Chapter 2: E-commerce business models and concepts

business model

set of planned activities (business processes) designed to result in a profit in a marketplace

business plan

describes a firm’s business model

value proposition

defines how a company’s product or service fulfills the needs of customers

revenue model

describes how the firm will warn revenue, generate profits, and provide a superior return on invested capital

advertising revenue model

company provides a forum for advertisements & receives fees for access to some or all of its offerings

subscription revenue model

company offers its users content or services and charges a subscription fee for access to some or all of its offerings

freemium strategy

give away certain levels of product/services for free BUT then charge subscription

transaction fee reveneue model

company receives a fee for enabling or executing a transaction

sales revenue model

selling goods, information, or services

affiliate revenue

company steers business to an affiliate and receives a referral fee or percentage of the revenue from any resulting sales

seed capital

entrepreneur’s personal funds such as savings credit cards home quity loansa, family and friends

incubators

“accelerators” provide a small amount of funding and also an array of services to startup companies like business, technical, and marketing assistance

crowdfunding

using the internet to enable individuals to collectively contribute money to support a project

equity crowdfunding

“regulated crowdfunding”, enables companies to use the internet to solicit investors to invest in small & early startups in exchange for stock (JOBS act)

transaction broker

process online transaction

primary value propositions > saving time and money

revenue model : transaction fees, each time stock gets traded

industries using this model: financial services, job placement services

scale economies

efficiencies that arise from increasing the size of a business

industry structural analysis

an effort to understand and describe the nature of competition in an industry, the nature of substitute products, the barriers to entry, and the relative strength of consumers and suppliers

value chain

the set of activities performed in an industry or in a firm that transforms raw inputs into final products and services

• each set of activities adds value