E-Commerce Business Models
There are mainly eight key elements that determines the e commerce model of a business. This are Value proposition, revenue model of the business, market opportunity of it, competitive environment in the market, factors giving competitive advantage to the business, market strategy, organizational development and the management of the team. The value proposition factor can be gained by providing customized services, products to the clients. In addition to that the organization can add value to their business by increasing the Speed of the provided Service as well as Convenience to the customers while they do business with the organization. More over as they share their financial and personal information with the organization thus by providing Security to those information as well as detailed Information about the products also adds value to the e commerce. The after sales support is another factor that contributes in the value proposition.
The market opportunity and the completive environment is related to the size of the market and the competitors in the market. Different other business organization selling similar products with the business organization in the same market are competitors for a specific organization. This incorporates both the direct and indirect competitors in the market place. The success of the e commerce also depends on the marketing strategy of the business organization that determines the target audience in a specific market for the specific product or the service.
The business models are categorized according to the sector of business (Such as B2B) and another is depending on the technology used for the e commerce (Such as e commerce). Different B2C models consist of the following models e-tailer, Community provider (like the social network platforms) Content providers, Portal, Transaction broker, Market creator and the Service provider.
The e-tailer is considered as the online version of traditional retailer in the physical market. Several variations includes, bricks-and-clicks, Catalog merchant, Virtual merchant etc. This kind of business models faces low barriers to enter a new market place.
The community provider are the providers of online environment such as the social network platforms on which the people with related interests can communicate , transact, share contents with reach other. This model uses the hybrid revenue models such as advertising, subscriptions of the users.
The content providers are the providers of digital content on the internet such as music, video, news artwork etc. another model is transaction broker that are responsible for processing of the online transaction of their consumers. The revenue model used by them are the transaction fees from the clients.
Value Proposition and Revenue Model
The market creators are responsible for development of digital environment or platform that can be used by the sellers and the buyers to meet and transact their services. Other type of model includes the on demand service companies that allows the users to sell the services.
In order to have an effective e commerce presence, it is important to have an idea about the target audience for the e commerce. For this it is important to get idea about the demographics like the gender, age group, location and income of the customer segment. In addition to that the behavior patterns or lifestyle of the customers, consumption patterns and the purchasing habits of the targeted segment. In addition to that the digital usage patterns of the users and the Content creation patterns on the social networking platforms must be analyzed before entering the market so that it can create a successful e commerce presence.
In order to have e commerce presence it can be done different ways, such as using the simple websites (costs up to $ 5000), or web start up (Costs up to $25,000 to $50,000) or at last having a large corporate site ($100,000+ to millions).
While developing an e-commerce site it is important to developing a clear idea about the business objectives of the organization. In addition to that, it is important to choose the right technology so that the identified objectives can be achieved easily.
There are mainly five major steps such as system analysis, design, and development of the system, testing and implementation of the system.
The development or the hosting of the e commerce websites can be done by two ways either by building it in-house or out sourcing the development and deployment of the site. The outsourcing refers to the hiring the experts or the vendors to build and manage the site for the business organization.
In case of hosting the website, it can be done hiring a hosting company which will be responsible for availability of the site against the payment of a monthly fee paid to the company.
Another options is Co-location. The business organization purchases or leases a web site deployment server (the control of the server and its operations will be under the organization) but the server will be placed and owned by the vendor.
The website optimization can improve the performance of the business on the internet. The factors that contributes and can enhance the performance are the edge catching, bandwidth to load the page, content delivery network, increased server response time, efficient resource allocation, controlling and monitoring the performance of the site etc.
Market Opportunity and Competitive Environment
In addition to that dynamic page generation using tools (like ASP, JSP, ODBC and JDBC etc.). The use of the web application servers helps in having business functionality required from a website. This acts as a middle ware that helps in isolation of the business applications from the databases and servers. Another important component in the having the basic functionalities for the selling of the products and services on the site is the e commerce merchant server software. The services provides by this software includes, Online cataloging
This helps in listing of the products available on Web site for sale.
Shopping Cart for the Customers
This service helps the shoppers or the customers to select, edit selections, review and then purchase the sleeted items.
Credit Card Processing
This typically works in combination with shopping cart of the site. This verifies the details of the card and puts through credit to company’s at the checkout point from the customer’s account.
According to a survey it is estimated that the average cost or the loss costs up to $15million/year. This mainly happens due to the stolen information from the server and different malwares or viruses implanted in the servers. While securing the site it should be kept in mind that the more number of security measures introduced to the site and the server the slower the site becomes. The main three points of security vulnerabilities are the clients, servers, and the used communication channel. The most known security threats to the environment are the exploit kits, Viruses, mal-advertising, Drive-by downloads, Worms, Ransomware, Trojan horses, Bots, botnets. One of the most discussed data breach due to the lack of security measures is the Ashley Madison Data Breach in the recent times.
There are several other threats such as Identity fraud/theft, Credit card fraud/theft, , Spoofing, SpamWeb sites, Link farms, Sniffing, Pharming, Man-in-the-middle attacks. In addition to that with the changes in the technology the users are access sites using their smartphones which also has some security threats. The websites, apps and the users can be protected by Protecting Internet communications channels such as using the cryptography mechanism for securing the channels of data transmission and communication. In addition to that the use of the TLS, SSL, VPNs. Another measure is to protect the networks using the Firewalls, proxy servers, IPS, IDS. Moreover by protecting the servers and clients systems via using the OS security, anti-virus software the systems can be easily protected from the attackers.
Marketing Strategy
The encryption technique is used to transform data into cipher text that is readable by sender and receiver of the message on the network only. This also helps in securing the stored information in the server and information transmission through the transmission channel. This helps in protecting the message integrity, nonrepudiation of the message, authentication of the message as well as users.
In public key cryptography technique, the sender in the network applies a particular algorithm known as the hash function or the hash algorithm to the message and after that encrypts the whole message with the hash result and receivers public key to send the data over the network.
At the receivers end the recipient of the message uses the public key of the sender to authenticate the incoming message and then uses his/her private key in order to decrypt the hash result with the message and the message itself. In addition to that the use of the digital certificates and the public key infrastructure are also helpful in protecting the security of the information sent or received by the users. In addition to that the use of the firewalls and the proxy servers also helps in securing the servers and the applications.
The clients of the e commerce can secure them from different kind of credit card frauds by using alternative payment mechanisms such as Amazon Payments, Visa Checkout Bill Me LaterWUPay, Dwolla and Stripe.
It is estimated that the 91% of the households of USA uses broadband to access the internet. Therefore in order to have a better penetration in the targeted market it is important for the organization to use the multi-channel marketing plan. Such as use of the traditional online marketing using the search engine optimization, pop up display, e-mails etc. in addition to that use of the Social marketing through the social networking platforms such as Facebook, twitter, blogs, videos etc. in addition to this the use of the mobile marketing by developing apps and sites suitable for the different devices. Again to attract the users using the offline marketing channels the organizations can use the television promotions, newspapers and radios. The search engine marketing (SEM) can be used to use the web search engines as a tool for marking for a specific brand or e commerce site. The search engine advertisement also can be used to promote direct sales of the products. The paid inclusion and Pay-per-click (PPC) advertisements can enhance the efficiency of the marketing of the e commerce.
Types of E-Commerce Business Models
The Rich media is a digital promoting term for an advertisement that incorporates propelled features like video, sound, or different components that asks the users to interact with the given content on the web. While content promotions offer with words, and show advertisements offer with pictures, rich media promotions offer more approaches to include a group of people with an advertisement.
According to different surveys the content marketing strategies produces 3 times more leads than the traditional marketing methodology. This Content marketing also costs 62% lesser investment compared to the traditional way. 82% of shoppers have a more positive sentiment about an organization in the wake of perusing custom substance. 70% of customers feel a nearer association subsequently of content promoting. 60% of buyers appreciate perusing related content from their brands. 70% surprisingly like to find out about a brand through articles than promotions. 72% of clients trust they shape an association with a brand thus of custom substance.
In addition to that the DoubleClick Ad Exchange can be also used for marketing. This is a real time commercial market place banded together with the Google Display Network for purchasing and offering advertisement on the different sites. It also represents to another market for publicists to offer in plain view publicizing over the Internet.
The social media marketing standout amongst the most cost-productive advanced advertising strategies used to syndicate content and increases the e commerce organizations profitability. Executing an online networking system will significantly expand the brand recognition since the organization will connect with a wide range of people or buyers.
With the increased visibility the business organization acquires more opportunities to acquire new customers. Each blog entry, picture, video, or remark may lead watchers to your organization’s site and increment movement. Online networking promoting enables the business organizations chance to give a positive impression through a refinement figure. At the point when brands are intuitive by sharing substance, remarking, and posting statuses via web-based networking media, it embodies a brand. Individuals like to do business with other individuals, as opposed to organizations.
Today most of the customers of the e commerce sites try to find out the quality of the services or the products by observing the reviews of the other customers. They no longer hope to brands as the essential source of data about their products; today they will probably counsel other resources and others in their interpersonal organizations. Basic social exercises are looking for guidance, perusing or composing surveys, or offering their encounters to their informal community.
E-Commerce Presence
Regardless of whether ecommerce organization attempting to achieve teenagers or seniors a target audience, they can discover them on Facebook and connect with them. As indicated by the researches done by Pew, exactly 72 percent of online American grown-ups utilize Facebook to connect with their relatives, friends and family. Eighty-two percent of online grown-ups ages 18 to 29 utilize it, 79 percent of those ages 30 to 49 utilize it and 64 percent of those ages 50 to 64 utilize it. Indeed, even among Internet clients matured 65 and up, almost half (48 percent) uses Facebook to get the data about the brands and other things.
As an e commerce business organization, the company can consider twitter an open complaint division or publicity channel to reach out the customers. We inquired as to whether they utilize Twitter as a client benefit channel.
One way brands can increase the level of engagement and increment the brand loyalty is to locate their most essential adherents and reward them.
The social networking tool of Twitter, Social Rank helps the business organization adherents and tracks confirmed records that follow on Twitter. The organization gets month to month reports to your inbox about the Best Followers, Most Valuable and Most Engaged individuals in your Twitter arrange, which you can target and lock in. The paid membership for this apparatus ($25/month) enables e commerce organization to separate the followers demographically and set up cutting edge channels to save time and increase profitability.
With all this advantages there are some disadvantages of the social media marketing; this can be described as online networking users have free rein to post whatever they want to post on it. This implies fulfilled clients can leave shining surveys on the related pages, yet it additionally implies that miserable ones can leave irate rages about your business.
Some of this negative input could originate from inside the particular e commerce organization. Disappointed representatives have been known to vent via web-based networking media about work and their managers, which makes the whole organization look terrible on the social networking sites like face book.
Retail portable internet business detonating Interpersonal organizations explore different avenues regarding social internet business Online retail still the quickest developing retail channel ,Purchasing on the web a typical, standard affair ,Choice of products increments, incorporates extravagance merchandise ,Instructive looking for expensive things extends ,Claim to fame retail destinations indicate fast development , Combination of various retailing channels ,Enormous Data utilized for prescient advertising for the customers.
Target Audience
According to the surveys It allegedly caught 33% of all US online buys in 2015, as indicated by Internet Retailer, up from 25% in 2012. In the event that those assessments are right, then the organization expanded its share of the US web based business advertise by 10% in 2016, a staggering achievement given that it effectively controlled such a sizeable lump of the space.
Cut said that Amazon’s development in 2016 was driven by deals in the hardware, home, and clothing classes. Hardware added to an expected 18% of the organization’s business development in 2016, as the quantity of US families that claim an Amazon Echo gadget dramatically increased from 2015.
The following greatest supporters were the home and kitchen classification (15%), clothing (12%), sustenance (11%), and wellbeing and excellence (10%), outlining that Amazon is seeing noteworthy development in customer bundled products (CPGs). The organization’s current extension of its Dash Buttons to its online webpage and portable application ought to help fuel advance development in these classes.
Amazon’s prosperity has additionally been filled by high client dedication and brand mindfulness. The Amazon Prime membership benefit keeps on growing: One review discharged last September by Consumer Intelligence Research Partners found that 20% of all US customers are Prime individuals.
The number of online customers has developed by almost 20 million from 2015 to 2016. Moreover, these 224 million customers are spending more, as the aggregate sum spent online developed from $61 billion in the main quarter of 2015 to $68 billion in Q1 2016. At long last, these clients are executing all the more every now and again, as the quantity of online exchanges has ascended by 115 million from 2015 to 2016.
In any case, the greater part of this shopping on the web makes its own arrangement of difficulties, both for purchasers and the organizations that are attempting to get their items onto customers’ screens and into their shopping carts.
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