E-Business Models that Work!

The history of business in one way or the other is the history of mankind, society and civilization. The way business is run today in the 21^st century is quite different from the way it has been through the different stages of our evolution. No doubt it has evolved with humans and also reflects how man thinks and wishes to progress in the future.

Modern communication technologies such as the telephone, radio, television and the internet have globalized communication by eliminating all political and geographical boundaries. This phenomenon of e-commerce is the global trend of today. Business today is free of hiring headache, and extra added paperwork, payroll handling and is more an empire of one than of thousands. All that was learnt in the business world for centuries to trade and barter is now replicated online. The company’s policy, operational strategy, technology and ideology define its business model. A business model in layman terms is simply putting all the nuts and bolts of how a business plans to generate profits and revenue, its long-term strategy and day-to-day operations. Every business can be innovative by making its model as complicated or as simple as they want, but all businesses at the end of the day cater to the basic seven components of:

Reaching out to Customers

Building a great “mouse-trap” does not determine the world on your doorstep. Every business still has to go through the hassle of searching out its potential customers who are not waiting for them through the conventional way of marketing, print or television, outdoor or socially interacting with their clientele online or on ground.

Differentiating your product

Every business thinks and feels they are unique in their capacity, but only a smart marketing company will accept competition whole heartedly, and develop unique product-positioning strategies.

Pricing

Whether you decide to sell online, or on ground, or use both mediums to sell your product, a business needs to know how to make money, and relying only on volume is not the smartest of all decisions all the time.

Selling

It’s all about selling for survival. Putting a sales strategy and defining a sales process will only benefit from the beginning.

Delivery/ Distribution

When selling online, it is fairly simple, but yet it needs to be thought out well in advance, as a product’s packaging and design depends on the channel through which the product will be distributed to the customers.

Supporting Customers – the business needs to have a 24/7 support for its customers

Achieving Customer Satisfaction – the success and failure of a business lies with happy customers.

E-commerce has given way to many different business models being applied by large retail names as well as single run enterprises which have become million dollar businesses. E-commerce allows companies to conduct business 24/7, all day, every day, worldwide.

Some of the most successful e-businesses are using the Storefront model. This model allows selling on the web, and involves a product catalogue, order processing, a secure payment method and a timely order fulfillment. Many of the leading storefront model companies are B2C (Business-to-consumer) companies. A good example is Ticketmaster.com (www.ticketmaster.com) or Ebookers Finland (www.ebookers.fi) that uses the internet to sell tickets online, to improve its customer service. Customers have access to seating plans, show listings and price discounts. Ticketmaster uses the shopping cart technology, which is an advanced database system supporting a strong infrastructure for smooth running of the business.

Another good example is More.com (www.more.com) a health and beauty e-commerce site that uses a shopping cart to allow its customers to shop, buy and arrange shipment. Products include skincare, eye care, pharmaceuticals and others related to health and wellness. Although both companies are using a shopping cart and supporting technologies to offer their products and services to its customers, each of them has chosen a different approach to e-commerce.

The Shopping cart technology is an order processing technology allowing customers to accumulate lists of items they wish to purchase as they shop along, a similar approach to an on ground departmental store. The shopping cart is supported by a product catalogue, a merchant server and a database technology. It also provides a wide range of purchasing options to customers and one the most widely spoken of e-business using this technology is Amazon.com (www.amazon.com). A similar local example using the same technology is Liberty Books (www.libertybooks.com). Both companies use a database that allows its customers to search through products in a different ways, a client centric approach also known as client server application. This database consists of product specifications, availability, delivery options, stock levels etc. The book titles, authors, prices, etc. are all stored in the database. Amazon goes a step further, allowing its customers to personalize their site for frequent returning customers. As the database keeps a record of the customer and searches the customers’ database of previous purchases to provide a recommended list of book titles. The task of an additional sell or a cross sell is conducted by the database itself, thus eliminating a human sales force cost.

Shopping cart is only one way of conducting online transactions, though an effective way of buying and selling products on the internet. Many companies combine a number of purchasing methods to give their customers more options. While the shopping cart technology provides convenience of quick and easy transactions, businesses need to be wary of consumer privacy and online security.

Online Shopping Malls models are also very popular providing a wide selection of products and services. Its popularity has grown with the convenience it provides its customers to purchase anything and everything under the sun, with multiple purchases in one transaction rather than shopping from multiple online stores. Pakistan too has experienced a series of such examples, the latest venture of TCS Connect (www.tcsconnect.com). Consumers can search and shop for a variety of products, and rather than making separate purchases, they can use the mall’s shopping cart technology to purchase items from many stores in a single transaction. Other smaller such examples have been in the technology items being sold under one roof, for example Home Shopping (www.homeshopping.pk).

Another popular method of e-business model being followed globally is the Auction Model. Through this forum internet users can log on and take up the role of either a bidder or a seller. This model earns through commission basis on every successful auction. Sellers post their products which they wish their buyers to bid on. Popular successful business models under this e-business structure are the Ebay (www.ebay.com) or locally we have OLX (www.olx.com.pk). As a bidder you may search the site for availability of the item you are seeking. Some sites allow the bidders to submit a maximum bidding price and will continue bidding. This model also practices reverse auction model where the buyer sets a price and sellers compete to match the price or beat it. A reverse price is the lowest price that the seller will accept in any type of auction. These business models do not involve themselves in payment or delivery procedures.

Group In (www.groupin.com.pk) and Chalo (www.chalo.pk) are also local examples of auction sites, but these businesses are following multiple e-business models. Their primaries focus being the Auction model, acting as a forum for buyers and sellers, to avail from the best discounts available. They not only facilitate as a B2B Exchange, but also directly to B2C.

Besides commercialized businesses, the e-learning industry too is catching up fast. Universities and corporate-training companies are offering high-quality distance learning, with certificate courses to complete degree being delivered and classes held online. Some popular e-learning websites are Click2Learn (www.click2learn.com) provides a database of products and services help individuals and companies find the education they need. Companies that wish to develop their own training can use the click2learn textbook option, create and sell courses online. My favorite is Blackboard (www.blackboard.com) that allows teachers and educationist to post their courses and ideas online, and works just the way a blackboard is used in a classroom. It also offers trainers marketing opportunities and access to customer support.

These business models are ever evolving, some work, some fail. Some businesses keep updating their features on their business model, trying to improvise and make it as simple for their consumers, cost effective and profitable. There is still room for more innovations and improvements to be brought to these e-business models, and keep evolving. 

The edited version was printed as a cover story in Spider Magazine in their June 2012 Issue. You may click here to see the printed version, and also send in your views on the article and all about e-business models, how you feel they are changing the world around you.