Internet based business models and e-commerce
Have you ever tried to figure out the different (and viable) eCommerce business models? In this post, I will try to provide a lucid categorization and will happily hear your remarks.
eCommerce – still in its infancy
With the growing consumer acceptance of eCommerce and a difficult business environment, brands and businesses are all beadily eyeing the opportunity. But, eCommerce is still in its infancy. If the percentage of total retail is closing in on double digits in some countries, the eCommerce model is still learning its way for the vast majority of us. Taking a look at eCommerce sites as a percentage of the number of total web sites, eCommerce is still just a small pinpoint. According to Bath-based (UK), there are a little over 600 million websites, while this Dutch-based website, , estimates that there may be around 7.4 billion pages referenced on the web. In comparison, I roughly estimate that there are 2 million eCommerce sites worldwide (500K in North America, 1 million in Europe, 500K in ROW).
Businesses are needing to figure out if and how to integrate electronic commerce into their existing business strategy. For some startups, they have the “chance” to start from scratch as a ‘pure player’; but, this is not necessarily an easy route — far from it. For most brands, meanwhile, it means figuring out the best mix of channels in light of their history and their existing partners and commercial strategy.
So, what is the right eCommerce business model?
When a company is sizing up its eCommerce strategy, there is, by definition, no historical data on which to build a model. In general, there is just not a lot of granular data available on how eCommerce is doing — and certainly not in terms of profitability since the data is always folded into some larger number (except for the odd publicly traded pure player). Nor is there a lot of talent with experience to go around. The main analysis in setting up an electronic commerce site must focus on three key pillars areas:
- establish the right fit with the brand image
- align with the company’s culture
- consider the fit/mix with the existing channels.