NEW BUSINESS MODELS

Professor Albert T. Villadolid

There are six basic e-commerce models. These models can be combined to create various hybrids.
Does site serve as neutral marketplace ?

Models
Yes

Start

Exchange

No
Does the site favor buyers or sellers? Sellers Does site owner own customer relationship ? No Does site owner buy goods/ services?

Buyers

Yes

Purchasing Aggregator

No

Consumer Aggregator

Does site owner own the goods/ services?

No

Yes

Department Store

Mall

Yes Destination

Examples of Models
The six basic e-commerce models are applicable for both B2C and B2B e-commerce.
Buyer-biased
Purchasing
Description:

Neutral
Exchange

Seller-biased
Destination

Consumer Aggregator

Department Store

Mall Aggregates storefronts of vendors Refers customers to vendor sites (hyper-linking)

Procurement Pools collective administered by buying power of buying group fragmented buyers aggregates facilitates product info purchases (i.e., from pregroup discounts) approved suppliers

Matchmaker: enables buyers and sellers to engage in commerce

Sells products or services directly to consumers/ other businesses

Aggregates products from different vendors in one marketplace

B2C:

N/A

BuyItTogether.com Coolbid.com (China)

eBay.com (C2C) Eachnet.com (C2C, China)

Amazon.com Rediff.com (India) Dell.com SatyamOnline.com (India) Dangdang.net (China) 8848.net (China) eShopping.ne.jp Sina.com (China) (Japan)

Yahoo.co.jp (Japan)

B2B:

Ford/ GM/ Chrysler parts purchasing

BuyGroup.com

AdAuction.com PaperExchange.co m

Dell.com Cisco.com

MRO.com

VerticalNet.com

Traditional Business Model

Vendor meetings Send out requirements Call vendors Receive bids & product specifications

Long cycle times

Send check in mail

Significant administrative resources Limited access to suppliers and information

Make modifications Fax out

Make decision Sign for goods Send to procurement and accounting Wait for delivery Purchasing Fax to vendor

Send out purchase order

E-Business Enabled Model

Display requirements on virtual bid board Meet with vendors via video conference

Review bid

Greatly reduced cycle times Minimal administrative requirements

Computer processes e-payment

Make Modifications

Greater access to suppliers and information

Select supplier Email purchase order & copy accounting Delivery Purchasing

What Drives Companies to Adopt e-Business?

E-Business adoption is being driven by: efficiency cycle time end user requirements process improvement quality and cost savings

The Value Shift

Inventory Physical Assets Closed Vertical Integration Information Intellectual Assets Collaboration Virtual Integration

Customer Relationships
Commoditizing products Customer loyalty yields incremental revenue Customer relationships are a differentiator and source of value Explosion of customer choice & access

In services, relationship is the product

Uncertain value of established brands

Customer Relationships Online

Customer Relationships
Information Sharing Product info Specifications Reporting tools Order status Newsletters Services Co benefits Internet Commerce Online quotes Order entry Standards maintenance Customized prices Legacy integration Service & Support File library Trouble-shooting Detailed reference Discussion forum Survey

Delivered through a customized interface

In Asia, there are obstacles

Talent and Experience

Infrastructure Highly variable infrastructure development High capex requirement

Lack of Proven Business Models

Asia Regional Complexities

Finite talent pool

No silver bullet models yet Suppliers, distributors, and customers may not be ready to change

Each country unique - www maturity - Languages - Currencies - Taxes & duties - Customs - Culture, politics, religion

Three company/industry attributes that determine to what extent a company can expect to be be affected by e-commerce

Product/service Characteristics bittable/digitisable Portability Company position within the value chain Can you innovate new products and channels Are you a pure intermediary Can you build an extended enterprise Customer Willingness How desirable is your offering via e-commerce How accessible is it (positive purchasing/servicing experience)