Business Model And Its Functionalities in E-commerce

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Maritime Economics � PAGE * MERGEFORMAT �1�


Among all the great communication inventions in history like radio, TV, and the various forms of the printed text, no other media invention has garnered quite the same level of hype and attention as the Internet since 1990s. Internet has revolutionized the way consumers search for information, communicate with others, purchase goods and services worldwide through better information exchange using fiber-optic cable, enhanced telephone lines/network/servers/hardwares, sophisticated computer software for security control, satellite network, etc. Every day, we read about the rapid growth of Internet users followed by grandiose predictions of users in the future. According to Internet World Stats (2009), estimated internet users are 1.7 billion as of September 30. The main reason for this growth is that it is getting cheaper and closer to the budget of every household.

Business transactions are now dealt through the Internet, and it is not tied solely to computer companies anymore as any company of any business can online easily with the aid of in-house or external network engineer/programmer. Further evolution in the Internet directory has aid with the increase of professional web sites that offer services; for example entertainment, information, education or retail, that attracts more and more users and their confident in engaging to the services offered, indulging deeper into the web site and finally arrive to purchase merchandise online with certainty and security without fear and doubt.

Commercially available products and services that currently exist can now be used to quickly create secure retail environments. A number of popular off-the-shelf solutions have evolved over the past few years and allow sellers to plug-in software modules to handle the varieties of goods sold online, the varieties of shipping and payment options, and the complexities of taxation. Each option offers its own set of pros and cons. This paper will analyse a business web site called ChinaZRH (, one of the largest online wholesale electronics products supplier, in terms of their business model, design and features.


To complete a detailed analysis of the selected web site, we must gain a clear understanding of business models. A business model is the method of doing business by which a company can sustain itself, that is to generate revenue and specifying where it is positioned in the value chain (Rappa 2001). Osterwalder and Pigneur (2002) extend this definition by seeing business models as the conceptual and architectural implementation of a business strategy and as the foundation for the implementation of business processes, illustrate by the figure below on this transition.


Source: Osterwalder and Pigneur (2002)

E-business models represent the development and implementation of business strategies to sustain long-term profit growth, utilizing the benefits of the internet to facilitate strategic advantages in areas such as customer value and business process. Understanding customer's needs, wants, and desires is always fundamental in developing a successful value proposition; reverse value chain principle. To assist with classification, the Value Network Segments by Afuah and Tucci (2003, p. 12) is used to simplify the analysis. A value network is a company that creates value by connecting customers to distribute information, products and services.


Source: Afuah and Tucci (2003, p. 12)

Based upon the above models, the following analysis is derived for the subject website.








E-commerce / Market makers

Wholesaler / Retailer

Buy products from various electronic vendors & mark up the selling price....
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