Revenue Models 4.

E-Business
Web business revenue-
generating models
Web catalog
Digital content
Advertising-supported
Advertising-subscription mixed
Fee-based
 Revenue Models

Web Catalog ...

Books, music, and videos
Amazon.com- Evolved with B2B to B2C
online music, book, movies, Electronics
Luxury goods, watches, spectacles

Combining marketing channels: Two retailer examples

 Revenue Models
Web Catalog ... Clothing
retailers
Display clothing photos categorized
by type- Prices, sizes, colors, tailoring,
Fabric attribute.

x
 Revenue Models

Digital Content Subscription

Firms owning written information
• highly efficient distribution mechanism
• subscriptions for access to information
• digital publications, Wall Street Journal ...

x
 Revenue Models

Advertising
• measuring visitor
• # of visitors, # of unique visitors, # of click-
throughs
• Stickiness
• Keeping visitors at site and attracting repeat visitors
• Exposed to more advertising in a sticky site
FIGURE 4-2 Three strategies for an advertising-supported revenue model
7
Advertising

General interest strategy- Excite, Google, Bing

Specific interest strategy-CNET
 Revenue Models

Advertising ...
Newspaper and magazine publishers
Targeted classified advertising sites
Flat Sale, Career, Real Estate, Services,
Business
• higher rates than general advertising
Web advertising
• Most successful targeted classified advertising
• Examples: CareerBuilder.com, bdjobs.com
 Revenue Models

Advertising-Subscription Mixed
Subscribers pay fee and accept advertising
• The New York Times- and
• The Wall Street Journal- Subscription revenue
weighted more heavily
ESPN
• Leverages brand name and
• Sells advertising, offers free information.

x
 Revenue Models

FIGURE 4-3 Revenue models used by online editions of newspapers and

magazines

E- Business, Ninth Edition 11

 Revenue Models

Fee-for-Transaction
Service fee charged based on transaction ...
Travel agency
• Web-based travel agencies are new entrants
• Travelocity, Expedia, Hotels.com,
• generate advertising revenue
• Specialized travel agents (cruises, hotels)
Insurance brokers
Health Insurance, life insurance
 Revenue Models

Fee-for-Transaction ...
Online games -
premium games
Physicians’ online consultations
Lawyer's company consultation
 Revenue Models

Free for Many, Fee for a Few

Economics of manufacturing is different for physical
and digital products. This leads to a different revenue
model
• Offer basic product to many for free
• Education
• Charge a fee to some for differentiated products
• Examples: Google Premium Services
 Managing

Strategy
Companies must adapt to revenue model
• or went out of business
Some e-commerce Web sites needed years to grow
large enough to become profitable (CNN and ESPN)
Management Issues
• Web revenue models implementation issues
• Long term or short term
Adaptation of market changes due to switching
consumer mind.
Formulate strategies to survive during this pandemic.

x
 Managing
Strategy- Channel conflict
(cannibalization)
• Web sales/activities interfere with existing
• Consider
• Web sites no longer sell products
• Sites now provide product, retail distributor
information
• Online purchases returnable at retail stores
• Required compensation and bonus plans
adjustments to support Web site
• Channel Cooperation made it successful
 Managing

Strategy
Strategic alliance
• Amazon.com joined with Target, Sears
E-generation join with ajkerdeal
 Web Presence

Web business site objectives

Attracting Web site visitors
Keeping visitors to stay and explore
Convincing visitors to follow site’s links to obtain
information
Creating an impression consistent with the
organization’s desired image
Building a trusting relationship with visitors
Reinforcing positive images about the
organization
Encouraging visitors to return to the site
 Web Presence
Making Web presence consistent
with brand image
Coca Cola Website pages
• Usually include trusted corporate image (Coke
bottle)
• Image: position as a trusted classic
Pepsi Website pages
• Usually filled with hyperlinks to activities and
product-related promotions
• Image: upstart product favored by younger
generation
 Web Presence

Web Site Usability

Current Web presences
• Few businesses accomplish all goals
• Most fail to provide visitors sufficient interactive
contact opportunities
Improving Web presence
• Make site accessible to more people
• Make site easier to use and ensure flawless data
communication
• Make site encourage visitors’ trust
• Make site develop feelings of loyalty toward the
organization
 Web Presence

Trust and Loyalty

Creates relationship value
Good service leads to seller trust
• Delivery, order handling, help selecting product,
after-sale support
Satisfactory service builds customer loyalty
Customer service in electronic commerce sites
• Problem
▪ Lack integration between call centers and
Web sites
▪ Poor email responsiveness
 Web Presence

Benchmarking
Review e-commerce Web sites for
• Better customer service
Expert Support
• Sell the gathered information directly to the
companies operating Websites
▪ Include suggestions for improvements
EX: BizRate.com posts ratings
• Provides comparison shopping service
• Compiles ratings by conducting surveys of
sites’ customers
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