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Specific business model changes associated with the Web

What is a Business Model?

The e-Business model, like any business model, describes how a company functions; how it provides a product or service, how it generates revenue, and how it will create and adapt to new markets and technologies. It has four traditional components.
  1. e-Business Concept
  2. Value Proposition
  3. Sources of Revenue
  4. Activities, Resources, and Capabilities
In the e-Business Model, there exists the e-business concept, value proposition, sources of revenue, and the required activities. In a successful business, all of its business model components work together in a cooperative and supportive fashion.
Although an e-Business is often thought of as e-Commerce, there are other types of online activities that fall under the definition of e-Business that can benefit from this discussion.
The e-business concept describes the rationale of the business, its goals and vision, and products or offerings from which it will earn revenue. A successful concept is based on a market analysis that identifies customers likely to purchase the product and how much they are willing to pay for it.

Web based ecommerce lowers the barriers of entry for virtually any industry. Because the cost of using the web as a retail outlet typically is far less than the costs of a physical store, a rash of new competitors should be expected.

Brick and mortar companies will take advantage of the web to move into new industry arenas.

An influx of competition into an industry usually translates into changes in product, mix, pricing, branding and supply chain partnerships.

The ability to market often differentiates companies. With the web, however, the marketing differences between companies become far easier for buyers to compare. With only a few keystrokes and clicks, a buyer can compare the web sites, and thus the products, prices and associated services of competitors.

The web generates new prospects and customers for companies, and new methods of marketing to those prospects/customers and existing customers.

A new science of marketing known as e-marketing has evolved to deal directly with the marketing challenges of doing business on the web. One of the disciplines of e-marketing. known as personalization, enables organizations to simulate one-to-one marketing to prospects and customers.

The notion of brand remains every bit as important on the web as it did before the web gained popularity. How organizations establish or extend brand on the web , however, is by offering compelling, reliable and understandable ecommerce sites

May companies have always taken pride in differentiating themselves from their competition through superior customer service. ecommerce offers new opportunities for organizations to distinguish themselves by offering customer self-service on the web.

Companies that provide extensive product information, or related product/service information, and even access to customer support specialists through email or chat, not only keep their web-centric customers happy, but cna reduce the overall operational costs of customer service.

Of course, the most obvious business model change resulting from e-commerce falls in the area of sales. E-commerce web sites may significantly reduce the cost of sales and savvy dot-comes and click-and-mortars have figured out ways of empowering web prospects and customers.

Allow web prospects and customers to perform their own product/service comparisons, configure their own pricing, choose their own shipping, make the payments, and track the fulfillment, all without the aid on an actual salesperson.