E-commerce Business Models

• A business model involves planned activities designed to result in a profit.
• An e-commerce business model aims to use the qualities of the Internet, the Web, and mobile platforms.

Major Business-to-Consumer (B2C) Business Models

• Business-to-consumer e-commerce involves online businesses that seek to reach individual consumers.
• E-tailers conduct retailing over the Internet; electronic retailing is sometimes called e-tailing.
• E-tailers can be subsidiaries of physical stores or exist solely online.
• Examples of e-tailers include wine.com, airasia.com, and hyatt.com.
• Community providers build online environments for people with similar interests to transact, share content, communicate, and receive information.
• Social networks like Facebook, LinkedIn, Twitter, and Pinterest offer community-building tools and services.
• Content providers distribute information content such as digital video, music, photos, text, and artwork.
• Content providers make money via advertising, subscription fees, and sales of digital goods.
• Music streaming services like Spotify and Apple Music allow users to stream music for a monthly subscription fee.
• Portals generate revenue through advertising and referral fees.
• Portals like Google, Yahoo, MSN, and AOL offer search tools, content, and services in one place.
• Transaction brokers process transactions typically handled in person, by phone, or by mail.
• Financial, travel, and job placement services are the largest industries using the transaction broker model.
• Transaction brokers make money each time a transaction occurs.
• Travel sites generate commissions from travel bookings.
• Job sites generate listing fees from employers.
• Examples of transaction brokers include Expedia, Travelocity, Orbitz, and Monster.
• Market creators build digital environments where buyers and sellers can meet, display products, and establish prices.
• Market creators make money by charging a percentage of each transaction or charging merchants for access to the market.
• Examples of market creators are Priceline and eBay.
• Service providers offer services online and use various revenue models, including fees, subscriptions, or advertising.
• Examples of service providers include VisaNow, GCash, and RocketLawyer.

Major Business-to-Business (B2B) Business Models

• Business-to-business e-commerce involves businesses selling to other businesses.
• E-distributors supply products and services directly to individual businesses.
• E-distributors are owned by one company seeking to serve many customers.
• Grainger (grainger.com) is an example of a large distributor of maintenance, repair, and operations (MRO) supplies.
• E-procurement firms create and sell access to digital markets.
• Ariba (ariba.com) has created software that helps large firms organize their procurement process.
• Ariba creates custom-integrated online catalogs for purchasing firms, and provides software to handle catalog creation, shipping, insurance, and finance.
• Exchanges are independent digital marketplaces where many suppliers meet large commercial purchasers.
• Exchanges generate revenue by charging a commission or fee based on transaction size.
• TravelB2BHub (travelb2bhub.com) helps travel companies, hoteliers, and event planners buy or sell tourism services.
• Industry consortia are industry-owned vertical marketplaces that serve specific industries.
• Vertical marketplaces supply smaller companies with products and services of interest to their industry.
• Horizontal marketplaces sell specific products and services to various companies in different industries.
• Avendra (avendra.com) is a hospitality procurement services provider in North America and the Caribbean.
• Private industrial networks, known as private trading exchanges, are digital networks coordinating communications among firms.
• Private industrial networks are owned by a single large purchasing firm, with participation by invitation to trusted suppliers.
• Walmart (walmart.com) operates one of the largest private industrial networks for its suppliers to monitor sales, shipments, and inventory levels.