Creators, Producers,

E-BUSINESS MODELS Distributors, Users

Wita Wojtkowski

Tuesday
April 24
2-6 pm

Business Models

Are defined along a continuum

from creators to producers, to
distributors and users
 Business Models
• Revenue
• Cost
• Assets
(handout)

CREATORS
• Develop new ideas, products or services and • Entertainers
refine existing ones • Authors and Artists
Examples? • Experts
• Inventors
 Producers Producers
• Package the work of creators into products, • Service Providers
services, and solutions that meet a market • Manufacturers
need
• Educators
Note: they may sell and maintain the product
or may share that role with others in the • Advisors
value chain • Custom Suppliers
• Information & News Services
Examples?

Producers- Please visit these

Examples
• Service Providers-Progressive
But check eCoverage!!!
• Manufacturers-Ford Motor, Micron (Crucial)
• Educators-Pensare
(http://www.pensare.com/index.asp)
• Advisors-Mainspring
(http://www.mainspring.com/home)
Please also check www.ey.com
(Ernst & Young)
Producers- continued examples
• Custom Suppliers-The McGraw Hill Companies
www.mhhe.com
Please check Primis services
• Information & News Services—Forrester
• The Wall Street Journal
www.wsj.com

FORRESTER
VIEW THE SITE AND EVALUATE
VIDEO AND TOP TEN QUOTES
Focused distributors
• Provide products and services related to
specific industry and market niche
Distributors
Enable buyers and sellers to connect,
communicate, and transact business
• Focused Distributors
• Portals
Focused distributors-Examples
• InsWeb (http://www.insweb.com/) and
Quicken Insurance
(http://www.quicken.com/welcome/)
services and products within the insurance
industry
• LandsEnd.com distributor for clothing and
accessories
 Types of Focused Distributor
Focused distributor
Business Models
• Please check • Retailers
http://www.individual.com/ • Marketplaces
• Aggregators and Infomediaries
• Exchanges

How to differentiate between

different types of Focused Assignment
Distributor
• Compare these focused distributors by
Ask these questions obtaining information from their web sites
• Does the business assume control of inventory?
• Does the business sell online?
E-Loan.com (www.eloan.com)
www.eloan.com
• Is the price set outside the market, or is online
price negotiation and bidding permitted? INSWEB.com (www.insweb.com)
www.insweb.com
• Is there a physical service or product that must be Freemarkets.com (www.freemarkets.com)
www.freemarkets.com
distributed?
 RETAILERS
• Assume control of inventory
• set a nonnegotiable price to the consumer
• sell physical products online
Example: LandsEnd.com
Retailers-continued
• Because e-ratailers assume control of
physical goods their ratio of tangible to
intangible assets is much higher than for a
firm that does not assume control of
physical inventory
RETAILERS-continued
The primary revenue model is based on
product/service sales
Cost model includes: procurement, inventory
management, order fulfillment, customer
service (including returns)
MARKETPLACES
• Do not take control of physical inventory
• Sell products with a nonnegotiable price
and complete the sale online
• Procurement and inventory management
costs often lower than e-retailer costs
 MARKETPLACE Companies E-marketplaces
• Sell information based products and • Revenue model includes commission on
services transaction fee on each sale
Example: Insurance
QuickenInsurance Since sale transactions take place online- must
Example: Loans electronically link to supplier databases and
E-Loan (http://www.e-loan.com/) transaction systems to ensure that
(
transactions can be completed and revenue
recognized

E-marketplaces
• Since must electronically link to supplier
databases and transaction systems to ensure
that transactions can be completed and
revenue recognized this might be reflected
in cost model
Aggregators
• Provide information on products and
services for sale by others in the channel-
often enabling comparison of features and
pricing- but do not complete the final
transaction

Any problems you foresee?


Aggregators
• Revenue model based on referral fees,
advertising, and supplemental revenue
sources
• Cost model?
Examples:
Autoweb (http://www.autoweb.com/)
InsWeb
Infomediaries-continued
B2C infomediaries may provide information
services for free
B2B infomediaries may charge a company a
corporate subscription fee
Infomediaries-a special class of
aggregator
• Unites sellers and buyers of information
• No physical product is involved
• Transaction can be completed online
Infomediaries-continued
Because information is available elsewhere
and the cost of packaging and delivering the
information is relatively low, barriers to
entry are low as well
 Infomediaries-continued
Infomediaries must quickly evolve from
simply brokering information
Example:
Individual.com
EXCHANGES
• May or may not take control of inventory
(tendency is to try to avoid assuming
inventory carrying costs whenever feasible)
• May or may not complete the final sales
transaction online

EXCHANGES -continued EXCHANGES -continued

• Key differentiating feature: Examples?
price not set; negotiated by the buyer and • eBay
seller at the time of the sale • FreeMarkets Online
• Chemdex
B2B, B2C, C2C
auction exchanges
 TRENDS IN THE FOCUSED
PORTALS
DISTRIBUTION MODEL
• Creating hybrid businesses that combine • Horizontal
several different business models- each of • Vertical
which generates separate revenue stream • Affinity

• Powerful B2B exchanges evolving to

vertical and horizontal portals
• E-retailers evolving to vertical portals

PORTALS -continued PORTALS -continued

Can be differentiated by asking the following Can be differentiated by asking the following

• Does the business provide gateway access
to the full range of Internet information and
services, including search, e-mail, instant
messaging, chat, and other community
building tools?
• Does the business provide access to deep
content, products, and services within
vertical industry(for example, financial
services) or related industries (for example,
travel)
 PORTALS -continued
Can be differentiated by asking the following
• Does the business provide information and
services for all types of users, or are the
information services specific to a well
defined affiliation group (for example,
women, lawyers, eldelrly)?
Horizontal Portals-continued
• Provide gateway access to the Internet’s
vast store of content
• provide a broad range of tools for locating
information , communicating with others
and developing online communities of
interest
Horizontal Portals
• Modeled on broadcast networks
Examples:
MSN
Yahoo!
AOL
Horizontal Portals-continued
Trends
• Extending the model to include multiple
vertical solution channels, for example,
finance, health, travel so that a new source
of revenue is provided from transaction fees
Current trouble at Yahoo! with a new source
of revenue?
 Vertical Portals Vertical Portals-Examples
Provide • Health--WebMD
• Deep content • Travel--Travelocity
• Place to conduct business • Financial Services--Quicken.com
• Learn, play, shop
• Set of communication and community
building tools

Affinity Portals Affinity Portals-continued

Provide • Can be targeted toward a specific event
• deep content, commerce, community Example:
features as in a vertical portal, but targeted theknot.com
at a specific market segment
Examples:
iVillage.com or oxygen.com
Women.com
wfn.com
 Trends in the evolution of the
portal model
• Emergence of wireless horizontal portals
• Vertical portals as possible destinations
where business and consumers will
communicate, transact business, learn and
play
Trends in the evolution of the
portal model
• Consequences for focused distributors?
Must establish strong portal relationships
otherwise vulnerable to loss of power

Intel Perspective

http://www.intel.com/eBusiness
/business/plan/