HelloI have to write an essay Candidate for Global e- commerce class Discuss in detail the various types of e-commerce models – be sure and mention all models from the b2b, b2c, c2c and c2b areas. How do these models work, which are strong and which are weak?I attached power point bellow
ebusmodels_2_.ppt
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Business Models — Today’s Objective
To develop an understanding of e-commerce business models
Components of a Business Model
Developing a business model in the networked economy requires four key choices on the part
of the senior management:
Value Cluster
Marketspace Offering
Resource System
Financial Model
• Specify the value proposition or
the value cluster for the business
• Articulate the online product,
service and information offer
• Define how the company needs to
align its resources to deliver the
value proposition
• Define and select the most
appropriate revenue model to
pursue
What is Value?
The bundle of benefits
-The bundle of costs e
Value
The bundle of benefits
Product/service (core benefit)
Service after the sale
Sales personnel
Image
The bundle of costs
Monetary price
Time costs
Energy costs
Psychic costs
Porter’s Four Competitive Strategies
To be effective, organization goals, objectives, culture, and activities
must be consistent with organization strategy.
Last Updated: 09/12/01
Copyright © 2001 by Marketspace LLC
Shattering the Myth That Consumers Care Only About Prices
Online
Percentage of Customers Who Care About Attribute
Customer Support
65
Attribute
On-time Delivery
58
Product Shipping & Handling
49
Product Content
49
Privacy Policies
45
Ease of Ordering
24
Product Information
24
Web Site Navigation & Locks
23
Product Selection
22
Product Price
19
0
10
Source: JP Morgan Report: etailing and the five Cs
20
30
40
50
60
70
Value Proposition/Cluster
The first step in the articulation of the business model is clearly specifying the value
proposition or the value cluster for the business:
Defining the value proposition or the value
cluster requires managers to answer the
following questions:
Value Cluster
• Which target segments should the
company focus on?
• What is the combination of customer
benefits that is offered?
Marketspace Offering
Resource System
Financial Model
• What makes the firm and its partners
better positioned to deliver the offering
than anybody else?
Value Proposition/Cluster
The definition of the value proposition is the result of a combination of choices about the
customers, the benefits offered and the unique capabilities of the firm:
Target
Segments
PC Flowers
& Gift
FTD.com
+
Key Benefits
Offered
+
Unique
Capabilities
Value
Proposition
“The special occasion
segment”
• Fresh flowers
• Complementary gifts
• Low prices
• Online experience
• Unique, broad product
line of complementary
gifts
“PC Flowers & Gift serves
the special occasion
segment by providing fresh
flowers and unique
complementary gifts”
“Mid- to high-end
market”
• Easy delivery of
flowers
• Strong brand name
• Market
Communication
• Supplier network
“FTD.com provides the
mid- to high-end market
with the easiest way to
send flowers thanks to its
extended network of
suppliers”
Exhibit 3–5: Marketspace Offering
The next step is to articulate the online product, service and information offering:
Value Cluster
Defining the Marketspace offering requires
managers to complete the following
sequential tasks:
Marketspace Offering
• Identify the scope of the offering
• Identify the customer decision process
• Map the offering to the consumer
decision process
Resource System
Financial Model
Customer Decision Process
The second step in the construction of the online offering is the articulation of the customer
decision process for the various product categories:
Flowers Example
Prepurchase
Problem Recognition
⚫
Need recognition, potentially triggered by a
holiday, anniversary or everyday events
Information Search
⚫
Search for ideas and offerings, including:
– Available online and offline stores
– Gift ideas and recommendations
– Advice on selection style and match
⚫
Evaluation of alternatives along a number of
dimensions, such as price, appeal, availability, etc.
⚫
Purchase decision
Message selection (medium and content)
Evaluation of Alternatives
Purchase
Purchase Decision
⚫
Satisfaction
Postpurchase
Loyalty
⚫
Post-sales support
– Order tracking
– Customer service
⚫
Education on flowers and decoration
Post-sale perks
⚫
Mapping the Offering to the Decision Process
The last step in the construction of the online offering is mapping the products and services
onto the customer decision process:
⚫
What occasions trigger the need
for my product? What tactics can
be used to stimulate demand?
Need
Recognition
⚫
Search for
Ideas and
Offerings
⚫
What post-sale
services can the
website offer to
create loyalty?
Customer
Decision
Process
Post-Sale
Support and
Perks
Evaluation of
Alternatives
Purchase
Decision
⚫
What functionality should the
site present to communicate
privacy, trust and security?
What information would
the consumer need to
make a selection?
⚫
What are the key evaluation criteria
that the consumer will use to evaluate
my product/service? What information
should the website offer to make the
consumer comfortable with his or her
choice?
Egg Diagram for 1-800-Flowers.com
⚫
⚫
⚫
⚫
⚫
“Care and handling”
“Do it yourself”
Special events and
educational
workshops held at
stores
Product
Offering
⚫
⚫
⚫
⚫
Post-Sale Support
Order receipt e-mail
eQ&A online customer
service
FAQ
Customer service
inquiry form
Perks
⚫
⚫
⚫
⚫
⚫
⚫
Gift reminder service
Holiday specials
Ideas and Information
Everyday celebrations
⚫ Floral ideas
⚫ Garden ideas
suggestions
⚫ Home ideas
Special occasion suggestions
⚫ Gift ideas
⚫ Gourmet ideas
Need
⚫ Store locator
Recognition
⚫ Recommendations by budget
⚫ Bestsellers
Education on Flowers
and Decoration
Post-Sale Support
and Perks
Miles earned with
flower purchases
Free gifts
Discounts at AOL
& BN.com with
flower purchases
Member specials
Search for Ideas
and Offerings
Flower / Gift
Decision Process
Evaluation of
Alternatives
Gift Recommendations
⚫ Gift guru
⚫ Favorite gifts
⚫ Gift frequency
⚫ Gift impossible
⚫ Gift baskets
⚫ Corporate gift services
⚫
⚫
⚫
⚫
⚫
Message
Selection
⚫
⚫
Gizmo fully-animated
greeting cards
Physical cards in gifts
Purchase
Decision
⚫
⚫
⚫
Shopping basket
E-commerce transaction
Special shopping features
– Delivery outside US
– 1-800-lasfloras.com
Product price
Product picture
Product description
Delivery information
Delivery availability
Exhibit 3–11: Resource System
The third step is to define the resource system and how the company must align it to deliver
the benefits in the value proposition:
Value Cluster
Marketspace Offering
A series of activities is required to construct
a resource system:
1. Identify core benefits in the value
cluster.
Resource System
2. Identify capabilities that relate to each
benefit.
3. Link resources to each capability.
Financial Model
4. Identify to what degree the firm can
deliver each capability.
5. Identify partners who can complete
capabilities.
Step No. 1 — Identify Core Benefits
The core benefits must be identified in the construction of the value cluster:
1-800-Flowers.com serves the “mid- to high-end market” with a broad gift assortment, fresh flowers,
reasonable prices and easy access because of its strong brand name, product and media partnerships
and bricks-and-mortar network of franchises.
Broad
Assortment
of Gifts
High Quality
of Flowers
Customer
Service
Widespread
, Easy
Access
Step No. 2 — Link Capabilities to Benefits
Managers need to identify which capabilities are required to deliver each benefit, regardless
(at this point) of the ability of the company to access or develop that capability:
For 1-800-Flowers.com, the benefit “widespread, easy access” is linked to four capabilities: strong brand
name, wide reach to customers, multiple points of contacts and a popular website.
Broad
Assortment
of Gifts
High Quality
of Flowers
Popular Website
Multiple Contact
Points
Customer
Service
Widespread
, Easy
Access
Wide Reach to
Customers
= Core benefits
= Capabilities
Strong Brand
Name
Step No. 3 — Link Resources to Capability
After the capabilities are identified, the firm should determined the resources necessary to
deliver each capability:
Broad
Assortment
of Gifts
High Quality
of Flowers
Popular Website
Telephone
3,000 Affiliates
Multiple Contact
Points
Online
Franchis
e Stores
Catalog
Customer
Service
= Core benefits
= Activities & assets
= Capabilities
Widespread
, Easy
Access
Wide Reach to
Customers
Strong Brand
Name
Steps No. 4 and 5 — Ability to Deliver Capabilities
The next steps assess whether the company has all the necessary capabilities in-house or if it
has to look outside and select the most appropriate partners to complete the missing
capabilities.
1-800-Flowers.com would not be able to deliver the capability “wide reach to customers” alone, and
therefore would need to create partnerships. Companies like MSN, AOL and Snap are potential partners.
Broad
Assortment
of Gifts
High Quality
of Flowers
Popular Website
Multiple Contact
Points
Starmedia
Customer
Service
Widespread
, Easy
Access
MSN
Wide Reach to
Customers
AOL
Snap
= Core benefits
= Activities & assets
= Capabilities
= Partners
Strong Brand
Name
1-800-flowers.com Resource System
BloomNet
Network
Address Book
Gift
Recommendations
Online Gift
Center
Gift Reminder
Third-Party
Contractors
Strong
Distribution
Network
Fulfillment
Center
Stores
Rich Content
Broad
Assortment
of Gifts
High Quality
of Flowers
Personalization
Capabilities
Popular Website
Garden Works
Integrated
Partner Offers
Telephone
3,000 Affiliates
Plow & Hearth
Online
Great Foods
Widespread
, Easy
Access
Customer
Service
Multiple Contact
Points
Franchise
Stores
Catalog
Technology
Customer
Service
Centers
= Core Benefits
Wide Reach to
Customers
Snap
= Activities & assets
= Capabilities
Strong Brand
Name
Integrated online
offline Systems
Starmedia
MSN
AOL
Components of a Business Model
Developing a business model in the networked economy requires four key choices on the part
of the senior management:
Value Cluster
Marketspace Offering
Resource System
Financial Model
• Specify the value proposition or
the value cluster for the business
• Articulate the online product,
service and information offer
• Define how the company needs to
align its resources to deliver the
value proposition
• Define and select the most
appropriate revenue model to
pursue
Revenue Models
While firms can pursue a number of revenue models, some are used most frequently:
Advertising
• Advertising revenues can be generated through the selling of ads, site sponsorships, event
underwriting, etc. (e.g., Yahoo, AOL, Business2.com)
Product, Service, Information
• Revenues can be generated from the sales of goods and services (e.g., Amazon, CDNow,
Buy.com)
Transaction
• Revenues can be accrued from charging a fee or taking a portion of the transaction sum for
facilitating a customer-seller transaction (e.g., Schwab, eBay)
Subscription
• Website can gain revenues by offering subscription services for information (e.g., FT.com,
NYTimes.com)
Case Study: Schwab
Value Cluster
Schwab’s value cluster offers a combination of benefits that address multiple segments of
customers:
Target
Segments
⚫
⚫
Schwab
⚫
Existing
offline
customers
Professionals,
incomes
< 150K, trade
frequently
Professionals,
incomes
< 150K, buy
and hold
Key Benefits
Offered
+
Supporting
Rationale
+
⚫
Innovative
products
⚫
Superior, cutting
edge technology
⚫
Superior service
⚫
Innovation
⚫
Lower prices
Value
Cluster
⚫
“Use technology
to lower costs
and offer
superior service
at lower price to
investors
unwilling to pay
for investment
advice”
Case Study: Schwab
The Marketspace Offering Egg Diagram
⚫
⚫
Product
Offering
⚫
⚫
⚫
⚫
⚫
⚫
⚫
⚫
Schwab Learning Center
Live events
Principles of investing
Understanding market cycles
“Did You Know” Q&A
Get educated
about
investing
Online chat with customer service
representatives
Customer service via phone
Post Customer service via e-mail
Investment
Customer service at branch
Support
My Watch List
Overall
⚫ General Goal
Planner
⚫ Investor Profile
⚫ Sample
Investment Plans
Retirement
Estate
⚫ Retirement
⚫ Estate Tax and
Planner
Probate Calculator
⚫ IRA Analyzer
⚫ Alternatives Comparison
College
Plan
⚫ College Planner
investments
Tax
⚫ Tax Strategies
⚫ IRS Withholding
Calculator
Online Investment Process
⚫
⚫
⚫
⚫
⚫
⚫
⚫
Margin loans
Money transfers
Automatic investing
Options service
After-hours trading
Account protection
Bill payment
Perform
Investment
Decide on
Investment
⚫
⚫
⚫
⚫
Schwab signature
services
Schwab AdvisorSource
Options service
Global investing service
Overall
⚫ Quotes and Charts
Perform
⚫ Analyst Center
Research
Stocks and Options
⚫ Stock Analyzer
Bonds and Treasuries
⚫ Schwab BondSource
services
Annuities
CDs and Money Markets
⚫ Schwab Select
⚫ SchwabOne
Annuity
Life Insurance
⚫ Insurance-needs
calculator
Case Study: Schwab
Resource System
Schwab’s resource system is centered around Schwab’s three main benefits: low price,
innovative products and superior services.
Learnin
g
Center
Invest
in CSR
Trainin
g
OneSource
Center of
Knowledge and
Innovation
Investment in
R&D
Customer Service
Innovative
Products
Cutting-Edge
Technology
Optimize
Staff in
Branches
Charge for
ValueAdded
Services
Provide
Lower
Commission
for Frequent
Traders
= Core Benefits
Align CSR
Compensation
with Quality
of Service
Investment in IT
Hire IT
Staff
Train IT
Staff
System Reliability
24/7
Access
Partnerships with
Content Providers
Multiple Points of
Access
Hoover
s
Streamlined
Operations
Lower
Prices
Online
Phone
S&P
Media
General
Competitive
Commission Rates
= Capabilities
Superior
Service
= Resources
Branch
Case Study: Schwab
Value Cluster
Schwab’s value cluster offers a combination of benefits that address multiple segments of
customers:
Target
Segments
⚫
⚫
Schwab
⚫
Existing
offline
customers
Professionals,
incomes
< 150K, trade
frequently
Key Benefits
Offered
+
Supporting
Rationale
+
⚫
Innovative
products
⚫
Superior, cutting
edge technology
⚫
Superior service
⚫
Innovation
⚫
Lower prices
Value
Cluster
⚫
“Use technology
to lower costs
and offer
superior service
at lower price to
investors
unwilling to pay
for investment
advice”
Professionals,
incomes
< 150K, buy
and hold
Last Updated: 09/12/01
Copyright © 2001 by Marketspace LLC
Case Study: Schwab
Resource System: In-House vs. Outsourcing
Schwab does not have the all the capabilities necessary to deliver the core benefits. Some of
them will be acquired trough partnerships:
Learnin
g
Center
OneSource
Center of
Knowledge and
Innovation
Cutting-Edge
Technology
Optimize
Staff in
Branches
Charge
for Value
Added
Services
Provide
Lower
Commission
for Frequent
Traders
= Company can
perform inhouse
Investment
in IT
Train
IT Staff
Superior
Service
24/7
Access
System Reliability
Partnerships with
Content
Providers
Multiple Points of
Access
Hoover
s
Streamlined
Operations
Lower
Prices
Competitive
Commission
Rates
= Company needs
to outsource or
partner
Align CSR
Compensation
with Quality
of Service
Well-Trained
CSRs
Capable IT Staff
Innovative
Products
Investment in
R&D
Invest
in CSR
Trainin
g
Hire IT
Staff
Online
Phone
S&P
Media
Genera
l
Branch
...
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