Table 7.1 E-Commerce Business Models
Flashcard maker : Lily Taylor
Online direct marketing
Manufacturers or retailers sell directly to customers. Very efficient for digital products and services. Can allow for product or service customization (www.dell.com).
Electronic tendering system
Businesses request quotes from suppliers. Uses B2B with a reverse auction mechanism.
Customers decide how much they are willing to pay. An intermediary (for example, www.priceline.com) tries to match a provider.
Customer specify a need; an intermediary compares providers and shows the lowest price. Customers must accept the offer in a short time, or they may lose the deal. Example: www.hotwire.com
Vendors ask partners to place logos (or banners) on partner’s site. If customers click on the logo, go to the vendor’s site, and buy, then the vendor pays commissions to partners.
Receivers send information about your product to their friends.
Group purchasing (e-coops)
Small buyers aggregate demand to get a large volume. The group then conducts tendering or negotiates a low price.
Companies run auctions of various types on the Internet. Very popular in C2C, but gaining ground in other types of EC (www.ebay.com).
Customers use the Internet to self-configure products or services. Sellers then price them and fulfill them quickly (build-to-order)(www.jaguar.com).
Electronic marketplaces and exchanges
Transactions are conducted efficiently (more information to buyers and sellers, lower transaction costs) in electronic marketplaces (private or public).
Intermediary administers online exchange of surplus products and/or company receives “points” for its contribution, which can be used to purchase other needed items. (www.bbu.com).
Company offers deep price discounts. Appeals to customers who consider only price in their purchasing decisions. Example: www.half.com
Only members can use the services provided, including access to certain information, conducting trades, etc. (www.egreetings.com)