E-commerce Fundamentals  «Prev 

Specific Business Model Changes associated with the Web

  1. Transition to E-Commerce: The advent of the internet has brought about a major shift from traditional brick-and-mortar stores to online platforms, a model known as E-commerce. This move allows businesses to broaden their market access and sell their products or services globally, 24/7, without the limitations of geographical location and store operating hours. Additionally, this transition reduces overhead costs linked to maintaining physical stores, such as rent, utilities, and staffing.
  2. Digital Marketing and Advertising: Online platforms have transformed marketing strategies, allowing for more targeted and personalized advertising campaigns. Businesses are now leveraging data-driven techniques such as Search Engine Optimization (SEO), Pay-Per-Click (PPC) advertising, email marketing, and social media marketing. These techniques not only enhance brand visibility but also provide valuable insights into customer behaviors, preferences, and trends, improving customer acquisition and retention.
  3. Software-as-a-Service (SaaS): The internet has propelled the rise of SaaS, a business model where companies offer software applications over the internet on a subscription basis. This eliminates the need for customers to install and run applications on their own computers or in their own data centers, reducing the expense of software maintenance, ongoing operation, and support.
  4. User-Generated Content and Crowd-Sourcing: Online businesses often leverage user-generated content (UGC) and crowd-sourcing as integral parts of their business models. UGC, including reviews, testimonials, and social media posts, often influences buying decisions and promotes trust and engagement. Crowd-sourcing, on the other hand, allows businesses to outsource tasks to a distributed group of people, enabling them to tap into global talent and ideas, reduce costs, and improve efficiency.
  5. Freemium and Microtransactions: The freemium model, often used by online service providers and game developers, offers basic services for free while charging for premium features or content. This model serves to attract a large user base with the free offering and then monetize through the small percentage that converts to premium. Microtransactions, where users can purchase virtual goods or advantages, have also become a significant revenue stream for many online businesses. This approach allows companies to generate consistent revenue over time, enhancing customer engagement and loyalty.

Each of these shifts represents a fundamental change in the way businesses operate, and understanding them is crucial for companies aiming to thrive in the digital age.

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.