We have ever seen or perhaps experienced some business transactions online. How many of us have ever purchased something online? When you purchased a product online (i.e. buying books from Amazon.com) and waited for the delivery to arrive, did it ever come to your mind that there is probably other way for people to earn money online?
There are plenty of businesses running on the internet and each of them adopts a certain type of business revenue model. This business revenue model determines how the business earns money online. Followings are some types of e-business revenue models:
The ‘web catalog’ model [1]
Web catalog model is simply a transformation of conventional, colorful catalogs into catalogs on the internet. In this revenue model, an e-business sells product by providing pictures and information of physical products on its website and encouraging customer to make purchase either via internet or via telephone lines. Companies like Amazon, Better world and Target are examples for this model.
The ‘digital content’ model [1]
In digital content model, products offered by companies are intangible products and basically are information-based products. This type of product is more suitable for selling online compared to the physical products [2]. In this revenue model, customers are required to register and pay subscription fee in order to access the information provided by the company. Example for this model is ProQuest. ProQuest sells published journal articles online and requires its customers to pay subscription fee before they can access to its products. Another good example for this case is news paper organizations that required their readers to subscribe online.
The ‘advertising-supported’ model [1]
In advertising supported model, companies earn money from advertisements made on their websites. The simplest example for this model is Yahoo! and Google. E-business that adopts this revenue model must maintain its website to be as attractive as possible, so that more audiences will visit the website and therefore more companies will put more advertisements on the website. Yahoo and Google provide search engines for this purpose.
The ‘fee for transaction’ and ‘fee for services’ model [1]
In this model, companies earn money from each transaction or services provided to their customers. Examples for this model are travel agents, online games and online payment systems. Travel agents charge fees for every ticket / accommodation bookings made for their customers. Online games require their customers to pay for either downloading the programme or to pay a certain amount of subscription fee. Online payment systems, such as Paypal, charge fees for each transaction made by their customer.
A company may not necessarily adopt only one of the models mentioned above; it can adopt the combination of two models and gain competitive advantages from it.
Other related topics:
How does E-business differ from traditional business?
Selling on the web: Can we sell everything online?
Optimizing your e-business with SEO
Linkspam: What is that and how to deal with it?
Do we need a better payment system for e-business?
[1] Schneider, G.P. (2006). Electronic Business. 7th Ed., Course Technology
[2] Dann, S. and Stephen Dann (2004). Strategic Internet Marketing 2.0. 2nd Ed., John Wiley & Sons Australia, Milton
Filed under: E-Business, Selling on internet | Tagged: E-Business, e-business model, e-business strategy, online business, Selling on internet, Selling on the web
