World Wide Web and E-commerce Winter

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Introduction to E-Commerce

Revenue Models

Objectives
In this chapter, you will learn about:
Revenue models
How some companies move from one
revenue model to another to achieve success
Revenue strategy issues that companies face
when selling on the Web
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Objectives (continued)
Creating an effective business presence on
the Web
Web site usability
Communicating effectively with customers
on the Web
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Revenue Models
Mail order or catalog model
Proven to be successful for a wide variety of
consumer items

Web catalog revenue model
Taking the catalog model to the Web

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Computers and Consumer
Electronics
Apple, Dell, Gateway, and Sun
Microsystems have had great success
selling on the Web
Dell created value by designing its entire
business around offering a high degree of
configuration flexibility to its customers
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Books, Music, and Videos
Retailers use the Web catalog model to sell books,
music, and videos
Among the most visible examples of electronic
commerce

Jeff Bezos
Formed Amazon.com

Jason and Matthew Olim
Formed an online music store they called CDnow
Used the Web catalog revenue model
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Luxury Goods
People are still reluctant to buy luxury goods
through a Web site
Web sites of Vera Wang and Versace
Constructed to provide information to shoppers, not
to generate revenue

Web site of Evian
Designed for a select, affluent group of customers
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Clothing Retailers
Lands’ End
Pioneered the idea of online Web shopping
assistance with its Lands’ End Live feature in
1999

Personal shopper
Intelligent agent program that learns customer’s
preferences and makes suggestions

Virtual model
Graphic image built from customer measurements
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Flowers and Gifts
1-800-Flowers
Created an online extension to its telephone
order business

Chocolatier Godiva
Offers business gift plans on its site
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Digital Content Revenue
Models
Firms that own intellectual property have
embraced the Web as a new and highly efficient
distribution mechanism
Lexis.com
Provides full-text search of court cases, laws, patent
databases, and tax regulations

ProQuest
Sells digital copies of published documents
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Advertising-Supported Revenue
Models
Broadcasters provide free programming to an
audience along with advertising messages
Success of Web advertising is hampered by
No consensus on how to measure and charge for site
visitor views
Stickiness of a Web site: the ability to keep visitors and attract repeat visitors

Very few Web sites have sufficient visitors to interest
large advertisers
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Web Portals
Web directory
A listing of hyperlinks to Web pages

Portal or Web portal
Site used as a launching point to enter the Web
Almost always includes a Web directory and
search engine
Examples: Yahoo!, AOL, AltaVista
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Advertising-Subscription
Mixed Revenue Models
Subscribers
Pay a fee and accept some level of advertising
Typically are subjected to much less advertising

Used by
The New York Times and The Wall Street
Journal
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Advertising-Subscription Mixed
Revenue Models (continued)
Business Week
Offers some free content at its Business Week
online site
Requires visitors to buy a subscription to the
Business Week print magazine

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Fee-for-Transaction Revenue
Models
Businesses offer services and charge a...
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