Unit II: Business Model for E-Commerce - E-Business

Business Model:

A business model is defined as the organization of product, service and information flows, and the source of revenues and benefits for suppliers and customers.  It is the method of doing business by which a company can sustain itself and generate revenue. The business model spells out how a company makes money by specifying where it is positioned in the value chain.

Some models are quite simple. A company produces goods or services and sells them to the customers. If everything goes normal, the revenues from sales exceed the cost of operation and the company realizes a profit.

Whereas, other models can be more complicated e.g.Radio and television broadcasting. The broadcaster is a part of a complex network of distributors, content creators, advertisers, and listeners or viewers. In this case, we cannot clearly state who makes money and how much, it depends on many competing factors.

The concept of e-business model is similar to the business model but used in the online presence, i.e. the sustainability is attained electronically.

Fig: Eight Key Ingredients of a Business Model

Type Of E-Commerce/E-Business Model:

Broadly categorized as:

1. E-Business Model Based On Relationship Of Transaction Parties:

1. Business - To - Business (B2B):

B2B is that E-business model in which a company conducts its trading and other commercial activity through the internet and the customer is another business itself. Website following the B2B business model sells its product to an intermediate buyer who then sells the product to the final customer.

Fig: Business - to – Business (B2B)

B2B implies that seller as well as buyer is a business entity. Some of the leading items in B2B e-Commerce are Electronics, Shipping and Warehousing, Motor Vehicles, Petrochemicals, Paper, Office products, Food, Agriculture.

The Major Advantages Of B2B Are As Follows:

a. Direct interaction with the customer.
b. Focused sales promotion
c. Building customer loyalty
d. Scalability
e. Savings in distribution costs

Key Technologies Used In B2B E-Commerce:

a. Electronic Data Interchange (EDI): EDI is an inter organizational exchange of business documents in a structured and machine process compatible format.

b. Internet: Internet represents the World Wide Web or network of networks connecting computers across the world.

c. Intranet: Intranet represents a dedicated network of computers within a single organization.

d. Extranet: Extranet represents a network where outside business partners, supplier or customers can have limited access to a portion of an enterprise intranet/network.

e. Back-End Information System Integration: Back End information systems are database management systems used to manage the business data.

The B2B E-Commerce Is Further Classified Depending On Who Controls The Marketplace:

a. Supplier Oriented Marketplace: In this type of model, a common marketplace provided by the supplier is used by both individual customers as well as business users. A supplier offers e-stores for sales promotion.

b. Buyer Oriented Marketplace: In this type of model, the buyer has his/her own market place or e-market. He invites suppliers to bid on the product's catalogue. A Buyer company opens a bidding site.

c. Intermediary Oriented Marketplace: In this type of model, an intermediary company runs a market place where business buyers and sellers can transact with each other.

2. Business – To – Consumer (B2C):

Website following B2C business model sells its product directly to a customer. A customer can view products shown on the website of a business organization. The customer can choose a product and order the same. Website will send a notification to the business organization via email and organization will dispatch the product/goods to the customer.

B2C enterprises include bestbookbuys.com and gartner.com. Most B2C models generate revenue from direct sales and processing fees. B2C also is known as electronic retail or e-tail and may include purchases such as airline tickets, entertainment venue tickets, hotel rooms, and shares of stock.

Some B2C e-businesses provide high-value content to consumers for a subscription fee, for example, Wall Street Journal (financial news and articles), Consumer Reports (product reviews and evaluations), and eDiets.com (nutritional counselling).

Fig: Business – To – Consumer (B2C)

Some of the Major Advantages Of B2C Are:

a. Inexpensive costs, big opportunities
b. Globalization
c. Reduced operational Costs
d. Customer convenience
e. Knowledge management
f. Disintermediation

3. Consumer – to – Consumer (C2C):

Website following the C2C business model helps the consumer to sell their assets like residential property, cars, motorcycles etc. or rent a room by publishing their information on the website. Website may or may not charge the consumer for its services. Another consumer may select to buy the product of the first consumer by viewing the post/advertisement on the website.

Fig: Consumer – to – Consumer (C2C)

Thus in the C2C business model, consumers sell directly to the other consumers via online classified ads and auctions, or by selling personal services or expertise online. For example ebay.com (auction) and TraderOnline.com (classified ads). There are a number of new consumer-to-consumer expert information exchanges such as AskMe.com, abuzz, InfoRocket.com (one of the first question-and-answer marketplaces) which is a person-to-person auction format.

4. Consumer – to – Business (C2B):

In this model, a consumer approaches website showing multiple business organizations for a particular service. Consumer places an estimate of the amount he/she wants to spend on a particular service. For example, a comparison of interest rates of personal loan/ car loan provided by various banks via the website. Business organization who fulfils the consumer's requirement within specified budget approaches the customer and provides its services.

Fig: Consumer – to – Business (C2B)

It is also called a reverse auction or demand collection model, which enables the buyer to name their own price, often binding, for a specific good or service generating demand. For example ReverseAuction.com (travel, autos, and consumer electronics) and priceline.com(travel, telephone, mortgages).

5. Business – to – Government (B2G):

B2G model is a variant of the B2B model. Such websites are used by government to trade and exchange information with various business organizations. B2G is a business model that refers to businesses selling products, services or information to governments or government agencies.B2G networks or models provide a way for businesses to bid on government projects or products that governments might purchase or need for their organizations.

Such websites are accredited by the government and provide a medium to businesses to submit application forms to the government. For example, a Website offering B2G services could provide businesses with a single place to locate applications and tax forms for one or more levels of government (city, state or province, country, and so forth); provide the ability to send in filled-out forms and payments; update corporate information; request answers to specific questions; and so on.

Fig: Business – to – Government (B2G)

6. Government - to – Business (G2B):

Government uses G2B model website to approach business organizations. Here, the seller is a government entity and the buyer is a business. Such websites support auctions, tenders, taxation and application submission functionalities.

Fig: Government – to Business (G2B)

7. Government - to – Citizen (G2C):

Government uses the G2C model website to approach citizen in general. Such websites support auctions of vehicles, machinery or any other material. Such website also provides services like registration for birth, marriage or death certificates. Main objectives of the G2C website are to reduce the average time for fulfilling people requests for various government services.

Fig: Government – to – Citizen (G2C)

Difference Between B2B and B2C:

BASIS FOR COMPARISON	B2B	B2C
Meaning	The selling of goods and services between two business entities is known as Business to Business or B2B.	The transaction in which business sells the goods and services to the consumer is called Business to Consumer or B2C.
Customer	Company	End-user
Focus on	Relationship	Product
Quantity of merchandise	Large	Small
Relationship	Supplier - Manufacturer Manufacturer - Wholesaler Wholesaler - Retailer	Retailer - Consumer
Relationship horizon	Long term	Short term
Buying and Selling cycle	Lengthy	Short
Buying Decision	Planned and Logical, based on needs.	Emotional, based on want and desire.
Creation of Brand Value	Trust and Mutual Relationship

Advantages of B2B and B2C Business Models:

1. Increased Awareness:

With over six billion Internet users across the world, it's obvious why B2B and B2C Internet marketing increases awareness of businesses and their products or services. More than that, with more B2B and B2C companies marketing themselves on the Internet, marketers are in a better position to pick up details about their competition. Additionally, with the advent of the social networking explosion, more business and consumer patrons are voicing their opinions about various products and services. This gives marketers even more empowering info about what the market is thinking – knowledge they wouldn't have if they themselves weren't using the Internet.

2. Better Interaction:

The social network explosion, in addition to email and website marketing, also gives marketers the ability to interact more directly with their customers, whether businesses or consumers. An important part of this interaction is educating customers, either as a group or as individuals. Marketing strategists at the firm, Customer Paradigm cite business authors Margaret Clark and Carol Pearson, who say that educated customers will buy more than confused ones. So whether it's marketing via email, podcasts, a website or social networks, marketers who are interactive on the Web increase their authority in the marketplace – another advantage from using the Internet.

3. Better Service:

Better education relates to better service. In the days of mom-and-pop stores, customer service usually meant the interaction we got once we walked in the store, when what we ordered was delivered to our doorstep or when we called via telephone. Now that more B2B and B2C companies are using the Internet, though, they're providing marketing websites on which customers can make contact when they have questions or concerns, and they're sending informative emails that don't merely advertise but also inform their customers with practical information. This means that customers, ideally, are getting much more robust service.

4. Refined Messaging:

The Internet has also provided marketers with more specific information about their customers, such as when they're more receptive to receiving an advertising message. Armed with this knowledge, some B2B and B2C companies use a marketing method called "right-time marketing." According to business analyst firm Garner, Inc., the statistics are too compelling to ignore: strategically timing email marketing messages will help marketers see as much as a 600 percent rise in performance over more lax messaging methods, such as email blasts and cold calling.

5. Unlimited Marketplace:

The influence of marketplaces is increasing. According to a recent survey by Amazon.com and Pymnts.com, 64% of shoppers begin their online searches on marketplaces. More customers begin their journeys at Amazon and similar platforms than perform Google searches, social media searches, or searches on their favourite retailer’s website. We can expect this trend to continue, as online marketplaces are growing at a pace of 22% per year. This is a clear signal to merchants – if organizations want their e-commerce game to reach its full potential, it is critical that they implement an online marketplace strategy.

6. Cost Minimization:

Companies report average cost savings up to 40% annually compared with providing B2B services in-house.

2. E-Business Model Based On the Relationship Of Transaction Types:

This business model is usually controlled by two parameters namely control and value Integration.

a. Based on Control: At the high end of control there is hierarchical control and at the low end, there is no control, so that it is self-organizing. Normally, the control is done through the policies of the website.

b. Based on Value Integration: Value integration is the addition of value to a product or service because of the opportunities that it offers on the Web. Based on these, nine types of transactions can be identified. Any business firm may combine one or two of these as part of its Web business strategy.  

1. Brokerage Model:

Whether a company sells products or services to consumers, other businesses, or both, there are many different ways to approach the marketplace and make a profit. Amongst many other Business models, the brokerage model is simply used to describe how companies go about this process.

They spell out the main ways in which companies make profits by identifying a company's role during commerce and describing how products, information, and other important elements are structured. Brokers are market-makers: they bring buyers and sellers together and facilitate transactions.

Major Characteristics:

a. The Price-discovery mechanism is its key-principle.
b. It is a meeting point for sellers and buyers.
c. Auctions and exchanges are the modes of transactions.
d. It is a Free-Market.
e. It consists of a global network of buyers and sellers.
f. It is a virtual market place enabled by the internet.
g. It encompasses all types of organization now.

Advantages:

a. Allows buyers and sellers to trade directly bypassing intermediaries which reduces cost for both the parties.
b. Global reach.
c. 24/7 hours trading and provides continuous up-to-date information.
d. Efficient access to information.
e. Alleviation (mitigation) of risk of anonymous trading.

Price Discovery Mechanism:

It is the process of determining the price of an asset in the marketplace through the interactions of buyers and sellers. Price discovery is a method of determining the price for a specific commodity or security through basic supply and demand factors related to the market. The basis for the brokerage model is the price discovery mechanism which includes:

i. Auction:

Many different auction formats have emerged since the first auction occurred in Babylon in about 500 B.C. Today, there are open and sealed-bid auctions. In some auctions, the auction price ascends as the auction proceeds, whereas, in other auctions, the price descends at regular intervals. There are single auctions and double auctions.

a. English Auction:

The English Auction is one of the most common auction formats which is also known as the open-outcry auction or the ascending price auction. It is frequently used for selling art, wine, and other physical goods, which do not have a limited lifetime.

The basic procedure in English Auction is in this way:

The auctioneer starts off the auction with the lowest acceptable price or the reserve price. He then receives bids from the bidders until the point from which there is no raise in the bid. At that point, the auctioneer “knocks down” the item, which indicates that the highest bidder will receive the item in exchange for the sum of money he bid for.

Sometimes, the reserve price will not be made known to the public. This may happen when the auctioneer is uncertain about the price expectation of the bidders and when he wishes the bidders to totally set the price level. As a consequence of not giving the reserve price, the item will never be sold if the highest bid is lower than the reserve price.

b. Dutch Auction:

The Dutch auction was developed in the Netherlands to auction flowers and other products with a limited life and is also known as the descending-price auction. In a Dutch auction, the opening price is set extremely high. The price then descends with a predefined amount, at predefined time intervals, until a buyer claims the product to be mine.

When many items of the same product are auctioned at the same time, many bidders may claim the product as mine at different points of time until no more items of the product is left.

This process results in different prices for different bidders, with the first person claiming the product as mine being the one who pays the highest price. Besides flowers in Holland, it has been used to sell fish in England and in Israel.

c. First-Price Sealed-Bid Auction:

The first-price sealed-bid auction has the main characteristics of not being an open-cry auction, like the English or Dutch auction, and thus the individual bids are hidden from other bidders. It has two different phases: a bidding phase, in which all the bids are collected, and a resolution phase, in which the bids are opened and the winner is determined.

During the bidding phase, each bidder submits his bid, which is based on his own valuation. The bidder is thus totally ignorant of all the other bids that have been submitted. The resolution phase works as: all the bids are opened and sorted from the highest to the lowest bid. If it is only one item that is auctioned, the highest bid will be the winning bid.

If multiple items of the same product are auctioned, the items are awarded to the highest bids until no more items are left. This is called Discriminatory Sealed-Bid Auction, since not all the bidders pay the same price. It is often used for refinancing credit and foreign exchange.

d. Vickrey Auction:

This auction was developed by William Vickrey, the winner of the 1996 Nobel Prize in Economics also called as uniformed second-price auction. In this auction, the bids are sealed and each bidder bids from his own intuitive knowledge ignorant of all the other bids.

What is different in this auction format compared to the first-price sealed-bid auction is that the winning bidder will pay the price of the second-highest bid, which is the same as the highest unsuccessful bid. Thus, the winner pays less than what he has actually bidden.

ii. Reverse Auction:

A reverse auction is a type of auction in which the roles of buyer and seller are reversed. In an ordinary auction (also known as a forward auction), buyers compete to obtain a good or service by offering increasingly higher prices. In a reverse auction, the sellers compete to obtain business from the buyer and prices will typically decrease as the sellers undercut each other.

Thus in reverse auction, sellers compete to obtain business. Example of reverse auction is Priceline.com (website launched in 1998). Priceline.com is a unique type of eCommerce known as a “demand collection system” that enables consumers to use the internet to save money on a wide range of products and services while enabling sellers to generate incremental revenue. It uses a simple and compelling consumer proposition – “name your price”

iii. Market Exchange:

A market exchange (also called simply exchange or bourse) is a highly organized market where brokers and traders buy and sell securities such as shares, commodities, currencies, futures and options. Market exchanges can be facilitated with a clearinghouse to cover defaults, or over-the-counter (OTC).

Market exchanges can be specialized, such as the global foreign exchange market or stock exchanges. The famous stock exchanges include:

a. New York Stock Exchange

b. London Stock Exchange

c. Tokyo Stock Exchange

d. Shanghai Stock Exchange

e. Frankfurt Stock Exchange (FRA)

f. Paris Stock Exchange

2. Aggregator Model:

It is an e-commerce business model where a firm (that does not produce or warehouse any item) collects (aggregates) information on goods and/or services from several competing sources at its website. They are known as Information aggregators. Based on the electronic marketplace, aggregator model bypasses distributors so as to bring sellers and buyers together.

Aggregators are involved in the overall process of selection, organization, matching the buyers’ requirement with the particulars of the available goods, fulfilment of the orders and enabling the customers to create a value about the sellers. Usually, information aggregators collect information from various sources, such as the Internet, diverse databases, company websites, and results of search engines.

There Are Different Kinds Of Aggregator Models As Follows:

a. Virtual Merchant:

This is a business that operates only from the Web and offers both traditional or Web-specific goods and services. The method of selling maybe by list price or auction.

b. Catalogue merchant:

It is the migration of mail order to a Web-based order business (e.g. Levenger)

c. Surf-And-Turf:

It is a traditional brick-and-mortar establishment with Web storefront. Brick and mortar (or B&M) in its simplest usage describes the physical presence of a building(s) or other structure. The term brick-and-mortar business is often used to refer to a company that possesses buildings, production facilities, or store for operations.

Brick and mortar is a traditional "street-side" business that deals with its customers face to face in an office or store that the business owns or rents. The local grocery store and the corner bank are examples of "brick and mortar" companies.

d. Bit Vendor:

It is a merchant that deals strictly in digital products and services, in its purest form conducts both sales and distribution over the Web.

e. Subscription Model:

In subscription model, the users pay for access to the site. High value-added content is essential (e.g. WallStreet Journal, ConsumerReports). Generic news content, viable on the news-stand, has proven less successful as a subscription model on the Web (e.g. slate).

Aggregators Can Be Of Different Types:

a. Content Aggregators:

They are among the first large-scale sites on the web and mostly represent large publishing companies. E.g. pathefinder.com. The basic challenge is that the content has to be attractive enough to make the site viable.

b. Mainstream Aggregators:

They include sites like yahoo providing a web directory and a search engine, along with a bunch of attractive tools like email services etc. The most attractive feature of these sites is that they have an ‘easy-to-remember’ URL which is one of the reasons for them to be the top traffic sites on the Web.

c. Event Aggregators:

These are sites that provide in-depth content and tools tailored to the needs of a particular group that acts clearly defined customer base. For example, mortgages–build tools, rates, advice, and the ability to purchase a mortgage online in the same place.

d. Shopping Aggregators:

They let consumers roam through hundreds of sites and catalogues and find the best price in seconds. They help consumers observe through dozens of e-commerce sites. E.g. compare.com and bizrate.com evaluate their quality on an independent basis as in the case of consumer reports.

3. Info-Mediary Model:

An organizer of the virtual community is called an information intermediary or infomediary, who helps sellers to collect, manage, and maximize the value of information about consumers. The simplest form of an infomediary model is the registration model.

In the registration model, companies require users to register before gaining access to information on their Web sites, even if the information itself is provided at no charge. Registration is a condition for viewing or downloading the articles so the company can capture contact information and other data from the interested party and use it to make sales calls and potentially acquire new clients for its consultants.

Data about consumers and their buying habits are extremely valuable, especially when that information is carefully analyzed and used to target marketing campaigns. These are information business, implying that they compete on their ability to capture and manipulate information in a manner that adds value for their clients who could be sellers or buyers.

An intermediary may offer users free Internet access (e.g. NetZero) or free hardware (e.g. eMachines.com) in exchange for detailed information about their surfing and purchasing habits.

Classification of Info-Mediaries:

a. Specialized Agents:

These intermediaries usually manage a specialized market.

b. Generic Agents:

These infomediaries maintain an open relationship with both buyers and suppliers and involve no relationship-specific investment. They create value through their comprehensive and unbiased service, often generating revenue from advertising.

c. Supplier Agents:

They are sponsored either by specific companies with a vested interest in selling their products or by close affiliation to the core group of sellers.

d. Buyer Agents:

They establish a relationship with a core set of buyers, working on their behalf and any number of suppliers. Examples: yahoo.com provides comprehensive search facilities for both suppliers and buyers. ChainDrugStore.net is the network for manufacturers, wholesalers and payers who need to analyze, understand and manage their pharmacy activity to achieve increased profitability and business efficiencies.

4. Community Model:

E-communities are formed when groups of people meet online to fulfil certain needs or serve their common interest, exchange information, share interests, trade goods and services, entertain and seek help. Several individuals or groups are encouraged to participate in the ongoing interaction of common purpose or may also bring together like-minded people to prepare new business plans.

The Communities utilize electronic tools such as forums, chat rooms, e-mail lists, message boards, and other interactive Internet mechanisms, which are usually tailored to the particular community. It comes in two basic varieties: those centred on relationships and those centered on tasks.

Relationship centred Community Model typically are informal, grassroots-oriented communities that revolve around shared interests, ideas, topics, and goals. In these communities, the development of relationships is the primary goal. To maximize member involvement, community sites must offer maximum degrees of interactivity and personalization.

E.g. GeoCities offers space and tools for members to set up their own Web sites and establish virtual communities within the broader GeoCities community.

Task-centered communities generally are more structured and impersonal. Web communities are established between business partners, between businesses and their customers, between different groups of customers, within companies, and between individuals and groups devoted to particular topics.

5. Value Chain Model:

A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. Value chain is based on the process view of organizations i.e. it is seeing a manufacturing (or service) organization as a system made up of subsystems each with inputs, transformation processes and outputs.

Inputs, transformation processes and outputs involve the acquisition and consumption of resources - money, labour, materials, equipment, buildings, land, administration and management. The goal is to develop full and continuous interaction among all members of the chain, resulting in lower inventories, higher customer satisfaction, and shorter time to the market.

It may include: Generalized Portal & Personalized Portal

1. Generalized Portal – Alta Vista as a VCM:

AltaVista Company was one of the leading knowledge resources on the Internet with strong search engine tool and patented technology. Alta Vista opened up possibilities in the internet to the richest and the most relevant information on any subject from any nook of the Web world, Web pages, shopping, live audio and video, and community resources.

AltaVista was an early web search engine. It was once one of the most popular search engines, but it lost ground to Google and was purchased by Yahoo! in 2003, which retained the brand but based all AltaVista searches on its own search engine. On July 8, 2013, the service was shut down by Yahoo! and since then, the domain redirects to Yahoo!'s own search site.

2. Personalized Portal - My Yahoo! As a VCM:

My Yahoo! is the user’s own personalized version of Yahoo! After the user gives his personal information, My Yahoo! allows him to collect all his favourite sections of Yahoo! in one place. User can customize his page. It is absolutely free. One can choose what he wants to surf, such as news, weather, stock prices, sports scores, horoscope, etc.

6. Subscription Model:

In subscription model, the organization makes money on the basis of membership/ subscription. Users are charged a periodic i.e. daily, monthly or annual fee to subscribe to a service. Subscription and advertising models are frequently combined.

Under the Subscription model:

a. ContentServices provide text, audio, or video content to users who subscribe for a fee to gain access to the service. E.g. Netflix.com

b. Person-to-Person Networking Services are methods for the distribution of user-submitted information, such as individuals searching for former schoolmates. E.g. Classmates.com

c. Trust Services come in the form of membership associations that abide by an explicit code of conduct, and in which members pay a subscription fee. E.g. Truste.com

d. Internet Services Providers offer network connectivity and related services on a monthly subscription. E.g. America Online

7. Affiliate Model:

In the affiliate (or click-through) model, an online merchant agrees to pay an affiliate in exchange for providing an advertisement and link to the merchant's site. Each sale generated as a result of a customer "clicking through" from an affiliate to the merchant results in a small commission for the affiliate.

The affiliate model requires an advertiser-the business with the product, and a publisher-the person bringing in sales. In this business model, both partners are making money, but in different ways.

For example, one can place the Priceline.com hyperlink on his/her website and any referral from an independent website to Priceline.com that results in business for Priceline.com, may receive $10 for the first time qualified user and $1 for subsequent users.

8. Manufacturer Model:

In the manufacturer or "direct model", a manufacturer (i.e., a company that creates a product or service) reaches buyers directly and thereby compress the distribution channel. The manufacturer model can be based on efficiency, improved customer service, and a better understanding of customer preferences. In this model, the manufacturer sells its products through the use of its website.

9. Advertising Model:

The Web advertising model is an extension of the traditional media broadcast model. The broadcaster, in this case, a website, provides content (usually, but not necessarily, for free) and services (like e-mail, chat, forums), together with advertising messages in the form of banner ads. The banner ads may be the major or sole source of revenue for the broadcaster.

The advertising model only works when the volume of viewer traffic is large or highly specialized. In the advertising model, a site offers free access to something and shows advertisements on every page. When a user clicks on an advertisement, he goes to an advertiser’s page. The advertiser pays the site operator for showing advertisement (eyeballs) or for every time someone clicks on the advertisement (click-through).

Users can download and use the program for free but advertisements are shown during operation or start-up of the program and usually when the user need to wait for some time-consuming operation.

For instance, if someone searches information on holidays, an advertisement is shown for a hotel chain on the page with search results.E.g. DoubleClick, which collects advertisements from many sources and arranges for placements on different sites.

Community Structure:

The internet community structures can exist in many forms as:

1. Newsletters:

Newsletters are the one-way communication in which the list server software sends the same message to an entire list of people. It handles new subscribers and also those who wish to unsubscribe.

2. Discussion Lists:

The another structure is the e-mail discussion lists in which the list server software allows a member to send a message to the list address and then sends that message to all the list members. The discussion lists can also be of three different types:

a. E-mail Discussion List: All messages from the members are forwarded to the other members as soon as they are received. The lists can also be configured so that a moderator approves a message before it is sent to the members.

b. E-mail Discussion List Digest: The digest collects all the messages sent to the list bundle them, and e-mails them in one e-mail to subscribers, either daily or when the accumulation reaches a certain size. A digest helps control the level of e-mail.

c. Moderated Discussion List Digest: Large discussion lists are eventually forced to limit the quantity and screen the quality of messages that go out of the list members. When people receive email from the discussion list, they begin to get acquainted with other list subscribers and recognize them by their comments or peculiar behaviour.

3. Bulletin Boards:

Web-based Bulletin boards have greater strength compared to the e-mail based communities. As in e-mail based communities, one of the struggles is in keeping threads (different topics of conversation) separate. If we are reading a multiple number of messages a day that are not sorted by topic though we can find subjects on emails, then things may look disjointed. While bulletin boards can:

a. Keep threads separate.

b. Allow posts to be read, searched and researched later by individuals who even may not have been part of the original conversation.

4. Chat Rooms:

Chat rooms can be a useful source of knowledge and information for any user. They provide opportunities for the users to initiate discussions, conduct interviews and share knowledge. It is, however, preferred that the chats are scheduled ahead of time so that enough people gather around for the same topic and have meaningful discussion.

Necessary Elements for the Community Model

In order to build a successful community, followings are the necessary elements:

a. A clear focus for the community that makes sense to prospective members

b. The requisite technical capability through own software and hardware of a free service

c. A proper structure, guidelines, and parameters for the discussion to keep the group on target. 

d. A moderator responsible for each group or list.

e. A clear strategy on how the community will benefit from our business.

3. Classification By Revenue Model:

A revenue model may comprise:

a. Product Sales Model that charges customers directly for the products or services they buy.

b. Subscription Model that charges a fixed monthly or annual rental for the service.

c. Transaction Fee Model that charges a service fee based on the volume and value of the transactions offered.

d. Advertising Support Model that charges advertisers instead of charging users; and

e. Sponsorship Model that provides sponsorship by companies for non-financial reasons

4. Classification By Distribution Channel:

A distribution channel may comprise:

a. Direct Marketing where manufacturers such as Dell, Nike, Lego or Sony market directly from company sites to individual customers;

b. Pure Play E-Tailors who have no physical stores, only an online sales presence. Eg-Amazon.com

c. Click-And-Mortar Retailers who are traditional retailers with a supplementary website, like walmart.com