e-business Models  «Prev  Next»
Lesson 5The Brokerage model
ObjectiveIdentify the various brokerage Models.

b2b Brokerage Model

Brokerage models can be applied to both B2B and B2C businesses, although some are more suited to one or the other.

Variations of the B2C model

A broker will usually take a commission for transacting business on behalf of others or for introducing buyers and sellers. There are many variations of the brokerage model that can be used by eBusinesses and some are adapted from more traditional business models and some are unique to eBusiness. Here are seven of the more common types of Brokerage models. Examples of each are described in the MouseOver below.

1) The Buy/Sell Match Model

The Buy/Sell Match model concentrates on fulfillment of buy/sell transactions. In many cases, this is based on a traditional "brick-and-mortar" business with a Web extension. This model can be applied to financial and insurance brokers and to travel agents. e-businesses based on this model work on high-volume, low-markup transactions for which they charge a broker's fee.

2) The Buyer-Aggregator Model

The Buyer Aggregator model brokers transactions on behalf of a group of buyers with one or more sellers.
The grouping of buyers allows for greater purchasing power and thus reduces costs for each of the grouped buyers. Sellers may pay the broker a fee based on a percentage of the transaction value. This model can be applied in either B2B or B2C applications.

3) The Classified-Advertiser model

Not unlike classified advertisements in a newspaper or magazine, this broker charges a fee to the advertiser based on the time period and/or size of the advertisement, regardless of whether or not a sale results. The broker may also offer search and rating services.

ecommerce Business Model

4) The Virtual Mall model

In this model, a broker sets-up a site and rents out virtual space to many online retailers. The broker may offer a variety of additional services to the stores, such as advertising and marketing, search facilities, advice, and even store-development platforms with transactional services.

5) The Virtual Mall-Intermediary model

The Virtual Mall Intermediary model is very similar to the Virtual Mall model, but takes it a step further. The Virtual Mall Intermediary broker locates multiple suppliers of a product, and then sells the product online from an e-store or virtual mall. The broker handles the online transactions and may initiate the billing, shipping, and tracking of the order. In some cases, the actual supplier of the goods is not identified to the buyer.

6) The Auction and Reverse Auction broker

Auction and Reverse Auction brokers are another type of B2C Brokerage model. Adapted and expanded from a traditional business model, an Auction broker offers goods and services from one or many resellers, for which they receive a fee per transaction. In the case of a Reverse Auction, buyers name their price and the broker seeks out a supplier who can fulfill that price.

7) Directory and Evaluator Model

These brokers offer a directory listing for general or specific goods or services. In many cases, they also evaluate the business concerned, and offer value awards to companies based on customer feedback. They may also offer rewards to customers.
These brokers may charge membership and/or pay-per-click fees. In some cases, membership fees are also charged to the customers.
The following list describes examples of each of the variations on the B2C model.

Five examples of the variations on the B2C model.

  1. Generalized portals rely heavily on mass appeal and huge volumes of traffic. The most obvious examples are search engines like Google, Bing, and DuckDuckGo. ISPs like AOL generate traffic through content and services.
  2. Vortals or specialized portals are based on an area of interest or industry-service. These portals keep to specific content to ensure continued interest from a group of visitors. Although volume is of importance, it is less so than for Generalized portals.
  3. Profile or personalized portals enable visitors to customize the site based on their interest and requirements.
  4. Customer loyalty models are structured along the lines of frequent flyer miles and supermarket customer loyalty points, offering buyer incentives in various forms. They can reward viewers for undertaking surveys, completing forms, viewing advertisements, or making purchases with points that can be accumulated and redeemed in various ways.
  5. The Free model, often adopted by Generalized portals, offers something for free. These models can develop into or from portals and may also merge into the infomediary model. They may offer free services, email, web space, internet access, software or other products. This model strives for loyalty while offering general appeal.
B2C Variation
In the next lesson, we look more closely at the various Advertising models.

B2B Digital Marketing Strategy