E-Commerce Business Models And Concepts


Case Study

1.     Compare Pandora’s original business model with its current business model. What’s the difference between “free” and “freemium” revenue models?

a.     The free business model gives products and services away completely 100% free while the freemium business model offers products and services away for free also while relying on a certain percentage of their customers to pay for products and services.

2.    What is the customer value proposition that Pandora offers?

a.    Pandora offered their customers a few options to use their service.

3.    Why did MailChimp ultimately succeed with a freemium model but Ning did not?

a.    Ning acquired free customers faster than they were able to attract the paying customers and due to the rising costs of running their business, they had to close up shop.

4.    What’s the most important consideration when considering a freemium revenue model?

a.    Some of the most important factors to consider for a successful freemium revenue model is to ensure you have low to almost zero marginal costs to support the free users.

Chapter Questions

1.     What is a business model? How does it differ from a business plan?

a.     A business model is a set of planned activities designed to result in a profit in a marketplace. A business plan is a document that describes a firm’s business model.

5.     Why is targeting a market niche generally smarter for a community provider than targeting a large market segment?

a.     It is smarter to target a smaller niche market as opposed to a larger market segment because it is easier and more cost effective to focus your attentions on a smaller number of individuals.

10.  Why is it difficult to categorize e-commerce business models?

a.     There are a great many e-commerce business models created each day. The only limit to the number of different e-commerce business models is the human imagination.

15.  What are the key success factors for exchanges? How are they impacted by e-commerce technology?

a.     The key success factor for exchanges is market liquidity. The ease, speed, and volume of transactions is referred to the market liquidity.

20.  What is crowdfunding and how does it help e-commerce companies raise capital?

a.      Crowdfunding involves using the internet to enable individuals to collectively contribute their money to support a project. E-commerce business are technology related at heart. Crowdfunding would not be as successful without the use of technology and the use of technology allows e-commerce companies to reach more people to allow them to achieve greater amounts of startup capital.


Project Question

2.     Examine the experience of shopping online versus shopping in a traditional environment. Imagine that you decided to purchase a digital camera. First, shop for the camera in a traditional manner. Describe how you would do so (for example, gather the necessary information you would need to choose a particular item, what stores you would visit, how long it would take, prices, etc.) Next, shop for the item on the web or via a mobile app. Compare and contrast your experiences. What were the advantages and disadvantages of each? What did you prefer and why? The advantages of shopping online include being able to read product reviews, comparing prices in seconds and no travel time from store to store. The advantage to shopping in a brick and mortar store and the disadvantage of shopping online would be not being able to get hands on with the product and view it in person. I prefer online shopping as opposed to going to physical stores because you’re able to get a better deal online and you can compare products for easily.