Business Models on the web (cont.)


Welcome back The next model that we are going
to So far what we have we we have been talking let us try to recapitulate We were talking
about the revenue model the business models that exist because of the Internet and the
web And in this category we saw there are various types of models and later we covered
few of them and we are again going to start we are going to continue with that and the
next model that we are going to talk about is actually merchant model What this merchant model These merchant models
are they they are wholesalers and retailers of goods and services on the web Their sales
may be made based on the list prices or through auctions So there are many virtual merchant
and there are many click and mortar merchants okay By virtual (mer) virtuals we mean they
truly do not have their own Uhh own stocks warehouses et cetera but they have the list
of products available list of products available with them and depending on what the customer
demands they tries to arrange that product and sell For example is your Amazon Amazon does not
have any products of your own but you can see you can buy books You can buy books you
can buy electronic products all from Amazon directly not from a 3rd party That is what
I am trying to say Okay In in in in a brokerage kind of model it is just a facilitator where
it brings in sellers and buyers But here it is a virtual seller himself It is a virtual
seller himself who is who you can say cannot have in fact they do have right now at least
all of them have some kind of physical infrastructure But in general they need not have physical
infrastructure Okay Physical infrastructure they need not maintain their stock they need
not maintain good inventory of everything but they do exist and they are the sellers
Then we also have in this category we have something called catalogue merchant These
catalogue merchants are specifically for let us say for Land’s End it is specifically
for clothing It brings in various brands together it is a store If you go to a cloth store you
naturally have many brands The store the retailer cloth store actually is not producing on its
own but it is a cloth store and deals with various brands with Uhh Uhh and you can buy
from choose from any of the brand Your Land’s End is of that type Then click and mortar They do have a physical
infrastructure This Barnes & Nobles is they have their physical stores around Uhh around
Uhh United States of America and additionally it has its web store So managing inventory
is their way of managing inventory is different Then there is another category called Bit
vendors you can say who sell audios videos and so on Your example is Apple iTunes Music
Store Now how are they different from the Broker
Because they are the they are the direct sellers of certain products They are the merchants
who directly sell the product responsible for its starting from its buying from the
let us say they are dealing with Amazon is dealing with a specific book buying from the
publisher and ending the cycle by sending it through using its supply chain to send
it to the end customer the whole thing is managed by the company Okay Look at this This is Uhh this is the website
of Barnes and Noble and it it what it does it it has all the books and additionally it
will be showing the Uhh the advertisements about the newer releases and all so that the
customers in a convenient manner can shop it shop from there Then the next category is actually manufacturer
or the direct model In fact about this manufacturer or direct model we have already discussed
while in the beginning in the introductory classes and we saw that Dell has this direct
model Dell is one example of this manufacturer model In fact not only Dell there are many
companies who can directly have their B2C kind of transaction From their business houses
they can directly to our customers from their web stores Dell is one such company And while discussing about the about Dell
Uhh we know that Dell is not only selling its its Uhh products products newer products
but products which are about to get obsolete it also does auction on those products And
specifically for computer parts it also takes it also provides a it is also a auction facilitator
for other companies as well ok But here when we talk about the manufacturer direct model
about Dell it is about selling its own product selling its own product directly to the customer And as you know Dell as such a company which
does not even it is a company with almost 0 inventory Okay It does not even have a place
it does not even own a place where it makes its products It buys so its supply chain works
in a very nice very interesting manner Once the customers put the order it it actually
connects to another company who will be assembling assembling the product and that company in
turn will be collecting the Uhh collecting the Uhh the part from other vendors around
the world and they finally they will be assemble the product and it will be sent to you But anyway it is they use it as a mechanism
for reaching the buyers directly and they are buy from they they compress the distribution
channel In fact it is very interesting to know that during when this Internet became
commercialised that time of course IBM was a very established computer manufacturer and
Dell was not that well-known but what happened This IBM decided to retain its regular supply
chain network where as because Dell was before also Dell was not Dell was directly dealing
with the customers and Dell was not Uhh Uhh i mean the not having a circular supply channel
it used to have retailers who will be buying Dell’s products and selling through their
retail channel Dell decided to move to this direct model So as a result during that period Dell’s
sale was at par with IBM because it could directly connect with the customer So it is
about reaching the buyers directly and thereby compress the distribution channel This manufacturer
model can be based on efficiency improved customer service and better understanding
of customer’s preference and that is how they make money Then the next one we are going to talk is
about affiliate model This affiliate model provides a purchase point click through to
a merchant It is a pay for performance model If an affiliate does not generate sales it
represents no cost to the merchant Otherwise it provides some money Then variations include
banner exchange pay per click and revenue sharing program and so on We were discussing
about double click Now and we talked that DoubleClick has certain
revenue model It is a revenue it is a advertising network It is a advertising network Now if
some banner ad by DoubleClick is posted on let us say Barnes and Noble site or with the
Amazon site what happens As long as somebody clicks as long i mean the if the banner is
displayed the site actually provides the space and no money is charged by the slide by the
site let us Amazon or Barnes and Noble Or there may be some very minimal fee they
might be charging to display the advertisement But the moment somebody clicks the advertisement
who will be paid DoubleClick will be paid and Amazon will be paid their shares So that
is how DoubleClick gets affiliated with Amazon and Barnes & Noble and generates its revenue
So it is affiliation model Next one is actually your community model
So this community model this revenue can be based on the sale of ancillary products and
services or voluntary contributions Or revenue maybe tied to contextual (advertisemen) advertising
subscriptions for premium services and so on For example look at the open source software
platform like that of your Red Hat Linux It is actually open source and all the open source
products are they really open source Are they really free Of course to the users at the lower segment
they are free But the moment you you actually need a very specialised technical component
of of that open source platform you need to pay And when you need to pay that is actually
a huge amount of money it is not small amount And that is how they charge And many times
they will Uhh Uhh Uhh they will be asking for donations If somebody is is is happy with
the kind of product or service they are providing people can donate That is how they will be
surviving Then you have public broadcasting Here the
user (con) user contribution model used by not-for-profit radio and television broadcasting
is extended to the web The model is based on the creation of a community of users who
support the site through voluntary donations So they actually survive because of donations
Then your social networking services Here the site provides individuals with the ability
to connect with the other individuals and the social networking sites there is nothing
special to talk about because now everybody is a social network user So the now the question is how you get how
do they generate money So many of them actually provide many premium services Let us say you
are a LinkedIn user and as a LinkedIn user if you would like to connect to a specific
company or you would like to have your profile being showed up to specific groups to increase
your visibility then you have to become a premium member and there you charge they charge
some additional money for that Then the next one is actually a subscription
model So in this subscription model the users are charged on a periodic basis either daily
monthly annual this way and once you and who are they There are many such service providers
Let us say for example you talk think about Netflix If you are a Netflix member Netflix
is a content provider It provides videos and movies and all So if you are a Netflix member
again and again you can ask its content if you subscribe it for once So that is one Then you can have person-to-person
networking services like that of connecting to your classmates and all and they are they
actually distribute the user submitted information for connecting schoolmates Then there are
many trust services and you have to be a member of a trust service When we talk about the
security in the e-business systems we will be talking more on trust services but before
that let me tell you something In many of the websites you must have trust
E mark this is powered by trust E Is not it So what exactly is this trust E and what do
we mean by it is powered by a trust E Look if you are visiting a website and you would
like to do transactions through the website the 1st thing you will be looking at is that
whether that particular site is trustable or not How do you ensure it Of course the
1st thing is that you have 1st hand information from your friends and Uhh whom you know physically
you know and you know that they have already done some transactions through this particular
website so you can also transact However if you are visiting for a first-time
to a site and you are keen to buy something you need some 3rd party who will be providing
you with that support In fact trust E and other such companies they provide certain
certain trust services What do they do They physically verify the company’s existence
its record and so on and they provide a certificate to the company with the company displayed
on its website okay And because you believe trust E and trust
E has certified other (com) other websites and you visited and never faced any problem
it is a trusted 3rd party you also believe that new website and you do transactions through
the website And how do this trust E It is about generating the money So how do this
trust E generate its money How do the trust E generate its money From the company while
providing the trust services It does not charge money from the users of the website Okay Then of course you know this Internet service
provider they also do exist because of the the net and they provide services and because
of their if you subscribe to some ISP you have to pay And this payment is again is of
different Uhh ways you can pay Either you can pay on a monthly basis there are various
options for paying also Either you get provide monthly service subscription or you provide
a base price then for day transaction how much amount of data you are using and so on So they basically provide service they (gen)
generate their money from from the users who take their service Then the last one is actually utility model
This utility model just like your electric meters if you are using certain certain utility
after certain amount is over I mean if you you prepay the service and you consume the
service till that amount is over So this is basically is the utility model So in this
utility model there are again is of two types one is metered use use and another is metered
subscription They are actually on demand services as you
know In case of metered use it is it measures the measures and bills the user Uhh based
on the actual usage of the service and then you pay For example this Internet service
providers in some parts of the world operate as utilities They do not they work I was telling
you last in last slide that some of them actually take monthly subscriptions So they have a
subscription-based model Now there are certain who are utility-based model In in certain parts of the world they actually
work just like in electric service service provider and all electricity service providers
and all What they do Depending on how much data you use they will be charging you It
is not a monthly subscription Then there are metered subscriptions They allows users to
purchase access to the content in a metered portion which can be measured the number of
webpages you see number of advertisements you see number of lists you browse and so
on So this is the model that we had to discuss Now at the end of this whole exercise I want
all of you to develop a case study From the beginning I have told you in this course is
basically made into 3 different parts This is it is so far whatever we have been talking
these are actually introductory part Then in the 2nd part what we will be doing We will
be looking at the various functional areas and how this e-business has actually enabled
the functional areas And in the 3rd part in the 2nd part what we
will be in the 3rd part what will be looking at is the technologies that is used for that
is that is behind the success of this e-business transactions Then the 4th part which actually
requires some kind of background in in terms of some kind of mathematical background I
expect at that point of time and there we will be discussing about various decision
support models Okay But whatever right now at the end of this I expect all of you to
develop a case which you will be submitting online And this is the instruction for developing
the case where you have to choose a company whether it is a it is immaterial whether you
choose a Internet based company which are some which exist because of the web or you
can have some brick and mortar company and you can also see how they have used (advert)
Internet to increase their reach to the customer to (rev in) increase their revenue and so
on So Uhh in in this in this the focus is you can be you can actually choose any of
the business functionalities you like whether it is procurement selling marketing HR operations
and so on You have to talk about the nature of the underlying
Information Systems You have to be talking about what was their original business process
and how it is re-engineered due to adoption of e-business practices what are the perceived
benefits Different types of models business models revenue model and so on whether the
models that they adopted were they failure or a success That stories also you have to
write and your views and analysis So I expect that you will have minimum 20
references that include the website of the company various research papers and other
resources you refer them and prepare the case study Okay So you can make maximum 10 slides
you can also include audios and videos are available And the main purpose of this is
because right now at least this part of the course I have been only doing talking you
may not realise the actual potential of this particular field if you do not make some search
of your own So therefore it is you have to (dev) develop this case study and you have
to make submissions online Thank you very much

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