Business Model Selection
Before jumping in to start or development of an online application or website, it is important to know what is going to be developed. The selected business model will determine a number of functions available to the end user and will depend upon the business in particular business online maturity.
At its most basic level a business model may be defined as a method of doing business, and in doing so the business sustains itself. The business model is a conceptual idea that outlines how a business creates profits.
As mentioned earlier in "e-commerce" a corporation/business moves through stages in the online world. At each stage the corporation will test the water to ensure that further investment is warranted or in fact required.
Stage One Business Models
Broacher-ware
This term coined in the late 1990's refers to one page websites that contain as much information as a yellow pages advertisement. Broacher-ware sites talk a little about the company, contain contact information and may be promotional information.
Static Web Site
Static web sites are websites that contain information that may be of interest to the end user. Information that may be contained on a static website will be:
· Contact information;
· Corporate information for investment; and
· Product/service information.
A static website business model is well suited to manufacturing firms who already have existing customers. A static website provides a low cost medium through which existing customers can check on technical manual updates, or download software updates.
1.4 Stage Two Business Models
Banner Ad
Banner ad websites create profit by providing something that a number of people are interested in e.g. latest news and weather. As people browser the web and come across sites like these they bookmark them because the site makes their life easier. Companies who are interested in increased exposure of their products and services purchase virtual real estate on the website and pay to do so.
Online community websites can create an opportunity for banner ad revenue also. Furthermore, online communities consist of an homogenous group, this provides companies with an opportunity to target marketing information to a more responsive group.
One might also consider newsletters as banner ad models, as they provide space in their newsletters to companies wishing to contact that particular group.
1.4.2 Static Catalogue
Companies who have static catalogues usually define the website goal as "To sell products/services". This business model closely resembles the business models of mail order companies.
When developing a static catalogue website the business will also need to answer the following questions:
1. Which purchase metaphor (add to basket, shopping trolley);
2. Should products/Services be offered at different prices to different customers (e.g. Corporate vs. Public);
3. How many ways should be provided to search;
4. What are the variable customers require to compare products; and
5. What is the target budget?
Stage Three Business Models
Online Payment Fulfillment
Businesses wishing to fulfil payments online will need to address all the issues raised in stage two. Hopefully the answers to these questions should be a little easier a second time around. In addition to these issues the business will need to address the software requirements to provide real time purchase of products and services online.
Brokerage
The middleman business model creates a community website that allows companies and consumers to trade online. Auction sites are a good example of a middleman business model.
Affiliate
One of the marketing strategies used by Amazon.com is affiliate. Amazon.com offers incentives such as percentage of sale to place banner ads on web sites. When an end user clicks on a banner ad, Amazon knows where the consumer came from and tracks the allocation of profits accordingly.
The affiliate business model can be a powerful revenue builder, as profits are distributed based on actual sales.
Infomediatery
In today's electronic age there is a lot of profit to be made through information exchange. Infomediatery business collection information from a range of differing source then on sell the value added information. Companies may offer something free in exchange for personal details about their surfing and purchasing behaviours.
