eBusiness Models explained

Even at the most basic level of providing company information online it can still be a considerable cost centre to have,  therefore companies must have long-term value planned from eBusiness to justify both the reasons and costs for adopting it. Each of the above stages of eBusiness adoption will warrant separate strategies and will each have their own cost factors, level of ICT requirements and business model factors.

There are nine different types of eBusiness models which can give companies options as to how they want to pursue an eBusiness strategy





















All of the above cover the entire spectrum of eBusiness models and are examples of how companies have developed through the use of eBusiness.

             Each company has to determine initially what the implications are for developing an eBusiness Model for their business i.e. “Who Pays?, For What, To Whom? And why? Answering these questions will lead a company to devising its “Value exchange reciprocal model” in other words it forces them to re-consider their overall business strategies and key drivers of their business. There are three types of value reciprocity which are: 

  1. Provision without compensation – often referred to as a “gift economy”.
  2. Indirect/Deferred Reciprocity - loans, advertising and subscriptions etc.
  3. Direct/Immediate Reciprocity – selling or bartering often referred to as “horse trading”

Recent trends in eBusiness have companies stuck in the provision without compensation stage and find it difficult to change. The reason is because an eBusiness Marketplace is a dynamic and competitive one. Personally if I was receiving free information on a particular website and they wished to start charging me for the service, I would switch to a competitor who is still providing the free service. I would speculate that this would be the case with 95% of consumers.

 The reason for this, apart for the Human Factor, is easy to identify but not so easy to tackle. Consumers have no incentive to stay with such firms. The critical issue here is “Value-added Services”. Companies need to sell their services if it means fighting intensive pricing (or otherwise) battles with competitors. Consumers including myself love to rationalise their expenditure. “What exactly am I getting for my money?”

 A company cannot afford to lose its customers. If it wishes to begin charging for services or follow a similar strategy it needs to create valued incentives for customers and users to remain. There are five key terms to analyse and master such a strategy which are: resource control, switching costs, perceived value, cost advantage and quality advantage. Companies need to have the ICT and IS/IT requirements in place to support a strategy of eBusiness adoption, they need to make sure that switching costs are high for existing customers so they won’t defect, and low for potential customers all with the benefit of providing customers with the added benefits of having cost and quality advantages. Failure, evident from many examples in the eBusiness world, is due to the lack of implementation of such key principles which give companies direction and strategy to help them focus on their business objectives.

The “some-free – some fee” model is an example of how to give customers value and incentive. Users who wish to avail of the “free content” can do so, and similar with customers who wish to subscribe for a greater level of service. A good example of this is the Irish Times website Ireland.com. Those who wish to view the main news headlines can do so freely and subscribers have access to richer content and level of services and value network including a detailed news service, email services etc which would not be available without subscribing. The trick however is to make the “free content” enticing enough to encourage users to subscribe and become part of the “greater value community.” That however is the job of the marketer and the salesperson.

Customer Defection and consolidation are two of the biggest problems facing the world of eBusiness. A business eStrategies need to be innovative with regard to providing the framework and value network necessary to increase the rate of customer acquisition and customer retention. Companies need to be market-driven and have foresight to achieve this. The difficulty however lies within doing all of the above profitably.