The development in Internet technologies have enabled the companies to transactions to be conducted electronically to make e-business. Electronic business is about executing company’s business processes, over open networks, such as Internet, in order to substitute information for original handwork business transactions. The accelerating growth of e-business has initiated an increased interest to examine the transformation from traditional business models towards e-business models and their integration on the companies’ traditional business models.
So what is the definition of a business model? If you search Google you will find 459,000,000 results. I like the way Alex Osterwalder & Piqneur put simple: “A business model describes the rationale of how an organization creates, delivers and captures value”. Since this blog focuses on online marketing, I wanted make a classification of online business models in particular, which are being presented in the picture. Osterwalder’s and Piqneur’s definition applies well to online context, if you just add “through Internet” in the end 🙂 I will depict the characteristics of the models and elaborate on how such companies typically make money. I will also bring in some real life examples of companies using those models in B2B and B2C context. The very same models apply to non-profit organizations as well.
Classification of Online Business Models, adapted from Roberts’ and Zahay’s book of Internet Marketing: Integrating Online & Offline Strategies (2008).
This is just one approach to online business models. Online business models are evolving rapidly at this point and we can still see some major disruptive innovations in the e-business environment. This when we come to one of my favourite topics, business model innovation, which refers to the search for new logic of the firm and new ways to create and capture value for its stakeholders; it focuses primarily on finding new ways to generate revenues and define value propositions for customers, suppliers, and partners. Business model innovation represents a new frontier in innovation beyond just product or service innovation. Though technology is an important medium for business model innovation, it is not all about just introducing and implementing new technology, but it can be thought through any kind of reassessment and reconstruction in the organizations value creation, and hence, new business models themselves can represent a form of innovation. One way to approach business model innovation is to merge several business models together and make it a success, like many of the before mentioned companies, such as Amazon have already done.