II. E-Business Models

Report
This topic focused on E-Business and Revenue Models. We began by considering the framework, Input-Processes-Output, and how E-Business is evident in the “input” and E-Commerce in the “output” phases. Successful E-Business requires effective message and information distribution systems, multi-media content, networks, databases, marketing strategies, e-payments and security, strategic alliances, knowledge management, and compliance with government regulations and public policy. It may establish intranets (between the company and its employees) and extranets (between the company and its suppliers/customers).

Business models include peer-to-peer (P2P) file-sharing networks such as kazaa and napster; business-to-employee (B2E) models that offer services, libraries, training, etc. to employees; government-to-business (G2B) and government-to-consumer (G2C) models, such as filing taxes online. The most important business models are business-to-business (B2B), used by companies like Dell and BT; business-to-consumer models (B2C), used by Amazon; consumer-to-consumer (C2C), used by companies that auction, such as eBay, and for social networking; and consumer-to-business (C2B), which may be used for reverse auctioning.

Business models may be classified further as online direct marketing, e-tendering, name-your-own-price, bartering online, affiliate marketing, online auctions, find-the-best-price, information brokers, membership, supply-chain improvers, value-chain service providers, product customization, e-marketplaces, i-exchange, e-co-ops, etc.. There are many names for what amounts to the same thing – different forms of marketing!

In setting up a business, determining where money will come from is one of the most important considerations. The revenue models that are most often used, or used in combinations include 1) sales (goods and services); 2) transaction fees; 3) subscriptions; 4) advertising; and 5) affiliate fees (for collections or referrals).

Lastminute.com, which first used the internet to introduce an innovative service, selling distressed inventories (hotel rooms, airline and theatre tickets), was presented as a case study then. As information brokers and participants in the affiliate market, the business falls into the B2B model; the value-added service it provides to customers is C2B. Airlines and other business provide revenue, and customers probably also pay a fee. Essentially, they are a travel agency! At this point in time, however, more recently developed businesses such as Opodo offer improved services, and lastminute is challenged to update their platform and increase the quality of their web service.

Reflection
Entering the world of E-Business, the variety of business and revenue model applications on-line is phenomenal! I’m impressed by the initiative and the creativity that i’m encountering as i meander through the web. At the same time, i find myself acutely aware of the demanding levels of competition that are evident, and by the way that economic, legal, societal and technological factors are propelling businesses towards increasing innovation and use of E-business models in order to survive. In the words of Turban in Electronic Commerce 2006, “Because the pace of change and the level of uncertainty are expected to accelerate, organizations are operating under increasing pressures to produce more products, faster, and with fewer resources” (p.13). This means that companies are under pressures not only to lower costs and close unprofitable facilities, but to innovate by creating new products, customizing or providing outstanding customer service.

I’m finding that these ideas connect most closely with my course in International Marketing. Frank Bradley, in International Marketing Strategy (2005), illustrates the shift, among managers, customers and society in general, from the scarcity paradigm of the industrial age, where the focus was on managing and allocating scarce resources, risk and efficiencies, to a paradigm of abundance, “where considerations such as growth, adding value, creating wealth and exceeding customer expectations, not just meeting them, have become the centre of the firm’s attention” (p.37). Knowledge and its manifestation in technology, he goes on to say, are the principal sources of value and power in the modern economy. Certainly, the advances in EC over the past decade are evidence of this.

One of Turban’s ideas that i found attractive was his description of the way the model of competition in the internet economy “is more like a web of interrelationships than the hierarchical, command-and-control model of the industrial economy” (p.62). Calling this the “internet ecosystem,” he compares it to an ecosystem in nature that is self-organizing and notes that some of the old rules of competition no longer apply.

Following these remarks, Turban provides a reference, meansbusiness.com/learntdig.asp, where one is supposed to be able to access further discussions. Interested in his point, i entered the address into my browser, only to find the following notice:

MeansBusiness closed at the end of July. The business has not been able to attain critical mass and recently we were informed that our largest content provider would not extend a new agreement. As a result we were unable to renew or pursue clients and have closed the business.

I am so sorry to have to deliver this news to you. When I started MeansBusiness seven years ago, I had a vision of providing content in a new and innovative manner. Not being able to fulfill that vision for my clients, especially after so much work, is a personal tragedy for me. I hope that this untimely conclusion of our service does not hamper you or your future plans.

David Wilcox

Clearly an example of the fragility of technological venture!

As i consider my new learnings, i also keep myself alert to how they might be of use in a context like the Philippines, especially in a mega-city like Manila, my particular interest, where the urban poor have no claim to land and little access to resources. What application might they have to the generation of livelihood (microfinance), to networking around social justice issues, to the raising of finance, nationally and internationally, for improved health and education? In doing a little research, i’ve come across some interesting websites. Globalgiving.com, for example, is a well-developed site that connects donors to over 450 grassroots projects around the world, much like eBay’s approach to online commerce. 4 of the projects listed are located in the Philippines: microfinance to rice farmers, retrofit for 2-stroke tricycles, rehabilitation for the disabled, and a clean water project. iConnect Online, an initiative of the International Institute for Communication and Development, seeks to provide a knowledge sharing forum for the application of information and communication technologies (ICT) in development.

Could a small karenderia (cafe) setup, for example, use a B2B model to cater the snacks or lunches of local businesses, i wonder??