Electronic Commerce

Business Models and Strategies

 Reference
1. Net Ready, by Amir Hartman and John Sifonis, McGRaw-Hill, 2000.
2. Now or Never, by Mary Modahl, Harper Business, 2000
3. Designing Systems for Internet Commerce by G. Winfield Treese, Lawrence C. Stewart
(May 1998) Addison-Wesley Pub Co; ISBN: 0201571676
4. Net Results: Web Marketing that Works by Rick E. Bruner (Editor), Cybernautics, Usweb
Corporation Hayden Books; ISBN: 1568304145
5. E-Business : Roadmap for Success by Ravi Kalakota, Marcia Robinson, Don
Tapscott (June 1999) Addison-Wesley Pub Co (C); ISBN: 0201604809
6. Customers.Com: How to Create a Profitable Business Strategy for the Internet and
Beyond by Patricia B. Seybold (Contributor), R. T. Marshak, Ronni Marshak 1 Ed edition
(November 1998) Times Books; ISBN: 0812930371
7. Net Success : 24 Leaders in Web Commerce Show You How to Put the Web to Work for
Your Business by Christina Ford Haylock, Len Muscarella, Ron Schultz, Steve Case (May
1999) Adams Media Corporation; ISBN: 1580621147
8. Creating the Virtual Store: Taking Your Web Site from Browsing to Buying, by Magdalena
Yesil, Published by John Wiley & Sons, November 1, 1996
9. Understanding Electronic Commerce (Strategic Technology Series), by David R. Kosiur,
Published by Microsoft Press, May 1, 1997.
 Outline
 EC Introduction
 Introduction
 The cycle of electronic commerce
 EC and Business Process
 EC statistics
 EC Strategies
 4Cs strategy: Customer, Content, Community, Commerce
 Revenue streams
 EC development process
 EC Business Models
 B2C Virtual stores: physical and digital goods and services
 Seller-side
 Buyer-side
 B2B marketspace
 EC Introduction

• Introduction
• The cycle of electronic commerce
• EC and business process
• EC statistics
 Electronic Commerce: Introduction

E-Business

E-Commerce
Commerce
Internet
Commerce
 Electronic Commerce
• Electronic commerce is broadly as the ability to
execute business activities (transactions,
contracts, and partnership) over a computer
network. The execution of these activities lead
to the exchange of goods, services, and money.
• Online business activities are changing market
dynamics and structures of various industries.
• Electronic commerce adds a new dimension
"information" to business activities involving
information goods, information services, and
electronic money.
 The Low-Friction Market
"[The Internet] will carry us into a
new world of low friction, low-
overhead capitalism, in which market
information will be plentiful and
transaction costs low."
-- Bill Gates, The Road Ahead

"Where there is a friction,

there is opportunity!"
-- Net Ready.
 The Cycle of Electronic Commerce

Access
Searches
Queries Follow-on Sales
Surfing 冲浪

Customers Online Ads Online Orders

Standard Orders

Distribution
Online: soft goods
Delivery: hard goods

Electronic Customer Support

Source: Understanding Electronic Commerce (Strategic Technology Series),

by David R. Kosiur, Published by Microsoft Press, May 1, 1997.
 Components of Electronic Commerce

Institution Processes

• Government 政府 • Marketing 市场
• Merchants 商家 • Sales 销售
• Manufacturers 制造商 • Payment 支付
• Suppliers 供应商 • Fulfillment 履行
• Consumers 消费者 Electronic • Support 支援
Commerce

Networks
• Intranet
• Extranet
• Internet

Source: adapted from David Kosiur, Understanding Electronic Commerce, Microsoft Press, 1997.
 EC and Business Processes
Seller Phone,
Customer
Send info Request info
fax, e-mail
Provide Identify
Info need
Data sheets,
catalogs, demos Web surfing
Web searches,
Get web ads Find
Web site
customer source
Corporate Databases

Newsgroups
Evaluate
Provide Net offerings
info communities

Demos,
reviews
Web site Purchase
Credit cards, e-cash
P.O.s
Fulfill
order EDI

Maintain,
Deliver soft goods electronically Repair,
Support Web site, phone, Operate
fax, e-mail, e-mailing list

Source: adapted from David Kosiur, Understanding

Electronic Commerce, Microsoft Press, 1997.
 World Wide Internet Commerce

$3,500 $3,200
Sales (Billions)
$3,000

$2,500
$2,000
$2,000

$1,500
$970
$1,000
$390
$500 $170
$80
$0
1998 1999 2000 2001 2002 2003
Forester Research, Inc. June 1999
 Business Internet Commerce Trends

$1,400 B2C
B2B(Services)
$1,200 B2B(Goods)
$1,000
$800
$600
$400
$200
$0
1999 2000 2001 2002 2003
B2C: Business to Consumer
B2B: Business to Business
Reference: http://cyberatlas.internet.com/
 Business-to-Business E-Commerce
• International Data Corporation forecasts that business-to-business e-
commerce revenue will jump from $80 billion worldwide in 1998 to $1.1
trillion in 2003. Forrester Research believes that number will go even
higher to $1.3 trillion by 2003.
• Business-to-Business -- Vertical Industries
– Computing and Electronics: For this year, businesses will invest
$50 billion in computers and other electronic equipment online.
Increase to $319 billion by 2002.
– Motor vehicles: Companies will spend $9 billion online to purchase
fleets of cars and trucks this year. 2002—grow to $114 billion—
more than a 1000% increase.
– Online utilities: Online trades of $15 billion in 1999 will grow to
$110 billion by 2002.
– Food and agriculture: Expected to be about $3 billion in 1999--$20
billion by 2002.
– Pharmaceutical and medical: Forecasted $1 billion this year.
Increase 20-fold by 2002.

Source: Business 2.0, March, 1999 re: Forrester Research

 Statistics
• Holiday Season 1998
– 2.1 million households shopped online for the first time
– Generated $2.3 billion
– Virtually all (98%) of AOL shoppers said they would shop online
again in the next 6 months (Source: Jupiter Communications)
• By 2003 . . .
– Consumers on the Web will spend more than $177 billion
worldwide.
– There will be an eight-fold increase in Web buyers worldwide to
143 million (International Data Corporation, March 1999)
– In Europe, 43 million households will be online. (Source: Nua
Internet Surveys 12/98 re: DataMonitor)
– In Japan, buyers will spend one trillion Yen online. (Source:
Nikkei Multimedia, 12/98)
• 1% of 5 million US merchants are able to collect payments
via the Internet in 1999.
• 10% E-merchants by year 2003.
 Retailing Trends

1950s 1960s-1970s 1980s 1990s

• Home Depot
• CompUSA
• Barnes and Nobles
• Border
 AOL Findings
• Buy brands
• Seek convenience
• Are increasingly time-starving
• Are not solely motivated by price
• Require simplicity

Source: America Online, 1999

 Net Economy
• 1940s - 1980s
– Manufacturing to information economy
– Local - regional - national - multinational
– Tangible brick-and-mortar assets 有形资产: offices,
shops, service centers, and warehouse
• 1990s - 21st Century
– Net economy:
» Information & Knowledge
» Communication and interactions
– Global and virtual
– Business Focus: Information, channel, flow, customer
loyalty, reliable service, relationship
– Intangible assets无形资产: Knowledge, experiences,
relationships
 Internet Economy Driving Forces
• Changing customer demands
• Globalization
• Internet
• New technology
• New marketplace
 Selling Points of Virtual Stores
• "The Internet is going to become a channel of
distribution." -- The president of a major U.S.
advertising agency
• Another firm advertise its virtual store as "The
parking is easy, there are no checkout lines, we
are open 24 hours a day, and we deliver right to
your door."
• The trend toward point-of-sale moving into the
home is accelerating.
 Benefits to the Merchants
• Increased sales of existing products to
generate additional revenues
• Use the web to target their offers to a niche
market
• "The store is always open!"
• Establish better relationships with customers.
• Low cost information distribution
• Increased speed to market
• Expanded delivery channels
• Global exposure and reach
 Benefits to the Consumers
• Convenience
• Informative
• Value presented upfront: Demo and free
download
• No long wait times
• Easy flow and navigation
• Search capabilities
• Engaging presentation
• Constant updates
• Easy to buy
 All 3 Steps in One Medium
• Web and EC allows you to integrate three major
steps of markting and sales in one medium.

Get Attention Give More Information/ Transact/

Answer Questions Service

Branding Informing Selling

• TV Ads • Brochures • Store

• Sales People • Telephone
• Magazines
• Print/editorial • Catalogue
 Internet Industry
Sports
Malls Commerce Instruments
Content Electronic Portals
Entertainment
and Commerce Commerce Servers
Newsfeed
Activity Infrastructure
Publications

Client/Server
Consulting
Internet Software
Economy
System Integration
and Design Browsers
Web Server
Application Servers
Security
Backbone Router Tools
Internet ISP
Access Equipment Network
Equipment Internet Service
Server Computers Services Consumer Services
Carriers
 EC Strategies
• 4Cs Strategy:
– Customer
– Content
– Community
– Commerce
• Revenue Streams
• EC Development Process
 New Competition From Surprising Places
• Most Visited Retailers: Not in Top 25:
1. Bluemountainarts.com • Towerrecords.com
2. Amazon.com
• Borders.com
3. AOL.com
• Toysrus.com
4. Ebay.com
• Target.com
5. Etoys.com
• Gap.com
6. Barnesandnoble.com
7. CNet.com (software)
• Macys.com
8. Egghead.com
• Sears.com
9. CDNow.com • WalMart.com
10. Musicblvd.com • “BigCompany.com”
11. ColumbiaHouse.com •
12. Classifieds2000.com •
13. Beyond.com • YourCompany.com??
14. Coolsavings.com
15. Valupage.com
 Moving Your Business Online
• Companies are motivated by either fear or
greed（既有所畏惧又翘首相望） to move to their
businesses to the net.
• To .com your company is becoming an
imperative.
• They have to obsolete（作废） their current
business models and work very hard to search
a new business model.

Your competitor is just

one-click away
Electronic Commerce Applications and the Cycle of Commerce

Seller's Cycle of Commerce

Time
Electronic Commerce Applications and the Cycle of Commerce

Buyer's Cycle of Commerce

Time
 EC Strategies: 4 Cs

Customers

Commerce

Content Community
 Customers
• Obsess over your customers
• Remember that the Web is an infant
– What do you have to offer that the physical world
cannot in order to attract customers?
• If you make one customer unhappy, he won't
tell five friends -- he'll tell 5,000 on newsgroups,
list servers, and so on.
– "Word of mouth" factor gets
amplified on the Net
• The shifts of balance of power away from
business and toward customer.
- Jeff Bezos
 Self Assessment: Customer Caring
What do your customers need?
What process do they go through?
What do you need from customer?
What can you do to build relationships?
What requests do they make of you?
How do you respond to customer’s requests?
What kind of information can they get from you?
How do you produce and distribute it to them?
What are the steps that your customers have to take
to complete a purchase transactions?
How do they get shipment status?
How are exceptions handled?
What do you know about customer preferences?
What information could you use to better target your
product and service offerings?
How can you engage customers in an ongoing dialog?
How can you continue to provide information, products,
and services to reinforce your ongoing relationships?
 5 Steps to Success in EC
• Set strategy
– Make it easy for customers to do business with you!
• Focus on the end-customer
– Identify end-customers and their needs
– Distinguish from channel partners
– Identify other internal and external stakeholders
• Redesign customer-facing business processes
• Wire your company for profit and success
• Foster customer loyalty
– Determine and prioritize objectives
– Decide what to measure and how to measure
– Measure profitability and other critical success
indicators
Source: Adapted from Customer.com by Patricia Seybold, 1998
 Foster Customer Loyalty
• The key to profitability in EC
• Achieving higher revenues via customer
acquisition获得 and customer retention保持
– Acquisition costs
– Base profit
– Revenue growth
– Cost savings
– Referrals
– Price premium
• Benefits:
– No-cost acquisition
– Experienced customer
• Strategies
– Increase customer “inventory” （保有量）
– Increase customer “tenure”（保有期）
 8 Critical Success Factors
• Target the right customers
• Own customer's total experience
• Streamline business processes that impact the
customer
• Provide a 360-degree view of relationships with
your customers
• Let customers help themselves
• Help customers do their jobs
• Deliver personalized services
• Foster community
 Target the Right Customers
• Know who your customers and prospects are
• Find out which customers are profitable
• Decide which customers you want to attract (or
keep from losing)
• Decide which customers influence key
purchases
• Find out which customers generate referrals
• Don't confuse customers, partners, and
stakeholders
 Own the Customer's Total Experience
• Deliver a consist and branded experience
• Focus on saving customer time
• Offer a peace of mind
• Work with partner to deliver consistent service
and quality
• Respect the customer individuality
• Give customers control over their experience
 Creating Sustainable Value in EC
• Develop a brand based on consumer experiences
– The brand emerges as the two-way communication on
the net and off the net.
• Develop superior physical distribution
– Physical distribution is a choke point in EC
• Leverage customer information
– Use personal information to more convenience
shopping and customized services
» Privacy issue
» Ask customer explicitly for such data
» Require a more subtle approach
– Use collective data
» Use it to adjust pricing, product offering, and target market
 Virtual Communities

• Content
• Money • Hard goods
Virtual
• Content • Games
• Demographics Community • Services

Users Providers
• Advertising

Advertisers Other
Websites
 Consumers' Needs for Community
• Communities of transaction: Facilitate the buying and selling of
products and services and deliver information related to those
transactions.
– Bring in a critical mass of sellers and buyers to facilitate certain
types of transactions.
– Virtual Vineyards (wine.com)
• Communities of Interest: Bring together participants who interact
extensively with one another on specific topics.
– Higher degree of interpersonal communication.
– GardenWeb: www.gardenweb.com
– Motley Fool created by David and Tom Gardners on AOL (fool.com)
– Parents Place: www.parentsplace.com
• Communities of Fantasy 虚拟社区
– Chat rooms: Red Dragon Inn
– Virtual Team competition at ESPNet: espnet.sportszone.com
• Communities of Relationship: People come together around
certain life experiences that are very intense and can lead to the
formation of deep personal connections.
– Cancer Forum on CompuServe
www.parentsoup.com
www.iVillage.com
 Geocities: www.geocities.com
• This collection of themes cyberhoods is populated by a half-million
"homesteaders" who get free home pages.

http://geocities.yahoo.com/home/
 Quick Test for Technographics
More Men More Women

More Educated Less Educated

High Income Low Income

Have Children No Children

Number of new users

Younger Age Older

Mainstreams
Early Adopter
Laggards

Time
Source: Now or Never, 2000
Technology-Fit: Customer and Product

High Customer Need for Product Information

Second Wave Earlier Adopter
AA
Jenny Craig FedExp
Chrysler Microsoft
Web Laggards Second Wave

Tide Nike
Low Denny's Pepsi

Customer Demographics Match

Source:
Poor High Forrester
Research
 Challenge
• Consumers: Everything on the Internet should to be free.
• Merchant: How can I make a profit if everything is free.
• Examples:
– Free web browsers: Netscape Communicator and Internet Explorer
– Free email: Juno, mail.yahoo.com and hotmail.com
– Free Internet Access: Freeserve in Britain
– Free PC: eMachine and CompuServe; Free-PC
– Free web hosting: Geocities, Angelfire, Zoom
– Free ...

All tangible and intangible items that

$250 Gilder's Law can be copied adhere to the law of
inverted pricing and become cheaper
as they improve.
Cost of a 3-minute
Long Distance Call
Anticipate this cheapness in your
pricing strategy and product/service
$0 development strategy
1930 Year 1999
 Revenue Streams
• Advertising / Sponsorship
• Transaction
• Subscription / Listing Fee
• Value-added services
 Multifaceted Model for Web-Based EC Design
• ATTRACT: Hits
– Communities of interest
– Changing topics for repeat customers
– Features that encourage customers to explore
• ENGAGE: Leads
– Special areas encourage customer to register (i.e. selection of
articles customized for visitors interests)
• PARTICIPATE: Sales revenue
– Free download (video, audio, & software)
Attract
– Shopping Jump
– Chat and News
Engage
– Subscription
• JUMP: Advertising revenue Participate
– Other products of interest to customer
– Other sites of interest to customer
Adapted from Netscape Communications Inc., 1996.
EC Companies Transform the Revenue Mix

Pricing The mix:

Who pays for
Value
what and
Customers how much.

New New
Values Pricing

New
Customers
Highly interrelated!

Source: Now or Never, 2000

 What To Do Now

1. Define your eBusiness strategy FAST

2. Assess readiness:
– customers

Rapid innovation
– products/services
– organization
– technology
– infrastructure
 What To Do Now
3. Identify the target:
– Business objectives
– Customer segment
– Application area
4. Build it in less than 6 months
-- Flexibility
-- Scalability
-- Extendibility
5. Keep extending the function -- new products and
services, new customer interfaces, enhance
performance, security and capability
6. START NOW !
You are never done!
Four Strategies to Start Online Business

Low Slow Low

• Integration

Time to Market
• Subsidiary

Cost

Risk
• Partnership
• Buyout
High Fast High
 Top Three Concerns
• Retailers
– Conflict with investment in physical stores;
– Technology issues; and
– Lack of distribution and fulfillment network.
• Manufacturers
– Products not appropriate for online sales;
– Potential risk to channel relationships; and
– Consumers won’t buy online
– Many manufacturers simply weren't capable
of shipping a single box of Tide or a bottle
of Advil. They had no experience in dealing
directly with consumers.
 Becoming Virtual
• Egghead to Egghead.com
• Computer Literacy to Fatbrain.com
• Romac International to KForce.com

Kinder Toys is Moving to

www.toydomain.com
(Find us on the web after June 1st)
Your 3 Biggest Problems/Opportunities

• What should our strategy

be?
• How do we build it in 3 to 6
months?
• How do we stay on the edge
of innovation for life?
 Web Experiences for Consumers
• A many-to-many rather a one-to-many
experience
• Fresh content
• Access to detail information
• Communities unbounded by space and time
• The multimedia appeal of TV
• A redefinition of privacy and identity
• Hyper-impulsivity: The web permits a closer
conjunction of desire, transaction, and payment
than any other environment.
 E-Business Creation Process
• Customer feedback
• Benchmark data
• Competitive analysis
• Personalization • Market forces • Systems and
• ROI • Usage statistics networks
• Profiling • Customer needs • Web architecture
• Segmentation • Current capabilities • Business
• Experience infrastructure
modeling • Technology
• Expanded components
business E-Vision • Web technology
opportunities strategy

Business Technology
Drivers Drivers

E-Business Rapid
Strategy Implementation
Source: Adapted from
Digital Transformation, 2000
 EC Development Process
• Knowledge building and market evaluation to identify a
need and a niche
• Competitive and capability analysis
• EC Business model design and feature identification
• Determine what you have to offer (merchandizing)
• Set your e-business goals and priorities
• Design your EC architecture
• Assemble your EC teams
• Build your web site
• Set up a system to handle sales
• Provide customer services
• Advertise your online business (online and offline)
• Evaluate your performance and moving on
Popularity Adds Value in a Network
Value to User

Positive
Network
Externality

Networks
• Real: LAN, Internet, Fax
• Virtual: Virtual community, Chat
room, Instant messenger

Number of Compatible User

 Keys to Long Term Success
• Fast deployment
• Evolutionary implementation
• First mover advantages
• Promotion, promotion, promotion
• Customer focus and services
• Interaction with customers
• Integrating emerging technologies
• Redefining and redesigning business models
• Comprehensive database and data warehouse
design
• Integrating back office operations with the
virtual store fronts
 EC Business Models
• Virtual stores: physical and digital goods and
services
• Infomediaries: Seller-side
• Informediaries: Buyer-side
• Infomediaries: B2B marketspace
 Types of Virtual Stores
• Hard goods:
– Food
– Clothes
– Computer hardware and Electronics
– Packaged software
• Soft goods (Bits delivered on-line)
– Information
» Database
» Publishing
» Research
– Software
» Computer games
» Java applets
» Application software
• Services
– Selling time:
» Computer game play
» Consulting
» Legal and medical services
– Selling information (subscriptions)
» Dating services
» Legal and medical advice
– Reservations and tickets
» Airline tickets
» Event tickets
» Hotel and restaurant
 Is EC Appropriate for You?

Industries who set up

virtual storefronts
 What Consumers Are Buying Online
• Computer-related products 49%
• Books 35%
• Consumer electronics 34%
• Travel Reservations 28%
• Cars, boats 19%
• Clothing and apparel 18%
• Recorded music, CDs 18%
• Larger household goods (furniture, major appliances) 15%
• Filmed entertainment, videos 13%
• Gifts delivered by mail (flowers, candy) 12%
• Publication subscriptions 8%
• Investment or financial services 8%
• Food and drink 8%
• Artwork, poster, etc 4%
• Other 13%
» Source: Ernst & Young Internet Shopping Study 1998
 EC Business Models
• Payment direction:
– Buy-side
– Sell-side
– Marketspace: Business is being transacted with both
suppliers and customers.
• Trading parties: Most analysts predict the B2B
model will have a more rapid adoption rate, but
that the volume of transactions in the B2C model
will, in the long run, greatly surpass that of B2B.
– Business to Business
– Business to Consumer
• Type of product or service that is being provided.
– Physical goods and services
– Digital goods (contents)
– Digital services
Sell-Side E-Commerce Model

Buyer A

Consumer or Business
EDI

Selling HTML & Forms Buyer B

Merchant HTML & XML

Online
Selling OBI
Buyer C
 Sell-Side Storefront
• Primary model used in current business-to-
consumer scenarios
• Single seller, typically a distributor, constructs
a Web storefront to sell to many consumers (i.e.
Amazon.com)
• Unless a single distributor can aggregate all the
suppliers in a given industry, the buyer remains
responsible for comparison shopping between
stores
• Expensive for buyer; does not meet the needs
of corporate procurement organizations.
 Buy-Side E-Commerce Model

Seller A
EDI

Business
Buyer HTML & Forms Seller B
HTML & XML

Online
Procurement OBI
Seller C
 Buy-Side eProcurement
• Buy-side applications generally consisting of a
browser-based self-service front end to ERP and legacy
purchasing systems
• Corporate procurement aggregates many supplier
catalogs into a single “universal” catalog and allows
end-user requisitioning from the desktop, facilitating
standard procurement for the organization and cutting
down on “maverick” purchasing
• Purchases made through this system are linked to the
back-office ERP or accounting system, cutting time and
expense from the transaction and avoiding potential
bookkeeping errors
• Model yields reduced transaction costs but not lower
purchase costs; no impact on size of supplier base, no
enablement of dynamic trade; buying organizations
must set-up and maintain catalogs for each of their
suppliers; too costly and technically demanding for
most medium and small-sized businesses.
 Marketplace E-Commerce Model

Buyer A Seller A
EDI
EDI

Buyer B HTML & Forms Virtual HTML & Forms

Seller B
HTML & XML Marketspace HTML & XML

OBI
Buyer C OBI Seller C
Infomediacy (Content Aggregator)
• eBay.com
• Pricelines.com
• Egghead.com
• Amazom.com Auction
• www.chemdex.com
Business-to-Business vs. Business-to-Consumer
Business-to-Consumer
• No vendor loyally
• No switching costs
• Time-insensitive
• Short-term
• Casual
• Many vendors
• Products differentiated
on price, image
Business-to-Business
• Relationship-based
• Very high switching costs
• Extremely time-sensitive
• Long-term
• Mission-critical
• Few partners
• Partners differentiated on
reliability, flexibility
 B2B Marketspace
• Latest evolution of B2B eCommerce, enabling a
many-to-many relationship between buyers and
suppliers
• Buyers and suppliers leverage economies of scale
in their trading relationships and access a more
“liquid” marketplace
• Sellers find buyers for their goods, buyers find
suppliers with goods to sell
• Many-to-many liquidity allows the use of dynamic
pricing models such as auctions and exchanges,
further improving the economic efficiency of the
market.
• Examples:
– E-Steel.com
– verticalnet.com
Channel Conflict: How About the Distributors
• The concept of complete dis-intermediation -
the elimination of the middleman - remains a
theory. New intermediaries are emerging.
• Cisco System has 2 billion dollars annual sales
on the Web.
• 70% of Cisco online business comes from
VARs and distributors.
• Fruit of Loom Inc. has 31 of its 55 distributors
up on its extranet called Activewear Online.
Distributors have to do lot of value-add and
customer support to survive.
 Retailers and Manufacturers Co-exist on the Web
• US retail sales revenues 1998:
– Brick-and-mortar stores 93%
– Catalog sales: 6%
– E-commerce 1%
• Cases:
– Levi Strauss sells jeans at www.levis.com but won't allow retailers
to sell them online.
– Estee Lauder sells Clinique cosmetics at www.clinque.com but
doesn't offer retail promotion.
– Waterford sells a limited selection at www.waterford.com like
chandeliers and corporate gifts.
• Strategies:
– Manufacturers want to maintain channels while stay in direct touch
with their customers.
– Provide online dealer locators.
– Share customers information back and forth.
 Clicks-and-Mortar
• Clicks-and-mortar has become the new buzzword in
retailing circles.
• It means having an integrated, multi-touchpoint strategy
that takes advantage of your physical retail outlets and
integrates them seamlessly into your Web strategy.
• A good clicks-and-mortar strategy uses the Web to
drive traffic to your stores and uses your stores to drive
traffic to the Web.

Brick-and-Click
YourSherpa.com
Business Channel: Multi-Channel Presence
• Brick-and-mortar
– Face-to-Face

Click and Mortar

• Mail order
– Mail
– Printed catalog
• Phone order
– Telex
– Phone
Buyer – Fax Seller
• Electronic commerce
• EDI
• Email Pure Play
• Web

Multi-channel plays will have extraordinary power if companies

elegantly blend and synchronize those channels.
 Business Models Based on the Value Chain in the Marketplace

Raw
material
producer Exchange

Manufacturer

C2B

Distributor

New Retailer B2C C2C

Middleman
• B2B: Vericalnet.com
• B2C: Amazon.com
Consumer
• C2B: Priceline.com
• C2C: eBay.com B2C
 Business Models: Multiple Dimensions
• Buy-sell direction: Buyer-side, seller side, and
marketplace
• Industry covered: single vs. multiple (Vertical
vs. Horizontal)
• Ownership: Buyer, seller, independent, software
vendor, consortia
• Service: Core vs. extended services
• Products: Core vs. MRO; Direct vs. Indirect;
• Pricing: Fixed price, Auction, Reversed auction,
negotiated
• Timing of purchase: Contact vs. spot vs. ad hoc
Portfolio of Buying & Selling Strategies
Size of Buyers and Seller

Direct Sales Big

Big e-Procurement
Supplier

Buyer
Small Suppliers
Net
Market Small Suppliers

Small Suppliers
Small Buyers

Small Buyers
Number of Sellers and Buyers
 The
Goldman
Sachs B2B
Windmill in
the Age of
Consortia