PRESENTATION ON

ECOMMERCE BUSINESS MODELS &

THE INTERNET AS NETWORK

INFRASTRUCTURE
Prepared by:
Sandesh Jonchhe
1
Prakash Shrestha
Bijay Karki
E-Commerce Business Model

-Bijay Karki
3
E-Commerce Business Model:

- E-commerce is a transaction of buying or selling online.

- A business model describes the rationale of how
an organization creates, delivers, and captures value, in
economic, social, cultural or other contexts.
- The process of business model construction is part of business
strategy.
4

Business Models are:

 Transaction Fee Revenue Model

 Subscription Revenue Model
 Advertising Revenue Model
 Affiliate Revenue Model
 Electronic tendering System
 Group Purchasing
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Transaction Fee Revenue Model:
1. A company receives commissions based on volume for enabling or executing
transactions

2. The revenue is generated through transaction fees by the customer paying a fee for
a transaction to the operator of a platform. The company is a market place operator
providing the customer with a platform to place his transactions

3. During this process the customer may be presented as a buyer as well as a seller. To
actively participate in this e-market, customers must register, so both parties of a
transaction taking place are identified

4. From a business perspective, the offer is determined by others as customers offer

their goods online and are acting as sellers. The amount of the transaction fee can be
both – fixed and percentage calculated

- Examples
eBay
Amazon
 6

Subscription Revenue Model:

1. Users are charged a periodic (daily, monthly or annual) fee to subscribe to a service.
Many sites combine free content with premium membership, i.e. subscriber- or
member-only content. Subscription fees do not depend on transactions
2. Subscribers use the content as long and often as they want

Examples:
- Publishers and content services, e.g. newspapers, magazines, TV channels
- they provide text, audio or video content to users who subscribe for a fee to get
access to the service or to download the new issue: New York Times
- Networks offer premium memberships to find business partners or former
classmates, subscribers can use all services, i.e. they get any information about
their account via short notifications or newsletter, receive and send e-mails, get
job offers: LinkedIn
- Internet service providers offer the connectivity (e.g. via broadband) and services
around (security software for download, e-mail-services): T-Online, AOL
- Special services: Companies offer security and payment services to internet
service providers and online retail customers: Paypal
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Advertising Revenue Model:
- Typically, fees are generated from advertisers in exchange for advertisements,
which is ultimately the classic principal among the revenue models besides sales
- The advertising revenue model is based on contacts making it one of the
indirect sources of revenue
- The conventional version is display-marketing - for example wallpaper, super
banner, rectangle, skyscraper - which is paid according to traffic (invoice per
CPC/cost-per-click or CPX/cost-per-action)
- The main online advertising variations are besides display-marketing, affiliate-
marketing (advertising on many websites, CPX) and search-engine-marketing
(CPC)
- Special models are e-mail-marketing and social-media-marketing. For
advertisers with a lower budget for example the New York Times created a self-
booking-tool for display-ads on a CPM(Cost-per-mille)-basis. And there are still
rising new opportunities
- Examples : Google (e.g. AdWords and AdSense), Facebook, New York Times
(Marketing)
8

Affiliate Revenue Model:

- The affiliate program is an online distribution solution which is based on the
principle of commission
- Merchants advertise and sell their products and services through links to
partner- websites
- It is a pay-for-performance model: Commissions are only paid for actual
revenue or measurable success
- An affiliate-link includes a code, which identifies the affiliate. That’s how clicks,
leads or sales are tracked
- The affiliate therefore acts as the interface between merchants and customers
- This model leads to a win-win situation: the merchants sell their products or
services and the affiliates get their commissions
- Variations include banner exchange, pay-per-click and revenue sharing
programs. The affiliate model is well-suited for the web and therefore very
popular
- Examples : Amazon…..
9
Electronic tendering System:
- Electronic tendering is an online process that manages the tendering cycle from the
advertisement of the notice straight through to the issuing of an award

- It provides a centralized process to help organizations improve efficiencies and

accountability while reducing traditional tendering costs

- This includes the exchange of all relevant documents in electronic format

1. RFQ(request for quotation)
2. RFT(request for tender)
3. e-bidding

- Business benefits:
1. Reduced tender cycle-time
2. Fast and accurate pre-qualification and evaluation, which enables the rejection of
suppliers that fail to meet the tender specification
3. Faster response to questions and points of clarification during the tender period
4. Reduction in the labor intensive tasks of receipt, recording and distribution of
tender submissions
10

Contd…….

5. Reduction of the paper trail on tendering exercises, reducing costs to both

councils and suppliers

6. Improved audit trail increasing integrity and transparency of the tendering

process

7. Improved quality of tender specification and supplier response

8. Provision of quality management information

11

Group Purchasing:
-A group purchasing organization (GPO) is an entity that is created to leverage the
purchasing power of a group of businesses to obtain discounts from vendors based
on the collective buying power of the GPO members

-Many GPOs are funded by administrative fees that are paid by the vendors that
GPOs oversee

-Some GPOs are funded by fees paid by the buying members

-Some GPOs are funded by a combination of both of these methods

-These fees can be set as a percentage of the purchase or set as an annual flat
rate. Some GPOs set mandatory participation levels for their members, while
others are completely voluntary

-Members participate based on their purchasing needs and their level of

confidence in what should be competitive pricing negotiated by their GPOs
12

Contd……

- Group purchasing is used in many industries to purchase raw materials and

supplies, but it is common practice in the grocery industry, health care, electronics,
industrial manufacturing and agricultural industries

- In recent years, group purchasing has begun to take root in the nonprofit
community. Group purchasing amongst nonprofits is still relatively new, but is
quickly becoming common place as nonprofits aim to find ways to reduce
overhead expenses

- In the healthcare field, GPOs have most commonly been accessed by acute-care
organizations, but non-profit Community Clinics and Health Centers throughout
the U.S. have also been engaging in group purchasing
 THE INTERNET AS THE
NETWORK
13
INFRASTRUCTURE

-Prakash
14 THE INTERNET AS THE NETWORK
INFRASTRUCTURE
The Internet
The internet is a large system of inter-connected networks.
The federal networking council(FNC) defines the internet as:
 it is logically linked together by a globally unique address
space based on the internet protocol(IP).
It is able to support communications using TCP/IP suite.

Internet allows:
 communication.
Participation in simulations and games.
Downloading of software, eBooks and music.
E-commerce
15
16 INTERNET GROWTH
• Increment in internet usage.
17 SIX STAGES OF INTERNET GROWTH

1. Experimental networking:
• It covers early years from 1965 under Department of
Defense ARPA and the province of a relatively small
technical community.
• This group developed not only the technology but the
cooperative mechanism that made if possible to scale and
allow further innovation to occur.

2. Discipline-specific research:
• It covers years from 1980-1985, grew out of the more
general ARPANET and began to build international on-line
communities. CSNET, of instance, linked computer science
researchers from all over the world.
18 SIX STAGES OF INTERNET GROWTH (CONTD..)
3. General research networking:
• It covers the year from 1985-1991 and called the NSFNET
program.
• NSFNET program was established chiefly to allow exchange
of information and access to remote resources within the
research and education community.

4. Privatization and commercialization:

• It covers year 1991-present.
• It involves removing government subsidies to regional
networks and dismantling the barriers imposed by
restrictive acceptable usage policies.
• Supports commercial transactions and connections for
commercial organizations.
19 SIX STAGES OF INTERNET GROWTH (CONTD..)
5. Restricted public data networks for research and education:
• It is high performance computing and communications(HPCC)
programs linked to the fundamental research on computer
science and engineering, the prerequisite to the development
of future computing, communications and information
systems.
• HPCC is an R&D program wherein each new set of technologies
forms the foundation for the next.
• HPCC have five basic interrelated objectives:
 To develop, provide and support advance research and
educational networking services and capabilities for
connecting researchers, educators and students in universities
and high schools.
 To provide access to high performance computing
environments.
20 SIX STAGES OF INTERNET GROWTH (CONTD..)

To generate fundamental knowledge that can lay the

foundation for future advances in high performance computing
and communications.
To enhance innovation, technology transfer, productivity and
industrial competitiveness through academic industrial
partnership.
To make computing and communication infrastructure
available to large society.

6.National information infrastructure:

• It is known as the I-way.
• The objective is to extend networking
everywhere(ubiquitous) and enable new consumer
applications.
21
22 NSFNET(National Science Foundation
Net)
• NSFNET was a program evolving projects sponsored by the
national science foundation(NSF) beginning in 1985 to
promote advanced research and education networking in the
United states.
• Open network NSFNET becomes internet backbone initially
connecting five supercomputer Centre's using TCP//IP in 1986.
-IBM provided the hardware and software for the packet-
switching.
-MCI provided the transmission circuits for the backbone.
• T1(1.5 mbps) nodes introduced in 1988 and T3 nodes(45mbps)
introduced on backbone in 1989.
• ARPANET was retired and transferred to the NSFNET IN 1990.
23 NSFNET architecture and components
24 NSFNET backbone
• The NSFNET backbone is a primary means of interconnection
between the regional networks.
• The NSFNET backbone includes switching nodes located at six
supercomputer sites: San Diego Supercomputer
Center(SDSC), National Center for Supercomputer
Applications(NCSA) at the University of Illinois, Cornell
National Supercomputer Facility(CNSF), Pittsburgh
Supercomputer Center(PSC), John von Neumann
Center(JVNC) and the National Center for Atmospheric
Research (NCAR).
• Each backbone node is connected to an onsite Ethernet ,
which serves as the attachment point for supercomputers
and other local hosts.
• It includes high speed bus, ring and point to point links.
25 NSFNET backbone(contd..)

• The backbone uses the DARPA internet architecture, which

is based on the IP and TCP protocols. Most of the regional
and campus networks they connect also use these
protocols.

• There are several thousand service hosts and gateways

connected to the internet as well as many more personal
computers and workstations.
26
27 Midlevel regional network

• Are often referred to as regional network, are one element

of the three-tier NSFNET architecture.

• They provide a bridge between local organization, such as

campuses and libraries.

• The service are of mid-level network tends to vary from sub

state, statewide, and multistate coverage.
28 State and campus networks
• It link into regional networks.

• It provides local connectivity and access to wider are services

for state governments, schools, higher education, and
research institutes.

• This networks include university and college campuses,

research laboratories, private companies, and educational
sites such as school districts.

• These are the most important components of the network

hierarchy, as the investment in these infrastructures far
exceeds that of the government’s investments in the national
and regional networks.
29 NSFNET succeeded because it was ….

Financially leveraged
Dumb network
Designed by highly
qualified researchers
 INTERNET GOVERNANCE

30

-Sandesh
31 INTERNET GOVERNANCE

Determines how the internet is managed and used now and in

the future
The development and application by governments, the private
sector and civil society, in their respective roles, of shared
principles, norms, rules, decision-making procedures, and
programmes that shape the evolution and use of the internet
Outcomes may affect all stakeholders
32
33 INTERNET GOVERNANCE(contd…)
34 GOVERNANCE HEIRARCHY
35 THE INTERNET SOCIETY
(ISOC)
WHAT IS INTERNET SOCIETY?
The Internet Society is a global cause-driven organization, dedicated
to ensuring that the Internet stays open, transparent and defined by
user

WHAT INTERNET SOCIETY DO?

The Internet Society engages in a wide spectrum of Internet issues,
including policy, governance, technology and development.
It also ensure that Internet continues to grow and evolve as a
platform for innovation, economic development, and social progress
for people around the world
36 THE INTERNET SOCIETY (ISOC) contd…

BRIEF HISTORY
 Was formed in 1992 by Vint Cerf and Bob Kahn
 Mission—to promote the open development, evolution, and use
of the Internet for the benefit of all people throughout the world
 Has its headquarters in Reston, Virginia, United States
 Has a membership base of more than 140 organizations and more
than 80,000 individual members.

WORKING PRINCIPLE
 Works at intersection of policy, standards, and development
37
38 INTERNET ARCHITECTURE
BOARD

 Has the responsibility for the technical management and direction

of the internet
 Is responsible for the overall architectural consideration in the
internet, technical direction, establishing standards and settlement
of conflicts in the standard process
 IAB meets regularly to discuss Internet Standards
 Also keeps track of various network address(IP) and develops rules
for assigning IP addresses
 Even works out for the current problem of IP(IPV4) (addresses it
using IPV6)
39 INTERNET ENGINEERING TASK FORCE

 The protocol engineering and development arm of internet

 IAB is supported by IETF
 Is a large international community of network designers, operators,
vendors and researchers
 Concerned with the evolution of the internet architecture and the
smooth operation of the internet
 Is open to any interested individual and meets regularly to discuss
operational and technical problems of the internet
40 IETF Working Groups
 Actual technical work of IETF is done in its working groups
 Organized by topic into several areas
 Most workgroup have finite lifetime and area dispersed after the
initial goal is achieved
 Currently divided into 8 functional areas:
 Applications
 Internet
 Network Management
 Operational requirements
 Routing
 Security
 Transport
 User services
41

THANK YOU

Prepared By
- Bijay Karki
- Prakash Shrestha
- Sandesh Jonchhe
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