Investigating models of e-business

BY ARA Retail Institute
31 December 2020

Different organisations and individuals will choose to use various forms of e-business. Some businesses will only use email for communication and don't require a website, whereas others will operate almost entirely online.

There are several successful business models that you should consider when determining what level of e-business is right for your individual circumstances.

An important point that you need to consider is the difference between operating an e-business and using a website to promote your traditional business. An e-business model maintains that revenue is generated as a direct result of operating some part of the business online, as opposed to just using the internet as a promotional method.

A business model is a specific method of conducting business that generates enough revenue to sustain a business successfully. Many electronic business models are based on profitable traditional business models while being adapted slightly for the online environment.

Electronic business models often take the form of direct sales, services, advertising, or the sharing of knowledge and skills, but many electronic businesses use a mix of models to get the best results from fastmoving consumer desires.

Remember that none of the following e-business models have to be used exclusively; you can use them in addition to an existing traditional business model.

Direct Sales

Direct Sales is an electronic business model that involves selling products through a website or online marketplace such as eBay.Retail-style shopping websites can be programmed to process orders 24 hours a day without physical sales or service staff. Some retail websites package and ship orders during regular business hours from their own warehouses while others outsource fulfilment to a third party in a drop-shipping arrangement. The retail business model also works well for digital goods such as electronic books or software as fulfilment is provided automatically through a website download.

Services

Service-based electronic business models include freelance writing, research, and fact-checking, website design, video production, customer service, reminder services, and virtual assistants. Service-based business models are ideal in an electronic environment because communication can be facilitated through email or instant messaging services, and the services can be rendered through those same mediums or an electronic work desk on a corporate website.

Advertising

Advertising is a flexible electronic business model that can be executed in several ways. Businesses can choose to be an online publisher of free content, for example, and sell advertising space on or within their content similar to what traditional magazines and newspapers do. According to Digital Enterprise, the online publishing model opens up subscription revenue options because companies can charge fees to access some or all of the content they produce.

Affiliate marketing is another type of advertising business model frequently used online. Businesses recommend or mention specific products related to their content and if readers purchase products through the links provided, the business earns commissions from each sale.

Knowledge

Knowledge-based electronic business models often involve consulting, mentoring, or teaching through an online website, chat service or email. Some consultants and mentors offer private individual sessions with their clients through email or Internet telephones, while others share their knowledge and training through teleconferences or discussion boards. Knowledge-based businesses commonly deliver much of their materials automatically through pre-recorded videos and audios, and written documentation that can be accessed for a fee through a private membership website.

Peter Drucker, renowned management consultant and author forwards the view that “every organisation, whether a business or not, has a theory of the business.” This theory is made up of “assumptions that shape [the] organisation’s behaviour, dictate its decisions about what to do and what not to do, and define what the organisation considers meaningful results.”

E-business presents all businesses with new threats and opportunities, and consequently, a need to reconsider their existing assumptions about their customers, products, markets, and business in general. In effect, the advent of the Internet and e-business make it useful to re-consider your “theory of the business.” The concept of the “theory of the business” appears to have merged with this contemporary discussion of “business models,” particularly in e-business contexts. The use of this terminology cuts across both e-business and traditional business thinking.

Ultimately, a business model is an integrated story that explains how the people in business understand and communicate the nature of that business. If there is a significant gap or unknown in the “business model,” then there may be a parallel gap (and, therefore, risk, problem, or opportunity) in the business.

There is nothing especially new or magical about e-commerce. The main thing to understand is that technology has shifted and created a significant gap in people’s story of their business (i.e. business model); e-commerce has created areas of risk, potential problems, and opportunities for businesses.

Want to learn more about e-business models? The ARA Retail Institute hosts a range of accredited and non-accredited workshops on business, retail and merchandise planning. Click on the link below to find the perfect workshop for you and your employees.

TRAINING WORKSHOPS

 

About ARA Retail Institute

ARA Retail Institute is Australia’s leading retail training provider for both accredited and non-accredited learning programs. For more information, please visit: www.retailinstitute.org.au

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ABOUT THE AUTHOR

ARA Retail Institute

ARA Retail Institute is Australia’s leading retail training provider for both accredited and non-accredited learning programs. The ARA Retail Institute is a Government Registered Training Organisation (RTO) making it fully qualified to offer retail education programs to ARA members and broader retail industry.

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