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E-Business Models Paper As any type of business, e-business has its own trends and models. But the question is how the Internet technology changes stereotyped business models and what they are. Are they much alike or not? Generally speaking, a business model is the method of doing business by which a company gets profit. It is an evident factor, which shows how a company makes money by specifying where it is located in the value chain. E-business is recognized as the way forward for most businesses, which are service-, product- or solution-makers.
The way a company work coincides with the traditional one: producing a good or service and selling it to customer. If all goes well, the revenues from sales exceed the cost of operation and the company realizes a profit. Internet commerce gave rise to new kinds of business models. Among them 3 basic business models are widely used: B 2 B (Business to Business), B 2 C (Business to Consumer), C 2 C (Consumer to Consumer). Each of them has some peculiar features, which fit the needs of a particular model.
One of the successful e-commerce market leader based on B 2 B model is Dell Company. As for B 2 C model the Edie Bauer can be mentioned and eBay for C 2 C model. One of the most essential differences between these companies is their target audience. The difference between B 2 B and B 2 C is that their customers are different B 2 B customers are businesses who deal predominantly with other companies, while B 2 C are businesses that deal with customers that are mainly individuals.
B 2 B transactions are more complex. The two main distinctions proved that B 2 B deals are done with a lot of price negotiation, product specifications and various other sides of a business transaction. Where as B 2 C deals are straightforward purchases made by the consumer at a set price for a set product and no price, product haggling takes place. Also B 2 B deals with other organizations possibly without a person being involved.
But in the B 2 C area this usually is not possible? because it applies to any business or organization that sells its products or services to consumers over the Internet for their own use. C 2 C model is competitively a new one. It is faced to customers, who are both the buyers and the sellers. The audience is different in vertical structure, but much alike in its horizontal one. The B 2 B audience includes government constituents, international clientele, the B 2 C involves mainly consumers of one particular country and social layer.
C 2 C model oriented to international market as well. The B 2 C model encompasses all e-commerce sites designed to sell products or services to a non-business end user. Eddie Bauer is an example of a B 2 C service. B 2 B is the e-business model that has proved the most successful on the Internet. Arguably, this is because the advantages of conducting business over the Internet are more readily exposed in an ordered business environment, than when a purchase of a product or service is left to the desire of a consumer. Another reason may be the enduring reservations that some consumers have in respect of credit card use over the Internet, as this does not apply to the same extent in the B 2 B model.
One of the most famous companies used B 2 B model is Dell Company. Dell Computer is certainly a leader in the e-commerce sphere. It is a brand that leads personal computer manufacturers. Its trademark method of selling products to customers, corporate and consumer allows customers to customize their PCs and order other products they need. This integration structure eliminates the need to manufacture everything, and instead uses the power of the Internet to share and exchange information with suppliers to build a great supply chain that key inventory turnover low and costs to a minimum. C 2 C model is the system of e-commerce that serves as a facilitator in a transaction between individuals or small enterprises.
The fact that C 2 C model is one of the most successful developments in electronic commerce is evident. One of the best examples of this model can be among different internet auctions, of which the site eBay is the strongest example. The success of this company cannot be understated, boasting a vast number of transactions taking place daily and an ever growing number of users. They have a world-size clientele becoming an International Company. They offer information and services to their consumers, helping them to find each other for the purpose of buying or selling pieces of goods having nothing to do with the products themselves.
eBay exploits many of the most important characteristics that have made the Internet so popular; it empowers users and provides the internet community with a place in which they can exchange goods and services with each other. The amazing success of the eBay model can be attributed to many different reasons, but at the heart of the sites accomplishments lays two basic truths about the internet. One is that people need a place where to buy and sell directly on the internet, and the second is the principle of peer-review and community enforceability. The companies use different features to reach the target audience. The wide choice of site gadgets could be easily explained by different sources of the audience.
The most often modes are: shopping cart, real-time inventory, customer service, product information or catalogue, customization, order status, personalization, pre-order, wish lists, intelligent agents, membership. As for the B 2 B model it uses the pre-order, customer service, product information and catalogue. B 2 C model develops its business on the basis of shopping cart system, order status, membership and etc. Useful functions for C 2 C model considered membership, wish lists, intelligent agents.
But its not enough to have an effective way of presenting information on the sites. In addition to that the appropriate way of getting information up to a customer is vital. Companies which business operations is based on the B 2 B model use click-and-mortar advertising. B 2 C type companies prefers to use search engines and C 2 C type finds the most suitable search engines and click-and-mortar advertising also. The benefits of the companies are different, because of size and trends of e-commerce. Brand recognition and season price reductions (discounts) are inherent to B 2 C model.
Eddie Bauer uses an Internet customer service suite to manage e-mail as well as provide a self-service question-and-answer feature on its site, called Ask Eddie. Eventually, Eddie Bauer wants all its customer-facing systems to talk with one another and with back-end systems. That will help agents resolve customer inquiries on first contact more often, and give customers more personalized service over the phone, online and in stores. Global presence gives great profits to B 2 B companies, as they are involved in the dealing with the industry-specific suppliers and distributors, and they require specialized logistics and fulfillment. They create value by aggregating buyers and sellers, creating marketplace liquidity, and reducing transaction costs.
Systematic sourcing involves buying through pre-negotiated contracts with qualified suppliers. These contracts are often long-term in nature, so systematic sourcing tends to be relationship-oriented. One of the main characteristics of C 2 C sites is the fact that they work as facilitators and intermediaries, which is usually stated in their terms of use. The C 2 C electronic commerce model is a new and exciting area in the relatively new field of e-commerce, but more it suffers from some lack of interest from the academic community. The main features of the eBay are: automation of traditional methods of selling unique items; reliability in mode of payments; customer friendly company; professional services in addition to just plain selling of goods; global reach; regional diversification; successful advertising. So, differences and similarities of the business models depend on the goals, methods of providing business and audience.
Taking into account the information mentioned above it is easy to say that companies choose the business model to operate on the e-market bearing in mind the product or service they want to sell and the potential consumers of their goods. The basic similarity is that they use Internet as a interactive connection between them and consumers. Bibliography Bunnell, D and Luck, R. The eBay Phenomenon. New York: John Wiley, 2000.
ECPC (Electronic Commerce Promotion Council of Japan), Market Survey Concerning Electronic Commerce. Tokyo, Mar. 2001. Gartner Group: Future of e-commerce lies in Europe. North America, 2001 Guth, Robert A, "Japanese aim to out-speed U. S.
Internet" Wall Street Journal, Aug. 31, 2000. London, K. C. and Traver, C. G, E-Commerce: Business, Technology, Society. Addison-Wesley, 2001.
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