E-Commerce Business Models | Free Essay Example

E-Commerce Business Models

Words: 2246
Topic: Business & Economics
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Introduction

The era of electronic commerce has existed since 1995. The computer revolution in the business world has since changed immensely with the introduction of Business-to-Business (B2B), Business-to-Consumer (B2C), Consumer-to-Consumer (C2C) and m-commerce models. Majority of the business firms have adopted e-commerce in harnessing growth and development (Loudon & Traver, 2013). The current technology development has become an integral factor in improving business and market competitiveness.

However, e-commerce exists in different models such as the B2B, B2C, C2C and m-commerce. B2B business model involves transactions between businesses. For instance, a supplier is involved in a B2B when supplying to other individual businesses. Importantly, B2B is supported by Electronic Data Interchange (ED) technology. B2C business model involves firms selling directly to individual consumers. For example, retailers dealing with end consumers are an example of B2C business model.

Other business examples include travel services offered in the tourism industry. Online retailers, transaction brokers and market creators are exemplary models of B2C business. C2C is a business model that allows consumers sell to each other without involving retailers or wholesalers. C2C allows the consumer to place an item for sale on an online market without charges. Amazon and eBay are examples of online markets that facilitate C2C business model. M-commerce is the latest business model that utilizes mobile devices in conducting transactions.

M-commerce is a wireless mode of business where the use of laptops and smart phones connect to the web for transactions such as banking, stock trading and travel reservations. M-commerce is expected to outgrow other models of business in the future. The following research highlights examples of B2C, B2B, C2C and m-commerce business models. In addition, the research focuses on companies, products and services that do not subscribe to e-commerce, and how they can apply the same in conducting business.

Business-to-consumer (B2C) business model

Online retail stores are components of B2C models and are similar to bricks-and mortar businesses. Typically, online retail stores have physical subsidiaries and virtual stores. Barnes & Noble, Walmart and Staples are examples of companies that operate virtual and physical stores. However, there are companies that only operate in a virtual world. For example, Amazon, iTunes, Drugsore.com and eBay are typical e-tailers that use online mall and catalogs (Loudon & Traver, 2013).

Community providers like Facebook, LinkedIn, Well.com, iVillage, Fool.com and Twitter are renowned for their social connection services. Community providers provide an online platform for business to share information on products and services they intend to sell. Sharing of video, pictures and information regarding products and services is a common characteristic of community providers. Another example of B2C model is content providers that trade on information.

In any case, content providers deal in intellectual property, distribution of information, video, music and text using the web as a marketplace. Trading of e-books, online journals and magazines, are also a within the scope of content providers. Renowned content providers include WSJ.com, CNN.com and CBSSports.com. B2C business model incorporates the use of portals or search engines like Google, Yahoo, Ask.com and MSN in providing content and services (Loudon & Traver, 2013).

In most cases, consumers use portals as a gateway to search for their favorite products and services. Other prominent examples of business models associated with B2C model include service providers like Google Docs and Gmail, as well as transaction brokers like Ameritrade and Datek.

Business-to-Business (B2B) models

Business-to-Business (B2B) models are more prevalent than B2C commerce. As indicated earlier, B2B utilizes EDI technology to ensure transactions between suppliers and purchaser remain private and confidential (Loudon & Traver, 2013). Examples of models that suit B2B business include the e-distributor, where companies utilize online catalogues to display their items. Grainger.com is a renowned e-distributor with online catalogs used to access and provide information of over 1 million items.

E-procurement firms like Ariba use customized software and integrated online catalogs that organize procurement procedures for vendors. The customized software and integrated online catalogs integrate additional information on services such as shipping, insurance and finance. In this context, e-procurement software is an integral element of value chain management. E-procurement software service providers earn money by charging transaction or annual licensing fees (Loudon & Traver, 2013).

Consumer-to-consumer (C2C) business models

C2C business models do not involve other business parties other than individual consumers. However, business between individual consumers qualifies to be e-commerce when it is electronically-facilitated. Online auction is an example model of B2B commerce, where individual consumers list their items for sale in an internet-based company such as eBay (Loudon & Traver, 2013).

Online classified advertising sites, as well as online retailers also support C2C businesses. In this regard, Craigslist and Amazon are renowned online classified advertising site and online retailer that support C2C respectively.

M-commerce business models

M-commerce is the recent e-business model entry since the inception of mobile devices. M-commerce models empower businesses and individuals to use their mobile phones, tablets and laptops in conducting transactions such as purchasing, payment and banking (Loudon & Traver, 2013). Mobile money transfer is a renowned m-commerce concept where hand gadgets are used to transfer money between businesses, customers, institutions and individuals.

M-PESA and Zap are renowned money transfer services provided by Safaricom and Airtel companies in Kenya (Kendall, Maurer, Machoka & Veniard, 2011). Mobile ATM business models allow bank customers to access banking services using their mobile phones. Vodafone is an example of a mobile service provider that allows Hungarian Citizens to make bank payments and pay bills using mobile phones at an ATM machine.

Mobile browsing allows individual consumers to access content over the internet using internet-enabled hand gadgets. Mobile purchasing allows individual customers to access online catalogs from businesses and make an order electronically. However, businesses develop customized mobile websites that allow consumers to navigate using a mobile device. Additional services supported by m-commerce include marketing, advertising, brokerage and payment services.

There exist renowned mobile applications that have proven the effectiveness of m-commerce. The Starbucks mobile application is a household name in the United States (Kaplan, 2012). Coffee consumers use the mobile application in paying for their drinks. The McDonald’s Sverige is a mobile application available in Sweden and is reliable for online purchases and delivery payments (Svensson, 2009). REI retail store has mobile application which is renowned in outdoor clothing and gear industry (Duffy, 2004).

The application allows customers to view products online and give a feedback about the items or services provided. The application is integrated with online social media like Facebook and twitter to provide customers with regular updates about new products, services and price adjustments.

Example companies

Pickering Lumber Company in East Texas is a renowned local timber milling business (Johnson & Gerland, 1996). However, the company still utilizes conventional business practices. In this context, the company assumes that its popularity within the state is enough to maintain its market competitiveness. In any case, the company does not utilize a B2C business model as expected through electronic media.

The company can utilize a website to market its products and services among its target customers. The company can develop a website portal where customers can make order inquiries, as well as product information. Sharing information through content providers is important to customers who want to learn more about the company’s products and services.

McDonald’s and Kentucky Fried Chicken (KFC) business do not utilize B2B models. It is important to note that a B2B lengthens the chain of distribution especially if the commodity traded has a short expiry date. In addition, lengthening the chain of distribution has costs implication to the end consumer and market.

However, McDonald’s and KFC can use B2B models to ease the mode of transactions between the companies and suppliers. In this context, using EDI technology to make instant payments to suppliers is integral in improving the value chain (Monczka, Handfield, Giunipero & Patterson, 2008). B2B model like the e-distributor can help McDonalds or KFC in accessing distant customers who want to have information about the companies’ products and services.

Companies like Google, Yahoo and Facebook allows customers to interact without offering any additional support such as payment options. In this regard, additional applications such as payment portals to support the use of credit and debit cards can increase the convenience and reliability of using social media in making purchases.

JP Morgan Chase Bank can introduce m-banking without necessarily using mobile applications that are supported by the internet. In this regard, potential customers who do not have iPhones or android gadgets do not have to access mobile applications to conduct m-banking. In addition, Times Publishing Company can benefit from an application that supports mobile subscription of the daily newspaper and payment.

Products

Technical products such as start-up software and hardware are difficult to sell through B2C models. In any case, technical products that are newly developed require much research and market demonstrations. However, integrating a Business-to-Developer (B2D) model with B2C would ensure that the customer gets relevant information from a reliable third party. In this context, the developer’s websites and other media platforms will be used to ensure that the customer gets the relevant information about the products.

In any case, the developer assumes the liability of the product from the manufacturer to the consumer. Selling of vehicles through B2C business model is difficult and has not been realized in recent years. In any given case, companies prefer selling the product through another business fraternity. General Motors can utilize B2C model to sell Chrysler or Ford through B2C since their products are widely popular in the world markets. Heavy machine equipments do not prefer trade through virtual stores.

This is due to critical technical demonstration required before a customer decides to make a purchase. Therefore, sharing information through community and content providers as evidenced through videos can be used to demonstrate technicalities of the products.

Textile products rarely use a B2B business model. Businesses dealing in finished textile products prefer using the internet for marketing. However, with a B2B model, companies can ensure that sourcing of textile raw materials from suppliers is timely. Products such as daily newspapers do not utilize a B2B model, but with digitization of the products, distribution of the same through online companies can be effective in harnessing market competitiveness.

Intellectual properties cannot be traded through C2C models. In fact, this requires facilitation from a legal office which is not possible through the internet. Stock market shares are sensitive products that cannot be traded through the internet or social media. However, with the increasing development of software, it is possible to create online portals where confidentiality of trading with intellectual properties of stock market shares is facilitated privately.

Nevertheless, this requires the development of secure portals that include virtual contribution of a legal office either through online forms and provision of terms and conditions required in trading of intellectual property or stock.

Currently, products like motor vehicles do not subscribe to m-commerce models. In this context, the mentioned products are technical and require well documented transactions to ensure that quality aspects are observed. In addition, almost every technical product cannot be transacted through a mobile phone since the gadget may not handle the required item descriptions. From this perspective, trading of motor vehicles requires special mobile applications that incorporate item description once a customer tries to download the information.

In addition, intellectual properties are not sold through mobile applications. However, development of customized mobile applications that allow communication between customers and the owner can effectively support m-commerce. Healthcare products are currently not traded through m-commerce models. From this perspective, the industry tries to safeguard ethical consideration required in selling of healthcare products.

However, licensed pharmaceutical companies liaison with medical facilities ensures that clients get the prescribed drugs. A special mobile application that networks a pharmaceutical business, medical facility and the client ensures that an order from the latter is medically certified by an expert.

Services

Services such as customer portal licensing do not involve a B2C model. Apparently, such kinds of services are expensive since a customer is charged per login to the system. However, customization of the portal system can be conducted to ensure that customers are charged subscription fees allowing them to navigate through the portal for maximum utilization. In this context, Partner Relationship Management (PRM) systems are deemed effective in structuring of support portal logins that are limitless.

Healthcare services do not subscribe to B2B models (Van Overwalle, Van Zimmeren, Verbeure & Matthijs, 2006). The business model is only possible when referral services are required from one medical facility to another. In this context, accessing medical services through EDI networks is important for customers to know where to access referred services.

In addition, healthcare services cannot be traded between individual customers unless one of them is a medical professional. However, for this service to be considered legal, the C2C model must verify details of the services provided. Healthcare services cannot be accessed through mobile devices especially if the service requires prescription of drugs and laboratory tests. In this regard, m-commerce can only support medical consultation services through a legally and medically verified mobile application.

Conclusion

The emergence of e-commerce is notably one of the greatest innovations of modern times. E-commerce has revolutionized business practices by effectively addressing issues of cost, reliability and market competitiveness. Today, businesses are quickly adapting to B2C, B2B, C2C and m-commerce models as a conformity to modern business practices. Apparently, companies, products and services that used conventional business practices can now subscribe to new models as a matter of necessity.

References

Duffy, D. L. (2004). Multi-channel marketing in the retail environment. Journal of Consumer Marketing, 21(5), 356-359.

Johnson, M. C., & Gerland, J. K. (1996). Tapping” Green Gold”: The Steam Rail and Logging Tram Roads of East Texas. Environmental History, 46-65.

Kaplan, A. M. (2012). If you love something, let it go mobile: Mobile marketing and mobile social media 4×4. Business Horizons, 55(2), 129-139.

Kendall, J., Maurer, B., Machoka, P. & Veniard, C. (2011). An emerging platform: From money transfer system to mobile money ecosystem. Innovations, 6(4), 49-64.

Loudon, K. C. & Traver, C. G. (2013). E-commerce. Business. Technology. Society. Upper Saddle River, NJ: Pearson Education.

Monczka, R., Handfield, R., Giunipero, L., & Patterson, J. (2008). Purchasing and supply chain management. Boston, MA: Cengage Learning.

Svensson, C. R. (2009). CultureShock! Sweden: A Survival Guide to Customs and Etiquette. Singapore, SG: Marshall Cavendish International Asia Pte Ltd.

Van Overwalle, G., Van Zimmeren, E., Verbeure, B., & Matthijs, G. (2006). Models for facilitating access to patents on genetic inventions. Nature Reviews Genetics, 7(2), 143-154.