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E-Business Models

The Internet is forcing companies to transform themselves, to rethink their strategies, organisation and business models.

What is the best E-business model? is a question many companies have. However there is no E-business model that fits for all. Electronic commerce over the Internet can be either complementary to traditional business or represent a whole new line of business.

Business models currently in place

On the basis of case study research, the following business models can be identified which are currently applied by companies :

• Portals

• E-shops

• E-malls

• E-procurement

• E-auctions

• Capacity optimizers

• E-logistics

• B2B Marketplaces

• Virtual Communities

• Value Chain Service Providers

• Value Chain Integrators

• Collaboration Platform Providers/ Collaboration Creation Centers

• E-service Providers (trust, marketing, finance and other services)

• Information Brokers qnd e-speculators

• Providers of extended products

• Others

Many of these business models are, with some modifications, applied in the mobile commerce sector, like m-shops, m-infomediaries and m-auctions. There are however also new mobile e-services emerging, like m-portals for positioning, video and personalised services, or m-banking services. 

Four fundamental stages of E-business development are prevalent:

• Stage 1 : marketing and deployment of an E-business company strategy (Website development both internally across the whole organisation and externally)

• Stage 2: channel innovation (portal solutions, order entry & tracking, e-catalogues, participation in E-ventures, dedicated Externets)

• Stage 3: full business integration (full integration between companies, collaborative planning and product development, supplier consolidation)

• Stage 4: full participation in different horizontal value chains.

The current reality for many large players presents stage 2. This stage encompasses channel enhancement and demand management, the publishing of Websites, online catalogues, basic online trading, and Enterprise Resource Planning (ERP) connectivity. While many companies are able to receive orders electronically, there is often no, or only partial, online-integration between their back-end and front-end systems.

Benefits for companies

If full integration of business processes can be achieved this will provide companies with the following advantages :

• the ability to share information in real time

• effective channel management - to ensure consistency and quality in the level of service and delivery

• transparency of business process

• cost and time efficiencies

• the ability to better meet customer demands and requirements

• control of the value chain.

Practical examples and case studies of e-business intiatives 

The following Websites provide practical examples and case studies of e-business intiatives :

• Line 56. Profiles each week businesses which have demonstrated superior initiative, commitment and success by aligning people, processes and technology to deliver corporate value.

• E - 100. Provides information on how Germany's top - 100 companies are using the Internet for their e-business strategies.

Hungry minds

An e-Business Model Ontology for Modeling e-Business, by Alexander Osterwalder, Yves Pigneur, June 2002

Business Models on the Web, by Michael Rappa. In this article Michael Rappa identifies nine generic forms of business models apparent on the web, including: Brokerage, Advertising, Infomediary, Merchant, Manufacture, Affiliate, Community, Subscription, and Utility.

Business Models for Electronic Markets, by Paul Timmers in: Gadient, Yves; Schmid, Beat F.; Selz, Dorian: EM - Electronic Commerce in Europe. EM - Electronic Markets, Vol. 8, No. 2, 07/98. This article provides a very good framework for the classification of Internet electronic commerce business models by outlining emerging business models and strategic marketing approaches that are applied.

E-Commerce Business Models, by Carlina Capelo, Erkan Konar, Sundaram Raman, Derya Savaser, February 2000. This article gives an excellent overview on the different business model definitions currently applied.

The Truth about Internet Business Models, by Jeffrey F. Rayport, 1999

Electronic Commerce: Strategies and Models for Business-to-Business Trading, by Paul Timmers, Wiley & Sons Ltd, April 2001. This book focuses on marketing in B2B Internet electronic commerce and highlights successful ecommerce strategies. It gives an overview on the most successful models and offers managers informed recommendations on how to implement them in their own businesses.

Internet Business Models and Strategies, by A. Afuah, C. Tucci, Boston: McGraw Hill, 2001. This book explores Internet business models and strategies and what it takes for them to allow firms to make money. It provides theoretical frameworks for analysis as well as cases for further discussion.

Internet, Comercio Colaborativo y mComercio, by I. Laso, M. Iglesias; Ediciones Mundi Prensa, 2002. This book gives an excellent analysis of the latest technological developments in electronic commerce, e-markets and new business models. 

Internet y Comercio Electronico, by J. Briz, I. Laso, Ediciones Mundi Prensa, 2001, p. 283 – 292. Chapter 12 of this Spanish e-commerce bestseller gives an overview on Internet business models.

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