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Lesson 3 Introduce e-Business models
ObjectiveIdentify common e-Business models.

Identify common e-Business Models

Relationships are changing the way business is done. These relationships have led to the emergence of several successful business models to address the special needs of the Internet consumer. Some of the more common e-Business models include:

  1. Infomediary
  2. Trust Intermediary
  3. Infrastructure Provider
  4. e-Business Enabler
  5. The Storefront
We will now briefly discuss each of these models.

1) Infomediaries

Infomediaries broker/aggregate information, knowledge, experiences, and/or products for the purpose of mediating between buyer and seller. For instance, Auto-by-Tel offers car buyers point-and-click access to information about vehicles hey may be interested in purchasing. Once the buyer selects the make and model of their vehicle, they submit their information online, and a local dealer with the desired vehicle contacts them. Another example is Juju, which facilitates online job hunting by retrieving employment opportunities from the job boards in parallel and in real time. The results are an aggregate of the employment opportunities listed on the Internet through job boards and other sites.

2) Trust Intermediaries

Trust Intermediaries build trust between buyer and seller. Within this model, there are three different kinds of trust:
  1. a) the payment enabler,
  2. b) security enabler, and
  3. c) trust enabler
1) Payment enablers empower and build trust around secure financial transactions.
2) Security enablers have less to do with transactions and more to do with secure communication. They confirm that individuals or companies dealt with in the e-Commerce marketplace are indeed real and not a fraud.
3) Trust enablers put their name on a commodity or service to make it more legitimate or trustworthy. Trust infomediaries are the most difficult to build, but probably the most powerful.
Trust enabler include the Web Trust seal which the company believes will allow "people like you to feel more comfortable shopping on the Web, and taking advantage of the speed, convenience and ever-expanding universe of products and services it puts right at your fingertips. Quite simply, "It's a matter of trust."

3) Infrastructure Providers

Infrastructure Providers offer a playing field for all or part of a marketplace. For instance, American Airline's Sabre System enables each of the major airlines to store and retrieve reservation information. For this service, American Airlines receives a 3 percent cut of each transaction. Other examples include all the Internet service providers.
ISP's such as AOL. Also included are network providers like Akamai.

4) E-business Enablers

E-business Enablers provide add-on services to e-Commerce sites. For instance, where would Amazon.com be without the services of the United States Postal Service? These companies enable e-Commerce sites to conduct their business from a virtual marketplace. This business model is also referred to as a distributive network.
Other examples include
  1. FedEx and
  2. Ingram Micro, providing reseller service, and
  3. FingerHut providing direct marketing in a Web-mall environment for a variety of retailers.

5) Storefront

The Storefront is an entity in the marketplace in which business occurs, margin is created, and value is created using existing as well as new market channels. Amazon.com is the pioneer and leader of this business model. Many adaptations and examples of the storefront model exist, as you will discover in the next few lessons.