Ecommerce business models Flashcards
What are the problems with the freemium model?
People become unwilling to pay, expect free
Difficult to find balance between paid offering and free offering
Offering too many features for free will cannibalise paying customers
Offering too few features for free will generate little interest
1-2% of people downloading will pay so must reach mass markets
How to make freemium work
Create bundles
make partnerships
Limit the free offering
promote free and paid version, not just concentrating on paid customers
create incentive for users to promote service to friends
Distinguish between free and paid services so consumers can justify making purchase.
what is an e-commerce business model?
a business model that aims to use and leverage the unique qualities of the internet and the world wide web
Give some examples of B2C business models
etailer/storefront
- online catalogue
- shopping cart technology
- secure payment
- revenue through product sales
portals
- horizonal e.g. yahoo
- vertical e.g. WebMD
Content providers
- distribute digital content
- revenue through subscription fees, pay per download or licensing
- e.g. BBC
Transaction broker
- sites that process transactions for customers
- Transaction fee
- e.g. Monster processes jobs
Market creator
- creates market that brings buyers and sellers together
- e.g. eBay
- e.g. pricewise - reverse auction (price goes down)
Advertising revenue model
- paid advertising on sites
- works best when it is not too intrusive
- works best for high levels of visits
- can be tailored - based on past purchases, preferences, location-based
Subscription revenue model
- websites that offer users content or service or charges subscription fee for access to its offering
+ guarantees income - how to make people subscribe - they have to see the value
Affiliate revenue model
- receive referral fee or percentage of revenue
- sites that steer customers to an ‘affiliate’
- requires sufficient traffic to be profitable
Pay per view revenue model
- pricing is difficult to get right
how does ecommerce generate value?
search and transaction cost efficiency
- faster, more informed decisions, choice and economies of scale
complementaries - bundling of goods
Lock-in : high switching cost of suppliers
novelty - new ways to innovate transactions, connect partners and foster new markets
four alternative revenue models for a website from a magazine publisher?
subscription
affiliate advertising
pay per article
advertising revenue
whats the difference between a revenue model and business model?
Business model includes details such as target market, products and services, business processes, supply chain, revenue models and financial viability.
Revenue model is the specific way in which a business monetizes its offering
