E-commerce Business Models and Concepts

B2B, C2C and M-commerce

E-Commerce Business Models

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 B2B E-Commerce

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 B2B Business Models
 Net marketplaces
 E-distributor
 E-procurement
 Exchange
 Industry consortium

 Private industrial network

 Single firm
 Industry-wide

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 DIFFERENTIATION B2B BUSINESS MODELS(Net Marketplaces)
Purchase/Input Type Direct Inputs (raw) Indirect Inputs (support)
Spot Purchasing Independent Exchanges eDistributors
Contractual Purchasing Industry Consortia eProcurement
Type of Market Vertical Markets Horizontal Markets

A vertical market is a market in which vendors offer good and services

 specific to an industry, trade, profession, or other group of customers
 with specialized needs. 

A horizontal market, in which vendors offer a broad range of goods

and services to a large group of customers with wide range of needs,
such as businesses as a whole, men, women, households, or, in the
broadest horizontal market, everyone.

'Spot' buying/purchasing is purchase for immediate delivery, as

opposed to delivery in three or six months' time (contractual
buying).

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 B2B Models: E-distributor
 Version of retail and wholesale store, MRO goods, and
indirect goods
 Owned by one company seeking to serve many customers
(Businesses)

 Revenue model: Sales of goods, Advertisement

 Example: tradekey.com.pk, Grainger.com, Cisco, Dell.inc,
BestBuy.com, pakbiz.com, pakimpex.com
www.Grainger.com, for example, is the largest distributor of maintenance, repair, and operations
(MRO) supplies are thought of as indirect input to the production process – as opposed to direct
inputs. In the past, Grainger relied on offline catalog sales and physical distribution centers in
metropolitan areas. Its catalog of equipment went online in 1995 at Grainger.com, giving
businesses access to more than 220,000 items. Other Company purchasing agents can search by
type of product or by specific brand name.

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 B2B Models: E-procurement
 Procurement is the acquisition of goods, services or works from an outside
external source.
 E-procurement is the B2B purchase and sale of supplies and services over the
Internet. 
 E-Procurement base E-Commerce business creates digital markets (as Ariba.com)
where participants transact for indirect goods (MRO)
 We can say that E-Procurement E-Commerce Businesses are B2B service providers or
application service providers (ASPs)
 Implementation of E-Procurement System* allow your organization to reach and
interact with global suppliers or providers.
 Typically, e-procurement Web sites allow qualified and registered users to look
for buyers or sellers of goods and services
 Depending on the approach, buyers or sellers may specify prices or invite bids. 
 Revenue model:
 Service fees or Transaction fees, supply-chain management, fulfillment services
 Example: Ariba (* A business can contact Ariba.com for implementation)

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 With Ariba and Ariba Network, trading partners (buyer and sellers) get real-
time information to make faster, better decisions while collaborating to cut
costs and risks.

Ariba creates custom integrated online catalogs (where supplier firms can list
their offerings) for purchasing firms.
On the sell side, Ariba helps vendors sell to large purchasers by providing
software to handle catalog creation shipping, insurance, and finance.
BENEFITS OF E-PROCUREMENT
VOCABULARY OF E-PROCUREMENT
• Better Products
• One Stop Shop (Example)
• More product choices • RFI: request for Information.
• Faster Product Find • RFP: request for Proposal
• Reduces Paper Cost
• Purchases can be tracked and made to comply
• RFQ: request for Quotation
• with company guidelines. • RFx: the above three together.

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 B2B Models: Exchanges
 Digital exchanges are independently-owned vertical marketplaces for direct
inputs and spot purchasing that allow multiple suppliers and purchasers to trade
in real time
 Internet has the capacity of changing the conventional way of doing business.
Today, you can not only buy and sell your products and services on the Internet,
you can, virtually, shift all your business processes to online solutions as well. If
you take advantages of new Internet based technologies, the outcome would be
tremendously beneficial to your business. How to do this without spending a
fortune and not putting a huge pressure on scarce corporate resources? The
possible answer could be B2B exchanges!
 A B2B exchange is an online marketplace, where buyers, sellers and intermediaries
form communities, exchange views, offer products and services, and conduct
business transactions.
 perfect.com, rusbiz.com

 Revenue model: Transaction, commission fees

 Fact: Create powerful competition between suppliers
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 Benefits of Exchanges
 New sales channel
By becoming a member of a B2B exchange, you open a low cost, highly functional and easy-to-use sales channel
for your company. You expose your company to a new targeted audience that otherwise would have been
untapped. Prospective customers can buy products and services from you, using various venues and features of
the B2B exchange, where you are a member.
 Marketplace: All B2B exchanges include a marketplace, where suppliers can post sales offer of
their products and services. Buyers, looking for specific products, can easily find best suppliers
that suit them from the marketplace. A populated marketplace can easily become a good sales
channel for a supplier.
 Electronic catalog: As a member of the B2B exchange, you are allowed to add all your products
or services to the consolidated online catalog of the exchange. Adding your products to the
catalog helps to create online standardize electronic version of your product specification. You
can publish sales offer of your entire catalog to the marketplace, eliminating a need for other
web presence.
 Web Store: Some B2B exchanges allow you to convert or integrate your website to their
exchange. This helps you to handle sales conveniently from your website and the marketplace of
the exchange seamlessly. You can make a web store from scratch with the help of integrated
website builder of the B2B exchange as well.
 Auctions: One of the great features of many B2B exchange is their auction systems. As we all
know from the immense success of Ebay, auctioning is a great way of selling products online.
Some exchanges boast reverse auction system, where suppliers bid for a deal posted by a
buyer.

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 Exchanges Other Benefits Include

 No Extra Cost: As a supplier, you can participate in those tenders without any extra cost
involved.
 Low customer acquisition cost: Your mere presence in the B2B exchange might bring you
new customers! Since the buyers come to the exchange themselves; your cost of getting
customers through this channel is relatively low in comparison to other traditional channels. 
 Improve customer service: You can track the whole ordering process from payment to
delivery and bring greater efficiency in customer service.
 Efficient information sharing method: Whether you are launching a new product through the
B2B exchange you can share the information more efficiently.

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 B2B Models: Industry Consortia
 Consortia are typically formed by a group of leading vendors (Industry) in
a particular industry
 that serve specific industries (e.g., food, automobile, chemical)
 More successful than exchanges
 Sponsored by powerful industry players
 Strengthen traditional purchasing behavior
 Revenue model: Transaction, commission fees
 Example: Exostar
 Exostar's founding partners included BAE Systems, Rolls Royce,
Boeing, Lockheed Martin and Raytheon.
 In July 2010, Exostar was fulfilling the needs of over 70,000 companies
in 95 countries with transactions totaling $35 billion annually.

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 Industry Consortia examples
Industrial Consortia Industry
Exostar Aerospace
SupplyOn Automotive, Aerospace and Manufacturing
Elemica Chemical
Dairy.Com Dairy Products
Global Healthcare Exchange Medical Services and Supplies
Quadrem Metals, Minerals and Mining
Risk Risk Management for Ship Owners,
OceanConnect
Traders, Refiners,and Financial Institutions
TheSeam Food and Beverage
Transplace Freight and Carrier Services

Exostar connects with over 300

procurement systems in 20 different
countries and has registered more than
24, 000 trading partners worldwide.
Most Fortune 500 and other large
companies belong to industrial consortia,
sometimes to several.

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 Private Industrial Networks
As the name suggests, private industrial networks are web-enabled networks
that coordinate transactions between specific companies — in all aspects
and all divisions: suppliers, distributors, retail, procurement, delivery
and so on.
Such systems are also called collaborative, as they facilitate efficiencies
throughout the network. Many large companies (Wal-mart, Agentrics,
Coca-Cola, Nike, Hewlett-Packard, IBM, Microsoft, Cisco Systems,
Dell and General Electric) operate private industrial networks, which indeed
form the largest part of B2B ecommerce today.

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Specific objectives include:
 More efficient buying and selling throughout an
industry.
 Resource planning on an enterprise- and industry-
wide scale.
 Increased supply chain visibility to all interested
parties, i.e. inventory levels of buyers and suppliers
can be monitored and kept to efficient levels.
 Closer relationships between buyers and suppliers,
improving demand forecasting, communications and
conflict resolution.

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 Private Industrial Networks

Unlike industrial consortia, which are collectively

owned by several major companies, private
industrial networks generally have a single,
sponsoring company that sets and enforces the
rules, only inviting other companies to participate at
its own choice.
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 Example : Ace Hardware
Ace Hardware, a cooperative of 5,100 retail stores
employs a private industrial network to manage
inventory levels and link with suppliers. Previously,
some 30 procurement managers were employed and
some 7-10 days were required to process an order.
These have been replaced with 14 Ace distribution
centers and 9 key suppliers. And whereas suppliers
previously had no access to Ace inventory levels, they
can now forecast demand with some accuracy. Manco,
one supplier of 200 products, has been able to reduce
distribution costs by 28% and freight costs by 18%.

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 Private Industrial Networks (Continue)

 Designed to coordinate flow of communication

among firms engaged in business together
 Electronic data interchange (EDI)

 Single firm networks

 Most common form
 Example: Wal-Mart’s network for suppliers

 Industry-wide networks
 Often evolve out of industry associations
 Example: Agentrics (initiate by Sears)

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 Why Industry Wide Private Industrial Network ?
(A response to Single Firm Industrial Network like wall- mart)
wal-mart has refused to open its very successful
network to other members of the retail industry, in
effect to become an industry standard, for fear it
will be sharing technology secrets with other
retailers like Sears.

Sears and other retailers around the world have

created their own set of organizations and networks
that are open to all in the industry.
Agentrics is now neogrid.com is an industry-wide
private industrial network for retailers and suppliers
designed to facilitate and simplify trading among
retailers, suppliers, partners and distributors.
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 Business Models in Emerging
E-commerce Areas
 Consumer-to-consumer (C2C)
 Examples: eBay, olx, Half.com, pakwheels.com etc.

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Business Models in Emerging E-commerce Areas
 M-commerce:
 Mobile e-commerce (m-commerce) is a term that describes
online sales transactions that use wireless electronic devices
such as hand-held computers, mobile phones or laptops.
 E-commerce models using wireless technologies (2G EDGE, 3G, 4G & LTE)
 3G, 4G, and LTE refers to the generation of network technology.
 Technology platform continues to CHANGE, The basic difference
between them is the speed of the network. the older models may
not support the newer data network technology.
  iPhone 6 Plus, iPhone 6, iPhone 5S, and the iPhone 5c. All these
models support LTE.
 In the PAKISTAN, demand highest for digital content such as email,
maps, ecommerce, social media and Internet browsing. So Mobile
Companies continue to upgrade their Networks for 3G, 4G & LTE
technology.

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 Business Models in Emerging
E-commerce Areas
 Peer-to-peer (P2P)
 Examples: The Pirate Bay, Cloudmark, Bit Torrent , Kazza

ASSIGNMENT
Collect Data on Woo-Commerce

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