Business Models in Electronic Markets

Business Models in Electronic Markets - Electronic Market...

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1 Electronic Market Business Models J. Christopher Westland The commercialization of the Internet with the introduction of the dot-com domain in 1991, and the development of the World Wide Web for transmission of multimedia (an idea broached by Tim Berners-Lee and others in 1993) opened several new venues for business. There was a great deal of experimentation directly after the World Wide Web arrived, the survivors of these experiments pointing the way towards business models that were viable using the new medium By the end of the 1990s, most of the Internet business models used today had been introduced in one form or another. This white paper summarizes the major classes of Internet enabled business models that have proved viable to date, with a brief description of implementation and value proposition for each. Firms may use several different business models in their commercial offerings, possibly in complementary ways. Firms in the early stages of defining their Internet presence, and the various options available will find this synopsis useful in customizing an Internet platform that fits their business, and prioritizing and scheduling their migration of portions of their business to the Web. Model Value Proposition(s) Key Competences Problems Examples Online Catalogue (1) Disintermediation Large searchable catalogue that is several orders of magnitude larger than 'bricks and mortar' competitors (1) High search costs (2) Low consumer engagement and information overload m e-Tailer (1) Customer management (2) Inventory selection and control tightly linked to customer demand (1) Sophisticated customer relationship management (2) Sophisticated demand forecasting, and translation to inventory control and marketing (1) Order fulfillment is difficult, with inherent high levels of split shipments and long hauls resulting in inefficiencies compared to 'bricks and mortar' retailers. Amazon Exchange (1) Best price discovery (2) liquidity (3) clearing and insurance Ability to match massive transaction volumes of bids and offers in real time. Prone to fraud in price discovery and order fulfillment eBay Value Chain Integrator (1) Vendor management that is extremely efficient (1) Efficient supply chain management (2) vendor (1) Managerially complex (2) may be difficult Cisco, Dell
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2 and tightly linked to customer demand (2) Customer demand is managed for complex products management (3) customer relationship management (often Internet-centric) (3) Brand management applied to outsourced products to enforce vendor relationships without having a significant proportion of the consumer market Open Source Alliance (1) 'Organic' contribution of producer services to the achievement of a common goal (often a product) (2) Producers are the consumers, insuring a large market for whatever is produced (3) Reputation building for the contributors (4) Control over the design of the product for prosumers (1) Strong sense of community purpose (2) efficient communications
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This note was uploaded on 11/02/2011 for the course IDS 594 taught by Professor Staff during the Fall '08 term at Ill. Chicago.

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Business Models in Electronic Markets - Electronic Market...

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