E-business
E-business models
Petr Suchánek
E-business

Outline of the lecture
•B2B
•B2C
•Value chain
•Value of products and services in e-business
•Virtual value chain
•Supply chain
•Supply chain management
•

B2B
•Business to business also called B to B or B2B, is a form of transaction between businesses, such
as one involving a manufacturer and wholesaler, or a wholesaler and a retailer.*
•Business to business refers to business that is conducted between companies, rather than between a
company and individual consumers.*
•Business to business stands in contrast to business to consumer (B2C) and business to government
(B2G) transactions.*
•B2B may include outsourcing, which occurs when a business hires a contractor with knowledge and
experience in that business's industry.**
*https://www.investopedia.com/terms/b/btob.asp
**https://www.techopedia.com/definition/1423/business-to-business-b2b

B2B – characteristics*
•Elements of Business-to-Business Sales
ØBusiness-to-business sales often involve more expensive or more technologically advanced products.
ØBusiness-to-business clients order more products and spend more money than retail clients.
ØThis means that business-to-business sales have the potential to make more money than
business-to-people sales.
ØBusiness-to business sellers need fewer clients than retail sellers because of the amount of money
a single business client can generate.
ØThis means that business-to-business sellers can focus more effort on each business client.
*https://smallbusiness.chron.com/advantages-businesstobusiness-vs-businesstopeople-10464.html

B2B – characteristics*
•Business Buyer Logic
ØBusiness buyers tend to be more logical and rational about their purchases because, unlike retail
clients, business clients are making decisions for a large number of people.
ØRetail clients are buying for their own consumer clients, business users are buying for their
employees and institutions are buying for their patrons.
ØThe rationality of business clients means that they often make purchase decisions based on
predictable criteria, such as price, durability, support and familiarity with the seller.
*https://smallbusiness.chron.com/advantages-businesstobusiness-vs-businesstopeople-10464.html

B2B – characteristics*
•Product Specificity
ØSometimes business buyers require products made specifically for their business.
ØThis is more likely to happen with business users and institutional buyers.
ØThis type of product specificity virtually guarantees a purchase and aids in long-term
relationship management.
ØAs part of the selling process, business-to-business sellers may need to demonstrate their
company's ability to make products according to the business buyers' requirements.
*https://smallbusiness.chron.com/advantages-businesstobusiness-vs-businesstopeople-10464.html

B2B – characteristics*
•Reciprocal Buying
ØBusiness-to-business buyers and sellers may buy from each other, cementing long-term relationships
and creating money-saving opportunities.
ØThis situation occurs most often when both parties are buying for business use.
*https://smallbusiness.chron.com/advantages-businesstobusiness-vs-businesstopeople-10464.html

B2C
•Business-to-consumer (B2C) is an Internet and electronic commerce (e-commerce) model that denotes
a financial transaction or online sale between a business and consumer.*
•B2C involves a service or product exchange from a business to a consumer, whereby merchants sell
products to consumers.*
•B2B2C (business-to-business-to-consumer) extends the B2B (business-to-business) model to include
e-commerce for consumers.**
•The goal is to create a mutually beneficial relationship between suppliers of goods and services
and online retailers.**
*https://www.techopedia.com/definition/1424/business-to-consumer-b2c
**https://whatis.techtarget.com/definition/B2B2C-business-to-business-to-consumer

B2C – business models
•Direct sellers
ØThis is the most common model, in which people buy goods from online retailers.
ØThese may include manufacturers or small businesses, or simply online versions of department
stores that sell products from different manufacturers.
•Online intermediaries
ØThese are liaisons or go-betweens who don’t actually own products or services that put buyers and
sellers together.
ØSites like Expedia, Trivago, and Etsy fall into this category.
*https://www.investopedia.com/terms/b/btoc.asp

B2C – business models
•Advertising-based B2C
ØThis model uses free content to get visitors to a website.
ØThose visitors, in turn, come across digital or online ads.
ØBasically, large volumes of web traffic are used to sell advertising, which sells goods and
services.
ØMedia sites like the Huffington Post, a high-traffic site that mixes in advertising with its
native content is one example.
•Community-based
ØSites like Facebook, which builds online communities based on shared interests, help marketers and
advertisers promote their products directly to consumers.
ØWebsites will target ads based on users’ demographics and geographical location.
*https://www.investopedia.com/terms/b/btoc.asp

B2C – business models
•Fee-based
•Direct-to-consumer sites like Netflix charge a fee so consumers can access their content.
•The site may also offer free, but limited, content while charging for most of it.
•The New York Times and other large newspapers often use a fee-based B2C business model.
*https://www.investopedia.com/terms/b/btoc.asp

Value chain
•A value chain is a business model that describes the full range of activities needed to create a
product or service.*
•For companies that produce goods, a value chain comprises the steps that involve bringing a
product from conception to distribution, and everything in between - such as procuring raw
materials, manufacturing functions, and marketing activities.*
•A company conducts a value-chain analysis by evaluating the detailed procedures involved in each
step of its business.*
•The purpose of value-chain analyses is to increase production efficiency so that a company may
deliver maximum value for the least possible cost.*
*https://www.investopedia.com/terms/v/valuechain.asp

Components of a value chain
•Inbound logistics - functions like receiving, warehousing, and managing inventory.
•Operations - procedures for converting raw materials into finished product.
•Outbound logistics - activities to distribute a final product to a consumer.
•Marketing and sales - strategies to enhance visibility and target appropriate customers - such as
advertising, promotion, and pricing.
•Service - programs to maintain products and enhance consumer experience -customer service,
maintenance, repair, refund, and exchange.
•
•
*https://www.investopedia.com/terms/v/valuechain.asp

Value chain – support activities
•Procurement - how a company obtains raw materials.
•Technological development - used at a firm's research and development (R&D) stage - designing and
developing manufacturing techniques; and automating processes.
•Human resources (HR) management - hiring and retaining employees who will fulfill business
strategy; and help design, market, and sell the product.
•Infrastructure - company systems; and composition of its management team - planning, accounting,
finance, and quality control.
•
•
•
•
*https://www.investopedia.com/terms/v/valuechain.asp

Value chain – support activities
*https://www.business-to-you.com/value-chain/


Value chain in e-commerce
*https://www.researchgate.net/figure/Insurance-value-chain-and-e-commerce-opportunities_fig8_268259
388

Value chain in e-commerce
•https://www.visiture.com/blog/22-ways-add-value-ecommerce-site/
•https://tinuiti.com/blog/ecommerce/50-value-propositions-for-ecommerce-retailers/
•https://www.growcode.com/blog/ecommerce-value-proposition/
•https://www.campaignlive.co.uk/article/whats-value-ecommerce/1438041
•https://www.builderfly.com/6-profitable-e-commerce-values-for-your-startup
•https://feinternational.com/blog/value-and-sell-an-e-commerce/

Supply chain
•A supply chain is the network of all the
•individuals;
•organizations;
•resources;
•activities;
•and technology
•involved in the creation and sale of a product, from the delivery of source materials from the
supplier to the manufacturer, through to its eventual delivery to the end user.*
•The supply chain segment involved with getting the finished product from the manufacturer to the
consumer is known as the distribution channel.*
*https://whatis.techtarget.com/definition/supply-chain

Supply chain management
•Supply chain management (SCM) is the broad range of activities required to plan, control and
execute a product's flow, from acquiring raw materials and production through distribution to the
final customer, in the most streamlined and cost-effective way possible.*
•SCM encompasses the integrated planning and execution of processes required to optimize the flow
of materials, information and financial capital in the areas that broadly include demand planning,
sourcing, production, inventory management and storage, transportation - or logistics - and return
for excess or defective products.*
•Both business strategy and specialized software are used in these endeavors to create a
competitive advantage.*
*https://searcherp.techtarget.com/definition/supply-chain-management-SCM

Supply chain management – components*
•Planning
ØThis is one of the most important stages. Before the beginning of the entire supply chain, it is
essential to finalise the strategies and put them into place.
ØChecking the demand for the product or service, checking the viability, costing, profit, and
manpower etc., are vital.
ØWithout a proper plan or strategy in place, it will be well-nigh impossible for the business to
achieve effective and long term benefits.
ØTherefore, enough time has to be devoted to this phase.
ØOnly after the finalisation of the plans and consideration of all pros and cons, can one proceed
further.
ØEvery business needs a plan or blueprint or a roadmap based on which the strategies are made.
ØPlanning helps to identify the demand and supply trends in the market and this, in turn, helps to
create a successful supply chain management system.
*https://www.iqualifyuk.com/library/business-management-section/the-eight-components-of-supply-chai
n-management/

Supply chain management – components*
•Information
ØThe world today is dominated by a continuous flow of information.
ØIn order to be successful, it is essential that a business stays abreast with all the latest
information about the various aspects of its production.
ØThe market trends of supply and demand for a particular product can be best understood if the
information is properly and timely disseminated through the many levels of the business.
ØInformation is crucial in a knowledge-based world economy, and ignorance about any aspect of
business may actually spell doom for the prospects of the business.
*https://www.iqualifyuk.com/library/business-management-section/the-eight-components-of-supply-chai
n-management/

Supply chain management – components*
•Source
ØSuppliers play a very crucial role in supply chain management systems.
ØProducts and services sold to the end user are created with the help of different sets of raw
materials.
ØIt is therefore necessary that suitable quality raw materials are procured at cost effective
rates.
ØIf a supplier is unable to supply on time, and within the stipulated budget, the business is bound
to suffer losses and gain a negative reputation.
ØIt is crucial that a company procures good quality resources so it can create good quality
products and maintain its reputation in the market.
ØThis necessitates a strong role for suppliers in the supply chain management system.
*https://www.iqualifyuk.com/library/business-management-section/the-eight-components-of-supply-chai
n-management/

Supply chain management – components*
•Inventory
ØFor a highly effective supply chain management system it is essential that an inventory is kept
and thoroughly maintained.
ØAn inventory means the ready list of items, raw materials and other essentials required for the
product or service.
ØThis list has to be regularly updated to demarcate available stock and required stock.
ØInventory management is critical to the function of supply chain management, because without
proper inventory management the production, as well as sale of the product, is not possible.
ØBusinesses have now started to pay more attention to this component simply because of its impact
on the supply chain.
*https://www.iqualifyuk.com/library/business-management-section/the-eight-components-of-supply-chai
n-management/

Supply chain management – components*
•Production
ØProduction is one among the most important aspects of this system.
ØIt is only possible when all the other components of the supply chain are in tandem with each
other.
ØFor the process of production to start it is essential that proper planning and supply of goods,
as well as the inventory, are well maintained.
ØThe production of goods is followed by testing, packaging and the final preparation for delivery
of the finished product.
*https://www.iqualifyuk.com/library/business-management-section/the-eight-components-of-supply-chai
n-management/

Supply chain management – components*
•Location
ØAny business, that wants to survive as well as flourish, needs a location which is profitable for
the business.
ØTake for example, a carbonated drink factory is set up in an area where water supply is scarce.
ØWater is a basic necessity of such business.
ØThe lack of water could hamper the production as well as affect the goodwill of the company.
ØA business cannot survive if it has to share an already scarce raw material with the community.
ØHence, a suitable location, which is well connected, and very close to the source of essential
resources for production is vital to a business’ prosperity.
ØThe requirement and availability of manpower must also be considered while setting up a business
unit.
*https://www.iqualifyuk.com/library/business-management-section/the-eight-components-of-supply-chai
n-management/

Supply chain management – components*
•Transportation
ØTransportation is vital in terms of carrying raw materials to the manufacturing unit and
delivering the final product to the market.
ØAt each stage, timely transportation of goods is mandatory to sustain a smooth business process.
ØAny business which pays attention to this component, and takes good care of it, will benefit from
the production and transportation of its goods on time.
ØIt is essential that a company works towards a safe and secure transportation process.
ØBe it in-house or a third-party vendor, the transportation management system must ensure zero
damage and minimal loss in transit.
ØA well-managed logistics system along with flawless invoicing are the two pillars of secure
transportation.
*https://www.iqualifyuk.com/library/business-management-section/the-eight-components-of-supply-chai
n-management/

Supply chain management – components*
•Return of goods
ØAmong the various components that create a strong supply chain is the facility for the return of
faulty/malfunctioning goods, along with a highly responsive consumer grievance redress unit.
*https://www.iqualifyuk.com/library/business-management-section/the-eight-components-of-supply-chai
n-management/

Supply chain management – components*
*https://corporatefinanceinstitute.com/resources/knowledge/strategy/supply-chain/


The end