E-COMMERCE BUSINESS MODELS: AN OUTLINE
I. A business model is the structural element of an organizational strategy that facilitates interaction between firm, external environment, and customer and which provides a framework for the creation of value for the firm.
II. The role of a business model is illustrated in the chart below.
III. There are a number of business model typologies, each of which includes varying numbers of model types.
A. The e-commerce business model typology (Datacomm Research, 1999) includes a total of 20 business model types, as follows: (1) Basic Business Model: Portals and Traffic-Builders; (2) Entertainment Business Model: Exploiting Attention Span; (3). High-Margin Business Model: Most Valuable Customer Skimming; (4) Service Business Model: Added Value Applications; (5). Community Business Model; (6) Personal Portal: BYO (Bring Your Own) Portal; (7) Vertical Business Model: Vertical Hubs and Communities; (8) Brokering Business Model: Facilitating Transactions; (9) Toll-Taking Business Model: Earn a Little Every Time; (10) Keiretsu Business Model: Oligarchic Internet Ecosystems; (11) B-2-B Business Model: Focus on Corporate Commerce; (12) Price Agent (Price Optimization) Business Model; (13) Low-Margin Business Model: Making it Up in Volume; (14) Zero-Margin Business Model: The Lowest Common Denominator; (15) SubZero Margin Business Model; (16) Free/Sub-Free Business Model: Indentured; (17) Commerce; (18) Auction-Based Business Model: Balancing Supply and Demand through the three sub-types (a) Standard Auctions, (b) Reverse Auctions, and (c) Multisite Auctions; (18) Super-Agent Business Model; (19) Virtual Worlds Business Model: VR, Avatars, and 3D Immersion; and (20) Nirvana: The Path to Profitable, Web-Based E-Commerce.
B. The Datacomm (1999) typology is both too cumbersome and insufficiently defined to provide a good understanding of prevailing business models in E-Commerce.