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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. Each of these models has adapted to new technologies and changing business environments, ensuring their continued applicability and success in the digital economy. 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: All five of the e-business models listed remain applicable in today's digital and business landscape, albeit in evolved forms due to technological advancements and changing market dynamics.
  1. Infomediary: 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. Infomediaries collect and analyze data on consumers and businesses to provide valuable insights to other companies. This model is still highly relevant due to the growth of data analytics, big data, and targeted advertising. Companies like Google and Facebook effectively act as infomediaries by leveraging user data to optimize advertising strategies for other businesses.
  2. Trust Intermediaries: Trust Intermediaries build trust between buyer and seller. Within this model, there are three different kinds of trust:
    1. Payment enabler: The Payment enablers empower and build trust around secure financial transactions.
    2. Security enabler: The 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 ecommerce marketplace are indeed real and not a fraud.
    3. Trust enabler: 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."
    Trust intermediaries are entities that provide services to verify the reliability and security of transactions between parties. This model is increasingly relevant in the age of e-commerce and online services, where trust is a crucial component. Examples include SSL certificate providers, payment processors like PayPal, and platforms like eBay that facilitate trusted transactions between buyers and sellers.
  3. Infrastructure Provider: 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.
    Infrastructure providers offer the essential technology and services needed for e-businesses to function, such as web hosting, cloud storage, and broadband services. This model is more relevant than ever due to the cloud computing revolution and the massive growth of online services requiring robust and scalable infrastructure. Major players include Amazon Web Services, Microsoft Azure, and Google Cloud Platform.
  4. e-business Enabler: e-business enablers provide add-on services to ecommerce sites. For instance, in the past Amazon.com was dependent on the services of the United States Postal Service. These companies enable ecommerce sites to conduct their business from a virtual marketplace. This business model is also referred to as a distributive network. Other examples include
    • FedEx and
    • Ingram Micro, providing reseller service, and
    • FingerHut providing direct marketing in a Web-mall environment for a variety of retailers.

    e-Business enablers offer tools and platforms that allow other businesses to operate online. This includes e-commerce platforms, customer relationship management (CRM) software, and digital marketing tools. The proliferation of e-commerce and the digital transformation of businesses keep this model highly pertinent. Shopify, Adobe Systems, and Salesforce are leading examples.
  5. The 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.
    This model involves creating an online store to sell products or services directly to consumers. It is fundamental to e-commerce and remains extremely relevant as more consumers shift to online shopping. The rise of direct-to-consumer brands and marketplaces like Amazon, Etsy, and Alibaba exemplify the ongoing significance of this model.

Many adaptations and examples of the storefront model exist, as you will discover in the next few lessons.

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