E-business is an expression that describes businesses that are carried out on the internet or those that utilize internet technology in improving profitability and productivity in a business. More generally the term is used in describing any way of doing electronic business. In most cases e-business exclusively implies doing business on the internet. E-businesses are in most cases an additional and sometimes primary mode of a storefront. In selling goods and services via the internet, an e-business can cover a wider range of consumers as compared to the conventional brick and mortar store, and this function of e-business is called e-commerce. Both terms can be used and applied interchangeably in exploiting the benefits pertaining to selling as also in procuring wholesale goods and services. The process of acquiring supplies for in-house production is called e-procurement which has enabled businesses to curtail their costs considerably. Several businesses that do not have a storefront on the internet have started using e-procurement as an effective means to manage and track their purchasing functions.
Other than selling and buying goods and services, e-businesses can engage in other conventional businesses such as electronic chatting which has now become an excellent means of providing customer and technical support to clients. The chat function enables an e-business to support its conventional phone support systems which results in massive savings in time and expenses and also provides services that are not available through the traditional systems. In making use of virtual computer systems, technical support can be provided by accessing a client’s computer and helping him in correcting specific problems. The relevant information about the specifications of software and hardware can be relayed to the customer without having the need to physically go all the way to a client. Another benefit of doing e-business through the internet is the use of private websites and email as a means to dispense with white sheets and internal memos. There is huge cost saving by way of email lists that can convey required messages instead of producing time consuming and expensive hard copies for distribution to all concerned.
During the past several years most businesses have to some extent become e-businesses due to the pervasiveness of internet technologies, timely availability of resolutions and the amply established advantages of this means. The trend continues with added benefits accruing by way of internet enabled mobile phones and PDAs. More and more direct selling is being done by way of e-business with the constant development of techniques of computer related software and equipments. One of the biggest beneficiaries in selling millions of dollars worth of products through the web was Dell Computers. People now prefer to have their travel bookings directly done on the web after they successfully research all available options in regard to their travel plans. Several products can be directly purchased on the internet with convenience and guarantee that is provided by most e-businesses.
Most web browsers have inbuilt security by way of digital certificates from companies such as Verisign that provide guaranteed security of the business transactions. Companies such as IBM have developed extranets and intranets that will become a common part of e-business and e-services in providing hassle free tasks and services on the internet. There are several advantages of bringing one’s business to the web since e-business results in improved supply chain management, higher quality of customer services and personalized services. Companies such as Yahoo.com, eBay and Amazon.com are pioneers in defining and setting high standards on the web.
Entrepreneurs who wish to start e-business have to be well versed with the different business models available for e-business and they must know how to implement the strategies effectively. An e-business is essentially a company that has an online presence and has the capabilities to do selling, trading, bartering and transacting over the internet. The grouping and blend of the company’s policies, technologies and ideologies describe its business models. There are several models in this regard and the technology varies in making the different models work effectively. It is to the advantage of businesses to leverage the given technologies in a particular model in order to extract maximum benefit in the prevailing competition. To get a better understanding of the different business models we will examine three models, namely, the storefront model, auction model and portal model.
Online shopping has now become widely popular and it is the storefront model that immediately comes to the mind of most people when mention is made of e-business. The storefront model involves a combination of processing of transactions, storage of information, security and online payments in order for the e-business to sell its goods and services on the web. This is considered the simplest means of e-business whereby there is direct interaction between the seller and buyer. In conducting storefront e-business the merchant has to arrange for an online catalogue of the products and confirm orders through its website through secure payment options. Relevant data of customers and transactions has to be maintained and the products have to be sent to the customers.
They have to also adopt internet marketing techniques to market their website to potential clients. The best example of an e-business that uses the storefront model is amazon.com. The company opened in 1994 and has rapidly advanced in becoming one of the largest online retailers in the world. The company has on offer millions of products that are patronized by millions of customers throughout the world. Although in its initial years of operation amazon.com provided mail order services for books, it now sells several products that include amongst others, toys, consumer products, hardware, DVDs, music and videos. The company uses client server applications in providing convenience to clients to search for products in different ways.
The auction model entails that buyers and sellers log on to the website which acts as a forum in coordinating buying and selling activities. Sellers post details of items that they wish to sell such as minimum price required and the date of close of auction. The site also permits sellers to add exhaustive details about their products. Buyers in their role as bidders can search for the required items by first observing the bidding activities and then finalising on their own bids for the given products. Online auctions have now become a popular and successful means to conduct e-commerce. Ebay is the leader in this category of e-commerce and is presently one of the most profitable e-businesses. The company has on its list about four million auctions at any given time and there are about 450,000 items added on a daily basis.
The portal model enables visitors of websites to find almost any product that they require. These websites provide information about sports activities, weather and latest news as also the means to search the web for whatever they are looking for. Companies such as Yahoo.com, about.com and altavista.com have adopted the portal model. In addition to providing visitors to their site with almost any information they wish to have, these companies have now started to provide visitors with shopping options via their shopping page, which in turn automatically directs them to thousands of different sites that sell a whole variety of goods and services. These portals connect the consumer to online auction sites, online shopping malls and online merchants. However, in using portals consumers have to be discreet in doing online shopping since different portals have different strategies. In generating income for themselves they charge merchants for the links which is passed on to the consumer.
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Kenneth C Laudon, Carol Guercio Traver, E-Commerce: Business,Technology, Society, 2008, Prentice Hall.
Peter Weill, Place to Space: Migrating to Ebusiness Models, 2001, Harvard Business School Press.