BUSINESS B7

E-Business Models

Learning Outcomes
1.

Describe the business-to-business (B2B)

and business-to-consumer (B2C) e-business
models

2.

Describe the four main areas where

companies conduct business online

3.

Differentiate between a vertical

marketplace and a horizontal marketplace

4.

Summarize the current and future trends

for e-business models

Introduction
Pure

play an Internet retailer that has no

physical store, such as Expedia.com and
Amazon.com

E-business

conducting business on the

Internet, not only buying and selling, but also
serving customers and collaborating with
business partners

E-business

model an approach to conducting

electronic business through which a company
can become a profitable business on the Internet

1.

2.

3.

4.

The four main areas where

companies conduct business
online
Direct
marketing,
selling, and
services
Financial and
information
services
Maintenance,
repair, and
operations
(MRO)
Intermediaries

Direct Marketing, Selling, &

Services
using the Internet to contact customers directly
Key to success:
Marketing create site visibility and demand
Sales

allow personalized content and adaptive

selling processes, integrate with back-office

Services

automate customer service features

such as customer feedback, customer inquires,
tracking information, and customized services

Financial and Information

Services
Online

banking
Paying bills
Making transfers between accounts
Trading stocks, bonds, and mutual funds

Online

billing
Internet-based bill delivery services saves
money

Secure

information distribution
Business can safeguard information

Maintenance, Repair, &

Operations (MRO)
The Internet can transform corporate purchasing
from a labor and paperwork intensive process
into a self-service application

MRO

goods include office suppliers, office

equipment, furniture, computers, and
replacement parts

Intermediaries
Intermediaries

agents, software, or
businesses that bring buyers and sellers
together that provide a trading
infrastructure to enhance e-business

Reintermediation

using the Internet

to reassemble buyers, sellers, and other
partners in a traditional supply chain in
new ways

Intermediaries
Content

providers
companies that
use the Internet to
distribute
copyrighted
content, including
news, music,
games, books,
movies, and many
other types of
information

Online

brokers
intermediaries
between buyers
and sellers of goods
and services

Intermediaries
Portals

Central hubs
for online
contents

Market

makers
intermediaries that
aggregate three services
for market participants
A place to trade
Rules to govern trading
An infrastructure to
support trading

Intermediaries
Infomediary

provides specialized
information on
behalf of producers
of goods and
services and their
potential customers

Application service

providers sell
access to Internetbased software
applications to other
companies

E-Business Models

Business-to-Business (B2B)
Models
Business-to-business

(B2B) applies to
businesses buying form and selling to each
other over the Internet
E-procurement the B2B purchase and sale
of supplies and services over the Internet
Systematic sourcing involves buying
through prenegotiated contracts with
qualified suppliers
Spot sourcing businesses buy transactionoriented commodity-like products and rarely
involves a long-term or ongoing relationship
between buyers and sellers

B2B: Marketplace classifications

B2B exchanges are new organizational

forms in digital space that can take place
in the following:
Buyer

model (few
buyers, many sellers)
Marketplace model
(many buyers, many
sellers)
Longer term
relationship model
(few buyers, few
sellers)
Seller model (few
sellers, many buyers)

B2B exchanges
Buyer

Model - Reverse
auction the winning
bid is the lowest,
rather than the highest
Seller model
appropriate when the
supplier hosts valueadded services on its
Web site such as
suppliers product
catalog and
customers order
information

Longer

term
relationship model
items requiring a high
degree of planning
between buyers and
sellers either in the
design stage or in
fulfillment
Marketplace model
allows a virtually
infinite number of
businesses to transact
electronically with
minimal cost

Consumer-to-Business
(C2B)
Consumer-to-business

(C2B) applies to any

consumer that sells a product or service to a
business over the Internet

C2B

facilitates the following:

Social interaction
Personal finance management
Purchasing products and information

Consumer-to-Consumer
(C2C)
Consumer-to-consumer

(C2C) appliers
to sites primarily offering goods and services
to assist consumers interacting with each
other over the Internet

C2C

communities thriving on the Internet:

Communities of interest
Communities of relations
Communities of fantasy

E-Business Challenges

Cost
Value
Security
Leverage existing systems
Interoperability

Current Trends: E-Marketplaces

and
E-Markets
e-marketplaces are interactive business
communities providing a central market
space where multiple buyers and sellers can
engage in e-business activities
Horizontal

marketplaces connect
buyers and sellers across many
industries, primarily by simplifying the
purchasing process
Vertical marketplaces provide
products that are specific to trading
partners in a given industry

Advantages and limitations

of various e-marketplace revenue models

The Content Perspective

of
Content and product description establish
E-Marketplaces

the common understanding between parties

in a transaction

The

accessibility, usability, accuracy, and

richness of the content directly affects the
transaction

Future Trends: E-Channels,

E-Portals, and E-Government
e-channel

Web-based business channel

e-portal

a single gateway through which to

gain access to all the information, systems, and
processes used by stakeholders of an
organizations

e-government

the use of strategies and

technologies to transform government(s) by
improving the delivery of services and enhancing
the quality of interaction between the citizenconsumer within all branches of government(s)

Extended E-Business Models

Specific e-business models as they

relate to
e-government

Consumer-to-government (C2G)
constitutes the areas where a consumer (or
citizen) interacts with the government
Government-to-business (G2B) includes
all government interaction with business
enterprises
Government-to-consumer (G2C)
governments dealing with
consumers/citizens electronically
Government-to-government (G2G)
governments dealing with governments
electronically

Closing Case One Questions

1.

eBay is one of the only major Internet pure

plays to consistently make a profit from its
inception. What is eBays e-business model and
why has it been so successful?

2.

Other major Web sites, like Amazon.com and

Yahoo!, have entered the auction e-marketplace
with far less success than eBay. How has eBay
been able to maintain its dominant position?

3.

eBay has long been an e-marketplace for used

goods and collectibles. Today, it is increasingly
a place where major businesses come to
auction their wares. Why would a brand name
vendor set up shop on eBay?