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A business plan is a document that describes a firm’s business model. An e-commerce business model is a business model that aims to use and leverage the unique qualities of the Internet and World Wide Web.

Business Models for Internet based e-commerce

For the sector of the industry that is hardly a decade old, a formal definition of a business model is non-existent. There have been scanty attempts in the 8 past to formally define and classify business models in the Internet context. In our understanding these attempts are neither complete nor robust. However, we present a brief over view of these for the sake of completeness. The 250 companies were categorized into 15 different business models after a thorough analysis of their websites and their respective business policies. These 15 business models can be listed as E-retail model, E-mall model, E-shop model, E-broker model, Merchant Model, Virtual Community model, Brand Awareness model, Portal model, Manufacturer model, Catalog Merchant model, Subscription model Service Provider model, Affiliate model, Advertising model.

The fundamental categories of E-Commerce business models

B2C – Business to Consumer

Storefront Model: It is the best known form of E-Commerce. Displays products, takes orders, accepts payment, fulfills order, manage customer data Click and Mortar versus Internet. For example, Amazon.com, eToys.com, CDnow.com

Online Shopping Mall Model: Present wider selection of products and services Searching and shopping convenience, common shopping cart, payment and shipping method, takes advantage of economies of scale, merchants are charged in various ways. For example, Mall.com, Canadashop.com, Shoptheshops.com.

Portal Models:

– Horizontal portals – general search engines: Broad range of topics, shallow depth, links to various malls, stores, auctions, sources, Altavista.com, Hotbot.com, Yahoo.com, Google.

– Vertical portals – specialist: Narrow range of topics, in-depth information

Innovative/Dynamic Pricing Models:

– Name-your-price – Priceline.com

– Comparison pricing – Bottomdollar.com

– Bulk-buy pricing – mercata.com, mobshop.com

– Rebating – eBates.com. eCentives.com

– Free products and services – iWon.com, Freemerchant.com – free hosting, free store building, free traffic logs, free auction tools, etc

C2C – Consumer to Consumer

Auction Model:

– Internet forum for sellers and bidders

– Various auctions (reserve-price, reverse, Dutch)

– eBay.com (1995, Pez dispenser collector)

Bartering Model:

– Offering one item in exchange for another

– Ubarter.com

B2B – Business to Business

· Businesses have long done E-Commerce with each other

o EFT – Electronic Funds Transfer (banks)

o EDI – Electronic Data Interchange (suppliers)

· Traditional EDI uses a VAN (value-added network)

o Closed networks, manufactures and suppliers

o Purchase orders and invoices exchanged daily

o Standards vary, VANs are costly, closed nets

Developing an Ecommerce Business Model

· Ecommerce strategies are best when driven by business, not technology, concerns.

· One way is to dissect the buying/selling process into its various elements, from the buying side and the selling side, and with your customers and suppliers.

· Determine how your customer needs are changing from a business perspective.

· Then think about how the Web can help you address them.

Benefits of an Ecommerce business model

Distribution: The use of the Web as a distribution channel reduces distribution costs, or cost-of-sales shrink to near-zero. Products/services can be delivered immediately. Buyers and sellers can access and contact each other directly, potentially eliminating some costs and constraints of phone, letter and fax.

Selling: More of the selling function is in the hands of the customer, through online ordering.

The use of fill-out forms: This also allows the capture of customer information

Competitive intelligence: Web technology allows one to gather market intelligence and monitor consumer choices through customers’ revealed preferences when browsing and buying.

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

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