The Real Value of “E-Business Models”

Summary Note: The real value of “e-business models” Research Questions Asked * What is the meaning of e-business model? * Do the e-Business model really matter to create a thriving e-firm? * Can only a good e-business model will give the strength to company to get success? * What are the real key factors determining the survival or failure of e-firm? The e-business model is a model used by the e-commerce company to better be organized for providing a product or service, generating revenues and, especially, creating and adapting to the new market and technologies.

Summary This article suggests in a critical way how this important model could be applied to different types of company, distinguishing the model by categories. It pays attention how the particular model is not the only successful key of the company, but it will an important tool if the company understands the linkage between it, its core business and the marketplace environment. The article presents some cases of failure and success, and how it creates a thriving for the firm. Supply chain model Direct sales: the firm provides a product or services directly to a customer ( Dell, Cisco, Aol) * Intermediary: the firm sells goods from a third party (Amazon) * Electronic marketplace: make easier the direct communication between buyers and sellers (Autobytel) Revenue model * Income is generated directly from the customer transaction * “Free sires where the income is generated through advertising or sponsorship (Napster) Internet business can also be distinguished according to the markets they serve * B2B business to business * B2C business to consumer Click and mortar: relies on offline asset * Pure play model: purely net based Failure and key of success Odds of survival of different business models compared| E-tail vs direct sales | 0. 93:1| Portal vs direct sales| 0. 97:1| Marktplace vs direct sales| 1. 30:1| Pay vs free| 0. 80:1| Clicks/mortar vs pure Net | 11:01| * E-tail and portal sites are slightly less likely to survive than direct sales sites * Marketplace model are likely to survive that direct sales sites * Free sites are a little more likely to survive than pay sites * Clicks and mortar are 11 times more likely than pure Internet sites.

Observation : * Firm that are part of group have a strategic advantages as brands, customers and suppliers relationship and cash * E-models are flexible and they enable rapid growth. Why some company in the same market will get success and some are not? * Logistic strategies – Case of eVineyards and Wine. com: the first decides to set up own retails store in each location generating a quicker and more reliable service. The second decided to outsource by relying on retail partners in various location, but it generated longer delivery times and out-of-stock problems Channel conflict: some firms have to cease trading via the Net owing to conflicts with existing channel partners (Starbucks, Levi Strauss, Reebok) * Free and pay web sites: the mass of users is attracted when the service is free * Lack of customer benefits is a common cause for the failure of the company * Network externalities: some firms focus on creating an high numbers of user, reeling in a large enough user base to make it attractive for the other users to join (eBay) * Level of utility and value added: to achieve a high target market penetration it may be necessary to be innovative (Priceline)

What to take from it? * Each model raises particular issues * There is not a “perfect model” * Key factor is understanding and managing the particular problem inherent in their model * The chances to be successful are much higher when the firm is a part of a larger group Critique * It’s a bit old. * It does not tell us , how is perfect business model look like? Questions for class * Is necessary to have a business model? * What are the key drivers of success in the business model? * How will these change in the future?