E-Commerce Business Models

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Summary

• E-Commerce Business Models
• Digital Enterprise
• E-Commerce
• E-Commerce 2.0

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E-Commerce Business Models

• business model
• A method of doing business by which a company
  can generate revenue to sustain itself

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EC Business Models

• Six elements of a business model include
  descriptions of
• Customers to be served and the companys
  relationships with these customers including
  customers value proposition
• All products and services the business will offer
• The business process required to make and deliver
  the products and services
• The resources required and the identification of
  which ones are available, which will be developed
  in house, and which will need to be acquired
• The organizations supply chain, including
  suppliers and other business partners
• The revenues expected (revenue model),
  anticipated costs, sources of financing, and
  estimated profitability (financial viability)

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EC Business Models

• revenue model
• Description of how the company or an EC project
  will earn revenue
• value proposition
• The benefits a company can derive from using EC

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EC Business Models

• The major revenue models are
• Sales
• Transaction fees
• Subscription fees
• Advertising fees
• Affiliate fees
• Other revenue sources

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EC Business Models

• Typical EC Business Models

• Information brokers (informediaries)
• Bartering
• Deep discounting
• Membership
• Value-chain integrators
• Value-chain service providers
• Supply chain improvers
• Social networks, communities, and blogging
• Direct sale by manufacturers
• Negotiation

• Online direct marketing
• Electronic tendering systems.
• Name your own price
• Find the best price
• Affiliate marketing
• Viral marketing
• Group purchasing
• Online auctions
• Product and service customization
• Electronic marketplaces and exchanges

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Benefits and Limitations of EC

• Benefits to
• Organizations
• Consumers
• Society
• Limitations
• Technological
• Nontechnological

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The Digital Enterprise

• digital enterprise
• A new business model that uses IT in a
  fundamental way to accomplish one or more of
  three basic objectives reach and engage
  customers more effectively, boost employee
  productivity, and improve operating efficiency.
  It uses converged communication and computing
  technology in a way that improves business
  processes

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The Digital Enterprise

• corporate portal
• A major gateway through which employees,
  business partners, and the public can enter a
  corporate Web site

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The Digital Enterprise
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E-Commerce

• Build your on-line Business.
• How to adopt e-commerce for your Business?

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Why is EC important

• Trends
• Growing importance of electronic commerce
• Domestically Internationally
• Globalisation (whether we like it or not!)
• Internet is creating a new economy the digital
  economy (or the e-economy) new services new
  delivery vehicle
• ICT as an enabler to economic growth (and social
  development) contributes to GDP growth
  productivity gains

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The Global Internet Economy
Worldwide E-Commerce Sales

• Worldwide e-commerce spending projected to grow
  at CAGR of 23, exceeding 8.75 trillion in 2009

Source IDC, Worldwide Internet Usage and
Commerce 2005-2009 Forecast update, April 2007
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Some Key Ideas...
DETRACTOR
Unhappy with Research chooses not to buy
Unhappy with product, service or delivery
Awareness
Receipt
Usage
Purchase
Research
Repeat
PROMOTER

• A fundamental picture for E-Commerce

Happy Usage
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Some Key Ideas...

• Marketing is a 450 billion industry and we are
  all making decisions with less data and
  discipline that we apply to 100,000 decision in
  other aspects of our business
• Jim Stengel, GMO at Procter Gamble

• consumers spending 34 of their time on-line
• marketers spend only 6 of their budget on-line

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Some Key Ideas...

• only 1-8 of visitors will purchase anything
• conversion rate
• only 30-50 of those who put anything in the
  basket will eventually buy
• customers research online buy online

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Some Key Ideas...

• Fundamental Questions

• How will customers find the site?
• search engines optimisation, other site to drive
  traffictarget advertising...
• How to convert a visitor into a paying customer?
• eliminating barriers, good design of customer
  experience, security, reassurance...
• How to keep the customer?
• post-purchase services, customer engagement,
  channels...

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Some Key Ideas...

• Where are the jobs?

• Advising companies how to improve their sites
• Running e-commerce development projects
• Designing effective on-line marketing
• Building new better e-commerce stores
• Designing new interface elements (AJAX)
• Analyzing and supporting the evolving businesses
• Designing secure 24/7 hosting
• Copywriting and taking photographs

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What to look for at a e-commerce site

• Customer Experience
• Graphical and Design Issues
• Business
• Technical

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What to look for at a e-commerce site

• Customer Experience
• customer journeys
• language of the site
• complexity of the navigation
• does the site make it easy to do business
• do they listen to the customers?
• Graphical and Design Issues
• Business
• Technical

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What to look for at a e-commerce site

• Customer Experience
• Graphical and Design Issues
• your first impressions
• use of space colour
• fit with brand?
• sense of time?
• Business
• Technical

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What to look for at a e-commerce site

• Customer Experience
• Graphical and Design Issues
• Business
• payments? try to buy something (VISA 4111 1111
  1111 1111)
• estimate traffic (www.alexa.com)
• check the Google rank
• regular customers?
• failed-to-convert visitors?
• look at the competition
• Technical

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What to look for at a e-commerce site

• Customer Experience
• Graphical and Design Issues
• Business
• Technical
• technology, standard shopping cart software
• search effectiveness
• accessibility (legal issue in the UK)

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What to look for at a e-commerce site

• Customer Experience
• Graphical and Design Issues
• Business
• Technical

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What to look for at a e-commerce site

• Common Suggestions

• Make the core pages working harder
• Provide better decision support
• Integrate better with the business and payment
• Optimise for search engines
• More, richer information
• Improve customer reassurance
• Use modern interface techniques (e.g. AJAX)
• Better sense of personality

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What to look for at a e-commerce site

• and some more modern ideas...

• Landing pages?
• Affiliate schemes?
• Price comparison sites?
• Syndicating?
• Social networking? Blogging? Mashups?

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Designing User Experience

• Where do the customers come from?
• Google, ads, other sites, direct URL...
• Not all of them are going to buy!
• research, collect information...
• Where they arrive?
• home page, landing pages, product pages,
  offers...
• Customer Journey Barriers
• errors, popups, registration, bad navigation...
• Reassurance
• security, privacy, delivery...

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Designing User Experience

• Why do customers not buy?

• When they encounter barriersproblems, poor
  search, confusion, errors
• When they are not happy with the researchprice
  comparison
• Research on-line buy off-line
• Payment, delivery, security...
• Not happy using your stuff buy once, never again

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Promoting Your Site

• Customers will not buy if they cant find you

• Search Engine Optimisation
• Internet Advertising
• Other...

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Promoting Your Site

• Search Engine Optimisation

• Create content services
• Keyword-rich relevant text
• Page titles, headlines, META tags
• Keyword-based design (content landing pages)
• Avoid barriers (Flash, tables, frames)
• Analyse server logs
• Update your site frequently

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Promoting Your Site

• Internet Advertising

• Traditional banners (and popups)
• E-mail
• Google ad-words, Pay per click
• Affiliates schemes
• Widgets/Gadgets, Web Services
• Internet radio, podcasts
• RSS
• Viral Campaigns (YouTube)

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Promoting Your Site

• More and less traditional...

• TV, radio, papers
• Direct mail
• Outdoor
• Interactive outdoor
• Ambient or Guerrilla Marketing

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10 Worst Mistakes

1. Requiring login to order
2. Complicated checkout
3. Not showing shipping prices upfront
4. Vague or hard to find return/privacy policies
5. Poor product descriptions
6. Lack of filtering sorting
7. Poor or no search facility
8. Using excess of Flash images
9. Unreachable customer service
10. No contact details

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Activity

• Evaluate an e-commerce site of your choice. To
  get best results, work in pairs and choose 2
  companies in the same product area as a
  comparison study.
• Avoid air lines, books, DVDs, phones, cars,
  supermarkets as they are usually rich good.
• Some suggestions cosmetics, perfumes, jewellery,
  fashion, furniture, plants gardening, sports
  accessories

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E-Commerce 2.0
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The EC Framework, Classification, and Content

• The Future of EC
• Web 2.0
• The second-generation of Internet-based services
  that let people collaborate and share information
  online in perceived new wayssuch as social
  networking sites, wikis, communication tools, and
  folksonomies

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Web 2.0 is the network as platform, spanning all
connected devices Web 2.0 applications are those
that make the most of the intrinsic advantages of
that platform delivering software as a
continually-updated service that gets better the
more people use it, consuming and remixing data
from multiple sources, including individual
users, while providing their own data and
services in a form that allows remixing by
others, creating network effects through an
"architecture of participation," and going beyond
the page metaphor of Web 1.0 to deliver rich
user experiences.
Tim O'Reilly, Web 2.0 Compact Definition?
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Nature of the Second Wave

• Sharing
• Collective intelligence
• Self-service
• Customer centricity
• Personalization
• Recommendation

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Core Competencies of Web 2.0 Companies

• Services, not packaged software, with
  cost-effective scalability
• Control over unique, hard-to-recreate data
  sources that get richer as more people use them
• Trusting users as co-developers
• Harnessing collective intelligence
• Leveraging the long tail through customer
  self-service
• Software above the level of a single device
• Lightweight user interfaces, development models,
  AND business models

Source OReilly, T., What is Web 2.0
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The EC Framework, Classification, and Content
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Social and Business Networks

• social networks
• Web sites that connect people with specified
  interests by providing free services such as
  photo presentation, e-mail, blogging, etc.
• Business-oriented networks are social networks
  whose primary objective is to facilitate business

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The Web 2.0 Framework, Classification, and
Content
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Social Trends

• Spread of Broadband
• Increasingly ubiquitous connections
• A generation of web natives
• Living on the web
• Social networking blogging instant messenger
• Create, not just consume
• Some hard lessons about data ownership
• Dont steal my data dont lock me in

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Business Trends

• Exploit the Long Tail
• At internet scale even niche communities are very
  large
• We sold more books today that we didn't sell at
  all yesterday, than we sold today of all the
  books that did sell yesterday.
• Amazon employee quoted on Wikipedia
• Success of web services
• No need to own the user interface. It's your data
  that they want
• Users can enrich your data
• Harnessing collective intelligence of users
• Review and Recommend Social Bookmarking
  Folksonomies

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Technology Trends

• The Power of XML
• Easier to exchange and process application
  independent data
• Agile Engineering
• Incrementally developer your product short
  release cycles
• Continually adapt to user need
• The Perpetual Beta
• Maturation of the browser
• XHTML, DOM, CSS, Javascript
• Browser as platform, not just document viewer

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Marketing 2.0

• Understanding Your Customers

• Customer centric
• Gathering the data
• demographics
• behaviour
• attitude
• decisions
• Generating Personas
• Identifying your most valuable customers

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Players in Customer-Centricity
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Identifying Opportunities

• Customer
• Active (e.g., wikipedia) vs. passive (CRM)
• Process
• Flexible on-demand process
• Technology
• Service-oriented computing, Web 2.0, mobile
  technology
• Product/services
• Personalization and customization

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Service-oriented Computing

• Web-based application is designed in a
  machine-interoperable form so that different
  applications are easily integrated on-demand.
• Example
• web services for stock analysis
• Web services from Amazon.com

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Service-oriented Architecture
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Web Services at Amazon
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Types of Personalization

• Personalized product
• Personalized content
• Personalized web page
• Personalized transaction process
• Personalized services

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Potential Applications

• Mobile commerce
• Location-based commerce
• Blog marketing
• Target marketing
• Information brokering

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Social 2.0

• Social Tools

• Forums, FAQs, Comments
• Reviews
• Blogs Wikis
• Lists
• Behaviour based elementsCustomers who bought
  this item also bought
• Feedback
• Ratings

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Social 2.0

• Additional Impact

• Open Source
• Web Services
• Mashups

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Engage 2.0

• building a long-term relationship with the
  customer

• Loyalty beyond collecting the points
• reward experience brand
• Word of Mouth beyond the tell a friend
• social tools widgets social space
• Cross Selling beyond the recommended purchase
• other items in the same category customers who
  bought this also bought... quick adds looks
  good with... complete the look bundles
  recently viewed recommended for you customer
  rated matches

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Engage 2.0

• (continued)

• Personalisation
• User Innovation
• Quality Search
• Rich Application Interface
• Ethical and Green
• Customer Experience Management

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Channel 2.0

• One customer, one seller, multiple channels

• On-line store
• High street store
• Call centre
• By mail
• Mobile commerce
• In-store kiosk

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Channel 2.0

• Channel interaction

• Pricing
• Promotions
• Order fulfilment
• Returns
• Real time delivery checking

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CSSContent with Style
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RSS Content Syndication
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Web Services Open Data
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Web Services

• Publish Data Not Pages
• Remember its your data that they want, not your
  user interface
• RSS feeds are web services, too
• Mashups
• Remix Data to Create New Applications
• 184 Web services listed on ProgrammableWeb.com
• Photo sharing calendars messaging blogging
• File storage ecommerce advertising search

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MAP API
EVENTS API
IMAGE API
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Is It Possible to Predict the Future of a
Technology Like the Web?

• No one predicted the dot-com bust
• No one predicted Web 2.0
• Is it a lesson from the past that the future of
  the Web is unpredictable?

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Three alternative trends of Web development
Applications, services, agents
Machines, devices, computers
Human Communities
Facilitates Machine-to-Machine interaction
Facilitates Software-to-Software interaction
Facilitates Human-to-Human interaction
Semantic Web
Web of Things
Metadata
Ubiquitous Computing
Web 2.0
Smart Spaces
Ontologies
Wikis
RFID
Web Services
Blogs
Embedded Systems
Agents
Mashups
Sensor Networks
EAI Portals
Community Portals
Web
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Semantic Wave (Web X.0)
We may add here Web 5.0 will come finally and
it is about connecting models in a Global
Understanding Environment (GUN), which will be
such proactive, self-managed evolutionary
Semantic Web of Things, People and Abstractions
where all kinds of entities can understand,
interact, serve, develop and learn from each
other. Vagan Terziyan
The semantic wave embraces four stages of
internet growth Web 1.0, was about connecting
information ... Web 2.0 is about connecting
people. Web 3.0, is starting now and it is
about connecting knowledge Web 4.0 will come
later and it is about connecting intelligences
in a ubiquitous web where both people and things
can reason and communicate together. Semantic
Wave 2008 , Mills Davis
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The Big Ideas of Web 2.0

• Fresh, useful data is the core
• The ability for other parties to manipulate that
  data
• Living applications that can be easily adapted
• Harnessing the collective experience
• The Web as a platform, independent of user
  platform
• Primary focus of participation, rather than
  publishing
• Trusting of users to provide reliable content

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The Big Ideas of the Semantic Web (1/3)

• Information has machine processable and
  machine-understandable semantics
• Can be built upon the framework of the existing
  Web technology
• Ontologies are the basic building block of a
  semantic Web

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The Big Ideas of the Semantic Web (2/3)
Web Services UDDI, WSDL, SOAP
Dynamic

• Bringing the computer back as a device for
  computation

WWW URI, HTML, HTTP
Semantic Web RDF, RDF(S), OWL
Static
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The Big Ideas of the Semantic Web (3/3)

• Bringing the Web to its full potential

Semantic Web Services
Web Services UDDI, WSDL, SOAP
Dynamic
WWW URI, HTML, HTTP
Semantic Web RDF, RDF(S), OWL
Static
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Conclusions

• Modern e-commerce is much beyond a digital
  catalogue with web based front
• Web 2.0 is
• User generated content
• User participation and engagement
• Service oriented design new interfaces
• Openness and transparency
• Decision support
• Social computing
• Building a reputation

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Summing Up

• Web 2.0 hard to define, but very far from just
  hype
• Culmination of a number of web trends
• Importance of Open Data
• Allows communities to assemble unique tailored
  applications
• Importance of Users
• Seek and create network effects
• Browser as Application Platform
• Huge potential for new kinds of web applications