E-Commerce Business Models – The Competitive Edge

Every day more and more companies, both large and small are attempting to capitalize on their existing capabilities through the use of the internet. This process of leveraging strengths and disturbing habits of the tried and true underlies the migration from "market place to market space".

There are many who still believe that there is no profitable business on the web. Value to the customer and company are the only two ways of being successful. This means a company must understand their customers within the time frame and context to achieve their business objective. The internet gives companies a change to do what they have always done, but in a much different fashion, further adding value to the business and customer.

There are many business strategies that take advantage of the internet as an interactive medium to reach many and emphasize communication and community.

Three business models that are working quite successfully for some companies are the auction model, portal model and storefront model.

This article will explore the three business models. After reading this article, you should then be able to determine which business model is most conducive for operating and growing your business.

The auction model has gained popularity since the inception of e-Bay. Auction models are those in which the participants bid for products or services over the internet. The auction sites sometimes do not own the products on its site, but facilitates the process of listing and displaying goods as an affiliate.

Auction models are a marketplace for individuals and businesses to auction off merchandise or service. "In English auctions, the initial price starts low and is bid up by successive bidders with the highest bidder winning the bid. In a Dutch auction, multiple, identical items are offered in one auction, with all winning bidders paying the same price, usually the highest price at which all items will be sold. Most auctions online currently use the English method. " (Nissanoff, 2006)

The advantages of the auction business model include:

  • No time constraints. Bidding and posting of items can be completed 24/7.
  • No geographical constraints. Sellers and bidders can participate from anywhere in the world.
  • The large number of bidders. The potential for low prices, numerous items and services available, easy access, and the social benefit draws a large number of bidders.
  • Large number of sellers. The number of bidders brings a potential for high price and reduced selling costs making more sellers choose the auction model.
  • Network economics. The more sellers, the more bidders and this cycle continue. The more the spiral operates, the larger the system becomes, making the business model more valuable for all participants.

The main source of revenue for the auction business model is through commissions from items sold on their site, advertising and posting merchandise fees.

Generally speaking, the portal business model is an "infomediary." A portal brings sellers and buyers together by providing content in the form of advice, services, or some other benefit.

A portal is the gateway for users when they connect to the internet. Portal business models provide services such as: latest news, online directories, personalized advertisements, targeted e-mail newsletters of products and services and a facility to create an individual company website within the pain portal making the portal a major commerce facilitator by adding a value to a particular e-business transaction.

The revenues for portal business model is earned by personalized advertising, hosting websites, building, designing websites, sponsoring discussion forums and negotiating a percentage of each transaction that takes place on the marketplace.

The store front business model is a shopping location that customers can browse and shop from the comfort of their homes, and where businesses can advertise their products and services for a fraction of the cost of brick and mortar businesses.

The store is entered through a portal or the direct website and upon entering the store; the customer is shown graphic displays to give a person the chance to see what the product looks like, just as if he / she were standing in the brick and mortar store. Once the purchase is made, a form is filled out that will transmit the financial information and issue a receipt to the customer.

Three types of storefront models are "hard good, soft goods and services." Hard goods are similar to operating catalog sales online. Selling soft goods or information based goods is perfect for the internet because everything can be completed and received on the internet.

Some companies use the storefront models to sell goods, such as e-Bay, others use it to reduce costs through marketing and customer support, and then others use it to generate new sales. Companies that really benefit from a storefront model are those that sell unique products that are either hard to find or can not be found in the local area.

The advantages to a storefront model includes extended sales and marketing, reduced transaction costs, new product introduction and testing and the ability to reach specialized markets.

With more than 90 million users on the web; the internet is a fascinating place to do business. There are vast variations of companies doing business on the web. large, small, or in between, it does not matter because it all comes to customer commitment.

Recognizing and Celebrating Your Company's Unsung Heroes

Right now in your company there are "unsung heroes" whose quiet dedication and, yes, devotion are keeping you in business. These are the people who:

* Do not complain
* Are present for work on time
* Gladly help out as necessary
* Are selfless and always focused on the good of the business and its employees.

Every business has such people.

Every business relies on them.

Unfortunately, these fortunate businesses often take such jewels for granted. That will never do.

1) Identify the "unsung heroes" of your company.

The better you know your employees, the easier selecting your "unsung heroes" will be. When you come to think about it, you'll know right away who has done much for you and is deserving of special recognition.

2) Have a classy recognition event.

Bringing in a couple of pizzas and saying some nice words about the employee / s in question may be OK for ordinary "thanks", but when an "unsung hero" is being celebrated that is most assuredly not good enough.

3) Say it with silver

For hundreds of years, important occasions have been celebrated by the presentation of silver objects. Post why? Because silver represents value, permanence, and something splendid to show family and friends.

Such objects must ALWAYS be sterling (not plate) and must ALWAYS feature a celebratory inscription:

"For (name) for exemplary service since (date). From your friends and colleagues at (name of company.) (Date of presentation.)

4) Include a check

Whenever possible, you should also present your "unsung hero" with a check for at $ 1000 least. Remember, you are recognizing one of the keys to your success. Reward this valuable person accordingly.

5) Hold a recognition event

Remember, for the person you are honoring, whatever you do will quite probably be unique in her life. Thus, if you do the thing, do the thing right. This means holding some kind of recognition event. In our busy times, luncheons are recommended.

Have it at a local restaurant with a function room. Make sure to get your hero's name on the facility's calendar of events.

6) Invite your hero's family and friends

Again, remember that this event will quite probably be unique in your hero's life. Thus, make it a point to invite family and friends to attend. Let them see in what regard you hold the honoree.

7) Get the day declared in her honor

Every public official from the President of the United States down has the ability to help you recognize your "unsung hero." How?

At least 30 days before the event send a letter to

* The governor of your state, or

* The mayor of your town, or

* Your state representative or state senator.

All of them have resplendent certificates readily available into which they can insert wording provided by you. If you ask them to attend your event to present the certificate themselves, they may well do so! This provides an extra level of importance.

Note: if the service of your "unsung hero" has been particularly noteworthy, do not hesitate to write the president. You may well get a telegram or letter or, even, (it happens) a phone call from the president himself … and that would surely make your event notable!

8) Take lots of pictures. Post them on your website.

This is the moment for all shutterbugs. The more pictures you take, the better. Post them prominently on your website.

9) Deliver heartfelt, gracious, sincere remarks. Do not stint on the compliments.

Talk from the heart about this person and what she has done. Remember, she has been one of the reasons for your success. Now is the moment to say so with grace, felicity and warmth. Be sure to record your words and give these, too, to your star.)

Last Words

We all mean to take the time and trouble to publicly thank and honor the good folks who keep our company going. But life has a way of getting away from us. That's why you need to make honoring your heroes a matter of priority and importance. They have served you well. Now do what is called for to recognize them for all their services. It is right and proper.

Free Book Summary One Simple Idea – By Stephen Key

Stephen Key was a mentor to Tim Ferriss. If you are not familiar with Tim, he wrote two bestselling books, The 4 Hour Work Week and the 4 Hour Body. One Simple Idea is a "how to" book on licensing your ideas. Licensing is one of the most lucrative business models in the world. Think about these companies, Microsoft, Oracle and Apple. These companies all license their ideas and make more money per person than 99% of all other companies. I am a big fan of Real Estate but if you need to make money with less risk and less capital requirements, then licensing is the way to go.

Why is this important to me?

Most people are not familiar with the power of licensing and royalty checks. This book shows you how to do it and I will expand on the why.

Why licensing? I have had several businesses and I can tell you that licensing is by far the most lucrative of all. When you own the IP (intellectual property), your marginal revenue of the next license sold is infinite. That is a very good profit margin by anybody's standards.

Inversion is one of the most powerful learning strategies in the world. Inversion means to look at the opposite or reverse of something. I told you above that Licensing is one of the best models out there. Let's use inversion to show you why. When you sell somebody else's stuff, you are only as good as your next sale. This means that no matter what, you have to buy what you sell every time. Thus your gross profit can be anywhere from 0% to 50% based on your cost structure and the competition level. This is what Wal-Mart does. Note that they are the best cost cutters in the world and competing with them head on would be a disaster.

Let's suppose you are a consulting or service based company. Again, you are only as good as your next consulting gig. I know that consultants make a ton of money but for every hour they consult, they lose that hour of opportunity to do something else. Thus you are trading hours for dollars.

One Simple Idea is packed with great information and Stephen's 10 step plan that shows you how to do it. We will touch on a few points.

First of all, there are two major reasons to license. Number 1 is royalty checks. You can make money while you sleep. Now you are NOT trading dollars for hours because you can be doing something else and still receive checks. Number 2 is omnipresence. You can do this from anywhere in the world. You do not have to be handcuffed to a desk in some vaulted locked building. All you need is a computer and ideas.

Stephen outlines several key factors to being successful at licensing. For the sake of time, I will highlight a few of the topics in this review.

1. Look for ideas – You do not have to be Einstein to have a break through idea. If you have ever been shopping, then you can come up with ideas. The key here is to focus on thins that really annoy you. If they annoy you then maybe they annoy others. This is a starting point for a new idea. Think about problems and come up with solutions. This also gives you a reason to go shopping.

2. Prove your idea – The traditional licensing model works like this. Find an idea, build an expensive prototype, spend a small fortune for patent protection and hope it sells. This is why most people do not think of licensing as a viable career because the barriers APPEAR too big to bridge. Proving your idea before you spend any money is now easy to do. Google has built in traffic. It is a ready-made platform for idea creation and proof. One simple way to do this is to create a video of your idea and ask for feedback. You can do this for a few hundred dollars. This process alone will save you tons of heartache and money. You need to prove the idea before you do anything else.

3. Protect your idea- Contrary to negative belief; most companies do NOT want to steal your idea. The traditional way to protect your idea was to submit for patents. This is a very expensive endeavor. One thing Stephen points out to avoid this is a PPA. This is a provisional patent application and costs $ 110 to submit. This gives you Patent Pending status which is all you need for 1 year to prove your idea and get it to market. This one concept can pay for this book 5,000 times.

4. Pitch your idea – If you decide to bring your idea to market then you need to be schooled in business. This means you need money, management, and accounting, production, sales and marketing. Then after you have all this, you need customers. This is like a beginner climbing Mount Everest in the winter time. The odds all point to your death with this approach. Pitching your idea to the big guys is the way to go. They have the name brand, infrastructure and distribution channel to hit millions of people NOW. Pitching your idea is the best way to go and causes the most fear. Everybody hates to cold call but this is required for you to pitch your idea. This is much easier than it seems because companies want new ideas and that is the hook for you to get in.

One Simple Idea is an outstanding guide to help you turn your ideas into a royalty check.

I hope you have found this short summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days. One thing you can take away from this book is the PPA. The biggest obstacle to ideas coming to market is the shear cost of getting protection and the fear of somebody stealing your stuff. For $ 110, you can protect it for one year and if it makes you money then you can protect it longer. Remember, in this game, the first to market wins.