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E-Business Management
Session Two : Revenue Models
Session Objectives
Define the type of revenue collection
methods for B2C and BCB marketplaces
 What is a revenue model?
 Define the type of revenue models
available
 Understand the changes in the revenue
composition of e-businesses

Revenue Collection

Collection and disbursement of revenue
items

B2C
Use of credit cards
 Digital wallets
 Digital Cash

Revenue Collection

Collection and disbursement of revenue items

B2B



Electronic Letters of Credit – where a bank or other authority
guarantees the payment, and therefore takes the risk associated
with repudiation or order dispute
Internet based EDI – although less standardised than more
traditional EDI, this approach has the benefit of integrating
payment details with other organisational systems
Electronic billing presentation and payment (EBPP): the
process by which companies bill customers and receive
payments electronically over the Internet. There are two types of
presentment models:


direct model: a biller delivers the bill to customers via its own
website, or via a third-party's site
consolidator model: bills from multiple billers are delivered to a
single Web site, to be presented in aggregate to the consumer for
viewing and payment
Revenue Model - Definition
A revenue model is a part of the overall
business model, and is essentially the
underlying concept of how the ebusiness will attract and collect revenue
 The three forms are:

Sales
 Taxes/Individual Service User Payments
 Financial Contributions from the public

Types of the Revenue Model
Advertising – income from, for example,
banner ads and linked to volume and quality of
hits
 Sponsorship – sponsorship from a company
wanting to convey brand values through
association with programs that fit the
company's product or corporate image.
 Subscription – in effect a membership charge
for the ability to receive services for a specified
time

Types of the Revenue Model
Transaction Fee – in effect, a broking
fee for facilitating a sale between two
parties
 Affiliate – referral fees when one
website leads a party on to another
where they conduct a transaction – and
the original site therefore gains a cut of
the fee : a referral type model

Types of the Revenue Model

Sales – may be of goods or services, which
can include information (for example, market
information) or provision of web services
themselves (such as server spaces for
websites, or hot counters)

sales packages may themselves come in diverse
forms, such as forward payments for a series of
services or deliveries of goods, or agreements to
purchase a number of as yet unspecified items (for
examples, on a book club model) or basic sales
plus discounts on add-ons and so on
Sales Revenue

Online sales revenues are further
affected by sales channel decisions,
such as customer service, purchase
processes, website performance
Internet B2C Revenue
Subscription
Advertising
Transaction Fee
Sales
Affiliate
Before the dot.com crash
Internet B2C Revenue
Subscription
Advertising
Transaction Fee
Sales
Affiliate
After the dot.com crash
Discussion

Discuss the feasibility of the types of
revenue models the following companies
use:
www.ebay.com
 www.orbitz.com
 Harvard Business Review Online
 www.amazon.com

References
Afuah & Tucci, Internet Business Models
and Strategies: Text and Cases, 2001
 Groucutt & Griseri, Mastering EBusiness, 2004
 Soh & Markus, B2B E-Marketplaces— A
Strategic Archetypes Approach, 2002
