Business Models

Business Models - Identify the key components of e-commerce...

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Chapter 2: Business Models Learning Objectives Identify the key components of e-commerce business models Describe the major B2C business models Describe the major B2B business models Describe how each of these models typically expects to generate revenue and earn profit 1
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E-commerce Business Models—Definitions Business model Set of planned activities designed to result in a profit in a marketplace . Spells-out how a company makes money E-commerce business model Uses/leverages unique qualities of Internet and Web 2
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Key Elements of a Business Model 3
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Value Proposition Defines how a company’s product or service fulfills the needs of customers Questions to ask: Why will customers choose to do business with your firm instead of another? What will your firm provide that others do not or cannot? Examples of successful value propositions: Personalization/customization Reduction of product search, price discovery costs Facilitation of transactions by managing product delivery 4
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Revenue Model Describes how the firm will earn revenue, generate profits, and produce a superior return on invested capital Major types: Advertising revenue model [Yahoo.com] Subscription revenue model [WSJ.com] Transaction fee revenue model [Ebay.com] Sales revenue model [Amazon.com] Affiliate revenue model [Google.com, MyPoints.com] 5
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Revenue Models 6
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Variations of Affiliate Revenue Model Banner Exchange -- trades banner placement among a network of affiliated sites Pay-per-click -- site that pays affiliates for a user click- through Revenue Sharing -- offers a percent-of-sale commission based on a user click-through in which the user subsequently purchases a product 7
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Market Opportunity Refers to a company’s intended marketspace and the overall potential financial opportunities available to the firm in that marketspace Marketspace: area of actual or potential commercial value in which company intends to operate Realistic market opportunity: defined by revenue potential in each of market niches in which company hopes to compete http://www.felixpc.com 8
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Competitive Environment Refers to the other companies selling similar products and operating in the same marketspace
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This note was uploaded on 01/28/2011 for the course IELM 120 taught by Professor Fu,qi during the Spring '09 term at HKUST.

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Business Models - Identify the key components of e-commerce...

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