E-commerce Chapter Two
Content
Chapter Two Business Model for E-commerce A business Model is a set of planned activities designed to result in a profit in a marketplace. An e-commerce business model aims to use and leverage the unique qualities of the internet and the World Wide Web. 2.1 Key Elements of a business model There are eight key ingredients of a business model. They are
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Value Proposition Defines how company¶s product or service fulfills the needs of customers The following questions should be answered Why will customers choose to do business with your firm * instead of another company What will your firm provide that other firms do not and cannot *
From customer point of view, e-commerce value proposition refers to * personalization * Customization of product offerings * Reduction of product search costs E.g. www.caterpillar.com, www.amazon.com 2. Revenue Model Describes how the firm will earn revenue, produce profits, and produce a superior return on invested capital 3. Revenue Model Describes how the firm will earn revenue, produce profits, and produce a superior return on invested capital. There are five revenue models * Advertising revenue model: a web site that offers its users content, services, and/or products also provides a forum for advertisements and receives fees from advertisers e.g. www.yahoo.com, * Subscription revenue model: a web site that offers its users content or services charges a subscription fee for access to some or all of its offerings. e.g. www.bbc.co.uk, www.newsweek.com , www.emerald.com * Transaction fee revenue model: a company receives a fee for enabling or executing a transaction e.g. www.ebay.com
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Sales revenue model: companies derive revenue by selling goods, information, or services to customers e.g. www.doubleclick.net Affiliate revenue model: sites that steer business to an ³affiliate´ receive referrals fee or percentage of the revenue from any resulting sales. e.g. www.MyPoints.com
3. Market Opportunity Refers to the company¶s intended market space and the overall potential financial opportunities available to the firm in that market space. 4. Competitive Environment refers to the other companies operating in the same marketspace selling similar products. It is influenced by * How large their operations are * How many competitors are active * What the market share of each competitor is * how profitable these firms are * How they price their products E.g. www.priceline.com, www.hotwired.com are direct competitors www.priceline.com, www.amazon.com are indirect competitors 5. Competitive Advantage Achieved by a firm when firms can produce a superior product and/or bring the product to market at a lower price than most, or all, of their competitors. It may arise due to Asymmetry; the firm in a market has more resources- financial backing, knowledge, information, and or power-than other participants. The asymmetry can be * patent * connection * Image * first mover advantage 6. Market Strategy Is the plan a firm put together that details exactly how you intend to enter a new market and attract new customers. www.yahoo.com advertises aggressively to attract more number of users.
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www.kozmo.com partners with other companies 7. Organizational Development Describes how the company will organize the work that needs to be accomplished. Work is divided into * Functional departments * defined area within the function * Responsibilities * hiring people 8. Management Team Employees of the company responsible for making the business model work. The management team ability and credibility to outside investors, immediate market-specific knowledge, and experience in implementing business plans. In pooling effective management team, the following questions should be answered * What experience a manager have * What kind of technical background is desirable * What kind of supervisory experience is necessary * What job function should be filled first? Marketing, operation, finance etc * Do prospective senior managers have experience and contacts for raising financing from outside investors? 2.2 E-business Model based on relationship of Transaction Parties There are five types¶ e-business models which bases on the transaction parties 2.2.1 Business to Consumers (B2C) Business organizations sell products or services directly to consumers Example: www.amazon.com, www.autobytel.com www.ediets.com, www.pets.com Firms reach individual consumers through five businesses to consumer models A. Portal They offer users powerful web search tools as well as integrated package of content and service such as news, e-mail, instant messaging, calendars, shopping, music downloads, video, business information, all in one place. * Portals do not sell anything directly and in that sense they can present themselves as unbiased. * Portals generate revenue primarily by charging advertisers for ad placement, collecting referral fees for steering customers to other sites, and charging for premium services
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* Portals are divided into two * Horizontal /General portal: define their marketplace to *
include all users of the internet. www.google.com Verticals/vortals: focus around a particular subject matter or subject market or market segment. www.iboats.com
B. E-Tailor * online retail store where time-starved customers can shop at any hour of the day or night without leaving home or office. * They referred as ³Click and mortar ³or ³Click and brick´. * Keeping expense low, selection broad, and inventory controlled are keys to success in e-tailing * E.g. www.ibaby.com, www.marthastewart.com , www.amazon.com Types of E-tailor C. Content Providers * A way of internet service provision that can be defined broadly to include all forms of intellectual property. * They distribute information content such as digital news, music, photos, video, and artwork over the web. * Micro payment system technology provides content provdiers with a cost effective method for processing high volumes of very small monetary transaction. * They make money by charging subscribers a subscription fee. Some make money by selling advertising space and partner promotion on their sites E.g. www.emerald.org, www.wsj.com D. Transaction Broker Sites that process transactions for consumers normally handled in person, by phone, or mail. The largest industries using this model are financial services, travel services, and job placement services. The online transaction broker¶s primary value propositions are savings of money and time. Online stock brokers charge commissions that are considerably less than traditional brokers, with many offering substantial deals. Transaction brokers make money each time a transaction occurs. e.g.: www.ethiojobs.com , www.e-trade.com , www.schwab.com , E. Market Creator
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It builds a digital environment where buyers and sellers can meet, display products, search for products, and establish a price for products. e.g. www.Priceline.com www.ebay.com It is profitable because there is no inventory carried. F. Service Providers Offer services online. Some charge a fee, while others generate revenue from other sources such as advertising and by collecting personal information that is useful in direct marketing. Service cannot be provided online and service providers can make arrangements through their websites. e.g. www.myCFO.com, E. Community Provider Are sites that create a digital online environment where people with similar interests can transact (buy and sell goods, communicate with likeminded people, receive interest related information and even play out fantasies by adopting online personalities. It rely on a hybrid revenue model that includes subscription fees, sales revenues, transaction fees, affiliate fees, and advertising fees from other firms who are attracted by a tightly focused audience. e.g. www.about.com, www.ivillage.com, www.blackplanet.com 2.2.2 Major Business-to-Business (B2B) Business Model It is about a commercial transaction between businesses focus on selling to other businesses. 1. Marketplace/Exchange (B2B HUB) It is a digital electronic marketplace where suppliers and commercial purchasers can conduct transactions. B2B hubs make it possible to gather information, check out suppliers, collect prices, and keep up-to-date on the latest happenings all in one place. Sellers, on the other hand, benefit from expanded access to buyers. They make transaction and inventory carrying cost lower. It can be a. Vertical marketplaces that serve specific industries e.g. www.covisint.com serve automotive, health care b. Horizontal marketplaces that sell specific products and services to a wide range of companies. e.g. www.e-steel.com www.out.com 2. E-distributor
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Companies that supply products and services directly to individual businesses. Whereas B2B hubs pull together many businesses, making it possible for them to do business with other companies, e-distributors are set up by one company seeking to serve many customers. With e-distributors, the more products and services a company makes available on its site, the more attractive that site is to potential customers. E.g. www.geae.comm, General electric purchases aircraft parts from sellers that through the website 3. B2B Service Providers They sell business services to other firms. Traditional B2B service providers offer online equivalents to common business services, such as accounting, financial services, human resource management, printing, and so on. Application service providers: a company that sells access to internet based software applications to other company. E.g. www.Salesforce.com sells customized CRM software and companies save expensive automation system. B2B service providers make money through transaction fees, fee based on the using the service or annual licensing fees Service tends to be knowledge-intensive, based on expensive professional employees
4. Matchmakers Companies that make money by linking other business and taking cut of any business that occurs via a transaction or usage fee are called matchmakers. E.g. www.iship.com compares prices among shipping companies. Once a company has the cheapest shipper for its particular package, it pays is hip a fee in order to get service for the shipments. 5. Infomediary A new company that would act as custodians, agents, and brokers of customer information marketing it to businesses on consumers¶ behalf while protecting their privacy at the same time. They can be classified into two basic subcategories:
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Audience brokers: capture information about customers and use it to help advertisers find the most appropriate audience. The source of revenue is sales of information e.g. www.doubleclick.net Lead generators: gathers customer¶s data, from which they then create customer profile or reference. They then direct vendors of products and services that fit the profiles to the customer. The source of revenue is referral fee. e.g. www.autobytel.com
2.2.3 Business Models in Emerging E-commerce Areas There are new forms of business such as
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Consumer-to-consumer(C2C) Business Models provide a way for consumers to sell to each other, with the help of an online business. e.g. www.ebay.com buy used or unwanted expensive products through auctions. www.half.com enables consumers to sell off unwanted books, movies to other consumers. * Peer-To-Peer (P2P) Business Models Link users, enabling them to share files and computer resources without a common server e.g.: www.groovenetworks.com help its workers share files, calendars, work schedules, and plans without burdening central servers. C. M-commerce is a short for mobile-commerce which permit mobile access to the web. Wireless networks utilize newly available bandwidth and communication protocols to connect mobile users to the internet. The key technologies are * Telephone based 3G( third generation wireless) * Wi-Fi (Wireless local area network) * Bluetooth (Short range radio frequency web devices) 2.3 E-business Model Based on the Relationship of Transaction Types Business models are basically ruled by two parameters. * Control: It is hierarchically controlled and at lower level there is no control so that it is self-organizing * Value Integration: the addition of value to a product or service because of the web business opportunities
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Based on these two parameters, there are four types of transactions can be identified? * The Brokerage Model Its characteristics are * The price discovery mechanism is its key principle * It is a meeting point for sellers and buyers * Auctions and exchanges are the modes of transactions * It is a ³Free Market´ * It consists of Global Network of buyers and sellers * It is a virtual Marketspace enabled by the internet * It encompasses all types of organization now Advantages of Brokerage Model * C2C trading * allows buyers and sellers to trade directly bypassing intermediaries, and * reduces cost for both parties * global reaches * trading convenience, which * Allows a trading at all hours * Provides continually updated information * Sense of community through direct buyer and seller communication * Efficient access to information * Alleviation of the risks of anonymous trading One of the brokerage model is: Auction Model Auction sites acts as company¶s or forms through which internet users can log on and assumer the role of either the seller or the buyer( either bidder or seller). As a seller, you are able to post an item you wish to sell, the minimum price you require to sell your item and a deadline to close the auction. As a bidder, you may search the site for availability of the item you are seeking, view the current bidding activity and place a bid. The reverse auction model allows the seller to sell a product at a price as a buyer competes to match or even beat it. A reverse price is the lowest price that the seller will accept in any type of auction. 2. Aggregator Sales can be made based on list prices or through auctions. In some cases goods and services are unique to the web and not have a traditional ³ brick and mortar´ storefront. Following are some of the aggregator models a. Virtual merchant: This is a business that operates only from the web and offer either traditional or web specific goods or services
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b. Catalog merchant: is the migration of mail order to a web-based order business. c. Surf-and-turf: is traditional brick-and-mortar establishment with web storefront. The model has the potential for channel conflict. d. Bit Vendor: is a merchant that deals strictly in digital products and services and, in its purest form, conducts both sales and distribution over the web e. Subscription model: users pay for access to site. What do Aggregators do?
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They bypass distributors so that the buyers and sellers come together They are in the overall process of selection, organization, matching the buyers¶ requirement with that of the available goods, fulfillments of the orders and enable the customers to create a value about the sellers
There are four types of aggregators based on what they offer to users. They are: * Content aggregators: are among the first large scale sites on the web and mostly represent large publishing companies. Eg. www.pathfinder.com b. Mainstream aggregators: include sites like yahoo providing a web directory and a search engine along with a bunch of attractive tools like e-mail address, homepages, reminders and many others. eg. www.yahoo.com c. Event Aggregators: are sites that provide in-depth content and tools tailored to the needs of a particular group, which doubles as a clearly defined customer base. eg. www.homeshark.com d. Shopping aggregators: let consumers roam through hundreds of sites and catalogs and find the best price in seconds. They help consumers sift through the dozens of e-commerce sites that evaluates their quality on same independent basis as consumer reports. eg. www.compare.com 3. Info-mediary Model It is an organizer of virtual community who helps customers to collect, manage, and maximize the value of information about consumers. Data about consumers and their buying habits are extremely valuable especially when that information is carefully analyzed and used to target marketing campaign. An infomediary may offer users free internet acces or free hardware in exchange for detailed information about their surfing and purchasing habits.
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eg. www.netzero.com, www.emachines.com Classification of Info-mediaries It can be classified in terms of their relationships with sellers and buyers into four types based on whether these relationships are open (nonproprietary, giving anyone free access) or closed (proprietary, restricting access). The four types are: * Specialized agents: the related proprietary networks are sectioned off the broader internet by having closed relationships with both buyer and supplier. Their business performance depends on their ability Ability to deliver value through scope Specialization ( a well defined and lucrative niche) Infrastructure ( a platform for transaction) b. Generic Agents maintain open relationships with both buyers and suppliers and involve no relationship-specific investment. They create value through their comprehensive and unbiased service often generating revenue from advertising, which is based on eyeballs, or number unique user clicks. www.google.com c. Supplier Agents Start off in this quadrant, sponsored either by specific companies with a vested interest in selling their products or by close affiliation to core group sellers. Thus, they do not provide unbiased options for buyers. E.g. www.auto.com D. Buyer agents Establish relationship with a core set of buyers, working on their behalf and any number of suppliers. To succeed, they must build a large base of clients and win their trust. eg. www.infoseek.com
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4. E-Community Model are formed when groups of people meet online to fulfill certain needs, which include personal interests, relationships, entertainment and transaction.
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Value Proposition Defines how company¶s product or service fulfills the needs of customers The following questions should be answered Why will customers choose to do business with your firm * instead of another company What will your firm provide that other firms do not and cannot *
From customer point of view, e-commerce value proposition refers to * personalization * Customization of product offerings * Reduction of product search costs E.g. www.caterpillar.com, www.amazon.com 2. Revenue Model Describes how the firm will earn revenue, produce profits, and produce a superior return on invested capital 3. Revenue Model Describes how the firm will earn revenue, produce profits, and produce a superior return on invested capital. There are five revenue models * Advertising revenue model: a web site that offers its users content, services, and/or products also provides a forum for advertisements and receives fees from advertisers e.g. www.yahoo.com, * Subscription revenue model: a web site that offers its users content or services charges a subscription fee for access to some or all of its offerings. e.g. www.bbc.co.uk, www.newsweek.com , www.emerald.com * Transaction fee revenue model: a company receives a fee for enabling or executing a transaction e.g. www.ebay.com
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Sales revenue model: companies derive revenue by selling goods, information, or services to customers e.g. www.doubleclick.net Affiliate revenue model: sites that steer business to an ³affiliate´ receive referrals fee or percentage of the revenue from any resulting sales. e.g. www.MyPoints.com
3. Market Opportunity Refers to the company¶s intended market space and the overall potential financial opportunities available to the firm in that market space. 4. Competitive Environment refers to the other companies operating in the same marketspace selling similar products. It is influenced by * How large their operations are * How many competitors are active * What the market share of each competitor is * how profitable these firms are * How they price their products E.g. www.priceline.com, www.hotwired.com are direct competitors www.priceline.com, www.amazon.com are indirect competitors 5. Competitive Advantage Achieved by a firm when firms can produce a superior product and/or bring the product to market at a lower price than most, or all, of their competitors. It may arise due to Asymmetry; the firm in a market has more resources- financial backing, knowledge, information, and or power-than other participants. The asymmetry can be * patent * connection * Image * first mover advantage 6. Market Strategy Is the plan a firm put together that details exactly how you intend to enter a new market and attract new customers. www.yahoo.com advertises aggressively to attract more number of users.
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www.kozmo.com partners with other companies 7. Organizational Development Describes how the company will organize the work that needs to be accomplished. Work is divided into * Functional departments * defined area within the function * Responsibilities * hiring people 8. Management Team Employees of the company responsible for making the business model work. The management team ability and credibility to outside investors, immediate market-specific knowledge, and experience in implementing business plans. In pooling effective management team, the following questions should be answered * What experience a manager have * What kind of technical background is desirable * What kind of supervisory experience is necessary * What job function should be filled first? Marketing, operation, finance etc * Do prospective senior managers have experience and contacts for raising financing from outside investors? 2.2 E-business Model based on relationship of Transaction Parties There are five types¶ e-business models which bases on the transaction parties 2.2.1 Business to Consumers (B2C) Business organizations sell products or services directly to consumers Example: www.amazon.com, www.autobytel.com www.ediets.com, www.pets.com Firms reach individual consumers through five businesses to consumer models A. Portal They offer users powerful web search tools as well as integrated package of content and service such as news, e-mail, instant messaging, calendars, shopping, music downloads, video, business information, all in one place. * Portals do not sell anything directly and in that sense they can present themselves as unbiased. * Portals generate revenue primarily by charging advertisers for ad placement, collecting referral fees for steering customers to other sites, and charging for premium services
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* Portals are divided into two * Horizontal /General portal: define their marketplace to *
include all users of the internet. www.google.com Verticals/vortals: focus around a particular subject matter or subject market or market segment. www.iboats.com
B. E-Tailor * online retail store where time-starved customers can shop at any hour of the day or night without leaving home or office. * They referred as ³Click and mortar ³or ³Click and brick´. * Keeping expense low, selection broad, and inventory controlled are keys to success in e-tailing * E.g. www.ibaby.com, www.marthastewart.com , www.amazon.com Types of E-tailor C. Content Providers * A way of internet service provision that can be defined broadly to include all forms of intellectual property. * They distribute information content such as digital news, music, photos, video, and artwork over the web. * Micro payment system technology provides content provdiers with a cost effective method for processing high volumes of very small monetary transaction. * They make money by charging subscribers a subscription fee. Some make money by selling advertising space and partner promotion on their sites E.g. www.emerald.org, www.wsj.com D. Transaction Broker Sites that process transactions for consumers normally handled in person, by phone, or mail. The largest industries using this model are financial services, travel services, and job placement services. The online transaction broker¶s primary value propositions are savings of money and time. Online stock brokers charge commissions that are considerably less than traditional brokers, with many offering substantial deals. Transaction brokers make money each time a transaction occurs. e.g.: www.ethiojobs.com , www.e-trade.com , www.schwab.com , E. Market Creator
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It builds a digital environment where buyers and sellers can meet, display products, search for products, and establish a price for products. e.g. www.Priceline.com www.ebay.com It is profitable because there is no inventory carried. F. Service Providers Offer services online. Some charge a fee, while others generate revenue from other sources such as advertising and by collecting personal information that is useful in direct marketing. Service cannot be provided online and service providers can make arrangements through their websites. e.g. www.myCFO.com, E. Community Provider Are sites that create a digital online environment where people with similar interests can transact (buy and sell goods, communicate with likeminded people, receive interest related information and even play out fantasies by adopting online personalities. It rely on a hybrid revenue model that includes subscription fees, sales revenues, transaction fees, affiliate fees, and advertising fees from other firms who are attracted by a tightly focused audience. e.g. www.about.com, www.ivillage.com, www.blackplanet.com 2.2.2 Major Business-to-Business (B2B) Business Model It is about a commercial transaction between businesses focus on selling to other businesses. 1. Marketplace/Exchange (B2B HUB) It is a digital electronic marketplace where suppliers and commercial purchasers can conduct transactions. B2B hubs make it possible to gather information, check out suppliers, collect prices, and keep up-to-date on the latest happenings all in one place. Sellers, on the other hand, benefit from expanded access to buyers. They make transaction and inventory carrying cost lower. It can be a. Vertical marketplaces that serve specific industries e.g. www.covisint.com serve automotive, health care b. Horizontal marketplaces that sell specific products and services to a wide range of companies. e.g. www.e-steel.com www.out.com 2. E-distributor
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Companies that supply products and services directly to individual businesses. Whereas B2B hubs pull together many businesses, making it possible for them to do business with other companies, e-distributors are set up by one company seeking to serve many customers. With e-distributors, the more products and services a company makes available on its site, the more attractive that site is to potential customers. E.g. www.geae.comm, General electric purchases aircraft parts from sellers that through the website 3. B2B Service Providers They sell business services to other firms. Traditional B2B service providers offer online equivalents to common business services, such as accounting, financial services, human resource management, printing, and so on. Application service providers: a company that sells access to internet based software applications to other company. E.g. www.Salesforce.com sells customized CRM software and companies save expensive automation system. B2B service providers make money through transaction fees, fee based on the using the service or annual licensing fees Service tends to be knowledge-intensive, based on expensive professional employees
4. Matchmakers Companies that make money by linking other business and taking cut of any business that occurs via a transaction or usage fee are called matchmakers. E.g. www.iship.com compares prices among shipping companies. Once a company has the cheapest shipper for its particular package, it pays is hip a fee in order to get service for the shipments. 5. Infomediary A new company that would act as custodians, agents, and brokers of customer information marketing it to businesses on consumers¶ behalf while protecting their privacy at the same time. They can be classified into two basic subcategories:
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*
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Audience brokers: capture information about customers and use it to help advertisers find the most appropriate audience. The source of revenue is sales of information e.g. www.doubleclick.net Lead generators: gathers customer¶s data, from which they then create customer profile or reference. They then direct vendors of products and services that fit the profiles to the customer. The source of revenue is referral fee. e.g. www.autobytel.com
2.2.3 Business Models in Emerging E-commerce Areas There are new forms of business such as
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Consumer-to-consumer(C2C) Business Models provide a way for consumers to sell to each other, with the help of an online business. e.g. www.ebay.com buy used or unwanted expensive products through auctions. www.half.com enables consumers to sell off unwanted books, movies to other consumers. * Peer-To-Peer (P2P) Business Models Link users, enabling them to share files and computer resources without a common server e.g.: www.groovenetworks.com help its workers share files, calendars, work schedules, and plans without burdening central servers. C. M-commerce is a short for mobile-commerce which permit mobile access to the web. Wireless networks utilize newly available bandwidth and communication protocols to connect mobile users to the internet. The key technologies are * Telephone based 3G( third generation wireless) * Wi-Fi (Wireless local area network) * Bluetooth (Short range radio frequency web devices) 2.3 E-business Model Based on the Relationship of Transaction Types Business models are basically ruled by two parameters. * Control: It is hierarchically controlled and at lower level there is no control so that it is self-organizing * Value Integration: the addition of value to a product or service because of the web business opportunities
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Based on these two parameters, there are four types of transactions can be identified? * The Brokerage Model Its characteristics are * The price discovery mechanism is its key principle * It is a meeting point for sellers and buyers * Auctions and exchanges are the modes of transactions * It is a ³Free Market´ * It consists of Global Network of buyers and sellers * It is a virtual Marketspace enabled by the internet * It encompasses all types of organization now Advantages of Brokerage Model * C2C trading * allows buyers and sellers to trade directly bypassing intermediaries, and * reduces cost for both parties * global reaches * trading convenience, which * Allows a trading at all hours * Provides continually updated information * Sense of community through direct buyer and seller communication * Efficient access to information * Alleviation of the risks of anonymous trading One of the brokerage model is: Auction Model Auction sites acts as company¶s or forms through which internet users can log on and assumer the role of either the seller or the buyer( either bidder or seller). As a seller, you are able to post an item you wish to sell, the minimum price you require to sell your item and a deadline to close the auction. As a bidder, you may search the site for availability of the item you are seeking, view the current bidding activity and place a bid. The reverse auction model allows the seller to sell a product at a price as a buyer competes to match or even beat it. A reverse price is the lowest price that the seller will accept in any type of auction. 2. Aggregator Sales can be made based on list prices or through auctions. In some cases goods and services are unique to the web and not have a traditional ³ brick and mortar´ storefront. Following are some of the aggregator models a. Virtual merchant: This is a business that operates only from the web and offer either traditional or web specific goods or services
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b. Catalog merchant: is the migration of mail order to a web-based order business. c. Surf-and-turf: is traditional brick-and-mortar establishment with web storefront. The model has the potential for channel conflict. d. Bit Vendor: is a merchant that deals strictly in digital products and services and, in its purest form, conducts both sales and distribution over the web e. Subscription model: users pay for access to site. What do Aggregators do?
* *
They bypass distributors so that the buyers and sellers come together They are in the overall process of selection, organization, matching the buyers¶ requirement with that of the available goods, fulfillments of the orders and enable the customers to create a value about the sellers
There are four types of aggregators based on what they offer to users. They are: * Content aggregators: are among the first large scale sites on the web and mostly represent large publishing companies. Eg. www.pathfinder.com b. Mainstream aggregators: include sites like yahoo providing a web directory and a search engine along with a bunch of attractive tools like e-mail address, homepages, reminders and many others. eg. www.yahoo.com c. Event Aggregators: are sites that provide in-depth content and tools tailored to the needs of a particular group, which doubles as a clearly defined customer base. eg. www.homeshark.com d. Shopping aggregators: let consumers roam through hundreds of sites and catalogs and find the best price in seconds. They help consumers sift through the dozens of e-commerce sites that evaluates their quality on same independent basis as consumer reports. eg. www.compare.com 3. Info-mediary Model It is an organizer of virtual community who helps customers to collect, manage, and maximize the value of information about consumers. Data about consumers and their buying habits are extremely valuable especially when that information is carefully analyzed and used to target marketing campaign. An infomediary may offer users free internet acces or free hardware in exchange for detailed information about their surfing and purchasing habits.
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eg. www.netzero.com, www.emachines.com Classification of Info-mediaries It can be classified in terms of their relationships with sellers and buyers into four types based on whether these relationships are open (nonproprietary, giving anyone free access) or closed (proprietary, restricting access). The four types are: * Specialized agents: the related proprietary networks are sectioned off the broader internet by having closed relationships with both buyer and supplier. Their business performance depends on their ability Ability to deliver value through scope Specialization ( a well defined and lucrative niche) Infrastructure ( a platform for transaction) b. Generic Agents maintain open relationships with both buyers and suppliers and involve no relationship-specific investment. They create value through their comprehensive and unbiased service often generating revenue from advertising, which is based on eyeballs, or number unique user clicks. www.google.com c. Supplier Agents Start off in this quadrant, sponsored either by specific companies with a vested interest in selling their products or by close affiliation to core group sellers. Thus, they do not provide unbiased options for buyers. E.g. www.auto.com D. Buyer agents Establish relationship with a core set of buyers, working on their behalf and any number of suppliers. To succeed, they must build a large base of clients and win their trust. eg. www.infoseek.com
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4. E-Community Model are formed when groups of people meet online to fulfill certain needs, which include personal interests, relationships, entertainment and transaction.
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