E-Commerce Business Models: Part 1

Introduction

Internet and computers have revolutionized the electronic transactions which involve the transaction of ownership or right to use products or services online. E-commerce not only involves buying and selling over the Internet but also collaborating with business partners. It is not constrained by time or physical location it can be conducted at any time from any place which opened unlimited new markets. A business model is a framework of how an organization generates revenue. E-commerce business models use the Internet to carry on their activities and generate revenue. They have been developed from being a plain text websites to interactive e-commerce hubs that use Internet and mobile technologies to reach their current customers and attract the potential customers. Some services and products can be delivered by the internet while others do not. Services that can be delivered through the internet include distance learning, financial services, pension services, legal services, news services, and advisory services, information services such as information on travel flights, buses and trains services.

However, services that cannot be delivered using the internet include police and law enforcement treatment, fire brigade services, first aid, nursing, physiotherapy, surgery operations, dental services, hairdressing, house cleaning, waste disposal and washing services, plumbing and hosing, ventilating and heating services, forensics, transportation, freight and shipping services, building services, wedding, childcare, security and warehousing. Products that difficult to be delivered through the internet include jewels and timepieces, footwear, beauty care and cosmetics, furniture, frames of eyeglasses. All these products need to be tried out and assessed by the customers. In jewels ladies want to try out different models of jewels to choose a suitable one. In furniture it is hard to describe the required design and colors through the Internet and customers need to touch and try the furniture before taking a decision. The same issue applied for beauty care and cosmetics where ladies want to compare between different colors on their faces before taking a decision. However, an e-commerce business will not work well unless there is a well equipped infrastructure which includes computers that can connect to the Internet Service Provider (ISP) through dial-up lines or dedicated lines that offer a high bit rates such as digital subscriber lines (DSL). DSL is recommended if a user wants a faster access to the internet. ISPs provide the Internet access to customers at their homes, business and institutions. Berners-Lee in 1989-1991 and his associates developed the essential components of a Web site which are: HTML, HTTP, a Web server and a browser. The HyperText Markup Language (HTML) which is a programming language can be used to build Web pages on a Web server. Remote client computers which are called Web clients can access these Web pages using the HyperText Transfer Protocol (HTTP) to be displayed using Web browsers. Customers should easily interact with their Web sites or they will be lost to competitors and discouraging return visits to this Web site which results in sales losses. Software tools are required to achieve high levels of interactivity with Web sites which may include: