerage etc.)

■ Ongoing experimen-

tation with the revenue

flows (affiliate/PPC,

freemium, advertising,

subscription, dynamic

pricing, etc.)

During the last two decades, the Internet was the

main driver of business model innovation

■ New ways of

combining the roles of

the value creation &

delivery (C2C, web 2.0,

direct-to-customer etc.)

Péter Móricz 3. E-business Models: Trends and Prospects in Hungary

New e-business models triggered fundamental changes in even more industries.

Online business models increasingly challange the industry status quo.

Four fundamental patterns of e-business models

have specific characteristics

Péter Móricz E-business Models: Trends and Prospects in Hungary 4.

UTILITIES

SHOPS

MARKETPLACES

PORTALS

The four fundamental e-business models have

specific ways of sustaining the value proposition

Péter Móricz E-business Models: Trends and Prospects in Hungary 5.

Sellers,

buyers Transaction

Commission,

listing fees

Marketplace:

participants

Content

sources

User

(e.g. visitor)

Subscription,

advertisement

Portal:

content

Products,

services Customer

Margin,

service fees

Shop:

selection

Infrastructure,

know-how etc.

E-business

participant

Service fees,

price packages

Utility:

value-added s.

Portals

■ Aggregation, rebundling

■ Community building

■ Advertising and promotion

■ User database yields

■ Paid premium content or function

■ Affiliate

■ Commerce

Péter Móricz E-business Models: Trends and Prospects in Hungary 6.

Main theme Revenue streams

■ Three screens

■ Web 2.0

■ Open API

■ Tablets

■ Smartphones, location-based services

Trends

■ Horizontal/vertical portals

(mainstream/longtail)

■ B2C/B2B portals

■ Navigators (search, link catalogs etc.)

■ Web 2.0 (blogs, social network etc.)

■ Mashups

■ Games, entertainment

Model versions

Marketplaces

■ Many to many

■ Intermediation

■ Commission, PPC

■ Listing fee, maintenance fee

■ Extra services (shipment, payment)

■ Advertisements, highlighted items

■ Coupon fees

Péter Móricz E-business Models: Trends and Prospects in Hungary 7.

Main theme Revenue streams

■ Fixed price “auctions”, B2C

■ Classifieds (C2C)

■ Coupon sites

■ First mover lock-in?

Trends

■ B2B marketplaces (catalogs, auctions,

exchanges; horizontal/vertical)

■ Online malls

■ Price comparison

■ C2C auction, classifieds

■ Group buying, coupons and bonuses,

“name your own price”

■ Public e-procurement and e-auction

Model versions

Shops

■ E-commerce

■ Online buyer-seller relationship

■ Margin, sales revenue

■ Subscription fee

■ Cross-selling

Péter Móricz E-business Models: Trends and Prospects in Hungary 8.

Main theme Revenue streams

Trends

■ Classic webshops

■ Digital delivery webshops

■ Direct to consumer

■ Affiliate model

■ Private shopping clubs

■ B2B, e-procurement

Model versions

■ From shops to malls

■ Large players’ plans

■ Straight-forward ordering methods

■ Recommendation engines, self-service

■ Consumer feedback, after-sales services

Utilities

■ Support activities

■ Standardized value creation

■ Know-how and/or economies of scale

■ Fee based on usage/time

■ Off-the-shelf packages

■ Service fees

■ Commission

Péter Móricz E-business Models: Trends and Prospects in Hungary 9.

Main theme Revenue streams

■ Delivery tracking

■ Straight-forward shipping methods

■ Mobile payment, NFC

■ Cloud computing

Trends

■ Logistics

■ Payment

■ Ad brokerage

■ Consultancy, SEO

■ Webdesign, software

■ Webshop building / hosting

■ Hosting, ASP, SaaS

Model versions

Summary

■ Content aggregation (portals), market making (marketplaces), online selling (shops) and related support services (utilities) are the four main areas of e-business models

■ Unpredictable dynamics: New (?) e-business models emerge rapidly (coupons) while others unexpectedly decline (e.g. C2C auctions);

■ Competitors are not only those with the same model but also the other e-business models (e.g. auction site eBay versus Craigslist classifieds)

■ Successful e-business companies have multiple stakes in different models and consciously experiment with new models (e.g. Amazon EC2/S3, Allegroup’s Grando.hu)

■ Extreme technology dynamics calls for continuous innovation and renewal (e.g. QR codes, tablets, smartphones, NFC, mashups)

■ In Hungary, incumbent companies have their strength in “sense-and-respond” to the local needs (e.g. GRoby), but multinational companies are about to enter and grab some key positions (e.g. Amazon, Tesco)

■ Global entrants may threaten local companies (e.g. iWiW-Facebook) but also enlarge the pie by mobilizing new users

Péter Móricz E-business Models: Trends and Prospects in Hungary 10.

Further readings

■ Rappa’s e-business models: http://digitalenterprise.org/models/models.html

■ PhD thesis on Hungarian e-business models: http://phd.lib.uni-corvinus.hu/553/

■ Amazon’s business model evolution: http://www.slideshare.net/faberNovel/amazoncom-the-hidden-empire

■ E-commerce market research worldwide: www.emarketer.com

■ Online retail in Eastern Europe: http://ystats.com/en/press/release.php?id=182

■ E-commerce market research in Hungary: http://www.enet.hu/en/

■ Tesco Home Plus in South Korea: http://www.youtube.com/watch?v=fGaVFRzTTP4

■ Coop@home Drive-in: https://www.youtube.com/watch?v=QYKI8ZQkhbI

– Auchan Drive [French]: http://www.youtube.com/watch?v=kSdOiuleqAc

■ Amazon Locker [funny!]: https://www.youtube.com/watch?v=hXokiEofKpQ

– Deutsche Post Packstation [German]: http://www.youtube.com/watch?v=HUF3f4tvJnM

Péter Móricz E-business Models: Trends and Prospects in Hungary 11.

Institute of Management Dept. of Management and Control

H-1093 Budapest, Fővám tér 8.; H-1828 Budapest, PO Box 489. Phone.: (1)4825377, (1)4825263; fax: (1)4825118 Internet: http://mgmt.uni-corvinus.hu

Faculty of Business Administration

Business Models’ Basics

Retrospective backup

Business models à la carte

■ Low-cost/discount

■ Full service/

aggregation

■ Long-tail

■ Involvement/creation

■ Customization

■ Acceleration

■ Feeling

■ …

■ Vertical integration

■ Integrated

(dominated) supply

chain

■ Value constellations,

partnering

■ Community/self-

organized, web 2.0

■ …

Péter Móricz E-business Models: Trends and Prospects in Hungary 13.

■ Cross-subsidies/free:

e.g. advertising,

freemium, donations

■ Pay-per-use: e.g.

commission, service

■ Flat rate: e.g.

subscription

■ Selling: e.g. dynamic

pricing

■ …

Value Proposition Architecture Revenue Model

E-business framework models: Portals, Marketplaces, Shops, Utilities

Business models: The level of analysis

Péter Móricz E-business Models: Trends and Prospects in Hungary 14.

Business modelBusiness model Strategy

Value creation as a

system: elements and

connections

Competition &

differentiation

Business processes

Efficient and

effective

implementation

and execution

New

e-business

models

Enabler of

process

trans-

formation

Reshaped

strategic

environment

Internet had a profound effect at each level

Péter Móricz E-business Models: Trends and Prospects in Hungary 15.

Business model representations

3 “Simulator” 2 “Map” 1 “Case”

Type

Focus

Typical

applications

Tools

examples

Narrative

Qualitative patterns of a success or failure story

Recommendations, advising

Case study benchmarking and role playing

Graphic

Mapping the inter-action between key elements and factors

Understanding & generalization

Concept maps, value webs

Formal

Formal model of the relationship between elements and factors

Sensitivity test and scenario planning

Spreadsheets and business games

Péter Móricz E-business Models: Trends and Prospects in Hungary 16.

Visualization of business model maps

E-Business Model

Schematics (Weill & Vitale, 2001)

Competing Through

Business Models (Casadesus-Masanell &

Ricart, 2008)

Guideline

Adaptable

e3value (Gordijn & Akkermans,

2001)

Business Model

Generation (Osterwalder, 2004)

Fix specification

Meta-model

Mainly actors

Value network map

Mainly factors

Cause and effect map

Map element:

Flexibility

of application: