Cyber Boss

2.6 E-Business Models

An e-business model is simply the approach a company takes to become a profitable
business on the Internet. There are many buzzwords that define aspects of electronic business,
and there are subgroups as well, such as content providers, auction sites and pure-play Internet
retailers in the business-to-consumer space.
E-Commerce or Electronics Commerce business models can generally be categorized
into the following types.
Business - to - Business (B2B)
Business - to - Consumer (B2C)
Consumer - to - Consumer (C2C)
Consumer - to - Business (C2B)
Business - to - Government (B2G)
Government - to - Business (G2B)
Government - to - Citizen (G2C)
2.6.1 Business - to - Business (B2B)
A type of commerce transaction that exists between businesses, such as those involving a
manufacturer and wholesaler, or a wholesaler and a retailer is known as Business-to-Business
(B2B). It refers to business that is conducted between companies, rather than between a company
and individual consumers. This is in contrast to business to consumer (B2C) and business to
government (B2G). Website following B2B business model sells its product to an intermediate
buyer who then sells the product to the final customer. For example, a wholesaler places an order
from a company's website and after receiving the consignment, sells the end product to final
customer who comes to buy the product at wholesaler's retail outlet.
B2B implies that seller as well as buyer is business entity. B2B covers large number of
applications which enables business to form relationships with their distributors, resellers,
suppliers etc.
IBM, Hewlett Packard (HP), CISCO, Dell are the examples of B2B. Chemconnect.com
and chemdex.com are the examples of B2B that brings two firms together on the virtual market.
Following are the leading items in B2B e-Commerce.
 Electronics
 Shipping and Warehousing

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  Motor Vehicles
 Petrochemicals
 Paper
 Office products
 Food
 Agriculture
B2B applications can be witnessed in the following areas:
 Supplier management
 Inventory management
 Distribution management
 Channel management
 Payment management
Diagrammatic Representation of B2B Model

Models in B2B:
The B2B model can be supplier centric, buyer centric or intermediary centric models
Supplier Centric Model
In this model, a supplier sets up the electronic commerce market place. Various customers interact
with the supplier at its electronic market place. The supplier is generally a dominant supplier. He may

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provide customized solutions and pricing to fit the needs of buyers. Intel and Cisco have been adopting the
supplier centric Model.
Buyer centric Model
In this model, big business organisations with high volume purchase capacity create an electronic
commerce market place. The online electronic commerce marketplace is used by the buyer for placing
requests for quotations and carrying out the entire purchase process. The US government and the General
Electric Trading Process Network are examples of buyer-centric model.
Intermediary – centric model
In this model, a third party sets up the electronic commerce market place. The third party attracts
both buyer and seller to interact with each other at its market place. The buyer places their request interacts
with each other and reaches a final decision in purchase or sale of goods.
Advantages of B2B
Selling products to businesses using an online channel is much more complex than
selling to private customers. In addition to the way that you approach the customer, which is
different than in the B2C sector, there is a whole range of other differences that are essential to
understand and that can be advantageous. The following are the advantages of B2B model.
1. Instant purchases: Online business allows for instant purchases. Now, companies can do
almost everything over the internet. They can get in contact with the company they are seeking
to transact with, make a first time transaction, and then set up a system for future transactions.
This allows for frequent purchases. Under frequent purchases, prices usually drop. Therefore,
there is saving in time and money.
2. Increased revenue: 24/7 online ordering will increase companies’ revenue. Many different
time zones exist in the world and potential clients might not have the same business hours as
you. By allowing for companies to make transactions all the time, the time zone becomes
irrelevant. For example: If it is 10 am in your clients’ time zone and 2 am in your time zone, your
client can still make purchases. By offering products at all hours of the day, revenue will increase
for the company.
3. Expands company’s presence: If your company has joined the online community, than it is
expanding its presence and increasing its brand awareness. Nowadays, you can find just about
anything over the internet. Why not allow for people to find your company too?

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4. Closer business relationships: Doing business with other companies online will create closer
business relationships. This will result in more transactions. This frequent buying builds a
stronger relationship. Although this does not require face to face interaction, it does allow for
businesses to get more familiar with each other.
The Disadvantages of a B2B
Companies that embrace a B2B, model, stand to capture significant profit through the
sales of high-cost products or sheer bulk orders. B2B practices diverge in several and significant
ways from standard business-to-consumer practices. Although some differences entail simple
changes in perspective, others create disadvantages for companies seeking to sell to other
businesses.
1. Limited Market
Businesses selling to other businesses face a much smaller buying group than businesses
selling to consumers. The total number of prospective buyers may be in thousands, rather than
the potential millions of customers for consumer products. These limited numbers make every
lead and every existing customer more valuable and the loss of a single, large customer can
devastate the bottom line. For example, if you supply parts to businesses in mature markets,
where only a handful of competitors normally operate, your business might not survive if one of
your buyers closes shop.
2. Long Purchase Decision Time
The majority of consumer purchase decisions involve one or perhaps two decision
makers and the total time for a purchase decision tends to run on the short side. The B2B sales
cycle involves a complicated set of factors, involving multiple stakeholders and decision-makers,
with total decision times that can stretch out for months. B2B sellers cannot depend on a fast
turnaround with new clients for an influx of working capital and must maintain the financial
solvency to operate with long gaps between sales.
3. Inverted Power Structure
In B2B, buyers wield more power than sellers. A B2B buyer can, also within limits,
demand certain customizations, impose exacting specifications and drive a hard line with pricing
because the seller depends much more heavily on retaining its customers. This requires B2B
sellers to retain a level of flexibility in both product development and production.

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4. Sales Process
The typical sale process in B2B demands considerable face time, often multiple meetings,
and gets driven by quantifiable factors, rather than the qualitative and emotional factors. The
sales process often depends on the salesperson’s ability to demonstrate what the product does or
allows modifications that solve the very specific problem the buyer faces, and can deliver a solid
return on investment.
2.6.2 Business - to - Consumer (B2C)
As the name suggests, it is the model involving business and consumers over the
internet. B2C means selling directly to the end consumer or selling to an individual rather than a
company. Website following B2C business model sells its product directly to a customer. A
customer can view products shown on the website of business organization. The customer can
choose a product and order the same. Website will send a notification to the business
organization via email and organization will dispatch the product/goods to the customer. B2C is
also known as internet retailing or E-trailing.
 The B2C model includes electronic shopping, information searching (e.g. railway
timetables) but also interactive games delivered over the Internet.
 Popular items sold using B2C model are airline tickets, books, computers, videotapes,
music CDs, toys, music, health and beauty products, jewellery etc..
Following are the key features of a B2C Model
 Heavy advertising required to attract large number of customers.
 High investment in terms of hardware/software.
 Support or good customer care service
Consumer Shopping Procedure
Following are the steps used in B2C e-commerce −
A consumer
 Determines the requirement.
 Searches available items on the website meeting the requirement.
 Compares similar items for price, delivery date or any other terms.
 Gives the order.
 Pays the bill.
 Receives the delivered item and review/inspect them.

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  Consults the vendor to get after service support or returns the product if not satisfied with
the delivered product.

Diagrammatic representation of B2C Model

Advantages of E-Commerce for B2C Businesses

Benefits of B2C e-commerce can be considered either from the viewpoint of the
consumer or from that of the business.
From the consumer side, benefits include:
1. Access to goods and services from home or other remote locations.
2. The possibility of lower cost of goods and services.
3. Access to a greater variety of goods and services on offer.
4. Consumers can shop at any time of day, from the privacy of their own home. The internet has
been called “the mall that never sleeps.”
5. So many choices – Consumers can shop for basically any item they can think of! Airline
tickets, groceries, clothing, and even medicine!
6. Hassle free – Consumers can shop online without dealing with annoying sales people, fighting
the congestion of shopping malls, and driving 10 different places to find one thing.

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From the business side, benefits include:
1. Lower transaction costs associated with sales.
2. Access to global markets and hence to more potential customers.
3. Can reach worldwide market with unlimited volume of customers.
4. Can display information, pictures, and prices of products or services without spending a
fortune on colourful advertisements.
5. In some cases, makes order processing an easier task than before.
6. Can operate on decreased, little, or even no overhead
Disadvantage of E-Commerce for B2C Businesses
1. The competition is so fast for the web. There can literally be thousands of places a customer
can go and purchase the same product.
2. Technology problem can cause problems to operate the site properly, resulting in losing
customers and sales.
3. Catalogue Inflexibility: The catalogue needs to regenerate every time when there is some new
information or items to add in.
4. Limited Market Place: Normally, customer will be from locally and limited to certain area.
5. High Sales Cycle: Usually, a lot of phone calls and mailings are needed.
6. Required Higher Cost of Doing Business: Cost regarding inventory, employees, purchasing
costs, and order-processing costs associated with faxing, phone calls, and data entry, and even
physical stores increase transaction costs.
7. Inefficient Business Administration: Store inventory levels, shipping and receiving logs, and
other business administration tasks might need to be categorized and updated manually in and
done only when have time. This cause the information might not the latest or updated.
8. Need to employ number of staff: Need staffs that give customer service and sales support
service.
Disadvantages for the consumer
1. Security issue: probably the number one reason why people don’t purchase online. Credit card
information is very sensitive and must be handled by someone the customer can trust. Scams,
frauds and rip-off are not uncommon on the web.
2. Customer services: consumer are not always satisfied with their purchases and when buying
online.

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2.6.3 Consumer - to - Consumer (C2C)
Customer to Customer (C2C), sometimes known as Consumer to Consumer, E-
Commerce involves electronically-facilitated transactions between individuals, often through a
third party. One common example is online auctions, such as Ebay, where an individual can list
an item for sale and other individuals can bid to purchase it. Auction sites normally charge
commission to the sellers using them. They act purely as intermediaries who match buyers with
sellers and they have little control over the quality of the products being offered, although they
do try to prevent the sale of illegal goods, such as pirate CDs or DVDs.
Website following C2C business model helps consumer to sell their assets like residential
property, cars, motorcycles etc. or rent a room by publishing their information on the website.
Website may or may not charge the consumer for its services. Another consumer may opt to buy
the product of the first customer by viewing the post/advertisement on the website.
Another popular area for customer to customer transactions is online classified
advertising sites, such as Craigslist and Gumtree. Major online retailers like Amazon also allow
individuals to sell products via their sites.

C2C is expected to increase in the future because it minimises the costs of using third parties.
However, it does suffer from some problems, such as lack of quality control or payment
guarantees and there can sometimes be difficulties in making credit-card payments.

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  The same customer can act as both buyer as well as seller
 The online market place will allow buyer to browse products by using different criteria
such as; best seller, most popular product, from your city and many more
 Different sellers can bid on the products with list item listed by the buyer, what they are
looking for so that the buyer can get different best prices and offers from sellers
 The social media linking functionalities include, community or forum discussion and
blog and other social media website link interface.
 The back end interface includes features for administration to manage buyer and seller
accounts, payment settings, gallery setting, etc.
Advantages of C2C E-Commerce

 It is always available so that consumers can have access to whenever they feel like
shopping
 There is regular updating of the website
 Consumers selling products to other consumers benefit from the higher profitability that
result from selling directly to one another
 There is a low transaction cost; sellers can post their goods over the internet at a cheaper
rate far better than higher price of renting a space in a store
 Customer can directly contact sellers and do without an intermediary.
Disadvantages of C2C E-Commerce

 Payment made has no guarantee

 There could be theft as scammers might try to create their website with names of some
famous C2C websites such as eBay to attract customers.
 There is lack of controlling quality of the products.
C2C e-commerce websites must update their technologies to suit the current happenings
in their business. It is every body’s wish to buy or sell without any threat to their security. C2C
e-commerce websites to upgrade their security measures to arrest the situation of scammers and
fraudsters that pose threat to the security of consumers and sellers. C2C e-commerce websites
should increase their payment technology to allow consumers to purchase products at ease.

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2.6.4 Consumer - to - Business (C2B)
Customer to Business (C2B), sometimes known as Consumer to Business, is the most
recent E-Commerce business model. In this model, individual customers offer to sell products
and services to companies who are prepared to purchase them. This business model is the
opposite of the traditional B2C model.
C2B (Customer to Business) is a model where initiative comes from the customers
(consumers) and enterprises are the target group. The customers actively contact the enterprises
via the Internet and raise questions, suggestions and ideas that can be used, for example
for product or service innovation. The enterprises can facilitate the C2B model by setting, for
example discussions forums on their websites or their pages on social networks. In these cases,
the Word Of Mouth Marketing applies.
In this model, a consumer approaches website showing multiple business organizations
for a particular service. Consumer places an estimate of amount he/she wants to spend for a
particular service. For example, comparison of interest rates of personal loan/ car loan provided
by various banks via website. Business organization that fulfils the consumer's requirement
within specified budget approaches the customer and provides its services.
Elance was one of the first web sites to offer this type of transactions. It allows sellers to
advertise their skills and prospective buyers to advertise projects. Similar sites such as People per
hour and Guru work on the same basis.
General features of C2B
– Direct action.
– Collaborative consumption.
– Detailed segmentation.
– Interaction.
– Reciprocity.
– Bi-directionality.

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The advent of the C2B scheme is due to major changes:

 Connecting a large group of people to a bidirectional network has made this sort of
commercial relationship possible. The large traditional media outlets are one direction
relationship whereas the internet is bidirectional one.
 Decreased cost of technology : Individuals now have access to technologies that were
once only available to large companies ( digital printing and acquisition technology,
high performance computer, powerful software)

There are only a few kinds of companies whose trading models could be considered as C2B.

Online Advertising sites like Google Adsense, affiliation platforms like Commission
Junction and affiliation programs like Amazon are the best examples of C2B schemes.
Individuals can display advertising banners, contextual text ads or any other promotional items
on their personal websites. Individuals are directly commissioned to provide an
advertising/selling service to companies.

The new C2B business model is a revolution because it introduces a new collaborative
trading scheme paving the way for new applications and new socio-economical behaviours
Advantages and Disadvantages of C2B
C2B Advantages
1. Could be described in terms of paths, nodes, properties
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3. One single place for all Magnolia configurable elements.
4. Could still be linked to java doc

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