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Q1.
Amazon makes it possible for book lovers to shop for virtually any book in print from the comfort of
their home or office, 24 hours a day, and to know immediately whether a book is in stock. Amazon’s
Kindle takes this one step further by making e-books instantly available with no shipping wait. Amazon’s
primary value propositions are unparalleled selection and convenience.
Q2.
The five primary revenue models used by e-commerce firms are:
• the advertising revenue model
• the subscription revenue model
• the transaction fee revenue model
• the sale revenue model
• the affiliate revenue model
The advertising model derives its profit by displaying paid advertisements on a Web site. The goal is to
convince advertisers that the site has the ability to attract a sizeable viewership, or a viewership that
meets a marketing niche sought by the advertiser. Firms that use the subscription model offer users
access to some or all of their content or services for a subscription fee. Firms that use the transaction
fee model derive profit from enabling or executing transaction. For instance, transaction fees are paid
to eBay when a seller is successful in auctioning off a product, and E*TRADE receives a transaction fee
when it executes a stock transaction for a customer. In the sales revenue model, companies draw profit
directly from the sale of goods, information, or services to consumers. In the affiliate model, sites
receive referral fees or a percentage of the revenue from any sales that result from steering business to
the affiliate.
Q3.
One market strategy is to form strategic alliances with business partners who will help you to attract
new customers and extend your market reach. Another market strategy is to use product name,
packaging, and advertising to create a distinct mood or feeling about each of your product lines, and
carefully target each line to a specific audience. Some firms may choose to pursue a marketing strategy
that positions them as a “one-stop-shop” which carries a broad-based line of products, saving the
customer search time. Others may choose to position themselves as category experts who have an indepth and “personal” knowledge of their customers. Such firms will offer extensive customer support
networks to assist their customers in their purchasing decisions and will advertise themselves
accordingly. One critical factor is that a company needs to find a way to differentiate itself from the
competition.
Q4.
The major difference between virtual storefronts and bricks-and-clicks operations is that virtual
storefronts do not have any ties to a physical location. The major advantages of the virtual storefronts
are that they have low barriers to entry into the Web e-tail market and that they do not bear the costs
associated with building and maintaining physical stores. The disadvantages are that they must build a
brand name from scratch, quickly, and become profitable with no prior brand name or experience,
which can be very difficult. The major advantages of the bricks-and-clicks operations are that they have
an already established brand name, an established customer base, an established sales force, and the
resources to operate on the very thin margins associated with the retail industry. It is also much less
expensive for them to acquire new customers than it is for the virtual storefronts. The major
disadvantages of the bricks-and-clicks firms are that they face new competition in an extremely
competitive environment from new firms who may have more expertise at building credible Web sites,
and who can focus exclusively on building rapid response order systems.
Q5.
The major players in an industry value chain are the suppliers, manufacturers, distributors, transporters,
retailers and customers. E-commerce technology has helped manufacturers to reduce the costs they pay
for goods through the use of Web-based B2B exchanges. Some manufacturers have also developed
direct relationships with their customers online thereby eliminating the distributors and the retailers
from the value chain. Distributors can develop highly efficient inventory management systems to
reduce their costs, and retailers can develop highly efficient, customer relationship management
systems to strengthen their services to customers. Customers can use the Web to search for the best
quality, delivery, and prices, thereby lowering their overall transaction costs and reducing the final
price they pay for goods.
Q6.
value proposition
• revenue model
• market opportunity for the firm (the marketspace and how big it is)
• competitive environment for the firm (who the competitors are in the marketspace)
• competitive advantage the firm brings to the marketspace (the unique qualities that set the firm
apart from others in the marketspace)
• market strategy the firm will use to promote its products and services
• organizational development of the firm that will enable it to carry out its business plan
• capabilities of the management team to guide the firm in its endeavors
…
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