Unit 2 Electronic-Commerce Business Models.pptx
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Sep 01, 2025
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About This Presentation
E-Commerce Study Material for BIT
Slide Content
Unit 2:
•E-commerce Business Models
•E-commerce Business Models
Business model
•A business model serves as the blueprint for how a company operates and
thrives in the marketplace.
•It encompasses essential components that collectively define the
organization's strategy and approach.
•At its core, the business model outlines the value proposition, articulating
the unique benefits a product or service offers to its intended customers.
•Identifying and understanding the target customer segments is crucial, as is
determining the distribution channels that efficiently deliver the offering.
•Revenue streams, comprising the ways the company generates income, and
the associated cost structure are pivotal elements.
•Additionally, the business model addresses key resources, activities,
customer relationships, and partnerships that contribute to its success.
•A business model serves as the blueprint for how a company operates and
thrives in the marketplace.
•It encompasses essential components that collectively define the
organization's strategy and approach.
•At its core, the business model outlines the value proposition, articulating
the unique benefits a product or service offers to its intended customers.
•Identifying and understanding the target customer segments is crucial, as is
determining the distribution channels that efficiently deliver the offering.
•Revenue streams, comprising the ways the company generates income, and
the associated cost structure are pivotal elements.
•Additionally, the business model addresses key resources, activities,
customer relationships, and partnerships that contribute to its success.
•A business model serves as a strategic blueprint for a firm, outlining
how it runs and provides unique value to customers.
•Important elements are the value proposition, client groups,
distribution methods, income streams, and cost structure.
•Successful business models result in increased customer satisfaction,
financial resilience, agility, and a sustainable competitive edge.
•Business models include e-commerce, subscription, freemium,
franchise, and business-to-business.
•Companies like Amazon, Netflix, Uber, and Apple demonstrate
different and inventive approaches to business model design.
how it runs and provides unique value to customers.
•Important elements are the value proposition, client groups,
distribution methods, income streams, and cost structure.
•Successful business models result in increased customer satisfaction,
financial resilience, agility, and a sustainable competitive edge.
•Business models include e-commerce, subscription, freemium,
franchise, and business-to-business.
•Companies like Amazon, Netflix, Uber, and Apple demonstrate
different and inventive approaches to business model design.
Key elements of Business Model
1. Value Proposition:
•At the core of any business model is the value proposition, which articulates
the unique value a product or service provides to customers.
• This component encapsulates the key features and benefits that distinguish the
offering from competitors, addressing the specific needs or problems of the
target market.
•What unique benefit do you offer to your customers?
•Example:
•Amazon offers a wide range of products at competitive prices with fast
delivery, saving time and money for customers.
•Netflix provides unlimited streaming of movies and series anytime, anywhere,
with personalized recommendations.
1. Value Proposition:
•At the core of any business model is the value proposition, which articulates
the unique value a product or service provides to customers.
• This component encapsulates the key features and benefits that distinguish the
offering from competitors, addressing the specific needs or problems of the
target market.
•What unique benefit do you offer to your customers?
•Example:
•Amazon offers a wide range of products at competitive prices with fast
delivery, saving time and money for customers.
•Netflix provides unlimited streaming of movies and series anytime, anywhere,
with personalized recommendations.
Key elements of Business Model
2. Customer Segments:
•Identifying and understanding the target customer segments is crucial for a
business model.
•This involves delineating the demographics, behaviors, and preferences of the
customers the business aims to serve, ensuring a precise alignment between
the product or service and the intended audience.
•Who are your target customers?
•Example:
•Nike’s e-commerce site targets fitness enthusiasts, athletes, and
fashion-conscious individuals.
•Alibaba targets businesses looking for bulk and wholesale goods.
2. Customer Segments:
•Identifying and understanding the target customer segments is crucial for a
business model.
•This involves delineating the demographics, behaviors, and preferences of the
customers the business aims to serve, ensuring a precise alignment between
the product or service and the intended audience.
•Who are your target customers?
•Example:
•Nike’s e-commerce site targets fitness enthusiasts, athletes, and
fashion-conscious individuals.
•Alibaba targets businesses looking for bulk and wholesale goods.
Key elements of Business Model
3. Channels:
•The channels component focuses on how the business reaches and interacts
with its customers to deliver the value proposition.
•This can include various distribution channels, sales channels, and
communication platforms that facilitate effective engagement and transactions.
•How do you deliver your product or service to customers?
•Example:
•Zara sells via its online store, mobile app, and social media (Instagram ads),
alongside physical stores.
•Spotify uses web, mobile apps, email newsletters, and social media to reach
and serve customers.
3. Channels:
•The channels component focuses on how the business reaches and interacts
with its customers to deliver the value proposition.
•This can include various distribution channels, sales channels, and
communication platforms that facilitate effective engagement and transactions.
•How do you deliver your product or service to customers?
•Example:
•Zara sells via its online store, mobile app, and social media (Instagram ads),
alongside physical stores.
•Spotify uses web, mobile apps, email newsletters, and social media to reach
and serve customers.
Key elements of Business Model
4. Customer Relationships:
•Establishing and maintaining positive customer relationships is a key
component.
•It involves determining the type of interaction and support customers receive,
ranging from personalized services to automated systems, to ensure
satisfaction, loyalty, and repeat business.
•How do you interact with and retain customers?
•Example
•Amazon uses personalized recommendations, 24/7 support, and easy return
policies to build strong relationships.
•Etsy allows sellers to directly message buyers, creating a personalized and
trust-based shopping experience.
4. Customer Relationships:
•Establishing and maintaining positive customer relationships is a key
component.
•It involves determining the type of interaction and support customers receive,
ranging from personalized services to automated systems, to ensure
satisfaction, loyalty, and repeat business.
•How do you interact with and retain customers?
•Example
•Amazon uses personalized recommendations, 24/7 support, and easy return
policies to build strong relationships.
•Etsy allows sellers to directly message buyers, creating a personalized and
trust-based shopping experience.
Key elements of Business Model
5. Revenue Streams:
•The revenue streams component outlines how the business generate income.
•It involves defining the pricing strategy, sales models, and sources of revenue,
whether through direct sales, subscriptions, licensing, or other means, ensuring
a sustainable and profitable financial model.
•How does the business make money?
•Example
•Amazon earns through product sales, Prime subscriptions, AWS (cloud
services), and advertising.
•YouTube (Google) generates revenue through ads, premium subscriptions, and
channel memberships.
5. Revenue Streams:
•The revenue streams component outlines how the business generate income.
•It involves defining the pricing strategy, sales models, and sources of revenue,
whether through direct sales, subscriptions, licensing, or other means, ensuring
a sustainable and profitable financial model.
•How does the business make money?
•Example
•Amazon earns through product sales, Prime subscriptions, AWS (cloud
services), and advertising.
•YouTube (Google) generates revenue through ads, premium subscriptions, and
channel memberships.
Key elements of Business Model
6. Key Resources:
•Key resources encompass the critical assets required for the business to
operate successfully.
•These resources can include human capital, financial investments, technology,
intellectual property, and physical infrastructure, among others.
•What assets are essential for your business to operate?
•Example
•Amazon relies on advanced logistics infrastructure, cloud technology (AWS),
and a massive product database.
•Shopify depends on software developers, its e-commerce platform, data
centers, and payment processing systems.
6. Key Resources:
•Key resources encompass the critical assets required for the business to
operate successfully.
•These resources can include human capital, financial investments, technology,
intellectual property, and physical infrastructure, among others.
•What assets are essential for your business to operate?
•Example
•Amazon relies on advanced logistics infrastructure, cloud technology (AWS),
and a massive product database.
•Shopify depends on software developers, its e-commerce platform, data
centers, and payment processing systems.
Key elements of Business Model
7. Key Activities:
•This component identifies the essential tasks and processes that the business
must perform to deliver its value proposition.
•It includes production processes, marketing activities, distribution logistics,
and any other core functions critical for the business's operations.
•What are the core actions your business must take to succeed?
•Example
•Flipkart focuses on inventory management, logistics, customer service, and
platform maintenance.
•Uber Eats handles order routing, partner onboarding, delivery tracking, and
customer communication.
7. Key Activities:
•This component identifies the essential tasks and processes that the business
must perform to deliver its value proposition.
•It includes production processes, marketing activities, distribution logistics,
and any other core functions critical for the business's operations.
•What are the core actions your business must take to succeed?
•Example
•Flipkart focuses on inventory management, logistics, customer service, and
platform maintenance.
•Uber Eats handles order routing, partner onboarding, delivery tracking, and
customer communication.
Key elements of Business Model
8. Key Partnerships:
•In some cases, businesses rely on external partnerships or collaborations to
enhance their capabilities and reach.
•This component involves identifying and managing relationships with key
partners, suppliers, distributors, or other entities crucial for the business's
success.
•Who are your external partners that help your business succeed?
•Example
•Amazon partners with third-party sellers, delivery companies, and
manufacturers.
•Airbnb partners with payment gateways, local authorities, and cleaning
service providers
8. Key Partnerships:
•In some cases, businesses rely on external partnerships or collaborations to
enhance their capabilities and reach.
•This component involves identifying and managing relationships with key
partners, suppliers, distributors, or other entities crucial for the business's
success.
•Who are your external partners that help your business succeed?
•Example
•Amazon partners with third-party sellers, delivery companies, and
manufacturers.
•Airbnb partners with payment gateways, local authorities, and cleaning
service providers
Key elements of Business Model
9. Cost Structure:
•Understanding the cost structure is vital for managing the financial health of
the business. T
•his component involves analyzing and managing the major costs and expenses
associated with the key activities, resources, and partnerships to ensure
efficiency and profitability.
•What are the major costs involved in operating the business?
•Example
•Amazon incurs costs for warehousing, delivery logistics, tech infrastructure,
employee salaries, and marketing.
•Netflix has major costs in content licensing, content production, and
technology infrastructure.
9. Cost Structure:
•Understanding the cost structure is vital for managing the financial health of
the business. T
•his component involves analyzing and managing the major costs and expenses
associated with the key activities, resources, and partnerships to ensure
efficiency and profitability.
•What are the major costs involved in operating the business?
•Example
•Amazon incurs costs for warehousing, delivery logistics, tech infrastructure,
employee salaries, and marketing.
•Netflix has major costs in content licensing, content production, and
technology infrastructure.
Raising Capital for Business Model
•Starting an e-commerce business requires thorough planning, and one of
the most critical aspects is securing adequate capital.
•Capital is essential for starting and running an e-commerce business, as it
covers both initial and ongoing expenses.
•Fixed costs like rent and web hosting, and variable costs like marketing and
inventory, must be planned and funded properly.
•Initial spending on website design, software, advertising, and staffing can be
significant and requires sufficient capital.
•Funding can come from loans, venture capital, or crowd funding, each with
its own pros and cons that must be considered.
•Access to capital enables quick responses to opportunities, helping the
business grow and succeed over time.
•Starting an e-commerce business requires thorough planning, and one of
the most critical aspects is securing adequate capital.
•Capital is essential for starting and running an e-commerce business, as it
covers both initial and ongoing expenses.
•Fixed costs like rent and web hosting, and variable costs like marketing and
inventory, must be planned and funded properly.
•Initial spending on website design, software, advertising, and staffing can be
significant and requires sufficient capital.
•Funding can come from loans, venture capital, or crowd funding, each with
its own pros and cons that must be considered.
•Access to capital enables quick responses to opportunities, helping the
business grow and succeed over time.
Seed Capital
•It is the first official funding stage of a startup. It is typically used to
turn an idea into a viable product or business.
•This money often comes from the founder’s own savings or from close
friends and family.
•The funds are usually small in amount but are crucial for covering
early-stage costs such as product research, prototype development,
market analysis, and basic operations.
•Seed capital is often considered high risk by investors, so it’s usually
provided by those who trust the founder personally.
•It is the first official funding stage of a startup. It is typically used to
turn an idea into a viable product or business.
•This money often comes from the founder’s own savings or from close
friends and family.
•The funds are usually small in amount but are crucial for covering
early-stage costs such as product research, prototype development,
market analysis, and basic operations.
•Seed capital is often considered high risk by investors, so it’s usually
provided by those who trust the founder personally.
Elevator Pitch
•An elevator pitch is a short, impactful presentation of your business
idea—ideally under a minute.
•It’s called an "elevator pitch" because it should be brief enough to
deliver during an elevator ride.
•A good pitch explains what the business does, what problem it solves,
who the target market is, and why it's unique or better than
competitors.
•A strong elevator pitch is critical when approaching potential
investors, as it can capture their attention and lead to deeper
discussions or meetings.
•An elevator pitch is a short, impactful presentation of your business
idea—ideally under a minute.
•It’s called an "elevator pitch" because it should be brief enough to
deliver during an elevator ride.
•A good pitch explains what the business does, what problem it solves,
who the target market is, and why it's unique or better than
competitors.
•A strong elevator pitch is critical when approaching potential
investors, as it can capture their attention and lead to deeper
discussions or meetings.
Incubators
•Business incubators are organizations or programs that support new
and early-stage startups by offering essential services such as office
space, mentoring, legal guidance, technical support, and sometimes
even initial funding.
•Startups usually apply to join incubators, and those selected receive
guidance to improve their business models and prepare for future
funding rounds.
•Incubators are especially helpful for entrepreneurs with limited
business experience, as they offer structured support and access to
networks of advisors and investors.
•Business incubators are organizations or programs that support new
and early-stage startups by offering essential services such as office
space, mentoring, legal guidance, technical support, and sometimes
even initial funding.
•Startups usually apply to join incubators, and those selected receive
guidance to improve their business models and prepare for future
funding rounds.
•Incubators are especially helpful for entrepreneurs with limited
business experience, as they offer structured support and access to
networks of advisors and investors.
Venture Capital Investors
•Venture capital (VC) firms provide significant amounts of funding to
startups that show high growth potential.
•Unlike angel investors, VC investors usually come in during the
growth stage when the business has some proven traction (like user
growth or revenue).
•In return for funding, they take equity and often a seat on the
company’s board.
•Venture capital is suitable for startups aiming to scale quickly and
enter larger markets, but it comes with expectations for rapid growth
and a strong return on investment.
•Venture capital (VC) firms provide significant amounts of funding to
startups that show high growth potential.
•Unlike angel investors, VC investors usually come in during the
growth stage when the business has some proven traction (like user
growth or revenue).
•In return for funding, they take equity and often a seat on the
company’s board.
•Venture capital is suitable for startups aiming to scale quickly and
enter larger markets, but it comes with expectations for rapid growth
and a strong return on investment.
Crowdfunding
•Crowdfunding involves raising small amounts of capital from a large
number of people, usually via online platforms like Kickstarter,
Indiegogo, or GoFundMe.
•It allows entrepreneurs to showcase their ideas directly to the public
and gather funds from supporters who believe in the concept.
•There are different types of crowdfunding:
•Reward-based (backers receive a product or gift),
•Equity-based (investors receive shares),
•Donation-based (no return expected).
•Crowdfunding not only raises funds but also helps validate the
business idea and build an early customer base.
•Crowdfunding involves raising small amounts of capital from a large
number of people, usually via online platforms like Kickstarter,
Indiegogo, or GoFundMe.
•It allows entrepreneurs to showcase their ideas directly to the public
and gather funds from supporters who believe in the concept.
•There are different types of crowdfunding:
•Reward-based (backers receive a product or gift),
•Equity-based (investors receive shares),
•Donation-based (no return expected).
•Crowdfunding not only raises funds but also helps validate the
business idea and build an early customer base.
Angel Investors
•Angel investors are wealthy individuals who provide funding to
startups in exchange for equity (ownership shares).
•They often invest in the early stages of a business, sometimes even
before the company has significant revenue.
•Aside from capital, angel investors bring industry experience,
mentorship, and business connections.
•They are typically more flexible and willing to take risks than
traditional lenders, but they also expect a high return on their
investment over time.
•Angel investors are wealthy individuals who provide funding to
startups in exchange for equity (ownership shares).
•They often invest in the early stages of a business, sometimes even
before the company has significant revenue.
•Aside from capital, angel investors bring industry experience,
mentorship, and business connections.
•They are typically more flexible and willing to take risks than
traditional lenders, but they also expect a high return on their
investment over time.
B2C BUSINESS MODEL
•The term business-to-consumer (B2C) refers to the process of selling
products and services directly between a business and consumers
who are the end-users of its products or services. Most companies
that sell directly to consumers can be referred to as B2C companies.
•B2C became immensely popular during the dotcom boom of the late
1990s when it was mainly used to refer to online retailers who sold
products and services to consumers through the internet.
•As a business model, business-to-consumer differs significantly from
the business-to-business (B2B) model, which refers to commerce
between two or more businesses.
•The term business-to-consumer (B2C) refers to the process of selling
products and services directly between a business and consumers
who are the end-users of its products or services. Most companies
that sell directly to consumers can be referred to as B2C companies.
•B2C became immensely popular during the dotcom boom of the late
1990s when it was mainly used to refer to online retailers who sold
products and services to consumers through the internet.
•As a business model, business-to-consumer differs significantly from
the business-to-business (B2B) model, which refers to commerce
between two or more businesses.
KEY FEATURES
•Business-to-consumer refers to the process of businesses selling
products and services directly to consumers, with no middle person.
•B2C typically refers to online retailers who sell products and services
to consumers through the internet.
•Online B2C became a threat to traditional retailers, who profited from
adding a markup to the price.
•However, companies like Amazon, eBay, and Priceline have thrived,
ultimately becoming industry disruptors.
•Business-to-consumer refers to the process of businesses selling
products and services directly to consumers, with no middle person.
•B2C typically refers to online retailers who sell products and services
to consumers through the internet.
•Online B2C became a threat to traditional retailers, who profited from
adding a markup to the price.
•However, companies like Amazon, eBay, and Priceline have thrived,
ultimately becoming industry disruptors.
Process of B2C business
1. Identify Target Market
•Understand the needs, preferences, and demographics of individual
consumers.
•Conduct market research to define the ideal customer profile.
2. Develop Products or Services
•Create offerings tailored to the target audience’s needs or desires.
•Focus on value, quality, and usability to stand out in a competitive market.
1. Identify Target Market
•Understand the needs, preferences, and demographics of individual
consumers.
•Conduct market research to define the ideal customer profile.
2. Develop Products or Services
•Create offerings tailored to the target audience’s needs or desires.
•Focus on value, quality, and usability to stand out in a competitive market.
Process of B2C business
3. Set Up Sales Channels
•Establish platforms for transactions, such as:
•Physical stores for in-person purchases.
•Online e-commerce websites or apps.
•Third-party marketplaces (e.g., Amazon, Etsy).
4. Implement Marketing Strategies
•Use consumer-centric marketing to drive awareness and interest, including:
•Digital advertising (e.g., Google Ads, social media).
•Content marketing (e.g., blogs, videos).
•Promotions and discounts.
5. Facilitate Purchase Process
•Ensure an easy and seamless buying experience:
•Simplify website navigation and checkout.
•Offer multiple payment options.
•Provide detailed product descriptions and images.
3. Set Up Sales Channels
•Establish platforms for transactions, such as:
•Physical stores for in-person purchases.
•Online e-commerce websites or apps.
•Third-party marketplaces (e.g., Amazon, Etsy).
4. Implement Marketing Strategies
•Use consumer-centric marketing to drive awareness and interest, including:
•Digital advertising (e.g., Google Ads, social media).
•Content marketing (e.g., blogs, videos).
•Promotions and discounts.
5. Facilitate Purchase Process
•Ensure an easy and seamless buying experience:
•Simplify website navigation and checkout.
•Offer multiple payment options.
•Provide detailed product descriptions and images.
Process of B2C business
6. Deliver Products or Services
•Fulfill the order efficiently through:
•Shipping or delivery for online purchases.
•Immediate service provision for digital or physical transactions.
7. Customer Support and Engagement
•Provide post-purchase support (e.g., refunds, exchanges, help desks).
•Engage with customers through feedback, loyalty programs, and personalized
communication.
8. Build Loyalty and Retention
•Foster repeat business through:
•Exceptional service quality.
•Email marketing, subscription models, or reward systems.
•Regular updates about new products, services, or offers.
6. Deliver Products or Services
•Fulfill the order efficiently through:
•Shipping or delivery for online purchases.
•Immediate service provision for digital or physical transactions.
7. Customer Support and Engagement
•Provide post-purchase support (e.g., refunds, exchanges, help desks).
•Engage with customers through feedback, loyalty programs, and personalized
communication.
8. Build Loyalty and Retention
•Foster repeat business through:
•Exceptional service quality.
•Email marketing, subscription models, or reward systems.
•Regular updates about new products, services, or offers.
B2C MODELS
•E-tailer
•Community Provider
•Content Provider
•Portal
•Transaction Broker
•Market Creator
•Service Provider
•E-tailer
•Community Provider
•Content Provider
•Portal
•Transaction Broker
•Market Creator
•Service Provider
E-tailer (Electronic Retailer)
•An E-tailer is a business that sells goods or services directly to consumers
through an online platform. This is one of the most common forms of B2C
e-commerce.
•E-tailers operate virtual storefronts where customers can browse products,
read reviews, compare prices, and complete purchases using digital payment
methods.
•These businesses can sell a wide range of products, from electronics and
clothes to groceries and digital goods.
•They typically handle everything from inventory management to order
fulfillment and logistics.
•E-tailers benefit from lower overhead costs compared to physical stores but
face challenges in delivery logistics, customer service, and competition.
•Major examples include Amazon, Flipkart, Daraz, and Alibaba.
•An E-tailer is a business that sells goods or services directly to consumers
through an online platform. This is one of the most common forms of B2C
e-commerce.
•E-tailers operate virtual storefronts where customers can browse products,
read reviews, compare prices, and complete purchases using digital payment
methods.
•These businesses can sell a wide range of products, from electronics and
clothes to groceries and digital goods.
•They typically handle everything from inventory management to order
fulfillment and logistics.
•E-tailers benefit from lower overhead costs compared to physical stores but
face challenges in delivery logistics, customer service, and competition.
•Major examples include Amazon, Flipkart, Daraz, and Alibaba.
Community Provider
•Community providers are platforms that facilitate online communities where
individuals with shared interests, professions, or goals can connect, interact, and
engage.
•These platforms are built around social interaction, allowing users to create
profiles, post content, comment, share, and build networks.
•Community providers often depend on user-generated content to keep the platform
active and engaging.
•Their business model generally revolves around advertising, premium
memberships, and sometimes data analytics.
•Success in this model depends on network effects — the value of the platform
increases as more users join and participate.
•Examples include Facebook, Reddit, LinkedIn, and Discord. These platforms have
become essential for social networking, professional development, knowledge
sharing, and support communities.
•Community providers are platforms that facilitate online communities where
individuals with shared interests, professions, or goals can connect, interact, and
engage.
•These platforms are built around social interaction, allowing users to create
profiles, post content, comment, share, and build networks.
•Community providers often depend on user-generated content to keep the platform
active and engaging.
•Their business model generally revolves around advertising, premium
memberships, and sometimes data analytics.
•Success in this model depends on network effects — the value of the platform
increases as more users join and participate.
•Examples include Facebook, Reddit, LinkedIn, and Discord. These platforms have
become essential for social networking, professional development, knowledge
sharing, and support communities.
Content Provider
•Content providers deliver digital content such as news articles, videos,
music, e-books, educational courses, and more.
•These businesses focus on the creation, curation, aggregation, and
distribution of valuable digital media.
•Consumers access this content for entertainment, education, or information.
Content can be free, ad-supported, or available through paid subscriptions.
•Some content providers also offer personalized content recommendations
using AI and machine learning to improve user experience. High-quality and
original content is key to success in this model.
•Examples include Netflix for streaming films and series, YouTube for videos
(both user-generated and professional), Spotify for music and podcasts, and
The New York Times for news and journalism.
•Content providers deliver digital content such as news articles, videos,
music, e-books, educational courses, and more.
•These businesses focus on the creation, curation, aggregation, and
distribution of valuable digital media.
•Consumers access this content for entertainment, education, or information.
Content can be free, ad-supported, or available through paid subscriptions.
•Some content providers also offer personalized content recommendations
using AI and machine learning to improve user experience. High-quality and
original content is key to success in this model.
•Examples include Netflix for streaming films and series, YouTube for videos
(both user-generated and professional), Spotify for music and podcasts, and
The New York Times for news and journalism.
Portal
•Portals serve as large entry points to the internet, offering a wide array of
content and services all in one place.
•They are designed to be the user's homepage or starting point when
browsing online. Portals typically offer access to email services, news
updates, search engines, weather forecasts, financial tools, and more.
•Their goal is to retain users by keeping them within their ecosystem for as
long as possible. Revenue is primarily earned through display advertising,
affiliate links, and partnerships.
•Portals were especially popular in the early days of the internet and still hold
significance due to their comprehensive service offerings.
•Examples include Yahoo!, MSN, and AOL.
•Portals serve as large entry points to the internet, offering a wide array of
content and services all in one place.
•They are designed to be the user's homepage or starting point when
browsing online. Portals typically offer access to email services, news
updates, search engines, weather forecasts, financial tools, and more.
•Their goal is to retain users by keeping them within their ecosystem for as
long as possible. Revenue is primarily earned through display advertising,
affiliate links, and partnerships.
•Portals were especially popular in the early days of the internet and still hold
significance due to their comprehensive service offerings.
•Examples include Yahoo!, MSN, and AOL.
Transaction Broker
•A transaction broker is a business that facilitates online transactions between
buyers and sellers or service providers.
•These platforms streamline the process of completing complex transactions
such as booking flights, purchasing real estate, or trading stocks.
•Transaction brokers save users time and effort by consolidating options,
comparing prices, handling paperwork, and securing payments.
•They generate revenue through transaction fees, commissions, or service
charges. Trust, security, and speed are critical in this model.
•Examples include Expedia (for booking travel and accommodation),
E*TRADE and Robinhood (for online stock trading), and PayPal (for digital
payments and transfers).
•A transaction broker is a business that facilitates online transactions between
buyers and sellers or service providers.
•These platforms streamline the process of completing complex transactions
such as booking flights, purchasing real estate, or trading stocks.
•Transaction brokers save users time and effort by consolidating options,
comparing prices, handling paperwork, and securing payments.
•They generate revenue through transaction fees, commissions, or service
charges. Trust, security, and speed are critical in this model.
•Examples include Expedia (for booking travel and accommodation),
E*TRADE and Robinhood (for online stock trading), and PayPal (for digital
payments and transfers).
Market Creator
•Market creators build and manage digital platforms where multiple buyers
and sellers can conduct business.
•These platforms do not own the products or services sold; instead, they
provide the infrastructure that enables peer-to-peer or business-to-consumer
transactions.
•Market creators typically offer features such as product listings, customer
reviews, payment systems, dispute resolution, and seller support.
•They generate revenue through listing fees, commission on sales, and
optional premium services.
•These platforms rely heavily on trust, user feedback, and the overall quality
of the marketplace environment.
•Examples include eBay (for auctions and used goods), Etsy (for handmade
and vintage items), and Fiverr (for freelance services).
•Market creators build and manage digital platforms where multiple buyers
and sellers can conduct business.
•These platforms do not own the products or services sold; instead, they
provide the infrastructure that enables peer-to-peer or business-to-consumer
transactions.
•Market creators typically offer features such as product listings, customer
reviews, payment systems, dispute resolution, and seller support.
•They generate revenue through listing fees, commission on sales, and
optional premium services.
•These platforms rely heavily on trust, user feedback, and the overall quality
of the marketplace environment.
•Examples include eBay (for auctions and used goods), Etsy (for handmade
and vintage items), and Fiverr (for freelance services).
Service Provider
•Service providers offer value-added online services that consumers can
access directly over the internet.
•These services range from cloud storage, video confer
•encing, online education, graphic design tools, to writing assistants. Many
service providers use a freemium model, where the basic version of the
service is free and advanced features require payment. Others charge
monthly or annual subscriptions.
•The success of service providers depends on the reliability, usability,
scalability, and uniqueness of the services they offer. Often these services
are delivered as Software-as-a-Service (SaaS).
•Examples include Google Workspace (productivity tools like Gmail, Docs,
Drive), Zoom (video conferencing), Canva (graphic design), and Grammarly
(writing assistant).
•Service providers offer value-added online services that consumers can
access directly over the internet.
•These services range from cloud storage, video confer
•encing, online education, graphic design tools, to writing assistants. Many
service providers use a freemium model, where the basic version of the
service is free and advanced features require payment. Others charge
monthly or annual subscriptions.
•The success of service providers depends on the reliability, usability,
scalability, and uniqueness of the services they offer. Often these services
are delivered as Software-as-a-Service (SaaS).
•Examples include Google Workspace (productivity tools like Gmail, Docs,
Drive), Zoom (video conferencing), Canva (graphic design), and Grammarly
(writing assistant).
B2B ecommerce business model
•B2B ecommerce is the process of marketing and selling products between two businesses
online.
•The goal is simple: expand customer reach and reduce cost-to-serve to drive more revenue for your
business.
•Business-to-business (or B2B) refers to selling products and services directly between two
businesses.
•As a business model, B2B differs significantly from B2C, where businesses sell directly to
consumers. B2B ecommerce involves transactions between a manufacturer and wholesaler, or a
wholesaler and a retailer, through an online sales portal.
•Innovation and technology from B2B ecommerce platforms have helped drive the movement.
•B2B business traditionally involved labor-intensive, manual sales and marketing processes.
•The introduction of digital commerce helps these businesses reduce costs and improve efficiency
through ecommerce automation.
•B2B ecommerce is the process of marketing and selling products between two businesses
online.
•The goal is simple: expand customer reach and reduce cost-to-serve to drive more revenue for your
business.
•Business-to-business (or B2B) refers to selling products and services directly between two
businesses.
•As a business model, B2B differs significantly from B2C, where businesses sell directly to
consumers. B2B ecommerce involves transactions between a manufacturer and wholesaler, or a
wholesaler and a retailer, through an online sales portal.
•Innovation and technology from B2B ecommerce platforms have helped drive the movement.
•B2B business traditionally involved labor-intensive, manual sales and marketing processes.
•The introduction of digital commerce helps these businesses reduce costs and improve efficiency
through ecommerce automation.
•B2B sellers work with:
•Wholesalers
•Large retailers
•Organizations such as schools or nonprofits
•Resellers
•Buyers and sellers can now meet in one digital home, placing and
managing orders from their mobile phones and creating new
opportunities for businesses to connect with distributors and suppliers.
•Wholesalers
•Large retailers
•Organizations such as schools or nonprofits
•Resellers
•Buyers and sellers can now meet in one digital home, placing and
managing orders from their mobile phones and creating new
opportunities for businesses to connect with distributors and suppliers.
Stages of a B2B business
•Startup
•Think of the startup phase as the spark phase where all ideas are fair game.
At this stage, you’ve gone through the ideation process and have made a
firm choice to start your B2B ecommerce business. You’re testing the
market by picking an idea, bringing it to life, and getting those first few
sales in.
•The startup stage is the feedback stage. As you make sales (or fail to) and
take in market feedback, this is the perfect time to be nimble and readjust to
meet market demand.
•There are several relevant key goals during the startup phase, including:
•Validating your minimum viable product through sales
•Ensuring your startup idea solves a problem and offers value
•Figuring out your total addressable market (TAM)
•Creating brand awareness
•Startup
•Think of the startup phase as the spark phase where all ideas are fair game.
At this stage, you’ve gone through the ideation process and have made a
firm choice to start your B2B ecommerce business. You’re testing the
market by picking an idea, bringing it to life, and getting those first few
sales in.
•The startup stage is the feedback stage. As you make sales (or fail to) and
take in market feedback, this is the perfect time to be nimble and readjust to
meet market demand.
•There are several relevant key goals during the startup phase, including:
•Validating your minimum viable product through sales
•Ensuring your startup idea solves a problem and offers value
•Figuring out your total addressable market (TAM)
•Creating brand awareness
•Growth
•At the growth stage, a few things are starting to come together for you. Your
sales are increasing, they’re more predictable, and new customers discover
you daily.
•Here’s where you may start getting some room to experiment with offers,
possible partnerships, and the chance to reinvest in the highest ROI areas of
the business. The growth stage also means you’re constantly revisiting your
systems, how you deal with supply chains, and reimagining your approach
to operations.
•Some goals at the growth stage are:
•Seeking additional investor funding if that’s part of your growth strategy
•Hiring key employees
•Continuing to build supplier relationships
•Experimenting with B2B marketing tactics
•At the growth stage, a few things are starting to come together for you. Your
sales are increasing, they’re more predictable, and new customers discover
you daily.
•Here’s where you may start getting some room to experiment with offers,
possible partnerships, and the chance to reinvest in the highest ROI areas of
the business. The growth stage also means you’re constantly revisiting your
systems, how you deal with supply chains, and reimagining your approach
to operations.
•Some goals at the growth stage are:
•Seeking additional investor funding if that’s part of your growth strategy
•Hiring key employees
•Continuing to build supplier relationships
•Experimenting with B2B marketing tactics
•Expansion
•The expansion stage is where you can expect hockey stick
growth—that is, growth is only going up and to the right according to
your sales charts as you boost cash flow, move beyond breaking even,
and diversify your distribution channels.
•Depending on the needs of the market as well as the needs of your
company, some common expansion goals can be:
•Hiring top-notch talent
•Developing a sustainable customer-support strategy
•Creating a more sophisticated Omni channel marketing experience
•Maintaining growth each quarter
•The expansion stage is where you can expect hockey stick
growth—that is, growth is only going up and to the right according to
your sales charts as you boost cash flow, move beyond breaking even,
and diversify your distribution channels.
•Depending on the needs of the market as well as the needs of your
company, some common expansion goals can be:
•Hiring top-notch talent
•Developing a sustainable customer-support strategy
•Creating a more sophisticated Omni channel marketing experience
•Maintaining growth each quarter
•Maturity
•At the maturity stage, your sales are predictable, you can rely on future
forecasts to maintain cash flow and growth, and you can hire as
needed.
•At this stage, you’re likely:
•Looking to expand your product offering
•Testing new markets
•Investing in new technology
•Considering potential exit strategies
•Expanding your marketing campaigns to maintain growth
•At the maturity stage, your sales are predictable, you can rely on future
forecasts to maintain cash flow and growth, and you can hire as
needed.
•At this stage, you’re likely:
•Looking to expand your product offering
•Testing new markets
•Investing in new technology
•Considering potential exit strategies
•Expanding your marketing campaigns to maintain growth
B2B MODEL
•Net Market Places
•E-distributer
•E-procurement
•Exchanges
•Industry Consortia
•Net Market Places
•E-distributer
•E-procurement
•Exchanges
•Industry Consortia
Net Marketplaces
•Net marketplaces are digital platforms that connect multiple businesses (typically
buyers and sellers) to conduct commercial transactions online.
•Unlike single-seller websites, these platforms support multi-party interactions and
offer centralized environments where business transactions can be streamlined,
monitored, and optimized.
•Net marketplaces facilitate real-time trading, supply chain management, and
procurement activities across companies.
•They are critical in modernizing B2B commerce by improving speed, reducing
cost, and increasing market reach.
•There are four major types of net marketplaces:
•E-distributer
•E-procurement
•Exchanges
•Industry Consortia
•Net marketplaces are digital platforms that connect multiple businesses (typically
buyers and sellers) to conduct commercial transactions online.
•Unlike single-seller websites, these platforms support multi-party interactions and
offer centralized environments where business transactions can be streamlined,
monitored, and optimized.
•Net marketplaces facilitate real-time trading, supply chain management, and
procurement activities across companies.
•They are critical in modernizing B2B commerce by improving speed, reducing
cost, and increasing market reach.
•There are four major types of net marketplaces:
•E-distributer
•E-procurement
•Exchanges
•Industry Consortia
E-Distributor
•An E-distributor is a company that owns and manages a digital platform to sell a wide range of goods—usually
standardized, low-margin products—directly to other businesses.
•These platforms operate much like wholesalers but through an online system that automates and simplifies the
purchasing process. E-distributors are commonly used for Maintenance, Repair, and Operations (MRO)
products, office supplies, industrial equipment, and consumables.
•The E-distributor assumes full responsibility for product inventory, warehousing, shipping, and customer service.
They allow bulk purchases, offer price discounts for volume, and support recurring order setups.
•The system is highly scalable and is especially valuable for large companies managing procurement across
multiple departments or locations. This model increases efficiency by cutting out middlemen and directly linking
manufacturers or large wholesalers to businesses.
• Key Features:
•Centralized product catalogs
•Volume pricing & contracts
•Integration with buyer procurement systems
•Real-time inventory updates
•Typically operated by a single vendor
•Examples:
•Amazon Business – selling everything from office supplies to electronics
•Grainger – industrial supply distributor
•Fastenal – fasteners and construction tools supplier
•An E-distributor is a company that owns and manages a digital platform to sell a wide range of goods—usually
standardized, low-margin products—directly to other businesses.
•These platforms operate much like wholesalers but through an online system that automates and simplifies the
purchasing process. E-distributors are commonly used for Maintenance, Repair, and Operations (MRO)
products, office supplies, industrial equipment, and consumables.
•The E-distributor assumes full responsibility for product inventory, warehousing, shipping, and customer service.
They allow bulk purchases, offer price discounts for volume, and support recurring order setups.
•The system is highly scalable and is especially valuable for large companies managing procurement across
multiple departments or locations. This model increases efficiency by cutting out middlemen and directly linking
manufacturers or large wholesalers to businesses.
• Key Features:
•Centralized product catalogs
•Volume pricing & contracts
•Integration with buyer procurement systems
•Real-time inventory updates
•Typically operated by a single vendor
•Examples:
•Amazon Business – selling everything from office supplies to electronics
•Grainger – industrial supply distributor
•Fastenal – fasteners and construction tools supplier
E-Procurement
•E-procurement systems are platforms that allow businesses to digitally manage their internal purchasing
processes.
•These are often subscription-based services used by medium to large enterprises to automate procurement
workflows. They include features like requisition approval, supplier qualification, electronic purchase orders,
contract compliance, budgeting controls, and spend analytics.
•This model provides a private purchasing environment for a company, meaning the buyer is in control of
supplier selection and pricing terms.
•The goal of e-procurement is not only to reduce manual paperwork and delays but also to increase transparency
and accountability in purchasing decisions.
•These platforms can also be integrated with ERP (Enterprise Resource Planning) systems to ensure better
synchronization of purchasing with inventory, finance, and operations.
•Key Features:
•Controlled access to approved suppliers
•Automated purchase order generation
•Real-time budget tracking
•Audit trail for purchases
•Catalog and supplier management
•Examples:
•SAP Ariba – a leading procurement solution with sourcing and supplier collaboration features
•Coupa Software – spend management platform
•Oracle Procurement Cloud
•E-procurement systems are platforms that allow businesses to digitally manage their internal purchasing
processes.
•These are often subscription-based services used by medium to large enterprises to automate procurement
workflows. They include features like requisition approval, supplier qualification, electronic purchase orders,
contract compliance, budgeting controls, and spend analytics.
•This model provides a private purchasing environment for a company, meaning the buyer is in control of
supplier selection and pricing terms.
•The goal of e-procurement is not only to reduce manual paperwork and delays but also to increase transparency
and accountability in purchasing decisions.
•These platforms can also be integrated with ERP (Enterprise Resource Planning) systems to ensure better
synchronization of purchasing with inventory, finance, and operations.
•Key Features:
•Controlled access to approved suppliers
•Automated purchase order generation
•Real-time budget tracking
•Audit trail for purchases
•Catalog and supplier management
•Examples:
•SAP Ariba – a leading procurement solution with sourcing and supplier collaboration features
•Coupa Software – spend management platform
•Oracle Procurement Cloud
Exchanges (B2B Marketplaces)
•Exchanges are dynamic, real-time trading platforms where multiple buyers and sellers can interact
and conduct transactions, usually involving commodities or standardized goods. These platforms are
open to many participants and often include features like bidding, auctions, price comparison tools,
and real-time supply and demand updates.
•Unlike e-procurement systems (which are private), exchanges are public or semi-public
environments that foster competition and market-driven pricing. They are highly beneficial in
industries where pricing is volatile, and products are interchangeable.
•Exchanges offer high liquidity and fast transactions but may lack long-term stability or relationship
management, which is more common in private or consortium-based platforms.
•Key Features:
•Open access to many buyers/sellers
•Competitive pricing (often through bidding/auction)
•Transparent market operations
•Low switching costs for buyers
•Real-time data on price and availability
•Examples:
•Alibaba.com – international trade platform for bulk purchases
•Global Sources – B2B sourcing platform
•Freightos Exchange – real-time international freight marketplace
•Metalshub – metal commodity trading platform
•Exchanges are dynamic, real-time trading platforms where multiple buyers and sellers can interact
and conduct transactions, usually involving commodities or standardized goods. These platforms are
open to many participants and often include features like bidding, auctions, price comparison tools,
and real-time supply and demand updates.
•Unlike e-procurement systems (which are private), exchanges are public or semi-public
environments that foster competition and market-driven pricing. They are highly beneficial in
industries where pricing is volatile, and products are interchangeable.
•Exchanges offer high liquidity and fast transactions but may lack long-term stability or relationship
management, which is more common in private or consortium-based platforms.
•Key Features:
•Open access to many buyers/sellers
•Competitive pricing (often through bidding/auction)
•Transparent market operations
•Low switching costs for buyers
•Real-time data on price and availability
•Examples:
•Alibaba.com – international trade platform for bulk purchases
•Global Sources – B2B sourcing platform
•Freightos Exchange – real-time international freight marketplace
•Metalshub – metal commodity trading platform
Industry Consortia
•An industry consortium is a collaborative marketplace formed and governed by a group of
leading firms from the same industry.
•These consortia aim to improve supply chain coordination, enforce standards, and drive down
procurement costs for their members. Unlike exchanges, consortia are less about open-market
competition and more about long-term collaboration and efficiency across a vertical industry.
•Industry consortia often operate on a non-profit or cost-sharing basis and may include
procurement tools, logistics management, and even R&D collaboration. The strength of this
model lies in standardization, improved compliance, and the shared digital infrastructure that
benefits all members. This model also promotes trust and stable business relationships.
•Key Features:
•Member-owned and controlled
•Shared IT infrastructure and standards
•Industry-specific tools and data
•Long-term supplier relationships
•Strong integration with business processes
•Examples:
•Covisint – formed by automotive companies like Ford, GM, Daimler
•Exostar – aerospace and defense industry consortium (Boeing, Lockheed Martin)
•GHX (Global Healthcare Exchange) – for hospitals and healthcare suppliers
•AgGateway – digital agriculture consortium
•An industry consortium is a collaborative marketplace formed and governed by a group of
leading firms from the same industry.
•These consortia aim to improve supply chain coordination, enforce standards, and drive down
procurement costs for their members. Unlike exchanges, consortia are less about open-market
competition and more about long-term collaboration and efficiency across a vertical industry.
•Industry consortia often operate on a non-profit or cost-sharing basis and may include
procurement tools, logistics management, and even R&D collaboration. The strength of this
model lies in standardization, improved compliance, and the shared digital infrastructure that
benefits all members. This model also promotes trust and stable business relationships.
•Key Features:
•Member-owned and controlled
•Shared IT infrastructure and standards
•Industry-specific tools and data
•Long-term supplier relationships
•Strong integration with business processes
•Examples:
•Covisint – formed by automotive companies like Ford, GM, Daimler
•Exostar – aerospace and defense industry consortium (Boeing, Lockheed Martin)
•GHX (Global Healthcare Exchange) – for hospitals and healthcare suppliers
•AgGateway – digital agriculture consortium
Private Industrial Networks (PINs)
•A Private Industrial Network (PIN) is a secure, proprietary digital platform established
and controlled by a single large buyer or a group of strategic partners within an
industry. Its primary purpose is to facilitate and streamline communication, coordination,
and collaboration across the entire supply chain.
•Unlike public B2B marketplaces that are open to multiple participants, PINs are
invitation-only systems where selected suppliers, distributors, logistics providers, and
other stakeholders are connected through a private network.
•These networks are typically developed by large manufacturers, retailers, or
conglomerates that need real-time, integrated operations across thousands of suppliers and
partners.
•PINs handle a wide range of business processes, such as inventory management, demand
forecasting, production planning, order fulfillment, invoicing, and logistics tracking. The
goal is to optimize efficiency, reduce costs, minimize inventory levels, and ensure
just-in-time (JIT) delivery and coordination across a global supply chain.
•Because of their centralized control and custom-built features, private industrial
networks offer high security, tighter integration, and better data visibility than other
B2B models.
•These networks often rely on technologies like EDI (Electronic Data Interchange), ERP
integration, IoT, and AI-based analytics to improve coordination.
•A Private Industrial Network (PIN) is a secure, proprietary digital platform established
and controlled by a single large buyer or a group of strategic partners within an
industry. Its primary purpose is to facilitate and streamline communication, coordination,
and collaboration across the entire supply chain.
•Unlike public B2B marketplaces that are open to multiple participants, PINs are
invitation-only systems where selected suppliers, distributors, logistics providers, and
other stakeholders are connected through a private network.
•These networks are typically developed by large manufacturers, retailers, or
conglomerates that need real-time, integrated operations across thousands of suppliers and
partners.
•PINs handle a wide range of business processes, such as inventory management, demand
forecasting, production planning, order fulfillment, invoicing, and logistics tracking. The
goal is to optimize efficiency, reduce costs, minimize inventory levels, and ensure
just-in-time (JIT) delivery and coordination across a global supply chain.
•Because of their centralized control and custom-built features, private industrial
networks offer high security, tighter integration, and better data visibility than other
B2B models.
•These networks often rely on technologies like EDI (Electronic Data Interchange), ERP
integration, IoT, and AI-based analytics to improve coordination.
Electronic Data Interchange (EDI)
•EDI stands for Electronic Data Interchange.
•EDI is the electronic transfer of information between two trading partner’s systems
using a set of transactions that have been adopted as a national or international
standard for the particular business function.
•EDI is an electronic way of transferring business documents in an organization
internally, between its various departments or externally with suppliers, customers, or
any subsidiaries.
•In EDI, paper documents are replaced with electronic documents such as word
documents, spreadsheets, etc.
48
•EDI stands for Electronic Data Interchange.
•EDI is the electronic transfer of information between two trading partner’s systems
using a set of transactions that have been adopted as a national or international
standard for the particular business function.
•EDI is an electronic way of transferring business documents in an organization
internally, between its various departments or externally with suppliers, customers, or
any subsidiaries.
•In EDI, paper documents are replaced with electronic documents such as word
documents, spreadsheets, etc.
48
Electronic Data Interchange (EDI)
•An EDI document is an electronic equivalent of a paper document.
•Standards govern how EDI documents are structured, and define the rules for their
use.
•When data is sent electronically as EDI transactions, they can be exchanged between
two companies (commonly referred to as Trading Partners) anywhere in the world
within hours or minutes.
•In other words, Electronic Data Interchange (EDI) is the computer-to-computer
exchange of business documents in a standard electronic format between business
partners.
•By moving from a paper-based exchange of business document to one that is
electronic, businesses enjoy major benefits such as reduced cost, increased
processing speed, reduced errors and improved relationships with business partners.
49
•An EDI document is an electronic equivalent of a paper document.
•Standards govern how EDI documents are structured, and define the rules for their
use.
•When data is sent electronically as EDI transactions, they can be exchanged between
two companies (commonly referred to as Trading Partners) anywhere in the world
within hours or minutes.
•In other words, Electronic Data Interchange (EDI) is the computer-to-computer
exchange of business documents in a standard electronic format between business
partners.
•By moving from a paper-based exchange of business document to one that is
electronic, businesses enjoy major benefits such as reduced cost, increased
processing speed, reduced errors and improved relationships with business partners.
49
EDI Layered Architecture
50
50
How Does EDI Work?
•There are 3 steps to sending EDI documents –
•Prepare the documents,
•Translate the documents into EDI format,
•Transmit the EDI documents to your partner.
51
•There are 3 steps to sending EDI documents –
•Prepare the documents,
•Translate the documents into EDI format,
•Transmit the EDI documents to your partner.
51
How Does EDI Work? (Contd.)
•Step 1: Prepare the documents to be sent
▪The first step is to collect and organize the data. For example, instead of printing
a purchase order, your system creates an electronic file with the necessary
information to build an EDI document.
▪The sources of data and the methods available to generate the electronic
documents can include:
❖Human data entry via screens
❖Exporting PC-based data from spreadsheets or databases
❖Reformatted electronic reports into data files
❖Enhancing existing applications to automatically create output files that are
ready for translation into an EDI standard
❖Purchasing application software that has built-in interfaces for EDI files
•Step 1: Prepare the documents to be sent
▪The first step is to collect and organize the data. For example, instead of printing
a purchase order, your system creates an electronic file with the necessary
information to build an EDI document.
▪The sources of data and the methods available to generate the electronic
documents can include:
❖Human data entry via screens
❖Exporting PC-based data from spreadsheets or databases
❖Reformatted electronic reports into data files
❖Enhancing existing applications to automatically create output files that are
ready for translation into an EDI standard
❖Purchasing application software that has built-in interfaces for EDI files
How Does EDI Work? (Contd.)
•Step 2: Translate the documents into EDI format
▪The next step is to feed your electronic data through translator software to
convert your internal data format into the EDI standard format using the
appropriate segments and data elements.
▪You can purchase EDI translation software that you manage and maintain on
your premises. This requires specialized mapping expertise in order to define
how your internal data is to be mapped (i.e. correlated) to the EDI data.
▪Translation software is available to suit just about any computing environment
and budget, from large systems that handle thousands of transactions daily to
PC-based software that need only process a few hundred transactions per week.
▪Alternatively, you can use the translation services of an EDI service provider. In
that case, you send your data to the provider, who handles translation to and from
the EDI format on your behalf.
53
•Step 2: Translate the documents into EDI format
▪The next step is to feed your electronic data through translator software to
convert your internal data format into the EDI standard format using the
appropriate segments and data elements.
▪You can purchase EDI translation software that you manage and maintain on
your premises. This requires specialized mapping expertise in order to define
how your internal data is to be mapped (i.e. correlated) to the EDI data.
▪Translation software is available to suit just about any computing environment
and budget, from large systems that handle thousands of transactions daily to
PC-based software that need only process a few hundred transactions per week.
▪Alternatively, you can use the translation services of an EDI service provider. In
that case, you send your data to the provider, who handles translation to and from
the EDI format on your behalf.
53
How Does EDI Work? (Contd.)
•Step 3: Connect and Transmit your EDI documents to your business partner
▪Once your business documents are translated to the appropriate EDI format they
are ready to be transmitted to your business partner. You must decide how you
will connect to each of your partners to perform that transmission.
▪There are several ways, the most common of which include:
❖to connect directly using AS2 or another secure internet protocol,
❖connect to an EDI Network provider (also referred to as a VAN provider)
using your preferred communications protocol and rely on the network
provider to connect to your business partners using whatever communications
protocol your partners prefer, or
❖a combination of both, depending on the particular partner and the volume of
transactions you expect to exchange.
54
•Step 3: Connect and Transmit your EDI documents to your business partner
▪Once your business documents are translated to the appropriate EDI format they
are ready to be transmitted to your business partner. You must decide how you
will connect to each of your partners to perform that transmission.
▪There are several ways, the most common of which include:
❖to connect directly using AS2 or another secure internet protocol,
❖connect to an EDI Network provider (also referred to as a VAN provider)
using your preferred communications protocol and rely on the network
provider to connect to your business partners using whatever communications
protocol your partners prefer, or
❖a combination of both, depending on the particular partner and the volume of
transactions you expect to exchange.
54
E-commerce and the Industry Value Chain
•The Industry Value Chain refers to the sequence of activities and
processes that are performed by different firms in an industry to
deliver a product or service to the end customer.
•These activities include suppliers, manufacturers, distributors,
retailers, and service providers, all contributing value at different
stages.
•In the digital age, e-commerce has transformed the structure and
dynamics of the industry value chain by digitizing transactions,
reducing costs, and eliminating intermediaries.
•With e-commerce, companies can directly reach customers without
relying on traditional retailers or wholesalers, a process called
disintermediation.
•The Industry Value Chain refers to the sequence of activities and
processes that are performed by different firms in an industry to
deliver a product or service to the end customer.
•These activities include suppliers, manufacturers, distributors,
retailers, and service providers, all contributing value at different
stages.
•In the digital age, e-commerce has transformed the structure and
dynamics of the industry value chain by digitizing transactions,
reducing costs, and eliminating intermediaries.
•With e-commerce, companies can directly reach customers without
relying on traditional retailers or wholesalers, a process called
disintermediation.
E-commerce and the Industry Value Chain
•It also enables real-time communication, data sharing, and faster
logistics across the chain, making supply chains more responsive and
efficient.
•For example, manufacturers can receive direct feedback from
customers via online platforms, influencing product design or
customization.
•Furthermore, digital technologies such as cloud computing, IoT, and
AI are integrating with e-commerce systems to optimize inventory,
automate procurement, and enhance demand forecasting—reshaping
how value is created and delivered across the entire industry.
•It also enables real-time communication, data sharing, and faster
logistics across the chain, making supply chains more responsive and
efficient.
•For example, manufacturers can receive direct feedback from
customers via online platforms, influencing product design or
customization.
•Furthermore, digital technologies such as cloud computing, IoT, and
AI are integrating with e-commerce systems to optimize inventory,
automate procurement, and enhance demand forecasting—reshaping
how value is created and delivered across the entire industry.
Firm Value Chain
•The Firm Value Chain, developed by Michael Porter, refers to the
internal activities within a single firm that are performed to create
value for customers.
•These activities are divided into two categories:
•Primary activities (such as inbound logistics, operations, outbound logistics,
marketing & sales, and customer service)
•Support activities (like firm infrastructure, human resources, technology
development, and procurement).
•E-commerce significantly enhances the efficiency and coordination of
value chain activities within a firm.
•The Firm Value Chain, developed by Michael Porter, refers to the
internal activities within a single firm that are performed to create
value for customers.
•These activities are divided into two categories:
•Primary activities (such as inbound logistics, operations, outbound logistics,
marketing & sales, and customer service)
•Support activities (like firm infrastructure, human resources, technology
development, and procurement).
•E-commerce significantly enhances the efficiency and coordination of
value chain activities within a firm.
Firm Value Chain
•For instance, digital platforms automate order processing and
customer relationship management, while real-time inventory systems
improve warehouse operations and stock management.
•Marketing and sales are revolutionized through tools like search
engine optimization (SEO), social media marketing, and personalized
advertising. Additionally, technology platforms streamline internal
communication, supplier coordination, and product development.
• In essence, e-commerce enables firms to reduce costs, increase speed,
and improve customization, leading to a stronger competitive position.
•For instance, digital platforms automate order processing and
customer relationship management, while real-time inventory systems
improve warehouse operations and stock management.
•Marketing and sales are revolutionized through tools like search
engine optimization (SEO), social media marketing, and personalized
advertising. Additionally, technology platforms streamline internal
communication, supplier coordination, and product development.
• In essence, e-commerce enables firms to reduce costs, increase speed,
and improve customization, leading to a stronger competitive position.
Firm Value Web
•The Firm Value Web is a more flexible, networked version of the traditional
value chain.
•Instead of a linear sequence of activities, a value web emphasizes
interconnected, dynamic relationships among a firm and its multiple
partners—such as suppliers, business allies, customers, logistics providers,
and service firms.
•It reflects the collaborative nature of doing business in the digital economy,
where value is co-created across networks rather than within a single firm or
industry.
•E-commerce plays a central role in enabling value webs by providing the
digital infrastructure needed to support real-time collaboration, information
sharing, and integrated decision-making.
•The Firm Value Web is a more flexible, networked version of the traditional
value chain.
•Instead of a linear sequence of activities, a value web emphasizes
interconnected, dynamic relationships among a firm and its multiple
partners—such as suppliers, business allies, customers, logistics providers,
and service firms.
•It reflects the collaborative nature of doing business in the digital economy,
where value is co-created across networks rather than within a single firm or
industry.
•E-commerce plays a central role in enabling value webs by providing the
digital infrastructure needed to support real-time collaboration, information
sharing, and integrated decision-making.
Firm Value Web
•For example, through cloud platforms, companies can co-design products
with partners in different countries, or use shared logistics systems to fulfill
orders globally.
•The value web approach is particularly relevant in industries like
technology, retail, and manufacturing, where agility, customization, and
partnerships are key competitive advantages.
•By using platforms, APIs, and digital ecosystems, firms can plug into
broader webs of value, adapt quickly to market changes, and innovate
rapidly.
•This approach also allows firms to create multiple value propositions for
different customer segments simultaneously, rather than following a
one-size-fits-all strategy.
•For example, through cloud platforms, companies can co-design products
with partners in different countries, or use shared logistics systems to fulfill
orders globally.
•The value web approach is particularly relevant in industries like
technology, retail, and manufacturing, where agility, customization, and
partnerships are key competitive advantages.
•By using platforms, APIs, and digital ecosystems, firms can plug into
broader webs of value, adapt quickly to market changes, and innovate
rapidly.
•This approach also allows firms to create multiple value propositions for
different customer segments simultaneously, rather than following a
one-size-fits-all strategy.
Comparison
Aspect Industry Value Chain Firm Value Chain Firm Value Web
Definition
Series of linked activities performed by
multiple firms in an industry to
deliver value
Internal activities within a single
firm that create value
A network of interconnected firms
collaborating dynamically to
co-create value
Scope Cross-firm, cross-industry process Intra-firm, internal processes Inter-firm, collaborative network
Focus
How value moves through the entire
industry
How value is created within one
firm
How value is co-created in a
flexible ecosystem
Structure Linear, sequential flow of activities
Linear, sequential but internal to a
firm
Networked, non-linear, highly
flexible
Participants
Suppliers, manufacturers, distributors,
retailers, service providers
Departments, functions, teams
inside one firm
Multiple firms including suppliers,
customers, logistics, partners
E-commerce Role
- Enables direct interaction between
firms (B2B platforms)
Automates and integrates a
firm’s internal processes—from
order management and
inventory to marketing and
customer
Enables real-time collaboration
and seamless integration among
multiple firms
Aspect Industry Value Chain Firm Value Chain Firm Value Web
Definition
Series of linked activities performed by
multiple firms in an industry to
deliver value
Internal activities within a single
firm that create value
A network of interconnected firms
collaborating dynamically to
co-create value
Scope Cross-firm, cross-industry process Intra-firm, internal processes Inter-firm, collaborative network
Focus
How value moves through the entire
industry
How value is created within one
firm
How value is co-created in a
flexible ecosystem
Structure Linear, sequential flow of activities
Linear, sequential but internal to a
firm
Networked, non-linear, highly
flexible
Participants
Suppliers, manufacturers, distributors,
retailers, service providers
Departments, functions, teams
inside one firm
Multiple firms including suppliers,
customers, logistics, partners
E-commerce Role
- Enables direct interaction between
firms (B2B platforms)
Automates and integrates a
firm’s internal processes—from
order management and
inventory to marketing and
customer
Enables real-time collaboration
and seamless integration among
multiple firms
Tags
Categories
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