Pres:Basics of Ecommerce - New Business Models

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Basics of Ecommerce - New Business Models

Basics of Ecommerce - New Business Models

Title Basics of Ecommerce - New Business Models
Target group Students, Beginners
Topics Ecommerce Strategy, ECommerce Basics
Go to slideshow Go to print version

Public summary

Goal of this course lesson is to help students understand what a business model is and the impact the internet has on business models of existing companies.

The lesson is divided into 4 parts:

  • The impact the Internet has on the value chain (dis/re-intermediaition). Which can include a discuss.
  • The reasons for new retail models to emerge (price and service transparency). A framework is introduced for different kinds of new retailers. Students can discuss which companies fit into the model.
  • Best practices describes how small companies can still surive in the new retail economy.
  • Business models presents the busines model canvas and invites students to fill in a canvas for an existing company.

The course can be offered in one and two hours (skip the best practices for the one hour lesson). The last hour can be used for questions by the students about the entire course, the book or to do a test examination.

Slides

  • Loyalty
  • Loyalty management
  • Loyalty programs
  • CRM Systems
Question Mark.jpg
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  • Impact internet on the value chain
  • New retail models
  • Best practices
  • The business model canvas
  • Exam preperation
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The Internet is a typhoon force, a ten times force, or is it a bit of wind? Or is it a force that fundamentally alters our business?

Andy Grove, Chairman of Intel

Andy Grove.jpg
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Impact internet on the value chain.png
Logo Ecommerce Foundation1.png Source: Dave Chaffey, Digital Business and ECommerce Management, Edition 6 7

Notes

The internet has allowed producers and wholesales to sell directly to consumers. Thereby impacting retailers strongly. However retailers can now also sell to more consumers than before. They are no longer tight to their location but can sell nationally or even cross border.


Intermediation.png
Logo Ecommerce Foundation1.png Source: Dave Chaffey, Digital Business and ECommerce Management, Edition 6 8

Notes

What we see in many industries is that after disintermediation new intermediairies arise. National examples: Hotels (Booking.com), Insurances (Independer), Products: (Bol.com), Food: (Albert Heijn). International examples: DIY (B&Q with DIY), Goods (Google Shopping), Flight (Kayak, Expedia).


  • How has the Internet impacted specific industries?
  • Please take 10 minutes to map the impact the Internet had on a specific industry (e.g. Travel, Insurances, Consumer Electronics, etcetera).
  • List the most important players in the value chain of that industry at this moment.
Class Assignment.jpg
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Classfied ads.png
Logo Ecommerce Foundation1.png Source: www.spotifyartists.com/spotify-explained & Silicon Insider 10

Notes

Newspapers in the USA made more than $ 100 million in turnover in classified ads (small advertisements) in 2003. In 2009 this number has been reduced to $ 30 million.


Global scale music.png
Logo Ecommerce Foundation1.png Source: www.spotifyartists.com/spotify-explained/

& Silicon Insider, NVPI

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Notes

  • The global market for music has changed significantly due to Spotify and iTures.
  • Spotify pays $0.006 and $0.0084 per track played. For a CD of 19,95 with 15 songs, You will have to play that CD 190 times.
  • In 12 years’ time, the physical music publishing market in the Netherlands decreased by almost 500 million euros to 189,6 million euros in 2012


Notes

Social media and review sites are making price and service a hygiene factor… If you do not offer one of the lowest prices. You do not sell. With a high service score people will consider you, with an average or low score, they will not.


Notes

The marginal additional costs of more online turnover are (in theory) zero. E.g. it does not matter if you sell online to 100, 10.000, or one million customers. You only have to add a server. Competing on price is becoming very difficult (unless you are huge like Amazon).


Notes

Competing of differentiation and service is becoming challenging. ‘Big data’ makes it possible to serve customers individually. More data allows companies to create tailor made products and personalize content. This results in more customers and more content of them (reviews, ratings, insights, data) and the ability to sell more products to them.


Notes

Due to the characteristics you see that a few players dominate a specific market segment. Big is beautifull again (just like in the 60’s and 70’s in the pervious century).


Amazons Flywheel strategy.jpg
Logo Ecommerce Foundation1.png Source: Jeff Bezon, September 2001 17

Notes

Amazon is by far the biggest online retailer (bigger than the number 2 – 12 online players combined in the usa). Why? Because the know how to use the new rules of the internet to their advantage.

  • They create a huge offering upon that consumers can buy many products from the same retailer
  • They focus on creating a seemless customer experience (one click buy, look into the book, amazon prime).
  • Due to the traffic they have acquired as a result, sellers are nearly forced to sell using the amazon platform (that’s where their customers are).
  • This allows Amazon to lower their cost structure (the seller holds the inventory risk, does the delivery, return management, etcetera).
  • This again allows Amazon to offer its products at lower prices….


Notes

The internet is causing a rise of new retail models:

    • Generic, Vertical, Speciliast and market maker models.
    • Optimizers: those who use the internet to optimize their existing retail model.
    • Service providers: those who offer (back office) services to (online) retailers.

Let the students name a few companies for each quadrant.


Notes

The previously discussed framework does not comprehend all online business models (like publishers and infomediairies like Google).


Notes

How can small companies compete with the big (online) players? They focus on one pillar and turn it into a proposition (e.g. focussing on excellent customer service, price, etcetra..


Le Fournil French Baker.png
Logo Ecommerce Foundation1.png Source: www.maaikevankessel.nl/2008/11/30/caneles-et-le-fournil/ 23

Notes

Example of an excellent product. Le Fournil, a French Baker in Amsterdam has on average 700 to 1.000 clients per day. Takes 18 howers to make a baguette and 24 for a normal bread. Excellent quality bread.


Notes

Product/service example. Grapedistrict offers wine direct from the farmer in a new way (color coded). It is both active online (selling a lot B2B) as well as offline with 10+ stores).


Notes

Pollmann, online since 1890, advices consumers on table culture Has a strong online presence with servies.nl but specialized in “table cultures”. Visits clients at their homes to advice them. Also does weddinglists and sells b2b to company restaurants.


Notes

Example service Riksja Travel, in 10 years to 80 milllion, online but personalIn Started in 2000 with country websites like thailandonline, chinaonline for SEO. Customer can create its own trip only but is advised by phone, social media by experts who have actually been there. Each intereaction with the customer is stored in a CRM system.


Bloomon.png
Logo Ecommerce Foundation1.png Source: twinklemagazine.nl/nieuws/2014/11/bloomon-biedt-abonnement-voor-bloemetje-in-huis/index.xml 27

Notes

Bloomon offers a subscription service for flowers and buys directly skipping a lot of parties in the value chain.


Notes

College Style attracts a specific target group with shops and a website: The Christian woman with in-house developed products


Notes

Mr. Paprika: each day is different with toys, a café with homemade soup and apple pie, pop-up stores, workshops, and birthday parties


Notes

Experience example Tage Andersen demands an entrance fee for access to his flower shop He also sells its master pieces online.


Notes

Schorem & Barbier cuts and shaves only men. Men are allowed to drink, eat while being groomed. The barber is very popular. Often with 1 or 2 hour queues while having to pay 2 to 3 times the usual fee.


Notes

An online presence is required to be found but not all companies sell online.


Sell together online.png
Logo Ecommerce Foundation1.png Source: Cross Channel Retail Presentatie, Harry Bijl, Inretail 34


If you want to be 100% sure, you are 100% late.
Ibrahim Ibrahim Managing Director Portland

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Notes

Don’t wait for the perfect business model to arise. Just start your business and improve on the way.


  • What is a business model?:
  • Which elements does a business model describe?
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An architecture for product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources of revenue.

Timmers, 1999

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Notes

A framework to describe a business model.


Notes

The frame work for Nespresso. Value proposition: super taste coffee which is guaranteed by a patented cup. Customer segment: two kinds of customers – office workers and home segment Customer relationship: loyalty is very important at nespresso. Each person receives a card with which they can order online and dpending on the card even pay with it. Distribution is via retail of third parties but primarily via their own channels (phone, own stores and online). Strategic partners are coffee maker machines (nespresso is owned by nestly who is big in coffee). Key activities: Until recently nesspesso owned a patent on its cups. Nespresso is still very profitable thanks to a very loyal customer base.


Take an existing company and describe its business model using the business model canvas.

Class Assignment.jpg
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Companies lifespan.jpg
Logo Ecommerce Foundation1.png Source: The shift index: Deloitte’s Center for the Edge 43

Notes

The average life span of an S&P 500 company decreased from more than 60 years in 1930 to 15 years in 2010


Notes

Due to the internet (easier and faster communication), innovations are introduced must faster than ever before. Companies are no longer competing locally but globally. As a result, companies have to innovate, change and do business at a much faster rate than before.


It is still day one on the internet.

Jeff Bezos CEO Amazon

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Notes

If you want to know more about Amazon. Please consider reading Mr. Amazon. It gives you a better understanding on how the most successful online retailers works (and its fun to read too).


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