Introduction to e-Commerce:What is a Business Model? • A Business Model is how a business attracts customers and makes a profit. • Successful businesses: • Create and deliver something (a product or service) that has value. • Have a market for its products or services • Can pay their costs, i.e overhead • Ultimately make a profit
Introduction to e-Commerce:Common Characteristics of Successful Websites • Successful websites have the following four characteristics: • They make it easier for users to do something • They offer users something of value, often times for free • They incorporate features & benefits that generate repeat visits and use • They differentiate themselves from competition
Introduction to e-CommerceeBay: Online Auction Business Model • eBay is an electronic marketplace for people who want to sell things and people who want to buy. • eBay is considered by many business experts to be the most successful e-commerce site ever. • In 2006, eBay’s net revenues reached $5.97 billion, a 31% increase over the year before. • eBay’s profits exceeded $1 billion for the second straight year in 2006 ($1.13 billion)
Introduction to e-Commerce eBay: Online Auction Business Model What does eBay make easier? • It makes it easier for people to sell. • It makes it easier for people looking to purchase to find items for sale. • It makes it easier to buy, often times at a lower price. • It makes it safer to do business with people you haven't met.
Introduction to e-CommerceeBay: Online Auction Business Model What does eBay offer free to users? • It is free for buyers to submit bids on eBay. • It is free to monitor the progress of auctions on eBay. • It is free to use eBay’s search engine to find items for sale that you have an interest in purchasing.
Introduction to e-CommerceeBay: Online Auction Business Model How does eBay generate repeat usage? • Through the bidding process (bidders are compelled to return to see how their bid is doing.) • Requiring sellers and bidders to register. • Website ease of use to buy and sell. • A secure user environment (makes buyers and sellers more receptive to perform a transaction.) • A unique variety of products.
Introduction to e-Commerce eBay: Online Auction Business Model How does eBay differentiate itself from competition? • Excitement and competition in the shopping process. • Users don’t know the cost of a product until the winning bid has been posted. • Product variety, ease of use, and security
Introduction to e-Commerce eBay: Online Auction Business Model How does eBay Attract first-time visitors to its Web site? • Clever search engine marketing strategies • Publicity - Weird, clever, and unique items auctioned on eBay have received worldwide media coverage • Associates program that provides linking incentives • Advertising on TV, radio, the Internet, and direct mail
Introduction to e-CommerceeBay: Online Auction Business Model How does eBay make money? • Charges sellers a fee. • Charges for specialized services such as the rental of electronic storefronts to sellers and an on-line bill payment service. • Sells advertising space.
Introduction to e-CommerceAmazon: Online Retail Business Model • Amazon is an online retailer of books, music, DVD/video, toys, electronics, software, and home products. • Amazon spent 98 cents for every $1 of revenue it generated in 2006 while eBay spent just 81 cents for every dollar of its revenue. What helps make eBay’s business model more profitable?
Introduction to e-CommerceAmazon: Online Retail Business Model What does Amazon make easier? • It makes it easier for people to shop with features such as one-click shopping. • It makes it easier for people to get information about the products they are interested in. • It makes it easier for people to compare the features, benefits, and prices of competitive products. • It makes it easier to save money.
Introduction to e-CommerceAmazon: Online Retail Business Model What does Amazon offer free? • Detailed product information. • Product ratings and reviews. • Services and features (e.g. free chapters from books, samples of songs from CDs, e-cards, review restaurant menus, wedding registries, movie show times)
Introduction to e-CommerceAmazon: Online Retail Business Model How does Amazon generate repeat usage? • Purchasers must register. • Software that tracks users purchasing behavior and generates e-mail messages that notify when a similar or related item becomes available or goes on sale. • Promotions such as the gold box.
Introduction to e-CommerceAmazon: Online Retail Business Model How does Amazon differentiate itself from competition? • Offers its products at the lowest possible price. • Has a large variety of products. • Has an extensive database that tracks purchases
Introduction to e-CommerceAmazon: Online Retail Business Model How does Amazon attract first-time visitors? • Effective search engine marketing • An associates program that offers revenue generation potential for third party links • Lots of advertising on TV, radio, in mail
Introduction to e-CommerceNY Times: Online Newspaper Business Model • The mission of the online version of the NY Times is to provide a high-quality, worldwide online audience with trusted editorial content from The New York Times • Launched in January 1996 • Most of site’s content comes from content already being produced for hard-copy edition • Site has 13.3 million registered users
Introduction to e-CommerceNY Times: Online Newspaper Business Model What does the NY Times website make easier? • It makes it easier for people to access news information in each day’s edition. • It makes it easier for users to get access to additional information such as video feeds, slide shows, on-line chats with columnists and writers.
Introduction to e-CommerceNY Times: Online Newspaper Business Model What does NY Times offer free to users? • Users enjoy complete access to each day’s online version for free. How does NY Times generate repeat usage? • Free content • Feature that allows articles to be emailed to others • E-newsletters on special interest topics • A personalized news service
Introduction to e-CommerceNY Times: Online Newspaper Business Model How does NYTimes.com differentiate itself from competition? • Content is updated several times during each day • Use of features that have enabled the hard-copy to differentiate itself, such as op-ed writers, Sunday Magazine supplement, and the Crossword Puzzle • It’s free!
Introduction to e-CommerceNY Times: Online Newspaper Business Model How does NYTimes.com attract first-time visits? • RSS Feeds that permit other sites including blogs to abstract and link to NYTimes.com articles • By effectively using its hard-copy edition to promote its online edition
Introduction to e-CommerceNY Times: Online Newspaper Business Model How does NYTimes.com make money if the subscription is free? • Advertising • An ad that runs for about one month currently costs approximately $70,000 • Sale of Times Select subscriptions - access to premium and archived content • Sale of related products/services such as software to do the crossword puzzle, and products in the site's on-line store.
MySpace.com Social Networking • Businesses like this model because content is created by users of the site • MySpace’s mission is to create the coolest online place a 13-to-34 year old Internet user could possibly be • 35 million visits per month • User security is an issue with this model • MySpace was sold in 2006 for over half billion dollars
MySpace.com Social Networking What does MySpace offer free to users? • Users can create personal Web sites, blogs, photo galleries • Users can communicate with friends online and meet new people who have similar interests • Users can easily post and share images, videos, music etc.
MySpace.com Social Networking How does MySpace generate repeat usage? • Curiosity - When users post something at My Space, they check back at site frequently to see if friends or strangers have commented or left messages to their post. • Habit - MySpace.com has become a standard form of communication among its users in much the same way people use instant messaging, e-mail, and cells.
MySpace.com Social Networking How does MySpace differentiate itself from competition? • Social Networking Sites are very vulnerable to competition because the communication technology they feature is easily replicated and enhanced (MySpace replaced Friendster.com) • Sheer Size of MySpace’s user base (95 million registered users) gives it advantage because primary purpose of a social networking site is to communicate with as many “others” as possible.
MySpace.com Social Networking How does MySpace attract first-time visitors? • Viral marketing at its most effective. Since one of the key purposes of using MySpace.com is to communicate with friends, every user gets more people to become users. • Owner of MySpace.com is World News Corp. one of the biggest media companies in the world. Company’s newspapers, TV networks, radio stations, and magazines can be used to promote the site at every opportunity.
MySpace.com Social Networking MySpace should be used with caution and maturity • Don’t post anything at MySpace.com that you don’t want everyone in the world to know about yourself. • Employers now search MySpace for profiles of job candidates. • There have been instances where MySpace users have been identified and victimized using information those users have made available at the Web site.
You don’t have to be “BIG” to be successful online CustomInk.com - Started in a garage • Developed a new and creative way to sell imprinted tee shirts that takes full advantage of the Internet’s interactive technologies • This site’s users get to design the product they are purchasing • This Company has become successful by developing an online business model that makes it fun and engaging for customers to place orders and spend money at their Web site.
Introduction to e-CommerceMTV.com: Niche Portal Business Model • Focuses on music fans in their teens and twenties. • Is consistently ranked the No. 1 music content site in the teen demographic, according to Media Metrix
Introduction to e-CommerceMTV.com: Niche Portal Business Model What does the MTV.com website make easier? • It makes it easier to find information about music and artists. • It makes it easier to find out when and where an artist is performing. • It makes it easier to sample and purchase recordings. • It makes it easier to communicate with people from around the world who share the same musical interests.
Introduction to e-CommerceMTV.com: Niche Portal Business Model What does MTV.com offer free to users? • The ability to personalize features of the site based on musical tastes. • Downloads of free music from new and established artists. • Product ratings and reviews. • Chats hosted by top recording artists.
Introduction to e-CommerceMTV.com: Niche Portal Business Model How does MTV.com generate repeat usage? • Requires visitors to join/register. • Software that tracks personal preferences and purchasing behavior so that marketing can be more targeted. • Free samples of new recordings.
Introduction to e-CommerceMTV.com: Niche Portal Business Model How does MTV.com differentiate itself from competition? • It focuses on the teenage demographic, which is known to spend its money on music-related interests. • Exclusive content that is not available anywhere else. • It covers a wide expanse of musical related and cultural interests.
Introduction to e-CommerceAssignment • List the events happening inside your college / university that would be of interest to different segments of your community. • List ways to get people interested in what’s going on inside your college / university. • Write how you could obtain information that will be used as content for your website.