E-business models

A business model outlines how certain objectives are achieved, such as:

Presence of business
Revenue strategy
Pricing strategy
Value proposition
Competition

Presence of business

We categorize the presence based on the level of physical / virtual presence.

Brick and mortar (offline)
Click and Brick (hybrid)
Click only (online)

Revenue strategy

Where does the revenue come from?

Subscription
Transactional
Traditional sales
Affiliate marketing (profit from referrals)

Pricing strategy

How are the products priced?

Versioning - Multiple versions (e.g. professional, student)
Bundling - Cheaper at bulk
Freemium - Basic free, premium paid
Free trial - Limited time test before purchase

Long tail strategy

Profit from selling many low-volume, unique items rather than few high-volume items
Particularly effective in e-commerce where:
- No physical inventory limitations
- Items easily discoverable online
- Helps compete in crowded markets

Product differentiation

Vertical - By Standards
Horizontal - By Tastes

Porter's Five Forces of Competition

Rivalry among existing firms (no. of competitors $\uparrow$ $\implies$ competition $\uparrow$ )
Threat of new entrants (entry barriers $\uparrow$ $\implies$ competition $\downarrow$ )
Bargaining power of suppliers (no. of suppliers $\uparrow$ $\implies$ dependency $\downarrow$ )
Bargaining power of buyers (supply $\uparrow$ power of buyers $\uparrow$ )
Threat of substitutes (no. of alternatives $\uparrow$ $\implies$ competition $\uparrow$ )

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