E-commerce , Chapter II Business Models for E-Commerce

Chapter Two

Business Models for E-Commerce

A business model is the methods of doing business by which a company can maintain itself, that
is, generate revenue. The business model spells out how a company makes money by specifying
where it is positioned in the value chain.

Some models are quite simple. A company produces goods or services and sells it to customers.
If all goes well, the revenues from sales exceed the cost of operation and the company realizes
profit. Other model can be more intricately woven. Radio and television broadcasting is a good
example. With all the talk about "free" business models on the web, it is easy to forget that in
radio, and later in television, programming have been aired free to anyone with a receiver (here,
the radio or the television) for much of the past century. The broadcaster is part of a complex
network of distributors, content creators, advertisers, and listeners or viewers. Who makes
money and how much is not always clear at the outset. The bottom line depends on many
competing factors.
The literature about Internet e-commerce has offered various definitions, some of which are
listed as follows:!
 An architecture for the product, service and information flows, including a description of the
various business participants and their roles.
 A description of the potential benefits for the various business participants.
 A description of the sources of revenues.
However, a business model does not discuss how it will realize the business mission of the
company. The marketing strategy of the company is needed to assess the commercial viability of
a business model and to answer questions like: how is competitive advantage being built? what is
the positioning? what is the marketing mix? which product-market strategy is followed? and so
forth.
For our understanding, e-commerce can be defined as any form of business transaction in which
the parties interact electronically. Transaction in an electronic market represents a number of
interactions between parties. For instance, it could involve several trading steps, such as
marketing, ordering, payment, and support for delivery. An electronic market allows
participating sellers and buyers to exchange goods and services with the support of information

A company's business model is the way in which it conducts business in order to generate
revenue. In the new economy, companies are creating new business models and reinventing old
models. Reading the literature, we find business models categorized in different ways. As such,
there is no single, comprehensive and cogent taxonomy of web business models one can point
to. Although there are many different ways to categorize e-business models, they can be broadly
categorized as
 E-business model based on the relationship of transaction parties
 E-business model based on the relationship of transaction types

We can see that many of the entities of these models being assembled together to be called as e-
commerce.

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A business model can be defined as an architecture for product, service, and information flow,
including a description of business players, their roles, and revenue sources. For example, some
of the most popular revenue-generating models adopted by companies are: (i) charge fees for
advertising, (ii) sell goods and services, (iii) sell digital contents, and (iv) charge for processing
the transactions that occur between two parties on the web. E-commerce models can be
perceived in the form of relationship between two entities such as
 Direct marketing versus indirect marketing
 Fully cybermarketing versus partial cybermarketing
 Electronic distributor versus' electronic broker

 Business model – set of planned activities designed to result in a profit in a marketplace

 Business plan – document that describes a firm’s business model
 E-commerce business model – aims to use and leverage the unique qualities of Internet and
Web
Business Paradigm Shifts
Critical observation of the entire business setting exhibits so many changes taking place in
almost all angles .The changes in technology and economy are eliciting a new set of beliefs and
practices on the part of business firms. Let's look at the major business beliefs in the old
economy and how these beliefs are shifting .These are simply business paradigm shifts that are
prevalent. Hence, it is logical to conceptualize these shifts from the old economy to the new
economy before we discuss each detailed EC business models.
 From Organizing By Product Units to Organizing By Customer Segments
A company making two or more products normally assigns product managers or product
divisions to manage them. GE's Appliance Division would assign different people or business
units to manage their washing machines, dryers, refrigerators, and stoves. This makes sense, but
it also makes sense to add marketing groups that address the needs of different customer groups,
such as households and building contractors, who buy differently. This would mean a switch
from being product-centered to being customer-segment centered.
 From Focusing On Profitable Transactions to Focusing On Customer Lifetime Value
Companies normally focus on individual transactions with the aim of making a profit on each
transaction. New economy companies add a focus on estimating individual customer lifetime
value and designing their market offerings and prices to make a profit over the customer's
lifetime. The company will sometimes underprice to gain new customers and will be generous in
its pricing and services to existing. customers with an eye toward retaining them for the long run.
 From Focusing On Just the Financial Scorecard to Focusing Also On the Marketing Scorecard
Most senior managers will judge the company's performance by financial results as reflected on
the profit and loss statement and the balance sheet. Top management in new economy companies
will also examine the marketing scorecard to interpret what is happening to market share (not
just sales revenue), customer loss rate, customer satisfaction, product quality relative to
competitors, and other measures. They recognize that changes in marketing indicators predict
changes in financial results.
 From Focusing On Shareholders to Focusing On Stakeholders

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Top management sees its primary mission as making profits for shareholders. The costs of
working with other stakeholders, such as employees, suppliers, and distributors, are kept under
tight rein. They treat business as a zero-sum game, where by paying the least.
to employees, suppliers, and distributors, the company will be left with the most profit. Top
management in new economy companies respects the importance of creating coprosperity
among all the business partners and customers. These managers carefully define their
stakeholders and develop policies and strategies to balance the returns to all the key
stakeholders. They believe business success depends on high-level performance by
employees and business partners.
 From Marketing Does the Marketing to Everyone Does The Marketing
Companies generally establish a marketing department to be responsible for creating and
delivering customer value. Unfortunately, this leads other departments in the company to
feel less responsible for company performance vis-a.-vis customers. But as the late David
Packard of Hewlett-Packard observed, "Marketing is far too important to leave to the
marketing department." Every employee has an impact on the customer
and must see the customer as the source of the company's prosperity.
 From Building Brands through Advertising to Building Brands Through Performance
Relying on heavy advertising to build brand knowledge and preference in the target
public's mind certainly worked well in the old economy. But brands, ultimately, are built by
the customer's experience with the brand and by word of-mouth. Companies are
recognizing that a whole set of tools can help build brands, including sponsorships, event
management, public relations, and charitable gifts.
 From Focusing On Customer Acquisition To Focusing On Customer Retention
Most companies seek growth and reward salespeople handsomely for finding new
customers. As a consequence, salespeople spend less time ensuring the satisfaction of
existing customers, with the result that some current customers defect. New economy
companies place much more emphasis on customer retention. Attracting a new customer
may cost five times as much as doing a good job to retain existing customers.
 From No Customer Satisfaction Measurement to In-Depth Customer Satisfaction Measurement

Many companies fail to systematically measure and track customer satisfaction and the
factors shaping it. Instead they rely on anecdotal information that is not reliable. An
increasing number of companies are making customer satisfaction a major priority. For
example, IBM systematically measures how satisfied customers are with each IBM
salesperson they encounter, and makes this a factor in each salesperson's compensation.
 From Over-Promise. Under-Deliver to Under-Promise. Over-Deliver
To get the order, salespeople frequently over-promise on quality or delivery, and worry
later about the repercussions. This is true of ads that exaggerate the performance of com-
pany products. New economy companies recognize that customer satisfaction is a function
of the match between customer expectations and company performance. These companies
want their messages and promises to be accurate. Some would even prefer that their
salespeople under-promise and over-deliver, as a way to create customer delight.

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 The New Hybrid
The fact is that today's economy and most companies are a hybrid of the old economy and
the new economy. Companies need to retain skills and competencies that have worked in
the past, but they will also need to add new understandings and competencies if they hope
to grow and prosper. Today's marketplace is made up of traditional consumers (who do not
buy online), cyberconsumers (who mostly buy online), and hybrid consumers (who do
both).'
Most consumers are hybrid: They shop in grocery stores but occasionally order from
Peapod; they buy books ill Barnes & Noble bookstores and sometimes order books from
bn.com. People still like to squeeze the tomatoes, touch the fabric, smell the perfume, and
interact with salespeople. Consumers are motivated by other needs than only shopping.

2.1 Key Elements of a Business Model

A successful business model effectively addresses eight key elements:
1. Value proposition
It answers the question “why should customer buy products and services from a given firm?”. In
other words, how a company's product or service fulfills the needs of customers is typically
addressed by value proposition. Typical e-commerce value propositions include personalization,
customization, convenience, and reduction of product search and price delivery costs.
2. Revenue model
Refers to how the company plans to make money from its operations. Revenue model describes
how the firm will earn revenue, generate profits, and produce a superior return on invested
capital. Terms financial model and revenue model often used interchangeably. Major e-
commerce revenue models include the advertising model, subscription model, transaction fee
model, sales model, and affiliate referral model.

i) Advertising revenue model (ARM): Web site that offers content, services and/or
products also provides a forum for advertisements and receives fees from advertisers.
Example: Yahoo.com
ii) Subscription fee revenue model (SFRM): Web site that offers users content or
services charges a subscription fee for access to some or all of its offerings. Example:
Consumer Reports Online
iii) iii) Transaction fee revenue model (TFRM): Company that receives a fee for enabling
or executing a transaction.Examples:eBay.com and E-Trade.com.
iv) Sales revenue model (SRM): Company derives revenue by selling goods, information,
or services to customers. Examples: Amazon.com
v) Affiliate referral revenue model (ARRM): Sites that steer business to an “affiliate”
receive a referral fee or percentage of the revenue from any resulting
sales.Example:MyPoints.com
3. Market Opportunity
Market Opportunity refers to a company’s intended marketspace and the overall potential
financial opportunities available to the firm in that marketspace. Marketspace: the area of actual
or potential commercial value in which a company intends to operate is what a market
opportunity means. Realistic market opportunity is defined by revenue potential in each of
market niches in which company hopes to compete

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4. Competitive Environment
The direct and indirect competitors doing business in the same marketspace, including how many
there are and how profitable they are, i.e, it refers to the other companies selling similar products
and operating in the same marketspace. Competitive environment is influenced by:
 how many competitors are active.
 how large their operations are.
 what is the market share for each competitor.
 how profitable these firms are .
 how they price their products.
 Includes both direct competitors and indirect competitors

5. Competitive Advantage
A competitive advantage is achieved when a firm can produce a superior product and/or bring
product to market at a lower price than most, or all, of competitors. Firms achieve competitive
advantage when they are able to obtain differential access to the factors of production that are
denied to competitors.
Types of competitive advantage include:
 First mover advantage—results from a firm being first into a marketplace. What does this
firm has competitive advantage over its successors?
 Unfair competitive advantage—occurs when one firm develops an advantage based on a
factor that other firms cannot purchase.
 The factors that differentiate the business from its competition, enabling it to provide a
superior product at a lower cost. Here product differentiation, people differentiation,
channel differentiation, image differentiation are vital tools to make a uniqueness in the
marketplace.
 Second mover advantage –results form a firm being second into a market place. What does
this firm has competitive advantage over its predecessors?
6. Market Strategy
Market Strategy is a plan that details how a company intends to enter a new market and attract
customers. Best business concepts will fail if not properly marketed to potential customers. It
also connotes to all marketing mix strategies: product, price, place and promotion.
7. Organizational Development
Organizational Development is the process of defining all the functions within a business and the
skills necessary to perform each job, as well as the process of recruiting and hiring strong
employees. Describes how the company will organize the work that needs to be accomplished.
Work is typically divided into functional departments and respective employees are assigned
accordingly. Move from generalists to specialists as the company grows.
8. Management Team
The group of individuals retained to guide the company's growth and expansion. Employees of
the company responsible for making the business model work. Strong management team gives
instant credibility to outside investors. A strong management team may not be able to salvage a
weak business model, but should be able to change the model and redefine the business as it
becomes necessary

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2.2 E-Business Model Based on Relationship of Transaction Parties
On the basis of types of parties which are involved in e-commerce transaction, we have the
following possible combinations of e-commerce models :

Business Business

Government

Consumer Consumer

Fig. 2: E-business models on the basis of transaction parties .

1) Business-to-Consumer (B2C)
The B2C model involves transactions between business organizations and consumers. It
applies to any business organization that sells its products or services to consumers over the
Internet. These sites display product information in an online catalog and store it in a database.
The B2C model also includes services online banking, travel services, and health information
and many more as shown in figure below.
Consumers are increasingly going online to shop for and purchase products, arrange
financing, arrange shipment or take delivery of digital products such as software, and get service
after the sale. B2C e-business includes retail sales, often called e-retail (or e-tail), and other
online purchases such as airline tickets, entertainment venue tickets, hotel rooms, and shares of
stock.
Some B2C e-businesses provide high-value content to consumers for a subscription fee.
Examples of e-business following this subscription model include the Wall Street Journal
(financial news and articles), Consumer Reports (product reviews and evaluations), and
ediels.com (nutritional counseling).
B2C e-business models include virtual malls, which are websites that host many online
merchants. Virtual malls typically charge setup, listing, or transaction fees to online merchants,
and may include transaction handling services and marketing options. Examples of virtual malls
include excite.com, choice mall, women.com, networkweb.com, amazon.com, Zshops.com, and
yahoo.com.

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E-tailers that offer traditional or Web-specific products or services only over the Internet are
sometimes called virtual merchants, and provide another variation on the B2C model. Examples
of virtual merchants include amazon.com (books. electronics, toys, and music), eToys.com
(children's books and toys), and ashford.com (personal accessories).
Some businesses supplement a successful traditional mail-order business with an online
shopping site, or move completely to Web-based ordering. These businesses are sometimes
called catalogue merchants. Examples include avan.com (cosmetics and fragrances), chefs
(cookware and kitchen accessories), Omaha Steaks (premium steaks, meats, and other gourmet
food), and Harry and David (gourmet food gifts).
Many people were very excited about the use of B2C on the Internet, because this new
communication medium allowed businesses and consumers to get connected in entirely new
ways. The opportunities and the challenges posed by the B2C e-commerce are enormous. A large
amount of investment has gone into this and many sites have either come up or are coming up
daily to tap this growing market.

Major Business-to-Consumer Business Models are:

1. Portals
i) Horizontal/ General Portal
Offers an integrated package of content services and content search, news, e-mail, chat,
music downloads, video streaming, calendars, etc .Seeks to be a users’ home base.
It avails ARM, SFRM and TFRM.
ii) Vertical\Specialized Portal
Offers products and services to specialized marketplace. Same revenue models like that of
general portal are used.
2. E-tailers
i) Virtual Merchants
On-line version of retail stores, where customers can shop at any hour of the day or night
without leaving their home or office .E.g Amazon.com
iii) Click and Brick
Online distribution channel for a company that also has physical stores. E.g Wal-Mart.com
and Sears .com.
iv) Catalogue Merchants
On line version of direct mail catalogue. E.g LandsEnd.com.
v) Manufacturer Direct
A case where the manufacturer of a product directly sells to the customers .E.g Dell.com
and Compaque.com. N.B: All e-tailers models generate money using SRM.
3. Content Provider
Information and entertainment providers like newspapers ,sports sites and other on line sources
that offer customer up-to-date news and special interest how of guidance and tips and \or
information sales. E.g: Addis Admas.com, VOA.com, CNN.com, captal.com, ENA.com,
ESPN.com, skysports.com, teamtalk.com, goals.com, supersport.com.
4. Transaction Brokers
Processors of online sales transactions, such as stock brokers and travel agents that increase
customer’s productivity by helping them get things done faster and more cheaply. Industries

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using this model are financial services like mutual funds, travel agencies and job placement
service providers .They use TFRM. E.g includes E-Trade.com, Hotels.com etc.
5. Service Providers: are companies that make money by selling users a service rather than a
product. Typical examples of such firms would be online consultancy businesses, online training
providers, online education institutions that either partially or fully use net to admit students,
process payment of registration fees ,tuition fees ,conduct classes online and administer tests and
examinations and a host of many more .Use SRM.
6. Market Creator: are web-based businesses that use Internet technology to create markets
that bring buyers and sellers together. Use TFRM. E.g may include e-Bay.com, priceline.com,
and Amazon.com.
7. Community Provider: are sites where individuals with particular interests, hobbies and
common experiences can come together and compare notes. Use ARM, SFRM and ARRM. E.g
may include IVillage.com, About.com,Eopinion.com etc.

The B2C process:

1. Visiting the virtual mall. The customer visits the mall by browsing the online catalogue
—a very organized manner of displaying products and their related information such as price,
description, and availability. Finding the right product becomes easy by using a keyword
search engine. Virtual malls may include a basic to an advanced search engine, product rating
system, content management, customer support systems, bulletin boards, newsletters and
other components which make shopping convenient for shoppers.
2. Customer registers. The customer has to register to become part of the site's shopper
registry. This allows the customer to avail of the shop's complete services. The customer
becomes a part of the company's growing database and can use the same for knowledge
management and data mining.
3. Customer buys products. Through a shopping cart system, order details, shipping
charges, taxes, additional charges and price totals are presented in an organized manner. The
customer can even change the quantity of a certain product. Virtual malls have a very
comprehensive shopping system, complete with check-out forms.
4. Merchant processes the order. The merchant then processes the order that is received
from the previous stage and fills up the necessary forms.
5. Credit card is processed. The credit card of the customer is authenticated through a
payment gateway or a bank. Other payment methods can be used as well, such as debit cards,
prepaid cards, or bank-to-bank transfers.
6. Operations management. When the order is passed on to the logistics people, the
traditional business operations will still be used. Things like inventory management, total
quality management, warehousing, optimization and project management should still be
incorporated even though it is an e-business. Getting the product to the customer is still the
most important aspect of e-commerce.
7. Shipment and delivery. The product is then shipped to the customer. The customer can
track the order/delivery as virtual malls have a delivery tracking module on the website which
allows a customer to check the status of a particular order.
8. Customer receives. The product is received by the customer, and is verified. The system
should then tell the firm that the order has been fulfilled.

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9. After-sales service. After the sale has been made, the firm has to make sure that it
maintains a good relationship with its customers. This is done through customer relationship
management or CRM.

The example of the www.amazon.com site also involves the B2C model in which the consumer
searches for a book on their site and places an order, if required. This implies that a complete
business solution might be an integration solution of more than one business model. For
example, www.amazon.com includes the B2B model in which the publishers transact with
Amazon and the B2C model in which an individual consumer transact with the business
organization. The B2C model of e-commerce is more prone to the security threats because
individual consumers provide their credit card and personal information n the site of a business
organization. In addition, the consumer might doubt that his information is secured and used
effectively by the business organization. This is the main reason why the B2C model is not very
widely accepted. Therefore, it becomes very essential for the business organizations to provide
robust security mechanisms that can guarantee a consumer for securing his/her information.

Some of the reasons why one should opt for B2C are:
Inexpensive costs, big opportunities. Once on the Internet, opportunities are immense as
companies can market their products to the whole world without much additional cost.
1. Globalization. Even being in a small company, the Web can make you appear to be a big
player which simply means that the playing field has been levelled by e- business. The
Internet is accessed by: millions of people around the world, and definitely, they are all
potential customers.
2. Reduced operational costs. Selling through the Web means cutting down on paper costs,
customer support costs, advertising costs, and order processing costs.
3. Customer convenience. Searchable content, shopping carts. promotions, and interactive
and user-friendly interfaces facilitate customer convenience. Thus, generating more
business. Customers can also see order status, delivery status, and get their receipts online.
4. Knowledge management. Through database systems and information management, you
can find out who visited your site, and how to create, better value for customers.
Processes in B2C (How Does B2C Work?)
B2C e-commerce is more than just an online store. It really is about managing the entire
process, but just using technology as a tool for order processing and customer support.

2. Business to Business (B2B)

The B2B model involves electronic transactions for ordering, purchasing, as well as other
administrative tasks between business houses. It includes trading goods, such as business
subscriptions, professional services, manufacturing, and wholesale dealings. Sometimes in the
B2B model, business may exist between virtual companies, neither of which may have any
physical existence. In such cases, business is conducted only through the Internet.
Let us look at the example of www.amazon.com. As you know, www.amazon.com is an online
bookstore that sells books from various publishers including Wrox, O’Reilly, Premier Press, and
so on. In this case, the publishers have the option of either developing their own site or
displaying their books on the Amazon site (www.amazon.com), or both. The publishers mainly
choose to display their books on www.amazon.com at it gives them a larger audience. Now, to
do this, the publishers need to transact with Amazon, involving business houses on both the ends.

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Thus, B2B is that model of e-commerce whereby a company conducts its trading and other
commercial activity through the Internet and the customer is another business itself. This
essentially means commercial activity between companies through the Internet as a medium.
This is supposed to be a huge opportunity area on the Web. Companies have by and large
computerized all the operations worldwide and now they need to go into the next stage by
linking their customers and vendors. This is done by supply chain software, which is an integral
part of your ERP application. Companies need to set up a backbone of B2B applications, which
will support the customer requirements on the Web. Many B2B sites are company and industry
specific, catering to a community of users, or are a combination of forward and backward
integration. Companies have achieved huge savings in distribution-related costs due to their
B2B applications.

Major Business-to-business (B2B) models for E-Commerce

1. Net Marketplaces
These type of B2B EC business models incorporate e-distributors, e-procurement, hubs and
industry consortia.

2. Private Industrial Networks

Single-firm networks and industry-wide networks. Plasticsnet.com is a typical example. They
generate their revenue by charging fees and commission on transactions.

i) Single-firm networks
Company –owned networks to coordinate supply chains with limited set of partners. Her cost
absorbed by network owner and recovered through production and distribution efficiencies.
Here contributions from industry member firms and recovered through production and
distribution efficiencies; fees for transaction and services .E.g. may include Wal-Mart and Ford
Motor Co.

ii) Industry-wide networks

Industry –owned networks to set standards, coordinate supply and logistics for the industry.
Globalnetxchange.com is such example.

Major Advantages of B2B

1) Direct interaction with customers. This is the greatest advantage of e-business.
2) Focussed sales promotion. This information gives authentic data about the likes, dislikes
and preferences of clients and thus helps the company bring out focussed sales promotion
drives which arc aimed at the right audience.
3) Building customer loyalty. It has been observed that online customers can be more loyal
than other customers if they are made to feel special and their distinct identity is
recognized and their concerns about privacy are respected. It has also been found that
once the customers develop a binding relationship with a site and its product, they do not
like to shift loyalties to another site or product.
4) Scalability. This means that the Web is open and offers round-the-clock access. This
provides an access never known before, to the customer. This access is across locations

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and time zones. Thus a company is able to handle many more customers on a much wider
geographical spread if it uses an e-business model. The company can set up a generic
parent site for all locations and make regional domains to suit such requirements.
Microsoft is using this model very successfully.
5) Savings in distribution costs. A company can make huge savings in distribution,
logistical and after-sales support costs by using e-business models. Typical examples are
of computer companies, airlines, and telecom companies.
Processes for Business-to-Business Transactions and Models
B2B interactions involve much more complexity than B2C. For instance, typical B2B
transactions include, among others, the following steps:
(i) review catalogues, (viii) send PO to vendor,
(ii) identify specifications. (ix) prepare invoice,
(iii) define requirements, (x) make payment,
(iv) post request for proposals (REP). (xi) arrange shipment, and
(v) review vendor reputation. (xii) organize product inspection and
(vi) select vendor. reception.
(vii) fill out purchase orders (PO).
Due to the large number of transactions involved, business-to-business operations can be too
risky if e-business sites cannot guarantee adequate quality of service in terms of performance,
availability, and security.

3. Consumer to Business (C2B)

The C2B model involves a transaction that is conducted between a consumer and a business
organization. It is similar to the B2C model, however, the difference is that in this case the
consumer is the seller and the business organization is the buyer. In this kind of a transaction, the
consumers decide the price of a particular product rather than the supplier. This category
includes individuals who sell products and services to organizations. For example,
www.monster.com is a Web site on which a consumer can post his bio-data for the services he
can offer. Any business organization that is interested in deploying the services of the consumer
can contact him and then employ him, if suitable as shown in figure.

4 E-governance
In addition to the models discussed so far, five new models are being worked on that involves
transactions between the government and other entities, such as consumer, business
organizations, and other governments. All these transactions that involve government as one
entity are called e-governance. The various models in the e-governance scenario are:

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• Government-to-Government (G2G) model: This model involves transactions between 2

governments. For example, if the American government wants to by oil from the Arabian
government, the transaction involved are categorized in the G2G model.
• Government-to-Consumer (G2C) model: In this model, the government transacts with an
individual consumer. For example, a government can enforce laws pertaining to tax payments on
individual consumers over the Internet by using the G2C model.

Business Models in Emerging E-Commerce area

I. Consumer to Consumer (C2C)

The C2C model involves transaction between consumers. Here, a consumer sells directly to
another consumer. eBay and www.bazee.com are common examples of online auction Web sites
that provide a consumer to advertise and sell their products online to another consumer.
However, it is essential that both the seller and the buyer must register with the auction site.
While the seller needs to pay a fixed fee to the online auction house to sell their products, the
buyer can bid without paying any fee. The site brings the buyer and seller together to conduct
deals as shown in figure below.

Let us now look at the previous figure with respect to eBay. When a customer plans to sell his
products to other customers on the Web site of eBay, he first needs to interact with an eBay site,
which in this case acts as a facilitator of the overall transaction. Then, the seller can host his
product on www.ebay.com, which in turn charges him for this. Any buyer can now browse the
site of eBay to search for the product he interested in. If the buyer comes across such a product,
he places an order for the same on the Web site of eBay. eBay now purchase the product from
the seller and then, sells it to the buyer. In this way, though the transaction is between two
customers, an organization acts as an interface between the two organizations.
II. Peer-to Peer(P2P)
Links users, enabling them to share files and common resources without a common server.
Challenge is for P2P ventures to develop viable, legal business models. E.g may include Kazaa
and Groovenetworks

III. Mobile E-Commerce (MC)

Takes traditional e-commerce business models and leverages emerging new wireless
technologies. Key technologies are telephone-based 3G; Wi-Fi(Wireless local area network);
and Bluetooth(short range radio frequency devices .

By: Edmealem E.
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 E-commerce , Chapter II Business Models for E-Commerce

The emerging ecommerce frontier is the mobile marketplace via cellphones and other portable
devices. Micropayments for small things like parking meters, vending machines, tolls, and
goods and services that cost only a few dollars will be made using portable gadgets like cell
phones and PDAs. The micropayment transactions will be facilitated by secure internet
connections.

Cell phones and PDAs may be used not only for making local and long distance calls but for
email, picture-taking, texting friends, listening to music, reading the news, checking the weather
and sports scores, watching the latest videos and live television, and buying goods and services.
These mobile devices can function as shopping assistants remembering birthdays, location-aware
devices, they may serve ads and/or coupons as consumers near a store or restaurant. Like the
broadband internet, these mobile devices will benefit consumers because they are always on and
ready to support ecommerce on the move.

E-Business models based on the relationship of Transaction Types

(Assignment)
Based on transaction type, different types of transactions can be identified as listed below:
Brokerage Community
Aggregator Value chain
Info-mediary Advertising

By: Edmealem E.
13