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Business models
Business models
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For the purpose of this paper, I selected the following three categories for comparison : B2C, C2C and e-Government. For the sake of ease, I chose representative entities for each category : Amazon (B2C), EBay (C2C) and Arizona government, www.az.gov (e-Government). In the following paragraphs, I will identify the differences and similarities of those three business models by addressing the questions in the syllabus.
1) Who is the target audience for this Web site?
Amazon targets consumers and seeks revenue from small transaction markups on thousands of small sales each day. Originally they started with new books as their primary product. Once they established name recognition, they expanded into cross-category consumer goods and even used goods to continue growth. They have limited themselves to shippable products and have not yet expanded to services to my knowledge. EBay also targets consumers and seeks revenue from transaction fees on sales each day. EBay is different in the fact that it doesn't warehouse or distribute anything, but instead provides an auction format for consumer to consumer transactions. Originally it was focused on used products, which made it unique compared to other online marketplaces. Consumers were often looking to EBay to find a used product at a cheaper price or a product that is no longer available on the retail markets. EBay has since expanded to sell nearly anything, from new and used products to services. AZ.gov (AZ) targets Arizona residents and prospective residents. It provides information about Arizona, from weather to businesses to taxes, as well as services such as drivers license renewal. AZ intends to market the state of Arizona as a great place to live to promote growth.
2) What are they offering to their buyers or consumers via the Web?
Amazon offers hundreds of thousands of products, shippable directly to the consumer without leaving their home. The idea is one stop shopping for non-perishable goods, available at reasonable prices due to volume purchasing power. The most recent value added to Amazon was their creation of an "Amazon marketplace", where they allow other businesses to sell their products through Amazon for a fee. Amazon does not have to pay for inventory or distribution of these products, only the cost of maintaining the business link with the retailer (i.e. accurate inventory, transfer of information). This marketplace has added thousands of retailers, more specialized products and more used products, all under the "one stop" umbrella.
It is divided into several independent organizations like Amazon Europe, Amazon US and Amazon Japan.
Taking the e-commerce market by storm, Amazon.com was founded in 1994 (Amazon.com). Bringing the company to life was Princeton engineering graduate Jeff Bezos. He first thought of the idea to create Amazon.com when he was simply searcing the internet. He first worked as an investment banker D.E. Shaw & Co. where he was looking for investment opportunities for the company. surprisingly, he found that the internet was growing over 2,000 percent per month (“Jeff Bezos the King of E-Commerce”). He saw this as a massive opportunity and decided to start Amazon.com to first sell books. Amazingly, Amazon.com now has over 232 million products for sale for United States residents including electronics, clothing, and their own movie streaming
In addition to Amazon great physical networking presence with all of their warehouses they also have a great delivery network that allows businesses to sell their goods through Amazon. Having many warehouses spread out helps getting products delivered quicker and cheaper than many smaller businesses can. Smaller businesses sell their goods via consignment with Amazon. Selling their goods using Amazons delivery and website services helps keep cost for small businesses down despite the fees paid to
Launched by Jeff Bezos, the Amazon.com website started in 1995 and is today considered as one of the most prominent retail website on the internet with a record turnover of US$ 14.87 billion in 2007. Jeff Bezos’s intention was to create an internet based company with the most dedicated product portfolio on the internet where customers could find anything they might want. Amazon’s success is based on technology, services and products (Jens et al., 2003).
Amazon has been able to maintain sustainable competitive advantage based on three operational strategies. These are low cost-leadership, customer differentiation and focus strategies. Low cost-leadership is pursued by Amazon by differentiating itself primarily on the basis of price. By offering low prices to customers Amazon ensures its future success. Partially modifying the costs of lowering prices over time through achieving higher sales volumes, negotiating better terms with suppliers, and achieving better operating efficiencies. Amazon makes sure that it offers the same quality products as other companies at a considerably cheaper price. Another strategy that Amazon has is its fast delivery service and there are many delivery services that one can choose from. With Amazon Prime, there are certain, but many products that have free two-day shipping. Also, with Amazon Prime, there are many offers specifically for people that have Amazon Prime. For example,
Emphasizing on customer centricity, Amazon optimizes all of their processes to make it easier for the customer to decide and buy the product, and to make it as cheap to the customers’ as possible.
.... Amazon uses the internet to allow customers to make content searches, for instance inside books. In addition it has used e-commerce to enable customers to buy online access to certain books through its upgrade program (Webanalyticsbook.com, 2007).
Amazon.com creates value for its customers by offering customers broad array of products to select from through their website and ensuring timely delivery of products to exhibit high level of commitment towards their business and customers
This statement is still driving Amazon to provide the best for their customers. It is impressive when a business is able to fulfill their original mission statement, while being an E-business that is demanded to provide and keep up with the most current wants and desires of the consumer, especially as Amazon began and still is highly driven from popular department of electronic related products. Amazon began by selling their first book, progressing to 1-Click Shopping experience, then to creating their symbol “AMZN” on the NASDAQ, while launching the Music Store, Advantage Program, and opening numerous Fulfillment and Customer Service Center within and outside of the United States (History of Innovation). Next, let’s look at how Amazon uses all these characteristics to be a financially
Amazon.com entered the UK market as Amazon.co.uk on October 1998 by acquiring the site previously operated by Bookpages Ltd. The company began as US online book store in 1994. The retailer soon became very successful in the new market as its primary offer included over 1.4 million book titles, comprehensible search tools, secure transaction, direct shipping and also high discounts on thousands of popular books (Amazon, 1998). During 17 years of its presence on the market, Amazon offers various products and services including books, DVD, jewellery, electronics, furniture, , clothes, cosmetics, digital downloads, website development etc. (Datamonitor, 2010). Amazon significantly extended its product offer and currently is one of the leading online retailers in the world with several international websites and customers in over 200 countries.
Competition – The biggest competitor of Amazon is EBay and all the internet retailers and suppliers as Priceline.com; Buy.com; BN.com and many more.
When Amazon.com first began in 1995, as strictly a book retailer, Bezos knew he had discovered an excellent company. After all, a physical bookstore cannot stock anywhere close to the number of books Amazon can offer online. Within a year, the company had a customer base of approximately 340,000 consumers and daily site visits were huge as well. But Bezos wanted to expand the company to offer music and DVDs, because he realized there was little or no barrier of entry. In the next years Amazon would emerge as a marketplace, expanding the company globally offering products from toys to kitchenware. Because of the relatively cheap prices Amazon was offering and also the growing number of online shoppers, the company was doing tremendous amounts of sales and creating profits.
From the consumer side, Amazon provides services like Amazon Prime, which delivers free two-day shipping on retail purchases, on-demand video streaming and a free access to the Kindle library, everything for an annual
Amazon model initially offered customers access to massive selection without the needs to incur cost, time and stress of opening warehouses and stores and the needs for inventory handling. Amazon realized to ensure customers get a pleasant experience and Amazon acquire its inventory at reasonable prices, they need to be in control of the transaction process from beginning to the end through operating the business from their own warehouses.
The report also talks about the differences between, advantages and disadvantages of e-business and e-commerce. Recommendations and advice have been given in the end for businesses intending to adopt an e-business dimension.