Lei Shi

ITS 380

Chapter 2


Case Study Questions

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

In the beginning Pandora tried to give people free time for 10 hours, then let them pay $36 per month.  The original business model is let people use in a short time and then subscribers need to pay for it. But it’s failed. Then partnering with Amazon to take a free ad-supported model.

The difference between “free” and “freemium” revenue models is that freemium can give free services and free music to listen. Some customers pay for premium versions.


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

Customers can listen the music which they like of their favorite musician. If customers pay the subscription fee, and the music will be commercial free.


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

MailChimp offers free service to its light users, someone with a basic use for an email every week, with a volume of just dozens of emails. Ning didn't work as a freemium service because own targeted social networking site is not something that everyone needs.

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

The most important considerations to make a business model a possible freemium candidate, like immense prospective customers, easily to use, high retention rates, etc.



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

A business model is the way in which a company generates revenue and makes a profit from company operations.

The business model is the mechanism through which the company generates its profit while the business plan is a document presenting the company's strategy and expected financial performance for the years to come.


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

Targeting a market niche is generally a more clever strategy for a community provider than targeting a large market segment because targeting large market segments will only pit a company against bigger and more established competitors. Small sub-segments of larger markets have a greater potential for growth without the intense competitive pressure.

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

There are many e-commerce business models, and more and more are coming up every day according to the modern age development and so it can get difficult with several thousand commercial web sites to consider, there is a great variety of e-commerce business models. Some companies use multiple business models which will have closely related to B2C, B2B, and e-commerce variations on their business model

15. What are the key success factors for exchanges? How are they different from portals?

The huge market potential for the, easily to check in and checkout for buyers, easily to access for buyers and sellers, less expensive and fast in operation, things are good with nice prices.  

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

Crowdfunding is to use internet to ask people for money to raise capital to help people or for a project.



1.      Select an e-commerce company. Visit its web site and describe its business model based on the information you find there. Identify its customer values proposition, its revenue model, the marketspace it operates in, who its main competitors are, any comparative advantages you believe the company possesses, and what its market strategy appears to be. Also try to locate information about the company’s management team and organizational structure. (Check for a page labeled “the company,” “About us,” or something similar.)

Flight club, http://www.flightclub.com/, a website for selling shoes, it is a B2C model. Usually they get shoes from other customers or companies, then sale the shoes. You can find almost all kind of rare shoes. The price of shoes is higher than the original price. The main competitors like eBay, amazon, and some individual sellers. You can make sure you can buy 100% authentic, unused, brand new shoes. They have their own Facebook, twitter, Instagram page, also they have two stores in LA and New York.