ECommerce Models

1
E-Commerce Models

• Michael OHerlihy

2
E-Commerce Models

• Brokerage
• Advertising
• Infomediary
• Merchant

• Affiliate
• Manufacturer Direct Model
• Subscription
• Utility

3
Brokerage

• Brings buyers and sellers together
• A fee is usually charged for the transaction
• Examples
• Auction sites such as eBay
• Portals such as Yahoo
• Virtual Malls

4
Advertising

• An extension of the traditional media broadcast
  model
• Free service such as email or search engine, paid
  for by having advertisements
• Works best when the volume of viewer traffic is
  large or highly specialised
• Search engines such as Google

5
Infomediary

• An infomediary is a web site that provides
  specialised information on behalf of producers of
  goods and services and their potential customers
• Can be divided into those intended for consumers
  and those intended for businesses
• DoubleClick.com
• Kompass.ie

6
Merchant Model

• Selling goods and services online
• Existing wholesalers and retailers
• Virtual Merchant (Amazon)
• Shopping Cart
• Find item, add to cart, checkout

7
Affiliate Model

• Store offers financial incentive to affiliates
  for any sales generated from affiliate sites
• Pay-per-click
• Pay-per-lead
• Pay-per-sale
• Generates estimated 15-18 of sales
• Pioneered by Amazon
• 900,000 affiliates in 2003
• Pays up to 15

8
Manufacturer Direct Model

• Predicated on the power of the web to allow a
  manufacturer to reach buyers directly and thereby
  compress the distribution channel
• Can be based on efficiency, improved customer
  service, and a better understanding of customer
  preferences
• Example, DELL

9
Subscription Model

• Users are charged a periodic -- daily, monthly or
  annual -- fee to subscribe to a service
• It is not uncommon for sites to combine free
  content with "premium" (i.e., subscriber- or
  member-only) content
• Subscription fees are incurred irrespective of
  actual usage rates
• Subscription and advertising models are
  frequently combined
• Example, Ireland.com

10
Utility Model

• The utility or "on-demand" model is based on
  metering usage, or a "pay as you go" approach
• Unlike subscriber services, metered services are
  based on actual usage rates
• Traditionally, metering has been used for
  essential services (e.g., electricity water,
  long-distance telephone services)