Online business examples
What model should we use?
It is the first decision to be taken when we want to start a business on the Internet. There are several models for an online business. These can be categorized by their number of service providers, in: e-shops, e-malls, e-auctions. A chain of services is built this way, in which any element can be dominant.
The first element is the service provider, the second element is the Internet Service Provider, who will provide webhosting space as well as the integration in an e-mall. The third link of the chain is the customer, who has a certain professional training, specific interests and preferences. This customer can be a consumer, another company, the Public Administration or a company’s employee.
We will present below, in a few lines, several examples of online business:
- virtual community
- e-service providing
- information brokerage
- publicity models
The main idea of the e-commerce is to transfer the physical business to the website. This way the company is able to display its product catalogue and its Internet services.
- The products are generally offered in several price categories, established on the customer's trend to test the quality, the speed and the efficiency of the shipping, before deciding to buy more expensive goods. The most suited products to be sold through the Internet are usually those which can be easily described and which do not require the touch: concert or air plane tickets, CDs, books, software, tools, spare parts, some groceries and even cars. On the other hand, products which initially were considered unfit for Internet marketing, are now selling really well.
- These services usually come in adition to the company’s products offer, but sometimes can be part of a wider range of services: for example, in the case of a tie-selling business, the site can also present a drawing or a sketch about how to tie a knot. Plus, the site can also include a colour and style guide for business men, a reference book for business success or the tie store can decide to sell socks, shoes and hats, by including other sellers into the website.
- The prices of the products sold through Internet should be smaller than those of the classic orders. For example, books are offered at a 10-50% discount on the Internet, or, at least, without any shipping fees. Services and specially information services should be free of charge. Information services through magazines are offered for free at the beginning, by free access or free subscriptions; further on the sellers will initiate supplementary services like archives and will extend the search options, demanding the users to subscribe and to pay a fee in order to receive these services. It has been observed a very low impact of the online subscriptions on the users; many remain faithful to the normal subscription and usually only the new customers will use this new subscription way. Still, the payed subscription for online news services or debates with restricted attendace will raise interest only if the services are really valuable.
There are several e-shop hosting methods:
- on a distinct server (a computer owned by the company who holds the website), suited for complex and big website pages. This server is located at the company’s main office if changes are made very often (ex: news, prices) or if a large traffic is required between the company and it’s e-shop server.
- on a virtual server ( a space owned by the company who holds the e-shop site located on the HDD of an ISP’s computer). Many small and medium companies prefer this solution instead of having their own webserver.
- in an e-mall
Choosing the best possibility for your e-shop depends on the telecommunication costs, the company’s know-how level, the targeted group, the size, structure and the long-term objectives of the future e-shop. If it’s possible, there should be more ways to access an e-shop: through an advertising link in a portal and an advertising keyword submitted to the search engines.
An e-mall provides common ground for several e-shops. It can be designed using several transaction models, according to what type of services the e-mall owner wants to offer. The owner also has to take care of the e-mall’s marketing, so choosing the right e-mall is a vital decision for an e-shop owner. The right e-mall is defined as an e-mall with a strong network, a good marketing strategy, a nice display and which can access the e-shop in many ways; it has the right shop structure and it also offers services, like regional or sectorial informations.
We will come back to the above-mentioned example, the one with the tie-store: if the store owner decides to enlist his e-shop in an e-mall, he must decide either for a fasion e-mall or for an accessories e-mall.
For several fields, being included in an e-mall together with highly competitive products like jeweleries may be wholesome. That can increase the traffic in the e-mall and the increasing of the each store’s revenue. Also, the e-mall owner can benefit from membership fees, transactions fees and advertising.
Business-to-business e-procurement is possible when large corporates or guvernamental entities call for services or goods bidding. The actual bidding offer is made out of extensive projects like construction services, studies and investments. The e-procurement might also include for example, electronic negociation, agreement conclusion, bidding in alliance etc.
For this model to be accessible to the small companies, consortiums were built in which the sellers act together in order to get more reliable offers from the producers. Fashion industry is an important user of these consortiums.
The bidding of products and goods on the Internet turned out to be a very successful model. It can be used both for Business-to-business and to Business-to-customer transactions, and it can be included into the normal e-shops for being a field of wide interest.
The goods sold up may be the latest technology products, overstock products, varying stock products or valuable items for specialized collectors. For example, hardware companies put up for auction both new and used hardware devices.
Like an e-mall, an electonic auction includes many sellers. The auction operator plans the ways to place the product, the biddings (usually through e-mails) and he can also offer shipment and payment services.
People having the same interests will join a community related to their interests in order to talk about or to listen to their favourite subjects. The same thing happens on the Internet too. These forums, like the discussion forum, the interactive discussions group (chat), or the mailing list – are usefull both for the spare time and to business communications and they are called “virtual communities”.
The above mentioned tools are offered as free services, in order to increase the traffic on the website and to stimulate the emotional attachement to it. Business discussions can be made through a payed service too. Video conferences and lectures are attractive tools which cut back the travelling expenses and are used by the big companies both to scientifical sessions and to comercialize transactions.
Depending on the lecture organizer role (company, manufacturer, association) and the objectives it targets (marketing, benefits), it may exist participation fees or specific to the event, or free admitance.
Team work common grounds provide a toolkit and an updating environment for the collaborations between companies, between these and the outside collaborators and between experts, acting like a virtual company that stands by to the real business world. In case the platform is not owned by any of the companies, the operator must be very carefull with the security of the data and informations and with the communication safety, in order not to allow any information leak to the competitors. The bandwidth also plays a major role, specially in the technical field. Equally, the digital signature is becoming a requisite to the activity and specially to the contractual field.
The services that maintain the e-commerce activity are not exclusively provided by the Internet service Providers, which will only offer website hosting or internet access. For example, there are e-malls run by producers, sellers, Internet providers, web designers or associations. External electronic services are also present, like management, informational, data computing, consultance, delivery services, which can be integrated in several commercial activities.
Responsible information is required in every aspect of the service providing chain. Search engines and catalogues cannot meet this requirement anymore, so that the owners of the well-known data bases migrated to the web, offering indexed archives for magazines, licenses and market analysis, but for specific literature too. Some of these commercial services are offered for a small amount of money, either by a subscription fee, or by cyber-cash.
Research agencies and divisions were established, who try to create language detection mecanismes, but the human-based information services are of a great importance for the business world.
Beside direct sales and the subscription system, the commercials hosted into the websites are sometimes profitable for the electronic stores and for the websites as well. But the internet advertisment is not always possible or suitable: the design of the e-mall may allow or not the advertising in it’s own shops, depending on the transaction types found in the e-mall.
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Usually, the banners – the best-known publicity form – are located on the internet sites with an apropriate content, like host-pages, appealing links, pages which will be returns as a result of a keywors serach by the search engines etc. Still, the advertising can only generate profit in case the site is intensely visited. The advertising agencies will be interested in a site only if a large amount of visitors are ensured every month.
The advertising prices are differentiated by the importance of the contract, the specialization of the host Internet site, the keywords submitted to the search engines etc. The actual prices are between 0.01 EURO and 0.3 EURO/ per host website view.
The fact is that the website owners accept to host banners only if their banners will also be hosted on other websites. These exchanges are part of a “web ring” (field rings), which were created following several themes, and now there are thousands of these web rings on the internet. Inside such a web ring, the sites part of a field are linked together as a result of the website’s owners shared interest.
We will maintain the “gate” to e-commerce and have it open, by presenting you the first steps in launching an Internet business.
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