E-Commerce Models

It is the shop til you drop season, and there are more business models in the digital world than the physical world. Both buyers and sellers alike will need a guide. If you are an online businessperson responsible for any aspect of your companys e-commerce efforts, it is important to be familiar with the variety of current e-commerce models. There are more in existence besides the typical "shopping cart" and "fixed price for the merchandise" models. Heres a summary:

AUCTIONS
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Players: eBay, Amazon, Yahoo

Model: Create an environment to bring individual buyers and sellers together to sell each other virtually anything and compete amongst each other on price.

Commentary: A business model that consumers understand and the Internet heavyweights are employing rapidly. Almost 1,000 auction sites exist.

NAME YOUR PRICE
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Players: Priceline, Expedia

Model: Buyers state how much they are willing to pay and sellers choose whether or not to sell at that price.

Commentary: Priceline has filed a patent-infringement lawsuit against Microsoft claiming exclusive rights.

HAGGLING
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Players: NexTag, HaggleZone

Model: Allows sellers to respond to buyers purchase offers.

Commentary: The haggling really takes place between the buyer and the site, and sellers dont compete amongst themselves for the buyers business.

GROUP BUYING
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Players: Mercata, Accompany

Model: Gather a group of people wanting to purchase the same thing and let them negotiate a deal that presumably will produce a bulk discount.

Commentary: Very similar to a Sams Club or Costco that wield their group buying power to the advantage of the consumer.

WANTED MARKETPLACES
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Players: Imandi, Respond, iWant, eWanted

Model: The buyer makes known what they desire, and sellers compete for the business.

Commentary: Provides sellers a way to focus their marketing efforts on target group likely to respond.

GIFT REGISTRIES
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Players: WishClick, Della & James

Model: Individuals identify merchandise that they would like to receive as gifts from friends and family.

Commentary: Nothing new about the model except that the Internet made them more accessible and easier to manage.

PRODUCT REVIEWERS
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Players: C|Net, Epinions, Productopia, Deja

Model: Review merchandise and make recommendations to shoppers.

Commentary: Consumer trust of the service is the critical factor for success. The model generally falls into two types of implementation: 1. Paid reviewers and experts rate the merchandise and 2. shoppers review and provide their opinions.

ONLINE MALLS
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Players: Yahoo, AOL, Excite@Home, MSN, Lycos

Model: A familiar infrastruture for the shopper where the online mall makes money from transactions or advertising.

Commentary: Web sites with the original goal of becoming an online mall are having a difficult time because they dont have the necessary visitor traffic levels to compete effectively.

SELLING BELOW COST
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Players: Buy.com, OnSale.com

Model: Sell merchandise at or below cost to attract a large shopping audience, then leverage their presence through cross-promotion and advertising and/or move the shoppers over time towards purchasing product with positive profit margins.

Commentary: A risky business model thats fate will be determined by the test of time. Dont look for the highest levels of service with this approach.

With all of these e-commerce models, the ability to attract a significant shopping, and sometimes selling, audience is necessary to make them work. The net result is that consumers are afforded more options and given more power, and therefore provide for a better marketplace. While this is all about the consumer, business-to-business is going to follow some similar patterns. You may need some help getting your business model to pay off, so it might be time to call in experts.

About the Author

Robert McKim

:To contact see details below.


DBMarkets@aol.com
http://www.msdbm.com