What is an E-Business Model?

A business model describes a set of business entities

involved and interrelationships among them. The model
also describes the sources of revenue and potential
benefits accruing to the involved business participants.

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 Classification of Business Models

There are different business models that are being used by

e-commerce initiatives. These business models can be classified
on the basis of different parameters such as--- weather they are
content centric or transaction centric, if transaction centric then on
the basis of relationship of transaction parties involved in
business, or weather they are naturally involves the Internet or
transplanted on the Internet from real world etc.

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E-business models based on the relationship of transaction parties:
Or
(Classification of E-commerce)

 Electronic commerce utilizes information and

communication technologies to carry out market transactions
among two or more parties—usually businesses and
consumers. Based upon the entities (transaction parties)
involved in a transaction, electronic commerce has been
primarily classified into these four categories:
Business-to-Business (B2B),
Business-to-Consumer (B2C),
Consumer-to-Business (C2B), and
Consumer-to-Consumer (C2C).
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 Relation Between B2B and B2C Model

The relation between B2B and B2C models is clearly shown

in following figure.
B2B covers business transactions along the various interactions existing in
the value chain from producers of raw materials to retailers. On the
contrary, B2C reflects only the interactions between a consumer and a
retailer.

Raw material Manufacturer Distributor Retailer Consumer

producer

B2B B2C

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 Business-to-Business electronic commerce (B2B)

Definition:- Business-to-Business (B2B) is that model of e-commerce where a

company conducts its trading and other commercial activity through the Internet
and customer is another business itself. I.e., B2B electronic commerce facilitates
inter-organizational interaction and transaction.
Examples: - MetalSite.com, VerticalNet.com, SHOP2gether.com
Potential:- Experience in the west indicates that B2B forms a major constituent
of the total e-commerce volumes. This is because the value per transaction in a
B2B scenario is much higher when compared with Business to Consumer (B2C)
type of transaction.
Involved Business Entities:-This type of electronic commerce requires two or
more business entities interacting with each other directly, or through an
intermediary. The intermediaries in B2B may be market makers and directory
service providers, who assist in matching buyers and sellers and striking a deal.
Usefulness:- The business application of B2B electronic commerce can be
utilized to facilitate almost all facets of interactions among organizations, such as
inventory management, channel management, distribution management, order
fulfillment and delivery and payment management. 5
 Three B2B models of E-Commerce

The B2B electronic commerce can be classified into

1) Supplier-Centric,
2) Buyer-Centric, &
3) Intermediary-centric.

B2B

Supplier- Buyer- Intermediary

Centric Centric -Centric
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 Three B2B models of E-Commerce (Continued)
Supplier centric B2B-In the supp1ier-centric model, a supplier sets up the
electronic commerce marketplace. Various customer/ buyer businesses interact
with the supplier at its electronic marketplace. Typically, it is done by a
dominant supplier in the domain of products it supplies. The supplier may
provide customized solution and pricing to fit the needs of buyer’s business.
The supplier may also institute different pricing schemes for buyers depending
upon volume and loyalty count. Examples:
1. Intel
2. Cisco Connection Online (CCO)

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 Three B2B models of E-Commerce (Continued)
Buyer-centric B2B- In buyer-centric electronic commerce, major businesses
(buyer) with high volume purchase capacity create an electronic commerce
marketplace for purchase and acquisition by starting a site on their own. The
online electronic commerce marketplace is used by the buyer for placing
requests for quotations (RFQs) and carrying out the entire purchase process.
This kind of facility may be utilized by high volume and well-recognized
buyers, as they may have adequate capacity and business volumes to lure
suppliers to bid at the site. Examples:
1. United States Government
2. General Electric Information System

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 Three B2B models of E-Commerce (Continued)
Intermediary-centric B2B- In intermediary-centric B2B electronic commerce, a
third party sets up the electronic commerce marketplace and attracts both the buyer
and seller businesses to interact with each other. I.e., The role of the intermediary
Company is that of an electronic market maker. The intermediary, by electronically
connecting many different buyers and sellers through its database of potential
suppliers and buyers, fulfills the role.
The third party electronic commerce marketplace acts as a hub for both suppliers
and buyers, where buyers place their request for the quotations and sellers respond
by bidding electronically, leading to a match and ultimately to a final transaction.
The buyers and sellers, both benefit from the increased options in terms of pricing,
quality, availability and delivery of goods.
Some benefits achieved by this specific model over two previous models (Supplier
Centric and Buyer Centric) are:-
1. Since intermediary company represent a large number of members in that specific
market segment, i.e., both the buyers and the sellers, it reduces the need for buyers and
sellers to contact a large number of potential partners on their own.
2. The information available from the intermediary's database allows a buyer to screen
out obvious unsuitable sellers and to compare the offerings of many different potential
sellers quickly, conveniently, and inexpensively. 9
 Three B2B models of E-Commerce (Continued)

Examples of Intermediary-centric B2B :

1. Honeywell International (Myplant.com)
2. IndiaMart.com
3. General Electric's Trading Process Network (TPN)

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 Advantages of B2B model

Major advantages of B2B model

1. By using B2B Electronic Commerce, any business can reengineer their
supply chain and partnership. B2B will offer easy access to following types of
information, which help any business organization to take better decisions:
Information about Product - Price, Sales history
Information about Suppliers - Product line and lead-time, sales terms and
conditions
Information about Production process -Capacity and product plan
Information about Customers –Buying history and forecast
Information about Competitors –Market share, product offerings
Information about Sales and marketing –Promotions of new products

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 Advantages of B2B model (Continued)
Additional advantages of B2B
1. It is a cost reduction technique for the company by eliminating mediator
2. Focused sales promotion- By directly interacting with customer buying
patterns can easily be identified & these information gives authentic data
about the likes, dislikes and preferences of clients and thus helps the
company bring out focus sales promotion drives which are aimed at the right
audience.
3. Building customer loyalty- It has been observed that online customers can be
more loyal than other customers and do not like to shift to another site if
they are made to feel special, their distinct identity is recognized and their
concerns about privacy are respected.
4. With the help of online reverse auction the buyer of industrial goods can get
the product at a cheap deal, as there are many competitors in an online
reverse auction.
5. From the purchasing company’s point of view, B2B is a medium of
facilitating procurement management such as reduced prices and reduced
cycle time. 12
 Advantages of B2B model (Continued)
Additional advantages of B2B (Continued)

6.Electronic funds transfer-using EDI can be done between to organizations.

7. B2B helps in lowering the cost for selling and marketing.
8. It shortens the selling cycle.
9.The most important advantage of B2B is to have JIT just in time delivery
to ensure that materials or supplies arrive at a facility just when they are
needed. The supplier company can have the track of good as to which place
it has reached with the help of B2B electronic commerce.

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 Business-to-Consumer electronic commerce (B2C)
Definition:- Business-to-Consumer (B2C) is that model of e-commerce where a
business organization contemplating commercial transaction directly with
individual consumers. It is also called E-Retail or E-Tail because it is actually
retail sales over the Internet. The selling businesses offer a set of merchandise at
given prices, discounts, and shipping and delivery options.
Examples: - Dell Computers (//www. dell.com), Mustafa (www.Mustafa.com),
Amazon (www.amazon.com), Fabmart (www.fabmart.com)
Variation of B2C Model :-
1. One of the variants of B2C model is virtual merchants. In this model some
E-tailers offer traditional or Web-specific products or services only over the
Internet. Examples of virtual merchants include amazon.com (books, electronics,
toys, and music).
2. Another variant is e-businesses who provide high-value content to consumers
for a subscription fee. Examples- Wall Street Journal (financial news and articles)
3. A third variant is virtual malls, which are websites that host many online
merchants. Virtual malls typically charge setup, listing, or transaction fees to
online merchants, and may include transaction handling services and marketing 14
Business-to-Consumer electronic commerce (B2C) (Continued)
4. Forth variant is catalogue merchants who supplement a successful traditional
mail-order business with an online shopping site, or move completely to Web-
based ordering. Examples include avon.com (cosmetics and fragrances)
High Potential Area of B2C E-Commerce-
·Goods that can be easily transformed into digital format, such as books, music
clips and videos, and software packages
·Items that follow standard specifications, like printer ribbons, ink cartridges etc.
·Highly rated branded items or items with return security: such as Dell and
Compaq computers, electronic gadgets from Sony, etc.
·Items sold in packets that cannot be opened even in physical stores, e.g., Kodak
film rolls
·Relatively cheap items where savings outweigh risks
·Items that can be experienced online, such as music, videos etc

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 B2C Processes (Step-By-Step)
1. Customer identifies a need
2. Searches for the product or services to satisfy the needs
3. Customer visit a virtual mall
4. Customer registers
5. Customer negotiate prices with merchant
6. Customer buys Product
7. Merchant processes the order
8. Credit card is processed
9. Operation Management on merchant side (inventory management,
quality management, warehousing. Optimization, project
management
10. Shipment & Delivery by merchant
11. Customer receives
12. After Sale Services 16
 Advantages of B2C
Major advantages of B2C Over traditional company:-
1. More choices & Better Prices -Business-to-Consumer (B2C) electronic
commerce offers consumers the capability to browse, select, and buy
merchandise online, from a wider -variety of sellers and at better prices.
2. Overcoming Time & Geographic Boundary-In this type of electronic
commerce the sellers and consumers both benefit through the round the clock
shopping & accessibility from any part of the world.Even being a small
company, the Web can make it appear to be a big player.
3. Reduced operational costs- Selling through the Web means cutting down on
paper costs, customer support costs, advertising costs, and order processing
costs.
4. Customer convenience- Searchable content, shopping carts, promotions, and
interactive and user-friendly interfaces facilitate customer convenience, thus
generating more business. Customers can also see order status, delivery status
online.
5. Knowledge management- Through database systems and information
management business gain increased opportunity for effective direct marketing,
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customizations, and online customer service.
 Disadvantages of B2C

1. The competition is so vast on the web. There can literally be

thousands of places a customer can go to purchase the same
product that a business offers.
2. Technology problems can cause business website to not operate
properly, causing to loose customers and sales.
3. Some consumers are still somewhat fearful of sending their
credit card number over the Internet.

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 Consumer -to- Business electronic commerce (C2B)
Definition:- Consumer-to-Business (C2B) can be described as a form of
electronic commerce where, the transaction, originated by the customer has a set
of requirement specifications and specific price for a commodity, service, or
item. It is the responsibility of the electronic commerce business entity to
match the requirements of the consumers to the best possible extent.
Consumer-to-Business (C2B) enables a consumer to determine the price of a
product and/or service offered by a company.
Examples: - www.Priceline.com, www. ReverseAuction.com
Major advantages of C2B:-
In this type of electronic commerce consumers get a choice of a wide variety of
commodities and services.
Consumers also get the opportunity to specify the range of prices they can
afford or are willing to pay for a particular item, service, or commodity.
It reduces the bargaining time, increases the flexibility and creates ease at the
point of sale for both the merchant and the consumer.

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 Consumer -to- Consumer electronic commerce (C2C)
Definition:- Consumer-to-Consumer (C2C) is the electronic commerce activity
that provides the opportunity for trading of products and/or services amongst
consumers who are connected through the Internet
Examples: - ebay.com, InfoRocket.com, TraderOnline.com
Items dominates C2C:-
Traditional economic activities corresponding to 'classified advertisement' and
auctions of personal possessions form the basis for the category. Much of the
transactions in this category correspond to small gift items, craft merchandise,
and similar items that are normally sold through 'flea' markets or bazaars, where
individuals sell their goods to other individuals at a market determined prices.
Traditionally, C2C electronic commerce has been conducted through
intermediaries such as auctions, classified advertisements, and collectible shows.
The C2C, in many a situations, models the exchange systems with a
modified form of deal making. For deal making purposes a large virtual
consumer trading community is developed. The consumer operates by the rules
of this community to compete, check, and decide his own basic selling and/or
buying prices. 20
 Consumer -to- Consumer electronic commerce (C2C)
(Continued)

Advantages of C2C:
•Broader market
•Eliminates intermediary
•Constantly changing and updating

Disadvantages of C2C:
No quality control
No payment guarantee
Hard to pay for using checks, ATM, cards, etc but future this is likely to
change.

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An Example Of C2C E-Commerce - BaaZee.com (1)

BaaZee.com, founded in March 2000, is a popular Indian auction

site. In the initial stages, the company offered merchandise, from
a number of offline merchants, for public bidding to its
members. Later, it expanded the business by widening the range
of products and enabling its member consumers to buy and sell
goods amongst each other.
Thus the company supports both B2C as well as C2C auction models. Currently,
the low value items such as books and music contribute 32% of the revenue; travel
contributes 12-13%, 20% of revenue comes from mobile phones, 15% form
electronic gadgets, and 20% of the revenue is contributed by information
technology products. The auction process involves three entities, the seller, the
buyer and the auction house. BaaZee.com consists of nearly ten thousand
sellers, one million buyers, and an electronic auction house implemented by
BaaZee.com.  It charges the seller 3% of the sales value for every transaction
completed.

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 An Example Of C2C E-Commerce - BaaZee.com (2)
Baazee.com extends bidding on the auction facility only to registered
members; others can only browse through the items on auction. The
registration process is free of charge.
 In order to list items for auctioning on BaaZee. com, one acquire a verified user
status. The company supports both an automatic as a manual user verification
process. For automatic verification the credit card number has to be provided.
Baazee. com also supports a manual verification process but that requires a
telephone number on which the user can be contacted. The customer support
team verifies the information and changes the status of a member to a verified
user. Only verified users, either with credit card number information or with
the manual process, can put up items for auctioning. BaaZee.com undertakes
to protect the credit card number and personal information. Fees for successfully
completed auctions on BaaZee.com can be paid through credit card, demand
draft, or pay order.

 Registered members can bid for items up on sale, going as high as they like.
Baazee.com keeps members informed through e-mail, anytime they have
been outbid by some other user or they have won a bid. 23
 An Example Of C2C E-Commerce - BaaZee.com (3)
To sell an item, an auction has to be set up. The setting up of an auction
requires filling up a form to describe the item. This description includes
relevant product and auction details, such as category, description, start
price, auction duration, and acceptable shipping and payment methods. A
good photo of the item attached to the information may provide some degree
of look and feel and attracts bidders.
For each of these items the seller states the minimum acceptable price called
reserve price. Once the auction process is on and a bid has been placed the
seller cannot modify any quantity or the terms and conditions associated
with the item. If potential buyers have questions regarding the item being
sold, they use the "ask the seller" button. An e-mail containing the question
is sent to the seller, the seller may respond to it. Throughout the entire
process, the buyer and seller do not see each other's e-mail addresses or
personal details.
As soon as the auction process is over, as per the pre-fixed stage or time and
the seller has procured the highest bid above the reserved price, the buyer
and seller receive e-mail announcing the buyer and giving them details of
payment and delivery term.  
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 What is E-Government?
E-Government used to refer to the use of information and communication
technology to provide and improve government services, transactions and
interactions with citizens, businesses, and other arms of government.
Classification-
Primarily E-Government can be divided into:
•Government-to-Citizen (G2C)
•Government -to-Business(G2B)
•Government-to-Government (G2G)
•Government-to-Employees (G2E)

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 E-Government

Benefits-
1. It is convenient and cost-effective for public and businesses (also) that
they get easy access to the most current information available without
having to spend time, energy and money to get it.
2. Improved accounting and record keeping can be achieved through
computerization, and information and forms can be easily accessed,
resulting quicker processing time.
3. On the administrative side linked information can now be stored in
databases versus hardcopies stored in various locations.
4. Individuals with disabilities or conditions no longer have to be mobile to
interact with government and can be in the comfort of their own homes

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 E-Government

Problems:-
1. Although a prodigious amount of money has been spent on the
development and implementation of e-government, effects of
Internet-based governments are often difficult to gauge or
unsatisfactory.
2. Once e-government begins to develop and become more
sophisticated, citizens will be forced to interact electronically
with the government on a larger scale. This could potentially lead
to a lack of privacy for civilians as their government obtains
more and more information on them.
3. An e-government site that provides web access and support often
does not offer the potential to reach many users including those
who live in remote areas or have low English proficiency or exist
on poverty line incomes.

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 E-Government – Classification
Government-to-Citizen (G2C)-
Government-to-Citizen is the online non-commercial interaction between
local and central Government and private individuals. This also called
Individuals-to-Administration Model (I2A model) of E-Commerce.
Individuals filing tax returns at the government web site is an example of
I2A business model of e-commerce. It can help reduce hassles and avoid
queues in government offices and enhance productivity.
Government -to- Business Or Business -to- Government (B2G)-
On the Internet, business-to-government (B2G) is the concept that businesses
and government agencies can use central Web sites to exchange information
and do business with each other more efficiently than they usually can off the
Web.
For example, a Web site offering B2G services could provide businesses with a
single place to locate applications and tax forms for one or more levels of
government (city, state, country, and so forth); provide the ability to send in
filled-out forms and payments; update corporate information; request answers
to specific questions; and so forth. 28
 E-Government – Classification

Government -to- Business (B2G)- (Continued)

B2G may also include e-procurement services, in which businesses learn
about the purchasing needs of govt. agencies and give responses of
agency's request proposal. B2G may also support the idea of a virtual
workplace in which a business and govt. agency could coordinate the
work on a contracted project by sharing a common site to coordinate
online meetings, review plans, and manage progress.
Government-to-Government(G2G)-
Government-to-Government is the online interaction between
Government organizations, departments, and authorities and with other
Government organizations, departments, and authorities.
Government-to-Employees (G2E) –
Government-to- Employees is the online interaction between
Government organizations and its employees.

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 What is B2B2C &What is C2B2C?
Business-to-business-to-consumer; describes transactions in which a business
sells a service or product to a consumer using another business as an
intermediary.
Example - One example of this is Maytag.com, which allows consumers to
choose the features they want in durable goods. These are then shipped to the
retailers, which also function as services centers and return centers( if the
durable goods prove to be not so durable).
Consumer-to-business-to-consumer; describes transactions in which a
consumer sells a service or product to another consumer using a business as an
intermediary.

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 Education-to-Students (E2S) Model
As the name suggests E2S model envisages an educational institute
providing learning experience to students through the web site. A
student have to register for online education program at these sites.
Benefits of E2S Model - This model has considerable potential for mass
education programs that permit overcoming the geographical boundaries
and problems of students in commuting to their learning places. Students
from far off places can attend “on-line" class and can access online
tutorials and even appear for online examinations. Experts in respective
fields, spread across a wide geographical region can come together at the
E2S site to share their knowledge and experience with the students.
Example:- Barnes and Noble -the well known bookstores in USA with
acknowledged web presence in planning to hands with others in creating
an online University "Barnes and Noble University" that would offer
online learning experience through their well known site bn.com.

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 What is Business-to-Employee (B2E)?
B2E is an approach in which the focus of business is the employee,
rather than the consumer or other businesses & the business uses an intra-
business network to provide services to their employees.
For an employee, searching for a particular type of information from the vast
information base of the company is a time consuming task. This business-to-
employee (B2E) application offers employees a highly customized
corporate information. More specifically, the term "B2E" is frequently
used to refer to the B2E portal which is a customized home page for
everyone within an organization.
The B2E portal is sometimes considered to be synonymous with an intranet,
but it differs in its focus. The intranet's focus is the organization; the B2E
portal focus is the individual. The B2E portal is designed to include not only
everything that an employee might hope to find on an intranet (such as a
corporate information) but also any personal information and links that the
employee might want (such as stocks information or even games).
In a broad sense, B2E encompasses everything that businesses do to attract and
retain well-qualified staff in a competitive market.
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 What is Business-to-Employee (B2E)? (Continued)

Wipro Technologies, a diversified information technology product and

service provider, rolled out a B2E application Channel. Its basic features
include affinity clubs; message boards; chat; intranet searches; a
personalization engine; corporate communication, knowledge sharing; and
self-service applications such as leave management, benefits management,
compensation planning, and internal career management.

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